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Appeal No. 580 of 1972.
(From the Judgment and Order dated 8 9 1970 of the Gujarat High Court in Income tax Reference No. 9/68).
B.B. Ahuja and R.N. Sachthey, for the Appellants.
K.L. Hathi and P.C. Kapoor, for the respondent.
The Judgment of the Court was delivered by GOSWAMI, J.
This appeal by certificate is from the judgment of the Gujarat High Court in an Income tax Refer ence under section 66(1) of the Indian Income tax Act, 1922 (briefly the Act).
The two questions which were earlier referred by the Tribunal to the High Court at the instance of the Commis sioner of Income tax, Gujarat III.
are as follows : "(2) Whether, on the facts and in the circumstances of the case, the assessee was entitled to set off hedging.
loss of Rs. 31745/ against other profits of the previous year ? (2) Whether on the facts and in the circum stances of the case, the assessee was entitled to carry forward the speculation loss of Rs. 41603/ to the next year ?" The following facts appear from the statement of case and the order of the Tribunal: The assessment year in question is 1957 58 and the corresponding previous year is the Samvat year 2012.
The assessee is carrying on business by running an oil mill, and also doing business in sales and purchase of groundnuts, groundnut seeds and oil: speculation business in groundnuts, groundnut oil and groundnut seeds; and speculation business in cotton, errands, etc.
His total income for the year in question was determined by the Income tax Officer as Rs. 1,71,632/ .
This was after allowing set off of loss brought forward from the year 1955 56 amounting to Rs. 2,11,431/ .
In arriving at the figure of the total income, the Income tax Officer disallowed loss amounting to 28 Rs. 73,348/ in forward contracts in groundnut oil, ground nuts and groundnut seeds.
He disallowed this loss on the ground that it arose out of illegal contracts on account of the same being banned Under section 15(4) of the Forward Contracts (Regulation) Act, 1952.
It will appear that the break up of losses in the busi ness of illegal forward contracts is as follows : ( 1 ) Groundnut oil Account Rs. 49,664/ (2) Groundnut Account Rs. 22,522/ (3) Singdana (Groundnut seeds Account) at Veraval Rs. 1,162/ Total Rs. 73,348/ The above third item of loss is arrived at by the Income tax Officer after adjusting the profit of the forward business in groundnut seeds at Rajkot.
On appeal by the assessee the Appellate Assistant Com missioner affirmed the order of the Income tax Officer.
The Appellate Assistant Commissioner.
however, bifurcated the loss into two categories as follows : (1 ) Loss incurred in hedging transactions in the banned items Rs.331,745/ (2) Loss incurred in speculative tran sactions (other than hedging transac tions) in the banned items.
Rs. 41,603:/ Total: Rs. 73,348/ The Appellate Assistant Commissioner held that the assessee was not entitled to the set off of the loss against the assessee 's other business under section 24(1 ) of the Act and also that such loss could not be carried forward to the following year under section 24(2) of the Act On a second appeal by the assessee before the Appellate Tribunal, the Tribunal held that notwithstanding the ille gality of the transactions the loss could be set off and carried forward in accordance with the provisions of section 24(1) and 24(2) respectively of the Act.
The Tribunal accordingly directed that the loss in hedging transactions of forward business in the banned contracts amounting to Rs. 31,745/ be set off against the other profits of the asses see for the relevant accounting year under section 24(1) and that the balance loss of Rs. 41,603/ relating to the specu lative transactions in the banned contracts be carried forward to the following year under section 24(2) of the Act to be set off against profits of the following year from speculative business.
As stated earlier, at the instance of the Commissioner of Incometax, the two questions set out above Were referred to the High ,Court under section 66(1) of the Act.
The High Court relying upon its 29 earlier judgment in the Commissioner of Income tax vs S.C. Kothari(1) answered both the questions in the affirma tive in favour of the assessee.
That decision was, however, partly reversed by this Court in the Commissioner of Income tax Gujarat vs S.C. Kothari(2) (hereinafter to be referred to as Kothari decision).
This Court held in the Kothari decision as follows: " .
the taint of illegality of the business cannot detract from the tosses being taken into account for computation of the amount which can be subjected to tax as 'profits ' under section 10( 1 ) of the Act of 1922.
The tax collector cannot be heard to say that he will bring the gross receipts to tax.
He can only tax profits of a trade or business.
That cannot be done without deducting the losses and the legitimate expenses of the business".
This Court, however, held that the High Court was in error in considering that any set off could be allowed in that case under the first proviso to section 24(1).
This Court ob served: "The contract contemplated by Explanation 2 to the first proviso to section 24( 1 ) of the Income tax Act, 1922, has to be an en forceable contract and not an unenforceable one by reason of any taint of illegality resulting in its invalidity.
Set off cannot be allowed under the first proviso to section 24(1), read with Explanation 2 thereto, of losses in contracts which are illegal and unenforceable on account of contravention of Section 15(4) of the Forward Contracts (Regu lation) Act, 1952".
This Court held the contracts in that case in respect of which the loss was incurred by the assessee as illeged contracts.
It also held that the assessee was not entitled to a set off under the first proviso to.
section 24( 1 ) of the Act of the loss against its profit in speculative trans actions.
It, however, held that if the business in which the loss was sustained in that case was the same as the business in which the profit was derived then the loss had to be taken into account while computing the profits of the business under section 10(2) of the Act.
In the view it took this Court remitted the matter to the High Court to.
decide: the point which was not clear on the findings wheth er the profits and losses were incurred in the same busi ness even though that business involved the entering into of contracts some of which were illegal.
In the present case there is no dispute that the losses were incurred in connection with forward contracts which were banned under section 15(4) of the Forward Contracts (Regulation) Act.
It is also clear that the Income tax Officer adjusted the profit against the loss with regard to the illegal business in groundnut seeds which was carried on in two places, Veraval and Rajkot.
This set off is permis sible under section 10(2) of the Act because it is only by (1) (2) 30 setting off of the loss of the particular business in groundnut seeds that true profit with regard to that par ticular business can be computed under section 10(2).
There is, therefore, no reason to remit this case as the.course earnestly suggested by Mr. Hathi for the respondent.
In Kothari decision (supra) it was observed by this Court while remitting the case that "enough attention was not devoted to the business which the assessee was doing and in which the profit of Rs. 2,19,046/ was made and the loss of Rs. 3,40,443/ was sustained".
Such an uncertainty, however, is not present in the instant case.
The submission of Mr. Hathi, therefore, cannot be accepted.
The present case rests upon section 24 of the Act.
That section so far as material for our purpose reads as follows : "24(1) Where any assessee sustains a loss of profits or gains in any year under any of the heads mentioned in section 6, he shall be entitled to have the amount of the loss set off against his income, profits or gains under any other head in that year: Provided that in computing the profits and gains chargeable under the head 'Profits and gains of business, profession or vocation, any loss sustained in speculative transactions which are in the nature of a business shall not be taken into account except to the extent of the amount of profits and gains, if any, in any other business consisting of speculative transactions: (2) Where any assessee sustains a loss of profits or gains in any year, being a previ ous year not earlier than the previous year for the assessment for the year ending on the 31st day of March, 1940, in any business, profession or vocation, and the loss cannot be wholly set off under sub section (1), so.
much of the loss as is not so set off or the whole loss where the assessee had no other head of income shall be carried forward to the fol lowing year, and (i) where the loss was sustained by him in a business consisting of speculative transactions, it shall be set off only against the profits and gains, if any, of any business in speculative transactions carried on by him in that year; (ii) whether loss was sustained by him in any other business, profession or vocation, it shall be set off against the profits and gains, if any, or any business, profession or vocation carried on by him in that year, provided that the business, profession of vocation in which the.
loss was originally sustained continued to be 'carried On= by him in that year; and 31 (iii) if the loss in either case cannot be wholly so set off, the amount of loss not so set off shall be carried forward to the fol lowing year and so on but no loss shall be so carried forward for more than eight years".
X X X X X In the instant case there is no dispute about the fol lowing findings of facts: The assessee sustained losses in the relevant accounting year amounting to Rs. 73,348/ .
This figure was arrived at on a legitimate computation under section 10(2) of the Act.
No further question survives for a recomputation of the income under Section 10(2) of the Act in this case.
The only question remains is as to whether the loss of Rs. 31,745/ can be set off against other profits in the previ ous year.
This is the first question in the reference.
This question has to be answered in the.
negative in view of Kothari decision (supra).
The hedging loss being in respect of a banned contract under section 15(4) of the Forward Contracts (Regulation) Act, 1952, cannot be set off against the profits of other business of the previous year.
The second question is with regard to the assessee 's claim for entitlement to carry forward the speculation loss of Rs. 41,603/ to the next year.
It is also admitted that the contract for speculation in the commodity in question is banned under the Forward Contracts (Regulation) Act, 1952.
It also appears that the said loss could not be set off in the previous year against profit in the same business in that year.
The assessee contends that this loss should be allowed to be carried forward under section 24(2) of the Act.
To allow such a claim is to permit a benefit of ad justment of loss from an illegal business to spill over and continue in the following year even in a lawful speculative business.
A speculative business which is carried on in the following year must be a business of lawful speculation pertaining to lawful and enforceable contracts.
The asses see carrying on a lawful speculative business in the follow ing year cannot derive benefit by carrying forward and setting off a loss from an illegal speculative business of the earlier year.
Law will assume an illegal business to die out of existence with all its losses to the assessee in the year of loss itself.
The assessee can derive no benefit on account of the unlawful business in the following year.
The matter will be different if a lawful speculative busi ness after incurring loss is discontinued and loss therefrom is carried forward for set off against any other lawful speculative business in the following year.
This is the true legal effect of section 24(2)(i) of the Act in this case.
It iS inconceivable that law can permit an illegal activity to be carried on from which a benefit could be obtained.
The concept of carry forward is not the same thing as the setting off of loss in a particular illegal business against profit of that illegal business in a particular year.
The two concepts have to be kept distinct ly separate 32 even in a taxing statute.
There is no express warrant for the submission either under section 20(2) or under any other provision of the Act, far less on general principles.
It is true that by earning income from illegal trading activity the income does not get tainted so far as exigibil ity to tax is concerned.
While computing income from illegal activity in a particular year all losses incurred in earning that particular income are also taken into account for computation of real profits even in the illegal business.
That does not mean that fines imposed on the illegal activi ties detected, prosecuted and punished or otherwise pena lised, will be taken into account for ascertainment of real profits.
There is, therefore, a marked distinction between computation of a particular year s profit from illegal trading activity and carry forward of a loss to set it off against income in subsequent years even assuming that such illegal activity is continued against the provisions of law.
No illegal activity can be perpetuated under any provisions of law nor benefit out of it.
Law will miss its paramount object if it is not consistent with morality and any inter pretation by courts cannot read to a result where continua tion of illegal activity or benefit attached to it is given recognition.
The second question, therefore, must be answered in the negative and against the assessee.
In the result the judgment of the High Court is set aside and the two questions set out above are answered in the negative and in favour of the Department.
The appeal is allowed with costs.
P.H.P. Appeal allowed.
| IN-Abs | The assessee carries on business of running Oil Mill and dealing in groundnuts, groundnut seeds and oil, speculative business in groundnuts, groundnut oil and groundnut seeds, and speculation business in cotton errands etc.
The I.T.O. disallowed loss in forward contracts and groundnut oil, groundnuts and groundnut seeds on the ground that it arose out of illegal contracts on account of the same being banned under section 15(4) of the Forward Contracts (Regulation) Act, 1952.
The Appellate Assistant Commissioner on appeal confirmed the decision of the l.
T.O. but bifurcated the loss into two headings, namely, loss incurred in hedging transac tions m the banned items and loss incurred in speculative transactions.
On second appeal, the Tribunal held that notwithstanding the illegality of the transactions the loss could be set off and carried forward in accordance with the provisions of section 24(1) and 24(2) of the Income Tax Act, 1922.
The Tribunal accordingly directed that the loss in hedging transactions of forward business in the banned contracts be set off against the other profits of the asses see for the relevant accounting year under section 24(1) and that balance of loss relating to the speculative transac tions in the banned contracts be carried forward to the following year under section 24(2) of the Act to be set off against profit of the following year from speculative busi ness.
On reference to the High Court, the High Court an swered both the questions in favour of the assessee and upheld the judgment of the Tribunal.
The High Court relied on its earlier judgment in the case of C.I.T. vs S.C. Ko thari.
Allowing the appeal by certificate HELD: (1) The loss incurred ,in the hedging transactions cannot be set off against other profits in the previous year in view of the decision of this Court partly reversing the judgment of the High Court in the case of S.C. Kothari.
[31C D] Commissioner of Income tax vs S.C. Kothari, , ap plied.
(2) It is admitted that the contract for speculation in the commodity in question is banned under the Forward Con tracts (Regulation) Act 1952.
To allow such a loss to be carried forward is to permit a benefit of adjustment of loss from an illegal business to spill over and continue in the following year even in a lawful speculative business.
The speculative business which is carried on in the following year must be a business of lawful speculation pertaining to the lawful and enforceable contracts.
An assessee carrying on a lawful speculative business in the following year cannot derive benefit by carrying forward and setting off a loss from illegal speculative business of the earlier year.
Law will assume an illegal business to die out of existence with all its losses to the assessee in the year of loss itself.
The assessee can derive no benefit on account of the unlawful business in the following year.
The matter will be different if a lawful speculative business after incurring loss is 27 discontinued and loss thereupon is carried forward for set off against any other lawful speculative business in the following year.
It is inconceivable that law can permit an illegal activity to be carried on from which a benefit could be obtained.
The concept of carry forward is not the same thing as the setting off of loss in a particular illegal business against profit of that illegal business in a par ticular year.
The two concepts have to be kept distinctly separate even in a taxing statute.
It is true that by earning income from illegal trading activity the business does not get tainted so far as exigibility to tax is con cerned.
While computing income from illegal activity in a particular year all losses incurred in earning that particu lar income are also taken into account for computation of real profits even in the illegal business.
There is a marked distinction between the computation of a particular year 's profit from illegal trading activity and carry for ward of a loss to set it off against income in the subse quent years even assuming that such illegal activity is continued against the provisions of law.
No illegal activi ty can be perpetuated under any provisions of law nor bene fit out of it.
Law will miss its paramount object if it is not consistent with morality and any interpretation by courts cannot lead to a result where continuation of illegal activity or benefit attached to it is given recognition.
[31D H, 32A D]
|
Appeal No. 2070/68.
Appeal by Special Leave from the Judgment and Order dated 16 2 1968 of the Punjab & Haryana High Court in Civil Revi sion Case No. 107/66 and Civil Appeal No. 1784/69.
Appeal by Special Leave from the.
Judgment and Order dated 25 11 2968 of the Punjab & Haryana High Court in Civil Revision No. 2.39 of 1967.
G.L. Sanghi and K. J. John for the Appellants.
S.N. Anand and R.N. Sachthey for the Respondents.
39 The Judgment of the Court was delivered by KAILASAM, J.
Civil Appeal No. 2070 of 1963 is by spe cial leave by the appellants against the judgment of the Punjab and Haryana High Court dismissing the appellant 's petition for revising an order passed by the Subordinate Judge, Ambala City, allowing an application by the State, respondent, and appointing the Arbitration Committee.
The appellants entered into an agreement with the '.
Public Works Department, Punjab State, for execution of certain construc tion works in August, 1952.
They entered into an agreement, exhibit A I.
The agreement provided an arbitration clause in the following terms : "In the matter of dispute, the case shall be referred to the Settlement Committee consist ing of a Superintending Engineer, an officer of the.
Finance Department of the rank of at least Deputy Secretary and an Accounts Offi cer, all to be nominated by the Government for arbitration whose decision will be final.
" Disputes arose between the parties and the State of Punjab appointed a Settlement Committee by notification dated 31st January, 1958.
The Settlement Committee, entered upon the arbitration but before the Arbitration Committee concluded its work the State Government unilaterally abolished the Committee by an order dated 27th March, 1962.
Subsequent ly by a notification dated 18th May, 1962, the State Gov ernment constituted a Committee giving the names of three officers with headquarters at Nangal.
The new Committee took up the dispute as well as a claim made by the Govern ment and issued notice to the parties.
The new Settlement Committee passed an award on 25th July, 1962.
The appel lants challenged the validity of the award in the Civil Court.
The Civil Court set aside the second Settlement Committee 's award on the ground that it was made by the Committee even before the expiry of the time given by it to the appellants.
There after, the second Settlement Commit tee also ceased to function.
The State Government gave notice to the appellant under section 8(1) of the Arbitration Act to.
concur in the, appointment of a fresh Settlement Committee to arbitrate the matter between the parties.
The appellants did not respond to the notice.
The State Government made an application to the trial court for appointment of an arbitrator under section 3(2) of the Arbitration Act.
The appellants raised two objections, namely that section 8 was not ap plicable to the case and that by abolition of the first Settlement Committee the State Government had put an end to the arbitration clause agreed to between the parties by the agreement at exhibit A 1.
The learned JUdge rejected both the grounds and held that after the State Government withdrew the personnel of the first Settlement Committee they became incapable of acting and therefore the court Was entitled to act under section 8(1)(b) of the Act.
On the second point it held that the terms of the arbitration clause in the agreement exhibit A 1 did not justify reading into it the condi tion that the intention of the parties was that the vacan cies in the Settlement Committee for arbitration were not to be filled.
4 240SCI/77 40 In the Revision Application before the High Court the appellants in effect raised the same contentions though in a slightly different form.
The High Court agreed with the view of the trial Judge that when once the Government abol ished the first Settlement Committee it became incapable of acting and section 8(1)(b) became applicable.
It also agreed with the trial court and found that there was nothing in the terms of the arbitration clause in exhibit A 1 to justify the contention that when once a Settlement Committee was ap pointed the power under the clause is exhausted.
The High Court held that the trial court was justified in proceeding under sub section (1) of section 8 in .asking the appellant to give the names for consideration of the court for the reconstitution of the Committee and as the appel lants did not give the names the trial court was Justified in accepting the names given by the State Government.
In the appeal before us the same conten tions were raised.
It was submitted that when one of the parties to the arbitration agreement unilaterally disabled the Settlement Committee from functioning the court will not assist that party by holding that the Commit tee became incapable of acting.
It was contended that the provisions of section 8 of the Arbitration Act will not be applicable when one of the parties could appoint a Set tlement Committee by itself without reference to the other party.
The learned counsel for the appellant also contended that when the first Settlement Committee ceased to exist by the government unilaterally putting an end to it, the arbitration clause worked itself out and no other committee could be appointed The relevant clause in the agreement though given earlier is again "In the matter of dispute, the case shall be referred to the Settlement Committee consist ing of a Superintending Engineer, an officer of the Finance Department of the rank of at least Deputy Secretary and an Accounts offi cer, all to be nominated by the Government for arbitration whose decision will be final.
" The clause is an amendment to the original condition No. 5.
The clause further provided that the agreement is supplemen tal to the original agreement and save as varied as herein before provided the said agreement and all the terms and conditions thereof shall continue to be binding and in full force and effect.
The submission of the learned counsel for the appellant is that the clause referred only to the matter already in dispute and to a settlement committee which had been already appointed.
Reliance was placed on the words underlined in the clause "In the matter of dis pute", and "referred to the Settlement Committee".
This plea cannot be accepted for in the later part of the condi tion it is made clear by the words "all to be nominated by the Government for arbitration whose decision will b final." "To be nominated" contemplates a future appointment.
But we do not think that this makes any difference for there could be no doubt mat the condition enables the Government to appoint three persons holding the ranks specified in the condition as the Settlement 41 Committee.
There is no indication at all that when once the Committee was dissolved no new committee could be ap pointed.
In fact it has to be noted that after the first Settlement Committee was dissolved by the unilateral act of the Government a second Committee came into existence and gave an award which was set aside by the Civil Court.
After the award was set aside the second Committee also ceased to function.
There is no material on record to show that the appellants objected to the constitution of the second Committee on the ground that the condition did not provide for the appointment of a second Settlement Committee.
There is no reason alleged as to why the second Settlement Com mittee ceased to function.
If the second Committee was also not terminated by the action of the Government the contention of the appellants that a unilateral act would put the case outside the purview of section 8 of the Arbitration Act would not be available.
On a careful reading of the condition relating to arbi tration, we agree with the High Court as well as the trial court that there is no bar to the Government appointing a fresh Committee for going into the dispute consisting of three officers as stipulated in the condition.
As the appellant would not reply to the letter of the Government seeking to nominate a Settlement Committee the Government moved the court for appointment of the Committee.
The trial court gave an option to the appellant to furnish names but as he did not furnish the names trial court ac cepted the names suggested by the Government.
On our finding that the Government was entitled to appoint a Com mittee under the new agreement the Government could have very well appointed a committee by itself without coming to court.
But may be by way of abundant caution the Government came to court and the court has appointed a committee as suggested by the State.
We are equally clear that under section 8, the Court is entitled to act and appoint a com mittee.
As already found by us when the second Settlement Committee ceased to function the Committee became "incapa ble of acting" and therefore it was within the competency of the court to proceed to appoint a new committee.
Equally untenable is the contention that section 8 is not applicable to cases where the condition stipulates the appointment of a Settlement Committee by one of the parties.
This submis sion was made relying on the wording of the section that any party may serve the other parties or the arbitrators, as the case may be, with a written notice to concur in the appoint ment or appointments or in supplying the vacancy.
This part of the section no doubt contemplates two parties but the section cannot be read as not being applicable where the agreement provides for the nomination of the committee by one of the parties for the section itself says that the party may serve the other parties "May serve the other parties" will include not serving other parties in cases in which the service on the other party is not contemplated.
In the circumstances we are satisfied that the order of the High Court is proper and cannot be interfered with.
The appeal is dismissed.
The parties will bear their own costs.
42 Civil Appeal No. 1734 of 1969 This appeal is similar to the one which we have just now disposed of i.e.C.A.No. 2070 of 1968.
The High Court also dismissed the petition under appeal on the ground that the facts of the case are similar to the one in Civil Revision Petition No. 107 of 1966 out of which C.A. No. 2070 of 1968 arose and dismissed the petition on the same grounds.
In this appeal before, us the learned counsel for the appellant adopted the arguments advanced by the counsel in C.A. No. 2070 of 1968 and did not wish to add anything further.
For the reasons stated in C.A.No. 2070 of 1968 we dismiss this appeal also.
No order as to costs.
P.H.P. Appeals dismissed.
| IN-Abs | The parties entered into an agreement for the execution of some construction work.
An arbitration clause in the agreement stipulated that if disputes arose, the matter would be referred to a Settlement Committee to be appointed by the State Government.
A dispute arose, and a Settlement Committee was duly constituted, but was unilaterally abol ished by the respondent before it concluded its work, Subsequently the respondent appointed another Settlement Committee whose award was set aside by the Civil Court on the ground that it was made even before the expiry of the time given by the Committee to the appellant.
The Commit tee thereafter ceased to exist, and the respondent applied to the trial court for appointing an arbitrator section 8(2) of the Arbitration Act.
The appellant opposed the same on two grounds.
Firstly that by unilaterally abolishing the first Settlement Committee, the State Government had put an end to the arbitration clause, and no other committee could be appointed and secondly, that section 8 was not applicable.
The appellants ' objections were rejected by the trial court, and later by the High Court in revision.
In appeal before this Court, the respondent also argued that s.8 would not apply when one party could appoint a Settlement Committee without reference to the other party.
Dismissing the appeal, the Court, HELD: (1) The wording of section 8, that any party may serve the other parties with a written notice to concur in the appointment or appointments, or in supplying the vacancy, will include not serving other parties in cases in which the service on the other party is not contemplated.
The section cannot be read as not being applicable where the agreement provides or the nomination of the Committee by one of the parties, for the section itself says that the party may serve the other parties.
[41F G] (2) The Government could have appointed a Committee by itself without coming to court.
There is no indication in the clause that when once the Committee was unilaterally dissolved no new Committee could be formed.
When the second Committee ceased to function, it became "incapable of act ing" and, therefore, ' it was within the competency of the Court to proceed to appoint a new Committee.
[41E, F]
|
: Civil Appeal No. 2006 of 1968.
(From the Judgment and Decree dated 26 11 1961 of the Punjab High Court Circuit Bench at Delhi in Execution Second Appeal No. 158 D of 1964).
Bishan Narain and D.N. Mishra, for the appellant.
V.S. Desai, B.P. Singh and A.K. Srivastava, for the respond ent.
The JUdgment of .the Court was delivered by BHAGWATI, J.
This appeal by certificate raises a short but interesting question of law relating to the interpreta tion and effect of the proviso to section 3 of the Delhi Rent Control Act, 1958.
The dispute in this appeal relates to a shop situate on the ground floor of a building bearing Municipal No. 624 36 (Old) 530 35 (New) situate in Sadar Bazar, Delhi.
The building was an evacuee property and it was acquired by the Central Government under section 12 ,of the and formed part of the compensation pool.
It was sold by public auction and the appellant being the highest bidder was accepted as the auction purchaser by the managing officer on 5th September, 1955.
It does not appear from the record as to when the appellant paid the full purchase price to the managing officer but presumably he did so before 23rd September, 1955 when the sale was confirmed in his favour by the managing officer.
The sale certificate was not issued in favour of the appellant for a considerable time and we are told that even until now it has not been issued, but possession of the building was handed over to.
the appellant on 30th August, 1956 and a letter dated 3rd September, 1956 was addressed by the managing officer to the respondent intimating to him that since possession of the building had been handed over to the appellant, the respondent should pay rent to the appellant and otherwise deal directly with him with effect from 30th August.
This letter was addressed to the respondent, because at that time the respondent was in possession of one other shop in the same building as a tenant and pursuant to this letter, he attorned tenancy in respect of that shop to the appellant.
On 1st September, 1956, the appellant let out the shop in dispute thereinafter referred to as the prem ises) to the respondent and the latter continued in posses sion of the premises as a monthly tenant.
However, on 10th August, 1959 the appellant gave a notice to quit terminating the tenancy of the respondent and calling upon him to hand over vacant possession of the premises by the mid night of 31st August, 1959.
The respondent declined to comply with the requisition contained in the notice and hence the appel lant filed a suit in the Court of the Senior Subordinate Judge, Delhi on 15th September, 1959 for recovery of posses sion of the premises from the respondent.
There was also a claim made in the suit for recovery of arrears of rent but this claim is no longer material and we need not dwell on it.
The respondent resisted the claim for eviction inter alia on the ground that the certificate of sale not having been issued in favour of the 62 appellant, he was not the owner of the premises and hence he was not legally competent to let out the premises to the respondent nor was he entitled to recover possession of the premises, from the respondent.
The respondent also disputed the jurisdiction of the court on the ground that the.
Delhi Rent Control Act, 1958 which had come into force on 9th February, 1959 was applicable to the tenancy of the premises and by reason of section 50 of that Act, the civil court had no jurisdiction to entertain the suit.
The Trial Court took the view, on a reading of the decision of this Court in M/s Bombay Salt and Chemical Industries vs L.J. Johnson, (1) that since the certificate of sale was not issued in favour of the appellant, he had not become the owner of the premises and the premises continued to belong to the Government and by reason of section 3 which provided that "Nothing in this Act shall apply to any premises be longing to the Government", the Delhi Rent Control Act, 1958 was not applicable to the tenancy in respect of the premises and the civil court had jurisdiction to entertain the suit.
The Trial Court ' also.
held that since the full purchase price had been paid by the appellant and posses sion of the premises had been handed over by the managing officer to the appellant on 30th August, 1956, the appellant was legally competent to let out the premises to the re spondent and the premises having been lawfully let out by the appellant to the respondent, there was relationship of landlord and tenant between the parties and since the 'tenancy was validly terminated by the appellant by giving notice to.
quit in accordance with the provisions of section 106 of the Transfer of Property Act, the appellant was entitled to recover possession of the premises from the respondent.
A decree for eviction was accordingly passed by the Trial Court in favour of the appellant.
The respondent preferred an appeal but the appeal was dismissed ' by the Additional District Judge, Delhi on substantially the same view as that taken by the Trial Court.
This was followed by a second appeal to the High Court but that appeal also met with the same fate and the decree for eviction became final between the parties.
Now, before the decree for eviction could be executed, an amendment was made in section 3 of the Delhi Rent Control Act, 1958 which is very material.
We shall immediately refer to, this amendment, but before we do so, it would be convenient to advert too, few relevant provisions,of the Delhi Rent Control Act, 1958.
This Act came into force with effect from 9th February, 1959 and it was intended to provide inter alia for control of rents and evictions.
Section 14, sub section (1) granted protection to the tenant against eviction by providing that notwithstanding anything contained in any other law or contract, no order or decree for recovery of possession of any premises shall be made by any court or Controller in favour of the landlord against a tenant, but the proviso.
to this sub section laid down certain grounds on which the Controller could, on an appli cation made to him in the prescribed manner, make an order for recovery of possession of the premises.
Since the jurisdiction to make (1) A.I.R. 1958 S.C. 289.
63 an order for recovery of possession of premises o.n one or more of the specified grounds was given to the Controller under section 14, subsection (1), section 50 ousted the jurisdiction of the civil court by declaring that, save as otherwise expressly provided in the Act, no civil court shall entertain any suit or proceeding in so far as it relates inter alia to eviction of any tenant from any prem ises to which the Act applies or to any other matter which the Controller is empowered by or under the Act to decide.
If, therefore, the premises in the present case were prem ises to which the Act applied, the civil court would have no jurisdiction to entertain the suit filed by the appellant for recovery of possession of the premises from the respond ent.
But section 3, as it stood prior to its amendment, by Act 4 of 1963, provided that nothing in the Act shall apply to any premises belonging to the Government.
The view taken by the Trial Court and affirmed by the Additional District Judge and the High Court was that since the certificate of sale was not issued in favour of the appellant, the premises continued 'to belong to the Government and on this view, the Act clearly did not apply tO the premises and neither sec tion 14, sub section (1) nor section 50 being applicable, the civil court continued to have jurisdiction to entertain the suit.
This was the reason why the decree for eviction was passed by the Trial Court against the respondent and it was affirmed by the Additional District Judge and the High Court.
But by the time the decree for eviction came to be executed, the following proviso was added in section 3 by Act 4 of 1963 with retrospective effect: "Provided that where any premises be longing to Government have been or are lawful ly let by any person by virtue of an agreement with the Government or otherwise, then, not withstanding any judgment, decree or order of any court or other authority, the provisions of this Act shall apply to such tenancy.
" The effect of the addition of the proviso with retro spective effect was as if the proviso had always been there right from the time when the Act was enacted.
Therefore, when an application was flied by the appellant for execution of the decree for eviction against the respondent on 31st August, 1963, an objection was raised on behalf of the respondent that by reason of the retrospective introduction of the proviso in section 3, the decree for eviction was rendered null and void as a decree passed by a court without jurisdiction and hence it was not executable against the respondent.
This objection was negatived by the executing court on the ground that that was not an .objection which could be entertained in execution and the executing court must proceed to execute the decree which had become final between the parties.
The respondent preferred an appeal but the first appellate court took the view that, on the facts of the case, the proviso to section 3 was not attracted and hence the decree for eviction .could not be said to be one passed by a court without jurisdiction and on this view, it upheld the order of the executing court and rejected the appeal.
This led to the filing of a further appeal and in this appeal the High Court held 'that since the certificate of sale was hot issued in favour of the appellant, the building continued to belong 64 to the Government but the appellant having paid the full purchase price of the building and the sale of the building in favour of the appellant having been confirmed and posses sion having been handed over to him in pursuance of the sale, the appellant was legally competent to let out the premises to the respondent and the letting of the the prem ises by the appellant in favour of the respondent on 1st September, 1956 was lawful and hence the condition for the applicability of the proviso to section 3 was satisfied, and since the proviso was introduced in section 3 with retro spective effect, it must be held that the Act was applicable to the premises at the date of the institution of the suit and consequently the civil court had no jurisdiction to entertain the suit and in that view, the decree for eviction was a nullity.
The High Court accordingly allowed the appeal and held that the decree for eviction being null and void could not be executed against the respondent.
This view taken by the.
High Court is challenged in the present appeal preferred by special leave obtained from this Court.
Now, the law is well settled that an executing court cannot go behind the decree nor can it question its legali ty or correctness.
But there is one exception to this gener al rule and that is that where the decree sought to be executed is a nullity for lack of inherent jurisdiction in the court passing it, its invalidity can be set up in an execution proceeding.
Where there is lack of inherent jurisdiction, it goes to the root of the competence of the court to try the case and a decree which is a nullity is void and can be declared to be void by any court in which it is presented.
Its nullity can be set up whenever and whenever it is sought to be enforced or relied upon and even at the stage of execution or even in collateral proceedings.
The executing court can, therefore, entertain an objection that the decree is a nullity and can refuse to execute the decree.
By doing so, the executing court would not incur the reproach that it is going behind the decree, because the the decree being null and void, there would really be no decree at all.
Vide Kiran Singh vs Chaman Paswan(1) and Seth Hiralal Patni vs Sri Kali Nath.(2) It is, therefore, obvious that in the present case, it was competent to the executing court to examine whether the decree for eviction was a nullity on the ground that the civil court had no inherent jurisdiction to entertain the suit in which the decree for eviction was passed.
If the decree for eviction was a nullity, the executing court could declare it to be such and decline to execute it against the respondent.
The position which obtained when the suit for eviction was instituted by the appellant against the respondent was that section 3, as it stood prior to.its amendment by Act 4 of 1963, was in force and that excluded the applicability of the Delhi Rent Control Act.
1958 to premises belonging to the Government.
The premises in the present case, were vested in the Government under section 12 of the Displaced Persons (Compensation & Rehabilitation) Act, 1954 and they were sold by public auction to the appellant and though full purchase price (1) ; (2) ; 65 was paid by the appellant and the sale was confirmed in his favor and possession was also handed over to him, the cer tificate of sale was, for some inexplicable reason, not issued in his favour.
The Trial Court, therefore, took the view, and this view was affirmed by the Additional District Judge as well as the High Court, that the appellant did not become the owner of the premises and they continued to belong to the Government and for this reason, it was held that the Delhi Rent Control Act, 1958 did not apply to the premises and the civil court had jurisdiction to entertain the suit for eviction.
The Trial Court also found, and this finding too was accepted by the Additional District Judge as well as the High Court, that though the certificate of sale was not issued in his favour, the appellant was competent to let out the premises and the letting of the premises by him in favour of the respondent on 1st Septem ber, 1956 was lawful and since the tenancy of the respond ent was validly terminated by the appellant by giving notice to quit, the appellant was entitled to a decree for eviction against the respondent.
But, as pointed out above, section 3 was amended with retrospective effect by the introduction of the proviso and the question is whether the introduction of the proviso with retrospective effect had the effect of rendering the decree for eviction null and void.
Since the proviso was introduced with retrospective effect, it must be deemed to be part of section 3 since the time that the Delhi Rent Control Act, 1958 was enacted.
It was pointed out by Lord Asquith of Bishopstone in East End Dwellings Co. Ltd. vs Finsbury Borough Council(1) in a passage which has become classical by reason of its felicity of language that "if you are bidden to treat an imaginary state of affairs as real, you must surely, unless prohibited from doing so, also imagine as real the consequences and incidents which, if the putative state of affairs had in fact existed, must inevitably have flowed from or accompa nied it.
One of those in this case is emancipation from the 1939 level of rents.
The statute Says that you must imagine a certain state of affairs; it does not say that having done so, you must cause or permit your imagination to boggle when it comes to the inevitable corollaries of that state of.
affairs".
The proviso must, therefore, for all legal pur poses, be deemed to have been included in section 3 as from the date of enactment of the Delhi Rent.
Control Act, 1958.
If that be the true position, then obviously it must be held that the provisions of the Delhi Rent Control Act, 1958 were applicable to the tenancy of the respondent, for the premises though belonging to the Government, were law fully let out by the appellant to the respondent and the condition of the proviso was satisfied.
That was the posi tion which, by reason of the legal fiction brought about by the retrospective introduction of the proviso in section, 3, must be held to have prevailed at the date.
of the institu tion of the suit and the provisions of the Delhi Rent Con trol Act, 1958 being applicable, it must be concluded that the civil court had no inherent jurisdiction to entertain the suit (vide section 50) and the decree for eviction was a nullity.
Prima facie, it may appear somewhat strange that a decree for eviction which was good and valid when it was made should be treated as null and void by "(1) [1952] A. C. 132.
66 virtue of the retrospective introduction of the proviso in section 3.
But such a result is necessarily involved in the legal fiction created by the retrospective operation of the proviso.
If, as a result of the said fiction, we must read the proviso as forming part of section 3 as from the date of enactment of the Delhi Rent Control Act, 1958, the conclu sion is inescapable that the civil court had no inherent jurisdiction to entertain the suit and the Trial Court as well as the Additional District Judge and the High Court were in error in exercising jurisdiction in relation to the suit when their Jurisdiction was clearly excluded by section 50.
The appellant, however, urged that the introduction of the proviso in section 3 should not be given greater retro spective operation than necessary and it should not be so construed as to affect decrees for eviction which had al ready become final between the parties.
Now, it is true, and that is a settled principle of construction, that the court ought not to give a larger retrospective operation to a statutory provision than what can plainly be seen to have been meant by the legislature.
This rule of interpretation is hallowed by time and sanctified by decisions, though we are not at all sure whether it should have validity in the context of changed social norms and values.
But even so, we do not see how the retrospective introduction of the proviso in section 3 can be construed so as to leave unimpaired a decree for eviction already passed, when the question arises in execution whether it is a nullity.
The logical and inevitable consequence of the introduction of the proviso in section 3 with retrospective effect would be to read the proviso a.s if it were part or the section at the date when the Delhi Rent Control Act, 1958 was enacted and the legal fiction created by the retrospective operation must be carried to its logical extent and all the consequences and incidents must be worked out as if the proviso formed part of the section right from the beginning.
This would clearly render the decree for eviction a nullity and since in execu tion proceeding, an objection as to nullity of a decree can always be raised and the executing court can examine whether the decree iS a nullity, the principle of finality of the decree cannot be invoked by the appellant to avoid the consequences and incidents flowing from the retrospective introduction of the proviso in section 3.
Moreover the words notwithstanding any Judgment, decree or order of any court or or other authority in the proviso make it clear and leave no doubt that the legislature intended that the finality of "judgment, decree or order of any court or other authority" should not stand in the way of giving full effect to the retrospective introduction of the proviso in section 3 and applying the provisions of the Delhi Rent Control Act, 1958 in cases falling m the proviso.
We are therefore, of the view that the High Court was right in taking the view that by reason of the introduction of the proviso in section 3 with retrospective effect the decree for eviction was a nullity and the executing court was justified in declining to execute it against the re spondent.
67 We accordingly dismiss the appeal with costs throughout but order and direct the respondent to pay to the appellant all the arrears of rent in respect of the premises which remain to be paid by him to the appellant in the following installments: Rs. 2,000/ on or before 30th April, 1977; and out of the balance a further sum of Rs. 2,000 within three months thereafter and the balance, if any, by 31st October, 1977.
The respondent through his counsel under takes to make payment of the arrears in the manner afore said.
P.H.P. Appeal dismissed.
| IN-Abs | The appellant purchased in a public auction a building which was evacuee property.
Before the sale certificate was made out in favour of the appellant, the possession of the building was handed over to him.
He in turn let out a shop in the said building to the respondent.
The appellant filed a suit for eviction in the Civil Court against the respond ent.
The Civil Court passed a decree for eviction and negatived the contention of the respondent that the Delhi Rent Control Act, 1958 was applicable and, therefore, the jurisdiction of the Civil Court was barred.
The Court relied on section 3 of the Delhi Rent Control Act which provides that nothing in the Act shall apply to any premises belonging to the Government.
The decree for eviction was confirmed by the Appellate Court and then by the High Court in Second Appeal.
Before the decree could be executed section 3 was amended by adding a proviso with retrospective effect, which provided that where any premises belonging to Government have been lawfully let out by any person, then notwithstanding any judgment, decree or order of any court the provisions of the Act would apply to the tenancy.
The Executing Court held that it was not competent to it .to go into the question whether the decree was rendered d nullity on the ground that the jurisdiction of the Civil Court was ousted by the introduction of :the proviso in section 3 with retrospective effect since the decree had become final between the parties.
The Appellate Court upheld the said decision.
The High Court in Second Appeal reversed the decision of the two courts below and held that the decree was a nullity and could not be executed.
Dismissing the appeal this Court, HELD :(1) An executing court cannot go behind the.
decree nor can it question its legality or correctness but where a decree sought to be executed is a nullity for lack of inherent jurisdiction in the court passing it, its inva lidity can be set up in an execution proceeding.
[64C D] Vide Kiran Singh vs Chaman Paswan and Seth Hiralal Patni vs Sri Kali Nath, ; , followed.
(2) Since the proviso was introduced with retrospective effect it must be deemed to be part of section 3Since.
the time the Delhi Rent Control Act was enacted.
[65 D] East End Dwellings Co. Ltd. vs Finsbury Borough Council [1952] A.C. 132, approved.
As a result of the fiction the proviso must be deemed to be part of section 3 from the date of enactment of the Act.
The logical and inevitable Consequence of the introduction of the proviso.
in section 3 with retrospective effect would be to read the proviso as if it were part of the section at the date when the Act was 'enacted, and the legal fiction created by the retrospective operation must be carried to its logical extent and all the consequences and incidents must be worked out as if the proviso forms part of the section right from the beginning.
The phrase "notwithstand ing any judgment; decree or order of any court" in the proviso makes it clear that the legislature intended" that the finality of the judgment,decree etc., should not stand in the way of giving full effect to the= retrospective operation of the proviso in section 3.
[66C G] 61
|
ivil Appeal No. 1739 of 1973.
Appeal by Special Leave from, the Judgment and Order dated 22.10.1973 of the Jammu and Kashmir High Court in Letters Patent Appeal No. 9/72) F.S. Nariman, O.C. Mathur, P.N. Tiwari and D.N. Mishra, for the appellants.
Dushiant Kumar Rampal respondent.
(in person) The Judgment of the Court was delivered by BHAGWATI, J.
, We pronounced our order on this appeal on 17th December, 1976 and we now proceed to give our reasons.
We may point out that the respondent was not represented by a lawyer and he argued case in person and though he is a lay man, not well versed in the science of law and in the art and skill of advocacy, we must admit that he argued his case with conspicuous ability.
Prior to 5th September, 1969 there was only one Univer sity for the entire territory of the State of Jammu & Kash mir, namely, the University of Jammu & Kashmir.
It was constituted under the Jammu & Kashmir University Act, 1965 (hereinafter referred to as the Act of 1965) and, as provid ed in section 20, its central authorities included the Senate and the Central Council.
The Central Council was the executive body of the University and it had the power inter alia to appoint teachers and to define their duties.
The respondent was appointed as a lecturer in English by the Central Council on 25th April, 1966 and after his period of probation was over he was confirmed as lecturer with effect from 29th April, 1967.
The conditions of service of the respondent, like those of other confirmed teachers, were regulated by the Statutes made by the Senate from time to time under the provisions of Act of 196.5.
Statute 2 provided that every salaried teacher of the University shall have to execute a written contract with the UniverSity and the conditions of service of teachers appointed by the University shall be those embodied in the agreement of service annexed to the Statutes and every teacher shall execute such agreement before he enters upon his duties or as soon as possible thereafter.
It appears that though Statute 2 required an agreement of service to be executed by a teacher, no such agreement of service was executed by the respondent on his appointment as 47 lecturer.
But it was common ground between the parties that the conditions of service of the respondent were governed by the provision set out in the form of agreement of service annexed to the Statutes.
Clause (6) of this agreement and this clause admittedly governed the respondent stipulated that in all matters, the teacher would "abide by the Stat utes and Regulations from time to time in force in the University, and in particular, by those determining his/ her grade, increment, conditions of service, rules of superannu ation and provident fund rules, provided that no change in the Statutes and Regulations in this regard shall be deemed to have adversely affected the teacher.
" The respondent was thus clearly bound by any changes which might be made in the Statutes from time to time and no change made in the Stat utes was to be regarded as having adversely affected the respondent and he could not complain against it.
The case of the respondent was that he satisfactorily carried on his duties as lecturer and earned his increments from year to year.
On 5th September, 1969 the Governor of Jammu & Kashmir promulgated Ordinance No. 10 of 1969 establishing in place of the University of Jammu & Kashmir, two separate univer sities, namely, the University of Kashmir for the Kashmir division and the University of Jammu for the Jammu division of the State.
This Ordinance was replaced by the Jammu & Kashmir University Act, 1969 (hereinafter referred to as the Act of 1969) which came into force on 30th October, 1969.
The:Act of 1969 made a slight departure from the earlier Act in the constitution of the various authorities of each University, Section 20 of the Act of 1969 provided that the authorities of each university shall include the University Council and the Syndicate.
The University Coun cil was constituted supreme authority of the university while the Syndicate was entrusted with the chief executive authority.
Whereas under the earlier Act, the power to appoint all teachers of the University was entrusted to the Central Council.
there was bifurcation of this power between the University Council and the Syndicate under the Act of 1969.
The University Council was given the power to appoint teachers of the status of a reader and above white the power to appoint teachers below the status of a reader was en trusted to the Syndicate.
The Syndicate was thus the au thority under the Act of 1969 vested with the power to appoint and that power would also carry with it the power to dismiss teachers below the status of a reader.
Since the University of Jammu & Kashmir came to an end on the repeal of the Act of 1965 and two new universities, one of Kashmir and the other of Jammu, were established, some provision had to be made in the Act of 1969 for continuance of the Stat utes and Regulations so that there might be no hiatus or break causing dislocation in the functioning of the two new universities.
Section 51 of the Act of 1969.
therefore.
provided that all Statutes and Regulations made under the Act of 1965 and in force immediately before the commencement of the Act of 1969 shall so far as may be consistent with the provisions of the latter Act, continue to be in force in each University and section 48.
sub sec.
(2) gave power to the special officer to "examine the Statutes and Regulations continued under section 51 of this Act and propose such modifica 48 tions, alterations and additions therein as may be necessary to bring such Statutes and Regulations in conformity with the provisions of this Act" and provided that the modifica tions, alterations and additions proposed by the Special officer shall, if approved by the Vice Chancellor, be deemed to have been made by the competent authority under the Act of 1969 and shall continue in force until altered or superseded by the authority constituted under the Act of 1969.
There was also the problem of ensuring continuance of service of the existing employees of the University of Jammu & Kashmir and their allocation between the two succeeding universities and this problem was solved by the enactment of section 52 in the Act of 1969.
That section, in so far as material, provided as follows: "52.
Continuance of service of the existing employees and their allocation Notwithstanding anything contained in this Act or any Statute or Regulation made thereunder or in any other law for the time being in force.
(1) all employees of the University of Jammu and Kashmir constituted under the Jammu and Kashmir University Act, 1965 (other than those serving on contract.
or on deputation 'in the University or those serving m the Publication Bureau of the University) who immediately before the commencement of this Act, were holding or discharging the duties of any post of office in connection with the affairs of the said University shall, subject to the provisions of sub section (2), continue in service on the same terms and conditions as regulated their service before such commencement; (2) the Chancellor may in consultation with the pro Chancellor by order allocate the employees of the University of Jammu & Kashmir (other than those serving on contract or deputation in the University or those serving in the Publication Bureau of the University) between the University of Kashmir and the University of Jammu constituted under this Act in such manner as he may consider necessary and every such allocation shall be deemed to b e an appointment, transfer or promotion as the case may be,to the post or office by the competent authority under this Act: Provided that in making such allocations the conditions of service of employment of such employees shall not be varied to their disad vantage; (3) x x x x x (4) all persons who immediately before the commencement of this Act were holding or discharging the duties of any post or office in connection with the affairs of the Univer sity of Jammu and Kashmir, on 49 contract basis or by virtue of their deputa tion to such posts or offices from other services in the State.
unless otherwise or dered by the Chancellor after consulting the Pro Chancellor, shall cease to hold such posts or to discharge such duties after 60 days from the commencement of this Act and all such contracts with or deputations to he University of Jammu & Kashmir shall stand terminated with effect from the expiry of the said period of 60 days.
" Since most of the teachers had entered into an agreement of service with the University of Jammu & Kashmir as provided in Statute 2 and the rest were also treated as having en tered into such agreement of service by reason of the com pulsive force of Statute 2 though in fact such agreement of service had not been executed by them, perhaps due to inad vertence, the Chancellor took the view that all of them held their posts on contract basis and hence, proceeding on the assumption that sub sec.
(4) of section 52 was attracted in their case, he made an order dated 24th December, 1969 ' directing that the appointments of the teachers set out in Schedule (1 ), which also included the respondent, shall continue on the respective posts mentioned In that schedule on the terms and conditions embodied in Schedule II with effect from 9th January, 1970.
Schedule II contained the terms and conditions on which teachers mentioned in Schedule I were continued in service of the University of Jammu and clause 9(ii) of that Schedule read as follows: "The Vice Chancellor may when he deems it necessary suspend the teacher on grounds of misconduct, insubordination, inefficiency or unsatisfactory performance of duty, when he suspends the teacher he shall report it to the university Council/Syndicate at the next meeting.
" The respondent and some other teachers were of the view that the terms and conditions set out in Schedule II effected a change in their conditions of service to their prejudice and hence they made a representation to the Chancellor and other authorities of the University of Jammu.
It does not appear from the record as to what happened to this representation but presumably it was rejected.
Now we come to the events which formed the immediate cause for the predicament of the respondent.
It appears that certain complaints were received by the Vice Chancel lor against the conduct of the respondent and the Vice Chancellor took the view that these complaints were of a serious character and needed to be enquired into and pending such enquiry, it was not desirable that the respondent should be allowed to continue to work as a lecturer.
The ViceChancellor accordingly passed an order dated 21st May, 1970 directing that the respondent be placed under suspen sion with immediate effect.
This order was purported to be passed by the Vice Chancellor in exercise of the powers vested in him under clause 9(ii) of Schedule II of the Order dated 24th December, 1969 and section 13 (4) of the Act of 1969.
It may be convenient at this stage, before we proceed 50 further, to refer to section 13(4), since considerable argument before us turned upon it Section 13 deals with the powers and duties of the Vice Chancellor and sub section (4) of that section reads as follows: "(4) The Vice Chancellor may take action as he deems necessary in any emergency which, in his opinion, calls for immediate action.
He shall in such a ease and as soon as may be thereafter, report his action to the officer, authority or other body of the Uni versity concerned who or which would ordinari ly have dealt with the matter.
" Sub section (6) of section 13 is also material and it is in the following terms: "(6 ) The Vice Chancellor shall give effect to the orders of the University Council and the Syndicate of the University concerned regarding the appointment, dismissal and suspension of persons in the employment of the University and shall exercise general control over the affairs of the University.
He shall be responsible for the discipline of the University in accordance with this Act, Stat utes and Regulations.
" The Vice Chancellor, immediately after passing the Order of suspension, placed it before the Syndicate at its next meeting held on 24th June, 1970.
The respondent had also in the meantime submitted his representation against the Order of suspension and this representation also came up before this meeting of the Syndicate.
The Syndicate considered the Order of suspension made by the ViceChancellor as also the representation submitted by the respondent and passed a resolution rejecting the representation of the respondent recording the action taken by the Vice Chancellor and di recting that articles of charge be framed and communicated to the respondent and he may be required to submit his explanation in writing and a committee consisting of the Vice Chancellor and three other persons be appointed to investigate the matter and submit its finding to the Syndicate.
The Registrar of the University thereafter passed ,an order dated 6th June, 1970 declaring that, during the period of suspension, the respondent would not be enti tled to get full salary but he would be paid only subsist ence allowance at an amount equal to half pay and half dearness allowance in accordance with the usual practice followed by the University.
It may be pointed out that with effect from 21st May, 1971, that is after the expiry of a period of one year from the date of suspension, the subsist ence allowance payable ' to the respondent was raised to 75% of the pay and dearness allowance.
A charge sheet contain ing twelve charges was then given to the respondent and he was required to submit his explanation.
The respondent gave his explanation to the charges leveled against him and while doing so, he also objected to the constitution of the Committee which was appointed to enquire into the charges.
In consequence of his objection, the constitution of the committee was changed and the Vice Chancellor was kept out of it.
The enquiry by the Committee 51 commenced on 12th March, 19:71 and it went on for some time, but before it could be completed, the respondent filed a writ petition in the High Court of Jammu & Kashmir challeng ing the validity of the Order dated 24th December, 1969, the Order dated 6th June, 1970 in regard to payment of subsist ence allowance and also impugning the legality of the enquiry proceedings.
There were various grounds taken by the respondent in the writ petition but it is not necessary to refer to them in detail having regard to the course which the appeal has taken before us.
The writ petition was heard by a Single Judge of the High Court and by a judgment dated 28th April, 1972 the learned Judge dismissed the writ petition.
The respondent there upon preferred a Letters Patent appeal in the High Court.
During the pendency of the appeal, the departmental enquiry which was started against the respondent.
was completed and the committee made a report absolving the respondent of all the charges except charges Nos. 1 and 12 of which the respondent was found guilty.
The syndicate, after considering the report of the committee, resolved to issue a notice to the respondent to show cause why "the punishment for termination of his services from the University be not imposed on him" on the ground of charges Nos. 1 and 12.
Pursuant to this resolu tion, a show cause notice was issued to the respondent which led to the filing of a petition by the respondent in the Letters Patent appeal for taking notice of these subse quent events.
The respondent in this petition challenged the report of the committee as also the resolution of the Syndicate on various grounds which are no longer material.
The University filed its reply to the petition denying the allegations made against the committee and disputing the grounds on which the validity of the enquiry was challenged on behalf of the respondent.
The Letters Patent appeal thereafter came to be heard by a Division Bench of the High Court and the Division Bench, by a judgment dated 22nd October, 1973, took the view that the Order dated 24th December, 1969 was violative of section 52, sub section (1) of the Act of 1969 and the Order of suspension dated 21st May, 1970 was "defective for want of jurisdiction and other legal infirmities" and these two orders were accordingly quashed and set aside by the Division Bench.
The Division Bench also held that "as a necessary corollary to our find ings on the two impugned orders and also in consequence of our observations on the legal aspect of the show cause notice issued to the appellant to terminate his service, the same also deserves to be quashed." The Division Bench accordingly allowed the appeal, set aside the judgment of the learned Single Judge and issued a writ of certiorari quashing the Order dated 24th December, 1969 and the Order of suspension dated 21st May, 1970 as also the show cause notice issued to the respondent and directed the reinstate ment of the respondent.
The University and the Vice Chan cellor thereupon preferred the present appeal with special leave obtained from this Court.
The appeal was heard by this Court for some time on the points which were decided against the University and the Vice Chancellor and certain further points were also raised by the respondent in support of the order made by the Division Bench of the High Court.
52 But it is not necessary to examine the arguments advanced on behalf of the parties on these various points, since before the hearing of the appeal could be concluded, a partial settlement was arrived at between the University and the Vice Chancellor on the one hand and the respondent on the other.
It was agreed between the parties as a result of this settlement that the University should drop the disci plinary proceedings action against the respondent and that the respondent should be allowed to join service within fourteen days from the date of the order to be made by this Court and upon his joining, his pay should be fixed as lecturer taking in view the increments which he would have earned but for the suspension.
It was also declared in the settlement that there shall be no stigma whatsoever attached to the respondent and so far as the personal allegations made by him against the University authorities we;re con cerned, they would stand withdrawn by him.
The settlement also provided that the respondent should be given benefit of continuity of service and if the validity of the Order of suspension was ultimately upheld by this Court and it was held that the respondent was not legally entitled to any thing more than the subsistence allowance actually paid to him, the matter would be left to the Chancellor to determine in his sole and.
absolute discretion as to whether any additional amount at all, and if so, what amount, may be paid to the respondent for the period of suspension ex gratia without any liability on the part of the University.
The Chancellor was authorised to determine this matter in consultation with the Pro Chancellor or in such other manner as he thought proper and he could do so, even without giving any opportunity to either party to make his or their submis sions in the matter.
Having regard to this settlement, the only two questions which remained to be resolved by this Court were, first, whether the Order of suspension was valid, and secondly, if the Order of suspension was valid, whether the respondent was entitled to anything more than the subsistence allowance actually paid to him.
These two questions we shall now proceed to decide.
The first question is whether the Order of suspension made by the Vice Chancellor was a valid Order or it suffered from any legal infirmities.
The respondent assailed the validity of the order of suspension on the ground that it was made in purported exercise of the power conferred under clause (9) (ii) of Schedule II to the Order dated 24th December, 1969, but this Order w. as itself void and inoper ative as it was in conflict with the provisions of section 52, subsection (1) of the Act of 1969.
The argument of the respondent was that immediately before the commencement of the Act of 1969, he did not hold or discharge the duties of any post or office in connection with the affairs of the University on contract basis, nor was he on deputation from any other service of the State of Jammu & Kashmir and he was, therefore, not covered by section 52, sub sections (4) under which the Order dated 24th December, 1969 was purported to be made, but his case was governed by section 52, subsection (1) which ensured him continuity in service on the same terms and conditions as before and hence the order dated 24th December, 1969 altering his terms and conditions as set out in 53 Schedule II was invalid.
This argument would have required us to consider whether the employment or the respondent under the University of Jammu & Kashmir immediately prior to the commencement of the Act or 1967 was on contract basis, because the provision in regard to deputation being inapplicable, it is only if the employment of the respondent was on contract basis that the Order dated 24th December, 1969 could be justified under section 52, sub section (4).
But we shall, for the purpose of the present appeal, proceed on the assumption that the case of the respondent was gov erned by subsection (1) and not sub section (4) of section 52 and the order dated 24th December, 1969 in so far as it determined any different terms and conditions for the re spondent was not valid, since we find that, in the view which is being taken by us, it is not necessary to examine this question.
Undoubtedly, the effect of tins assumption would be to put clause (9) (ii) of Schedule II to the order dated 24th December, 1969 out of the way of the respondent and it would not be available to the University and the Vice Chancellor m support of the Order of suspension.
But even so, we think the Vice Chancellor had power to make the Order of suspension and he was within his authority in doing so.
We have already pointed out that by reason of Statute 2 read with clause (6) of the Form of Agreement annexed to the Statutes made under the Act of 1965, the respondent was bound by any changes which might be made in the Statutes from time to time and no change made in the Statutes was to be regarded as having adversely affected the respondent.
Now, the Statutes made under the Act of 196.5 continued to be applicable to the University by reason of section 51, but section 48, sub section (2) provided for making of modifica tions, alterations and additions in the Statutes with a view to bringing them in conformity with the provisions of the Act of 1969.
The Special Officer accordingly proposed certain modifications in the Statutes which were found necessary to bring the Statutes in conformity with the provisions of the Act of 1969 and.
these modifications were approved by the Chancellor by an Order dated 24th December, 1969 and by reason of section 48, sub section (2) they were deemed to have been made by the competent authority under the Act of 1969.
This Order dated 24th December, 1969 substituted Chapter iV in the Statutes by a new Chapter and Statute 24(ii) in the newly substituted Chapter made the same provision as clause (9)(ii) of .Schedule II to the Order made under sub section (4) of section 52.
Now, obvi ously, if Statute 24(ii) were a valid provision, the Vice Chancellor would have power to suspend a teacher "on the ground of misconduct, insubordination, inefficiency or unsatisfactory performance of duty" and the Order of suspen sion made against the respondent would be within the au thority of the ViceChancellor.
The respondent, there fore, assailed the validity of Statute 24(ii) on the ground that it was not necessary for the purpose of bringing the Statutes m conformity with the provisions of the Act of 1969 and was hence not within the terms of section 48, subsection (2).
Turning to the language of section 48, sub section (2) it is clear that the power conferred on the Vice Chancellor under 54 that provision to approve modifications in the ' Statutes is a power which can be exercised only where the modifications are necessary for bringing the Statutes in conformity with the provisions of the Act of '1969, and if it is found that any modifications purported to be approved by the Chancel lor are plainly unnecessary from the point of view of bring ing the Statutes in conformity with the provisions of the Act of 1969 ', it would be outside the power of the Chancel lor to approve them.
The Chancellor cannot say that it is for him to decide in his subjective opinion whether the modifications proposed to be made are necessary for bringing the Statutes in conformity with the Act of 1969 and that his subjective opinion is immune from scrutiny in a court of law.
Of course, if the view taken by the Chancellor is a reasonably possible view, the Court would not interfere with the Order made by him approving the modifications, but if what has been done by him is plainly and egregiously wrong, the Court would certainly interfere on the ground that the order made by the Chancellor is beyond the power conferred on him by section 48, sub section(2).
The question which, therefore, arises for consideration is whet.her Statute 24(ii,) could reasonably be said to be necessary for bring ing the Statutes in conformity with the provisions of the Act of 1969.
We may first refer to section 13, sub section (4) of the Act of 1969 which confers power on the Vice Chancellor to take such action as he deems necessary in any emergency which in his opinion calls for immediate action.
A similar provision was also made in section 13, sub section (4) of the Act of 1965.
But the Act of 1969 introduced a new provision in sub section (6) of section 13 to the effect that the Vice Chancellor shall be responsible for the disci pline of the University in accordance with the Act, Statutes and Regulations.
The Vice Chancellor was, thus, entrusted under sub section (6) of section 13 with the task of main taining discipline in the University and the entrustment of this task carried with it by necessary implication power to.
take whatever action was necessary for the purpose of main taining discipline, provided of course such action was in accordance with the Act of 1969 ' and the Statutes and Regu lations.
Since sub section (6) of section 13 was a new provision enacted in the Act of 1969, it was necessary to make Statutes for the purpose of enabling the Vice Chancel lor to effectively discharge the responsibility of maintain ing the discipline of the University and for that purpose, vesting power in the Vice Chancellor to suspend a teacher pending departmental enquiry against him.
It was with this object of bringing the Statutes in confirmity with sub section (6) of section 13 that Statute 24(ii) was added by way of modification in the Statutes by the Order dated 24th December, 1969.
We may concede straight away .that if there was anything in the Act of 1969 which was inconsistent with the conferment of power of interim suspension on the Vice Chancellor, Statute 24(ii) could not be approved by the Chancellor, because no Statute can be made is in conflict with any provision of the Act.
But we do not find anything in the Act of 1969 which militates against vesting of power in the ViceChancellor to order interim suspension of a teacher and hence Statute 24(ii) must be held to be a Stat ute validly approved by the Chancellor 55 within his authority under section 48, sub section (2).
The view taken by the Chancellor that Statute 24(ii) was neces sary for bringing the Statutes in conformity with sub sec tion (6) of 'section 13 can not in any event be said to be so plainly erroneous that the Court would strike down Stat ute 24(ii) as invalid.
Now, if Statute 24(ii) is valid, there can be no doubt that the respondent would be bound by it and in that event, the order of suspension made by the ViceChancellor would be clearly within the power conferred on him by that Statute.
It is true that the Order of sus pension did not recite StatUte 24(ii) as the source of power under which it was made, but it is now well settled, as a result of several decisions of this Court, that when an authority makes an order which is otherwise within .its competence, it cannot fail merely because it purports to be made under a wrong provision of law, if it can be shown to be within its powers under any other provision a wrong label cannot vitiate an order which is otherwise within the power of the authority to make, Vide Hukamchand Mills Ltd. vs State of Madhya Pradesh(1) and P. Balakotaiah vs Union of India.(2) We may also point out that the Order of suspension was, in any event, justified by the provision in section 13, sub section (4).
The Order of suspension, in fact, recited that it was made in exercise of the power conferred under section 13, sub section (4).
Sub section (4) of section 13 is general in terms and provides that the ViceChancellor shall be entitled to.
take such action as he deems necessary in any emergency which in his opinion calls for.
immediate action.
It does not talk specifically of an order of interim suspension of a teacher but the width and amplitude of the language of the provision would clearly include action by way of interim suspension of a teacher, ' when there is in the opinion of the Vice Chancellor an emergency calling for immediate action.
The respondent contended that the power to order interim suspension is a quasi judicial power and it would not be comprehended within the language of sub section (4) of section 13.
But this contention is clearly falla cious and the premise on which it is based is unsound.
It is not correct to say that an order of interim suspension is a quasi judicial order and in any event, the language of sub section (4 ) of section 13 is sufficiently wide and comprehensive to take within its scope and ambit every kind of action which may be considered necessary by the ViceChancellor in an emergency and there is no reason why such action should not include making of an order of interim suspension.
The Vice Chancellor, therefore, clearly had power under section 13, sub section (4) to make an order of interim suspension if he thought it necessary to make such an order in an emergent situation which in his opinion called for immediate action.
The respondent sought to contend that at the date when the order of suspension was passed, there was no emergency which called for immediate action on the part of the Vice,Chancellor and, therefore, the foundation for taking action under section 13, sub section (4) was wanting and the order of suspension could not be justified under that provision.
(1) ; (2) ; 5 240SCI/77 56 But this contention cannot be entertained by us since it has not been taken as a ground of challenge in the writ peti tion.
Whether or not there was 'an emergency requiring immediate action on the part of the Vice Chancellor .is entirely a question of fact and if the respondent wanted to contest the validity of the exercise of power by the Vice Chancellor under section 13, sub section (4) in making the order of suspension, he should have pleaded in the writ petition that the order of suspension was outside the power conferred under section 13, sub section (4) as there was no emergency.
The respondent was aware from the recital con tained in the order of suspension that it was made by the Vice Chancellor in exercise of the power conferred under section 13, sub section (4) and, therefore, if the respond ent wanted to challenge the exercise of this power on.
the ground that there was no emergency justifying its exercise, he should have made an averment to that effect in the writ petition.
If such averment had been made in the writ peti tion, the University and the Vice Chancellor would have had an opportunity of meeting it in the affidavit in reply filed by them, but no such averment having been made in the writ petition, the University and the Vice Chancellor were not called upon to meet it.
Hence, we cannot permit the re spondent to challenge the validity of the order of suspen sion on the ground that there was no emergency attracting the applicability of section 13, sub section (4).
The order of suspension made by the Vice Chancellor was plainly and indubitably an order which the Vice Chancellor had power to make under section 13, sub section (4).
It may be noted that immediately after making the order of suspension the ViceChancellor placed it before the Syndicate at its next meeting as required by the second part of section 13, sub section (4) and the Syndicate approved of the action taken by the Vice Chancellor by rejecting the representation of the respondent and recording the fact of the making of the order of suspension.
We may also refer to one other contention urged on behalf of the respondent and that was that by reason of section 52, sub section (1) the respondent was entitled to continue in service of the University on the same terms and conditions as regulated his service before the commencement of the Act of 1969 and in view of the provide to sub section (2) of section 52 the conditions of service of the respondent could not be varied to his disadvantage and, therefore, neither Statute 24(ii) nor section 13, sub section (4) could operate to confer on the Vice Chancellor power to make the order of suspension which he did not possess under the old terms and conditions.
This contention, plausible though it may seem, is, in our opinion, not well founded.
Section 52, sub section (1) undoubtedly continued the service of a teacher on the same terms and conditions as regulated his service before the commencement of the Act of 1969 and that was subject to the provisions of sub section (2) of section ,52, but this subjection to the provisions of sub section (2) did not import the requirement set out in the second proviso that the conditions of service of a teacher shall not be varied to his disadvantage.
The words "subject to the provi sions of sub section (2)" employed in subsection (1) of section 52 were intended merely 'to clarify that a 57 teacher shall continue in service on the same terms and conditions but subject to any allocation which may be made by the Vice Chancellor under sub section (2) of section 52.
Nothing in sub section (1) should be construed as in any way derogating from the power of the Vice Chancellor to make an allocation of the teacher under section 52, sub section (2).
The proviso to sub section (2)imposed a limi tation on the power of the Chancellor to make an allocation by providing that in making such allocation the conditions of service of the employee shall not be varied to his disad vantage and it could not be construed.
as a substantive provision adding a requirement in sub section (1 ) that even though the terms and conditions of service may permit alter ation to the disadvantage of an employee, such alteration shall be inhibited.
We must, therefore, consider the impact of sub section (1) of section 52 unaffected by the provision to sub section (2).
Now, it is obvious that even if the respondent was entitled to continue in service on the same terms and conditions as before by reason of sub section (1) of section 52, these very terms and conditions provided that he would be bound by any changes which might be made in the Statutes from time to time Vide Statute 2 read with clause (6) of the Form of the Agreement annexed to the Statutes made under the Act of 1965.
If, therefore, any changes were made in the terms and conditions of service of the respondent by Statutes validly made under, the Act of 1969, the respondent could not complain of any infraction of the provision of sub section (1) of section 52.
Statute 24(ii) was, as already pointed out above, a Statute validly made under section 48, sub section (2) and hence the Vice Chan cellor was entitled to make the order of suspension against the respondent in exercise of the power conferred by that Statute.
Section 13, sub section (4) of the Act of 1969 could also be availed of by the Vice Chancellor for sustain ing the order of suspension, since it conferred the same power on the Vice Chancellor as section 13, sub section (4) of the Act of 1965 and exercise of the power conferred by it as against the respondent did not involve any violation of sub section ( 1 ) of section 52.
We are, therefore, of the view that the order of suspension was a valid order made by the Vice Chancellor in exercise of the power conferred upon him under Statute 24(ii) as also section 13, sub section (4) of the Act of 1969.
Now, if the order of suspension was a valid order, it suspended the contract between the respondent and the Uni versity and neither the respondent was bound to perform his duties under the contract nor was the University bound to pay any salary to him.
The respondent was entitled to receive from the University only such subsistence allowance as might be payables under the rules and regulations govern ing his terms and conditions of service.
The legal position in regard to the right of a master to suspend his servant is now well settled as a result of several decisions of this Court.
The law on the subject was succinctly stated the following words by Hegde,J. in V P Gindroniya vs State Madhya Pradesh (1): (1) [1970] 3 S.C.R. 448.
58 "The general principle is that an em ployer can suspend an employee of his pending an enquiry into his misconduct and the only question that can arise in such a suspension will relate to the payment of his wages during the period of such suspension.
It is now well settled that the power to suspend, in the sense of a right to forbid a employee to work, is not an implied term in an ordinary contract between master and servant, and that such a power can only be the creature either of a statute governing the contract, or of an express term in the contract itself.
Ordi narily, therefore, the absence of such a power either as an express term in the contract or in the rules framed under some Statute would mean that an employer would have no power to suspend an employee of his and even if he does so in the sense that he forbid the employee to work, he will have to pay the employee 's wages during the period of suspension.
Where, however, there is power to suspend either in the contract of employment or in the statute or the rules framed thereunder the order of suspension has the effect of temporarily sus pending the relationship of master and servant with the consequence that the servant is not bound to render service and the master is not bound to pay.
It is equally well settled that an order of interim suspension can be passed against the employee while an enquiry is pending into his conduct even though there is no such term in the contract of employment or in the rules, but in such a case the employee would be entitled to his remuneration for the period of suspension if there is no statute or rule under which, it could be withheld.
The distinction between suspending the contract of a service of a servant and suspending him from performing the duties of his office on the basis that the contract is subsisting is important, The suspension in the latter case is always an implied term in every contract of service.
When an employee is suspended in this sense, it means that the employer merely issues a direction to him that he should not do the service required of him during a par ticular period.
In other words, the employer is regarded as issuing an order to the employee which because the contract is sub sisting, the employee must obey.
" It will, therefore, be seen that where there is power con ferred on the employer either by express term in contract or by the rules governing the terms and conditions of service to suspend an employee, the order of suspension has the effect of temporarily suspending the relation of master and servant with the consequence that .the employee is not bound to render service and the employer is not bound to pay.
In such a case the employee would not be entitled to receive any payment at all from the employer unless the contract of employment or the rules governing the terms and conditions of service provide for payment of some subsistance allow ance.
Here, as we have held, 59 the Vice Chancellor had the power to suspend the respondent under Statute 24(ii,) or in any event under section 13, sub section (4) and hence the respondent could not claim payment of his salary during the period of suspension.
The only ' payment which the respondent could claim to receive from the University was subsistence allowance.
if the rules governing the terms and conditions of his service made such a provision.
The University stated that it had adopted as a matter of practice the rules relating to Civil Servants of the State of Jammu & Kashmir for the purpose of payment of subsistence allowance to its employees and in fact the University Council at its meeting held on 22nd February, 1971 formally accorded approval to this practice.
The respondent was, therefore, clearly not entitled to receive from the University anything more than the subsistence allowance actually paid to him, which, we are told, was paid on the same basis as that prevailing under the rules relat ing to Civil Servants of the State of Jammu & Kashmir.
These were the reasons for which we made our order dated 17th December, 1976 upholding the validity of the order of suspension dated 21st May, 1970 and holding that the respondent was not entitled to anything more than the subsistence allowance paid to him during the period of sus pension under the order of the Registrars dated 6th June, 1970.
| IN-Abs | The Jammu and Kashmir University, which was a university constituted under the Jammu and Kashmir University Act, 1965, was bifurcated into two universities one for Jammu area and the other for Kashmir area by an act called the Jammu and Kashmir Universities Act, 1969.
Statute 2 made under the 1965 Act required every teacher to sign the pre scribed agreement of service with the University.
Clause (6) of the agreement stipulated that in all matters the teacher would abide by the statutes and regulations in force in the university from time to time.
The proviso to this clause provided that no change in the statutes and regula tions in this regard shall be deemed to have adversely affected the teacher.
Section 51 of the 1969 Act provides for continuing in force the statutes and regulations made under the 1965 Act; but section 48(2) empowered a special officer to propose modifi cations necessary to bring the statutes made under the 1965Act in conformity with the provisions of the 1969 Act and if such modifications were approved by the Chancellor they were deemed to have been made by the competent author ity under the 1969 Act.
Section 52(1) of the 1969 Act provides that all employees of the university employed under the 1965 Act shall continue in service on the same terms and conditions as regulated their service before the commence ment of the 1969 Act.
Sub section (2) empowers the Chancel lor to allocate employees of the university (other than those serving on contract) between the two new universities and the allocation so made was deemed to be an appointment to the post under the 1969 Act.
The proviso to this sub section provides that in making such allocations the condi tions of service of employment of such employees shall not be: varied to their disadvantage.
Sub section (4) provides that all persons who were employed under the former univer sity on contract shall cease to hold such posts after 60 days from the commencement of the 1969 Act and all such contracts with the former university shall stand terminated on the expiry of 60 days.
Section 13(4) of the 1969 Act empowers the Vice Chancel lor to take such action as he deems necessary in any emer gency which calls for immediate action.
Section 13(6) provides that the Vice Chancellor shall be responsible for the discipline of the University.
Section 14(3) of the 1969 Act contained an identical provision as that contained in section, 13(4) of the 1965 Act.
To bring the statutes under the 1965 Act in conformity with the provisions of the 1969 Act modifications proposed by the special officer under section 48(2) of the 1969 Act were approved by the Chancellor by his order dated December 24, 1969.
This order substituted Chapter IV in the statutes by a new chapter.
Acting under section 52(4), the Chancellor made an order on December 24 1969 directing that certain teachers shall continue on the respective posts in the new Universities on the terms and conditions embodied in Schedule II to the order.
Clause 9(ii) of the Schedule empowered the Vice Chancellor to suspend a teacher on grounds.
among others of misconduct.
The respondent, a teacher appointed under the. 1965 Act, was transferred to the Jammu area by the Chancellor 's order dated December 24, 1969.
In exercise of the power under el.
9(ii) of Schedule II of the Chancellor 's order 44 and section 13(4) of the 1969 Act, the Vice Chancellor, by an order dated May 21, 1970, suspended the respondent from service.
By another order dated June 6, 1970 the respondent was allowed a subsistence allowance amounting to half his pay and half D.A. which was later raised to 75% of his pay and allowances.
The respondent 's writ petition under article 226 of the Constitution challenging the suspension order of May 21, 1970, as well as the order dated June 6, 1970 was dismissed by a single Judge of the High Court.
On appeal the Division Bench struck down the order of suspension as violative of section 52(1) of the 1969 Act.
In appeal it was contended by the respondent that (1) since his case was governed by section 52(1) the order of Decem ber 24, 1969 made under section 52(4) was invalid because the terms and conditions set out in Schedule H to the order altered his conditions of service; (2) statute 24(ii) was invalid because it was not within the terms of section 48(2) and the statute was not necessary for bringing the statutes in conformity with the provisions of the 1969 Act; (3) the power to order interim suspension was a quasi judicial power and it would not be comprehended within the language of section 13(4) and (4) section 52(1) entitled him to continue in service on the same terms and conditions as before and under section 52(2) his conditions of service could not be varied to his disadvantage; therefore neither statute 24(ii) nor section 13(4) could confer power on the Vice Chancellor to suspend him which power the Vice Chancellor did not have under the earlier Act.
Allowing the appeal, HELD: The Vice Chancellor had the power to make the order of suspension and he was within his authority in doing so.
By reason of statute 2 read with el.
(6) of the form of agreement the respondent was bound by any changes made, in the statutes from time to time and no change made in the statutes was to be regarded as having adversely affected him.
Statutes made under the 1965 Act continued to be applicable by reason of section 51.
To bring the statutes in conformity with the provisions of the 1969 Act, modifica tions proposed by the special officer were approved by the Chancellor by his order dated December 24, 1969 and by reason of section 48(2) they were deemed to have been made by the competent authority under the 1969 Act.
This order substi tuted Chapter IV in the Statutes by a new Chapter and stat ute 24(ii) made the same provision as el.
9(ii) of Schedule II to the order made under section 52(4).
If statute 24(ii) were a valid provision, the Vice Chancellor would have power to suspend a teacher and the order of suspension against the respondent would be within the authority of the Vice Chancellor.
[53D E] Statute 24(ii) iS a statute validly approved by the Chancellor under section 48(2).
[54H] 2(a) Section 13(6) has entrusted the Vice Chancellor with the task of maintaining discipline in the university and the entrustment of this task carried with it, by neces sary implication, the Vower to take whatever action was necessary for maintaining the discipline.
Since section 13(6) was a new provision, it was necessary to make statutes for enabling the Vice Chancellor to discharge the responsibili ty of maintaining the discipline and for that purpose, vesting power in him to suspend a teacher pending departmen tal enquiry against him.
It was with this object of bring ing the statutes in conformity with section 13(6) that statute 24(ii) was added by way of modification in the statutes by the order of December 24, 1969.
Moreover, there is nothing in the 1969 Act which militates against vesting power in the Vice Chancellor to order interim suspension of a teacher.
The ChancellOr 's view that statute 24(ii) was necessary to bring it in conformity with section 13(6) cannot be said to be erroneous.
[54F G] (b) If statute 24(ii) is valid, the respondent would be bound by it and in that event the order of suspension made by the Vice Chancellor would be within the power conferred on him by that statute.
[55B] (c) Though the order of suspension did not recite stat ute 24(ii) it is wellsettled that when an authority makes an order which is otherwise within its competence, it cannot fail merely because it purports to be made under a wrong 45 provision of law, if it can be shown to be within its power under any other provision; a wrong label cannot vitiate an order which is otherwise within the power of the authority to make it.
[55B C] P.Balakotaiah vs Union of India, ; fol lowed.
3(a) It is not correct to say that an order of interim suspension was a quasijudicial order and in any event the language of section 13(4) is sufficiently wide and comprehensive to take within its scope and ambit every kind of action considered necessary by the Vice Chancellor in an emergency.
The order of suspension.
made by the Vice Chancellor was plainly an order which he had the power to make under section 13(4).
[55F] (b) Section 13(4) does not talk specifically of an order of interim suspension of a teacher but the width and ampli tude of the language of the provision would clearly include action by way of interim suspension of a teacher, when there is in the opinion of the Vice Chancellor, an emergency calling for immediate action.
[55E] (c) The respondent 's contention that there was no emer gency which called for immediate action on the part of the Vice Chancellor and, therefore, the order of suspension could not be justified, cannot be entertained by this Court because no such averment had been made in the writ petition.
[55H] 4(a) The respondent could not complain of any infraction of the provisions of section 52(1).
Since statute 24(ii) was a statute validly made the Vice Chancellor was entitled to make the order of suspension.
The Vice Chancellor could also avail of section 13(4) for sustaining the order of suspen sion since it conferred the same power on him as section 13(4) of the 1965 Act and exercise of the power conferred by it as against the respondent did not involve any violation of the provisions of section 52(1).
[57D E] (b) Section 52(1) continued the service of a teacher on the same terms and conditions as regulated his service before the commencement of the 1969Act and that was subject to the provisions of section 52(2).
But this subjection to the provisions of sub section (2) did not import the requirement set out in the proviso that the conditions of service of a teacher shall not be varied to his disadvantage.
The words "subject to the provisions of sub section (2)" in section 52(1) were intended merely to clarify that a teacher shall contin ue in service on the same terms and conditions but subject to any allocation which may be made by the Chancellor under section 52(2).
Nothing in sub section
(1) should be construed as in any way derogating from the power of the Chancellor to make an allocation of the teacher under section 52(2).
The proviso imposed a limitation on the power of the Chancellor to make an allocation by providing that in making such allocation the conditions of service of the employee shall not be varied to his disadvantage and it could not be construed as a substantive provision adding a requirement in sub s.(1) that even though the terms and conditions of service may permit alteration to the disadvantage of an employee, such alteration shall be inhibited.
[56H; 57A] (c) Even if the respondent was entitled to continue in service on the same terms and conditions as before by reason of section 52(1) these very terms and conditions provided that he would be bound by any changes which might be made in the statutes from time to time.
If, therefore, any changes were made in the terms and conditions of service of the respondent by statutes validity made under the 1969 Act the respondent could not complain of any infraction of the provisions of section 52(1).
[57C D] 5(a) The order of suspension suspended the contract between the respondent and the university and neither the respondent was bound to perform his duties under the contract nor was the university bound to pay any salary to him.
The respond ent was entitled to receive only such subsistence allowances as might be payable under the rules and regulations govern ing his terms and conditions of service.
[57G] (b) Where there is power in the employer either by an express term in the contract or by the rules governing the terms and conditions of service to 46 suspend an employee, the order of suspension has the effect of temporarily suspending the relation of master and servant with the consequence that the employee is not bound to render service and the employer is not bound to pay.
In such a case the employee would not be entitled to receive any payment at all from the employer unless the contract of employment or the rules governing the terms and conditions of service provide for payment of some subsistence allow ance.
[58H] In the instant case the Vice Chancellor had the power to suspend the respondent under statute 24(ii) and the respond ent could not claim payment of his salary during the period of suspension.
P. Gindroniya vs State of Madhya Pradesh, [1970] 3 SCR 448 followed.
|
l Appeal No. 2054/69.
(Appeal by Special Leave from the Judgment and Order dated the 5 8 1969 of the Punjab and Haryana High Court in Regular Second Appeal No. 983 of 1969).
V.C. Mahajan, Mrs. Urmila Kapoor and Miss Kamlesh Bansal, for the appellants.
Ram Sarup and R. A. Gupta, for respondent No. 1.
The Judg ment of the Court was delivered by JASWANT SINGH, J.
This appeal by special leave which is directed against the judgment and order dated September 24, 1969, of the High Court of Punjab and Haryana at Chandigarh, passed in R.S.A. No. 983 of 1969 arises in the following circumstances : Bhawani Dass, respondent No. 2 herein, who owned agri cultural land measuring 50 kanals and 6 mafias comprised in Khewat No. 223, Khatauni No. 467 468, situate in village Kohlawas, Tehsil Dadri, District Mohindergarh, sold the same to Munshi, Dina and Rani Dutt, appellants before us, in lieu of Rs.10,000/ by means of registered sale deed (Ext.
D 1) dated October 17, 1966.
Alleging that he held as a non occupancy tenant under Bhawani Dass the aforementioned land on the date of its sale to the appellants and had continued to do so and as such had a preferential right of its purchase under clause Fourthly of section 15(1)(a) of the Punjab Pre emption Act, 1913 (Punjab Act 1 of 1913) which still applies to the State of Haryana, Richpal, re spondent No. 1 herein, brought a suit on October 17, 1967 for possession of the said ' land by pre emption, in the Court of the Sub Judge, Charkhi Dadri.
The suit was resist ed by the appellants contending inter alia that the plain tiff respondent was neither a nonoccupancy tenant of the land in question under Bhawani Dass, vendor, nor was he in possession of the land either on the day of the aforesaid sale or on the day of the institution off the suit.
After settling the necessary issues and recording the evidence adduced by the parties, the trial court by its judgment dated February 1, 1969, decreed the suit in favour of the plaintiff pre emptor on payment of Rs. 10,000/ (the consid eration of the aforesaid sale) plus Rs. 727/ (the costs incurred by the vendees appellants on the stamps, registra tion fee etc.) holding that he had been a tenant at will under the vendor from Kharif, 1957 to Rabi, 1968; that he was forcibly dispossessed after the sale; that wrongful eviction of a tenant could be of no consequence in the eye of law; that the plaintiff pre emptor continued to hold his rights as a tenant, including the right to immediate posses sion and cultivation of the land notwithstanding his wrong ful ouster therefrom by the vendees who could not be allowed to take advantage of their own wrongs and the former must be deemed to continue in legal possession of the land which was comprised in his tenancy under the vendor on the date of the sale right upto the date of the suit and the date of the decree of the trial court in his favour.
The trial court further held that 'a tenant 's eviction can only be had under sections 7 and 7A of the Pepsu Tenancy and Agricul tural Lands Act, 1955, and there is nothing on the record of the case to even insinuate that the plaintiff 's tenancy 3 which subsisted at the time of the impugned sale was ever determined or terminated under section 7 or 7A of the Act and the plaintiff who was in physical possession of the land in suit as a tenant at the time of the sale has to be taken to be in legal possession up till the present moment '.
In conclusion, the trial could held that the mere act of forcible dispossession of the plaintiff pre emptor at the hands of the vendees after the sale could not have the effect of divesting him of his right to hold the land which he had acquired as a tenant of the vendor and in the eye of law he must be presumed to have continued to be a tenant all along and as such had a preferential right of pre emption.
The judgment and decree passed by the trial court was affirmed in appeal not only by the Additional District Judge, Gurgaon, but also by a learned Single Judge and Letters Patent Bench of the High Court.
Aggrieved by these decisions the vendees appellants have, as already stated, come up in further appeal to this Court.
The sole point that has been urged before us on behalf of the appellants is that as according to the decision of this Court in Bhagwan Das vs Chet Ram(1) the plaintiff pre emptor has to prove his subsisting right of pre emption on all the three material dates viz.(1) the date of sale, (2) the date of institution of the suit and (3) the date of passing of the decree and in the instant case, he failed to file a suit in the revenue court for recovery of possession of the suit land within one year of the date of his dispos session as contemplated by section 50 of the Punjab Tenancy Act 1887 not only his remedy was destroyed but his right and title was also extinguished at the expiry of that period on the general principles underlying section 27 of the , which may not in terms be applica ble to the present case.
Though the learned counsel for the appellants cited a few cases in support of his contention but did not unfortunately bring to our notice the decision of this Court in Dindyal & Anr.
vs Raja Ram (2) which may in an appropriate case require reconsideration by a larger bench of this Court, we think, he cannot be allowed canvass the aforesaid point.
A reference to the record of the case shows that the point now sought to be agitated before us was not raised by the appellants either in their written state ment or in the grounds of the three appeals preferred by them before the courts below.
All that appeals from the record to have.
been urged by them in the grounds of the aforesaid appeals was that the evidence had not been proper ly appraised and that in the absence of any lease deed in his favour or any receipt evidencing payment of rent by him to the vendor, mere entries in the khasra girdawaries were not enough to establish that the plaintiff pre emptor was a tenant of the suit land under the vendor at the time of the sale.
The suit land being situate in the district of Mohindergarh which formed part of the territories of the erstwhile of Pepsu, the case, as rightly observed by the court of first instance, was governed by sections 7 and 7A of the Pepsu Tenancy and Agricultural Lands Act, 1955, which in view of section 4 of that Act have an overriding effect and provide as under : "4.
Act to over ride other laws Save, as otherwise expressly provided in this Act, the provisions of this Act (1) ; (2) 4 shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instru ment having effect by virtue of any such law or any usage, agreement, settlement, grant, sanad or any decree or order of any court or other authority.
Termination of tenancy. (1) No tenancy shall be terminated except in accord ance with the provisions of this Act or except of any of the following grounds, namely : (b) that the tenant has failed to pay rent within a period of six months after it falls due; Provided that no tenant shall be ejected under this clause unless he has been afforded an opportunity to pay the arrears of rent within a further period of six months from the date of the decree or order directing his ejectment and he had failed to pay such ar rears during that period; (c) that the tenant, not being a widow, a minor, an unmarried woman, a member of the Armed Forces of the Union or a person incapa ble of cultivating land by reason of physical or mental infirmity has after commencement of the President 's Act sublet without the consent in writing of the landowner, the land comprising his tenancy or any part thereof; (d) that the tenant has, without sufficient cause, failed to cultivate personally such land in the manner and to the extent customary in the locality in Which such land is situat ed; (e) that the tenant has used such land or any part thereof in a manner which is likely to render the land unfit for the purpose for which it was leased to him; (f) that the tenant, on demand in writing by the landowner, has refused to execute a kabuliyat agreeing to pay rent in respect of his tenancy in accordance with the provisions of sections 9 and 10.
(2). . . . . 7A. Additional grounds for termination of tenancy in certain cases. (1) Subject to the provisions of sub sections (2) and (3), a tenancy subsisting at the commencement of the Pepsu Tenancy and Agricultural Lands (Second Amendment) Act, 1956 may be terminated on the following grounds in addition to the grounds specified in section 7, namely : (a) that the land comprising the tenancy has been reserved by the land owner for his personal cultivation in accordance with the provisions of Chapter II: (b) that the landowner owns thirty standard acres or less of land and the land falls within the permissible limit; 5 Provided that no tenant shall be ejected under this subsection (i) from any area of land if the area under the personal cultivation of the tenant does not exceed five standard acres, (ii) from an area of five standard acres, if the area under the personal cultivation of the tenant exceeds five standards acres.
until he is allowed by the State Government alternative land of equivalent value in stand ard acres.
(2) No tenant, who immediately preceding the commencement of the President 's Act has held any land continuously for a period of twelve years or more under the same land owner or his predecessor in title, shah be ejected on the grounds specified in sub section (1) (a) from any area of land, if the area under the personal cultivation of the tenant does not exceed fifteen standards acres, or (b) from an area of fifteen standards acres, if the area under the personal cultiva tion of the tenant exceeds fifteen standard acres; provided that nothing in this sub section shall apply to the tenant of a landowner who both, at the commencement of the tenacy and the commencement of the President 's Act, was a widow, a minor, an unmarried woman, a member of the Armed Forces of the Union or a person incapable of cultivating land by reason of physical or mental infirmity.
Explanation.
In computing the period of twelve years, the period during which any land has been held under the same land owner or his predecessor in title by the father, brother or son of the tenant shall be included.
(3) For the purpose of computing under sub sections (1) and (2) the area of land under the personal cultivation of a tenant, any area of land owned by the tenant and under his personal cultivation shall be included.
" It cannot, in view of the above noted provisions of law and the decision of this Court in Rikh Ram & Anr.
vs Ram Kumar & Ors.(1) be disputed that an order or decree direct ing eviction of a tenant is necessary to be obtained to bring about a determination of the tenancy.
A fortiori, a person who has been in possession of land with the right to possess it continues to hold the 'land and to be a tenant in spite of having been wrongfully put out of possession espe cially if he has initiated proceedings for recovery of possession.
As in the instant case, it has been concur rently found by all the courts below that the plaintiff pre emptor was a tenant of 'the suit land on the date of sale (1) 6 and it has not been alleged much less proved that his tenancy was, thereafter determined or terminated on any of the grounds set out in sections 7 and 7A of the Pepsu Tenan cy and Agricultural Lands Act, 1955 and he had admittedly applied to the Tehsildar for restoration of his posses sion, he cannot but be deemed to be a tenant of the suit land on the date of the sale as well as on all other materi al dates and thus fully qualified and entitled to pre empt the land.
We must fairly state that our judgment is based on the provisions of law brought to our notice by counsel and our conclusion is confined to the interpretation of the Acts referred to above.
For the foregoing reasons, we do not find any merit in this appeal which is dismissed.
In the circumstances of the case, we leave the parties to bear their own costs of this appeal.
P.B.R. Appeal dismissed.
| IN-Abs | Section 7 of the Pepsu Tenancy and Agricultural Lands Act, 1955, which deals with termination of tenancy, provides that no tenancy shall be 'terminated except on any of the grounds mentioned in the section.
Section 7 gives additional grounds for termination of tenancy in certain cases.
Respondent No. 2 sold his land to the appellants.
Claiming that he was a non occupancy tenant under respondent No. 2, respondent No. 1 filed a suit for possession of the land by pre emption.
The trial Court decreed the suit in favour of the plaintiff pre emptor holding that he had been a tenant at will on the date of the sale and that he was forcibly dispossessed after the sale.
The District Judge as well as the High Court upheld the trial Court 's decision.
It was contended on behalf of the appellants that the pre emptor had to prove his subsisting right of pre emption on the date of sale, date of institution Of the suit and date of passing of the decree and since the plaintiff had failed to file a suit for recovery of possession under section 50 of the Punjab Tenancy Act, 1887 his right and title had been extinguished.
Dismissing the appeal, HELD: The plaintiff cannot but be deemed to be the tenant of the suit land on the date of sale as well as on all other material dates and is thus fully qualified and entitled to pre empt the land.
[5H] The point now sought to be raised was not raised by the appellant in the Courts below.
In view of the provisions of sections 7 and 7A of the Pepsu Tenancy and Agricultural Lands Act, 1955, which have an over riding effect and the decision of this Court in Rikki Ram & Anr vs Ram Kumar & Ors it cannot be disputed that an order or decree di recting eviction of a tenant is necessary to be obtained to bring about a determination of the tenancy.
A fortiori, the person who has been in possession of the land with the right to possess it continues to hold the land and be a tenant in spite of having been wrongfully put out of posses sion specially if he has initiated proceedings for recovery of possession.
[3E & 5F] Since in the instant case, it has been concurrently found by the Courts below that the plaintiff pre emptor was a tenant of the suit land on the date of sale and it has not been alleged that his tenancy was thereafter determined or terminated on any of the grounds set out in sections 7 and 7A of the Act and the plaintiff had applied to the Tehsildar for restoration of possession, he could not but be deemed to be a tenant of the suit land on the date of the sale as well as on all other material dates and thus fully qualified and entitled to pre empt the land.
[5G] Rikki Ram & Anr.
vs Ram Kumar & Ors. followed.
Bhagwan Das vs Chet Ram ; and Dindyal & Anr.
vs Rajaram referred to. 2
|
Appeal No. 2080 of 1968.
Appeal by Special Leave from the Judgment and Order dated 11 4 68 of the Assam and Nagaland High Court in Second Appeal No. 98/65.
G.L. Sanghi and K.J. John for the Appellant.
S.K. Nandy and G.S. Chatterjee for the Respondent.
The Judgment of the Court was delivered by BHAGWATI, J.
, This appeal by special leave raises a short question relating to the validity of a notice to quit given by the appellant terminating the tenancy of the respondents.
The appellant, as landlord, filed a suit for eviction against the respondents as tenants, after giving a notice to quit dated 25th September, 1962.
The Trial Court dismissed the suit but on appeal, the First Appellate Court reversed the judgment of the Trial Court and passed a decree of evic tion against the respondents.
The respondents preferred a second appeal to the High Court and the only question debat ed before the High Court was in regard to the validity of the notice to quit.
There were two grounds on which the notice to quit was assailed as invalid.
The first is imma terial since the decision of the High Court negativing it has not been challenged before us on behalf of the respond ents.
The second was 76 that the notice to quit was invalid as it was not in con formity with the requirements of section 106 of the Transfer of Property Act.
That section says that in the absence of a contract or local law or usage to the contrary, a lease from month to month shall be terminable, "on the part of either lessor or lessee, by fifteen days ' notice expiring with the end of a month of the tenancy".
The argument of the re spondents before the High Court was that the notice to quit did not expire with the end of the month of the tenancy and was hence invalid.
This argument found favour with the High Court and it held that the notice to quit was not clear and unambiguous and was "open to doubt as to the date of deter mination of the tenancy" and did not terminate the tenancy on the expiration of the month of the tenancy and was, therefore, invalid and in this view it dismissed the suit of the appellant.
The appellant thereupon preferred the present appeal with special leave obtained from this Court.
The only question which arises for determination in this appeal is whether the notice to quit given by the appellant to the respondents was invalid as not being in conformity with the requirements of section 106 of 'the Transfer of Property Act.
The notice to quit, so far as material, was in the following terms: "You are hereby informed by this notice that you will vacate the said house for our possession within the month of October 1962 otherwise you will be treated as trespassers from 1st November in respect of the said house.
" The tenancy was admittedly a monthly tenancy and hence the notice to quit could not be said to be valid under section 106 of the Transfer of Property Act unless it expired with the end.
of the month of the tenancy.
The view taken by the High Court was that since by the notice to quit the appel lant called upon the respondents to.
vacate the premises "within the month of October 1962" and not on the expiration of that month, the notice to quit was not in accordance with law and did not operate to determine the tenancy of the respondents.
The question is whether this view taken by the High Court can be sustained.
Now, it is settled law that a notice to quit must be construed not with a desire to find faults in it, which would render it defective, but it must be construed ut res magis valeat quam pereat.
"The validity of a notice to quit", as pointed out by Lord Justice Lindley, L.J. in Sidebotham vs Holland(1), "ought not to turn on the split ting of a straw".
It must not be read in a hyper critical manner, nor must its interpretation be affected by pedagogic pendantism or overrefined subtlety, but it must be construed in a commonsense way.
See Harihar Banerji vs Ramsashi Roy(2).
The notice to quit in the present case must be judged for its validity in the light of this well recognised principle of interpretation.
It is indisputable that under section 106 of the Trans fer of Property Act the notice to quit must expire with the end of the month of the tenancy or in other words, it must terminate the tenancy with effect (1) (2) 45 I.A. 222. 77 from the expiration of the month of the tenancy.
If it terminates the tenancy with effect from an earlier date, it would be clearly invalid.
Now, ' here the notice to quit required the respondents to vacate the premises "within the month of October 1962" and intimated to them that otherwise they would be "treated as trespassers from 1 st November" in respect of the premises.
The question is: what is the meaning and effect of the words "within the month of October 1962" in the context in which they are used in the notice to quit ? Do these words mean that the tenancy of the respond ents was sought to be terminated at a date earlier than the expiration of the month of October 1962 and they were re quired to vacate the premises before such expiration ? We do not think so.
When the notice to quit required the respondents to vacate "within the month of October 1962"; what it meant was that the respondents could vacate at any time within the month of October 1962 but not later than the expiration of that month.
The last moment up to which the respondents could, according to the notice to quit, lawfully continue to remain in possession of the premises was the mid night of 31st October, 1962.
We fail to see any differ ence between a notice asking a tenant to vacate "within the month of October 1962" and a notice requiring a tenant to vacate latest by the mid night of 3 l st October, 1962, because in both cases, the tenant would be entitled to occupy the premises up to the expiration of 31st October, 1962 but not beyond it.
This position would seem to follow logically and incontestably, as a matter of plain natural construction, from the use of the words "within the month of October 1962" without any thing more, but here it is placed beyond doubt or controversy by the notice to quit proceeding to add that otherwise the respondents would be treated as trespassers from 1st November, 1962.
This makes the inten tion of the authors of the notice clear that they are termi nating the tenancy only with effect from the end of the month of October 1962 and not with effect from any earlier point of time during the currency of that month.
If the respondents do not vacate the premises within the month of October 1962, they would be treated as trespassers from 1st November, 1962 and not from any earlier date, clearly imply ing that they would lawfully continue as tenants up to the expiration of the month of October 1962.
The tenancy was, therefore, sought to be determined on the expiration of the month of October 1962 and not earlier and the notice to quit expired with the end of the month of tenancy as required by section 106 of the Transfer of Property Act.
It was in the circumstances a valid notice which effectively determined the tenancy of the respondents with effect from the mid night of 31st October, 1962.
We accordingly allow the appeal, set aside the order of the High Court and restore the decree for eviction passed against the respondents.
Since the respondents have been in possession of the premises for a long time, it is but fair that they should have some reasonable time to vacate the premises.
Hence we direct that the decree for eviction shall not be executable against the respondents up to 31st October, 1977 on condition that the respondents continue to pay to the appellant regularly from month to month an amount equivalent to the monthly rent as and by way of compensation for use and occupation of the permises.
There will be no order as to costs throughout.
M.R. Appeal allowed.
| IN-Abs | The appellant filed a suit for evicting his tenant Bhagwandas Kanu etc.
after giving them a notice to quit.
The Trial Court dismissed the suit but on appeal, the First Appellate Court passed a decree for eviction against the respondents.
In second appeal before the High Court, the respondents assailed the validity of the notice to quit, on the ground that it did not conform with the requirements of section 106 of the Transfer of Property Act.
The High Court allowed the appeal holding that the notice to quit did not clearly terminate the tenancy on the expiration of the, month of the tenancy, and was invalid.
Allowing the appeal by special leave, the Court, HELD: A notice to quit must be construed ut res magis valeat quam pereat.
It must not be read in a hyper critical manner, nor must its interpretation be affected by pedagogic pendantism or over refined subtlety, but it should be construed in a common sense, way.
The notice to qui re quired the respondents to vacate "within the month of Octo ber 1962", otherwise they would be treated as trespassers from 1st November, 1962.
This makes the intention of the authors of the notice clear that they were terminating the tenancy only with effect from the end of the month of October 1962 and not with effect from any earlier point of time during the currency of that month.
Sidebotham vs Holland ; Harihar Banerji vs Ramsashi Roy 45 I.A. 222, applied.
|
Appeal No. 900 of 1976.
Appeal by Special Leave from the Judgment and Order dated 8 3 1976 of the Gujarat High Court in Spl.
Civil Appln.
No. 263 of 1976.
P.H. Parekh and (Miss) Manju jetley for the Appellant.
S.C. Agarwal, V.J. Francis and A.P. Gupta for the Respond ents.
933 The Judgment of the Court was delivered by GOSWAMI, J.
This appeal by special leave at the in stance of the Bhavnagar Municipality is directed against the order of the Gujarat High Court dismissing in limine its writ application challenging the award of the Industrial Tribunal, Gujarat, made under section 33A of the Industrial Disputes Act (briefly the Act).
There was an industrial dispute pending between the Bhavnagar Municipality (briefly the appellant) and its workmen before the Industrial Tribunal 'in Reference No. 37 of 1974 referred to it under section 10(1) (d) of the Act on March 5, 1974.
The said industrial dispute related to several demands including the demand for permanent status of the daily rated workers of the Water Works Section of the Municipality who had completed 90 days ' service.
While the aforesaid industrial dispute was pending before the Tribu nal, the appellant, on September 30, 1974, passed orders retrenching 22 daily rated workmen (briefly the respondents) attached to the Water Works Section of the Municipality.
It is not disputed that the appellant had complied with sec tion 25F of the Act and due retrenchment compensation had been paid to those workers.
On June 20, 1975, the respond ents filed a complaint to the Tribunal under section 33A of the Act for contravention of section 33 of the Act by the appellant.
Neither party adduced any oral evidence before the Tribunal but relied only upon documents produced before it.
On October 30, 1975, the Tribunal made its award holding that the appellant contravened section 33(1)(a) of the Act and, therefore, directed reinstatement of the respondents.
The appellant preferred a writ application before the High Court which was dismissed in limine, as stated above.
Hence this appeal by special leave.
Two questions arise for decision in this appeal.
First, whether the appellant contravened section 33 (1)(e) of the Act by ordering retrenchment of the respondents who, along with other workers, were directly involved in the industrial dispute pending before the Tribunal.
Second, whether contra vention of section 33 will automatically lead to an order of reinstatement of the respondents, as has been held by the, Tribunal.
It is common ground that the appellant did not obtain prior permission of the Tribunal before retrenching the respondents.
It is well settled that a complaint under section 33A is maintainable only if the employer contravenes section 33 of the Act.
It is submitted by Mr. Agarwal, on behalf of the respondents, that the object of section 33 should be borne in mind in considering the question about alteration of conditions of service under section 33(1)(a) of the Act.
He submits that since the respondents were directly in volved in the dispute and the question of their permanent status from a casual or temporary status formed the subject matter of the dispute, the reference.
has been made nuga tory by the action of the appellant in retrenching them. 'Mr. Parekh, on the other hand, submits that retrenchment of the respondents does not ' involve alteration of conditions of service and hence there is no contravention of section 33 of the Act.
934 There is no complaint by Mr. Agarwal that there is any noncompliance by the appellant with section 28F of the .Act.
Mr. Agarwal further rightly concedes that he cannot bring his case under section 33(1) (b) or under section 33(2)(b) since it is not a case of discharge or dismissal for miscon duct.
His entire submission is based on section 33(1)(a) of the Act.
Section 33 of the Act so far as material for us may be set out: "33(1) During the pendency of any . proceeding before a . Tribunal . in respect of an industrial dispute, no employer shall (a) in regard to any matter connected with the dispute, alter, to the prejudice of the workmen concerned in such dispute, the condi tions of service applicable to them immediate ly before the commencement of such proceeding; X X X save with the express permission in writing of the authority before which the proceeding is pending".
There is a clear prohibition in section 33(1)(a) against altering conditions of service by the employer under the circumstances specified except with the written permission of the Tribunal or other authority therein de scribed.
In order to attract section 33(1)(a), the following features must be present: (1) There is a proceeding in respect of an industrial dispute pending before the Tribunal.
(2) Conditions of service of the workmen applicable immedi ately before the commencement of the Tribunal proceeding are altered.
(3) The alteration of the conditions of service is in regard to a matter connected with the pending industrial dispute.
(4) The workmen whose conditions of service are altered are concerned in the pending industrial dispute.
(5) The alteration of the conditions of service is to the prejudice of the workmen.
The first feature is admittedly present in this case since action has been taken by the appellant in retrenching the respondents during the pendency of the proceeding before the Tribunal.
The point that requires consideration is whether the other features are also present in the instant case.
Before we proceed further we should direct our attention to the subject matter of the industrial dispute pending before the Tribunal.
It is sufficient to take note of the principal item of the dispute, namely, the demand of the respondents for conversion of the temporary status of their employment into permanent.
To recapitulate briefly the appellant employed daily rated workers to do the work of boring and hand pumps in its Water Works Section.
These workers have been in employment for over a year.
They claimed permanency in their employment on their putting in more than 90 days ' service.
They also demanded two pairs of uniform every year, cycle allowance at the rate of Rs. 10/ per month, Provident Fund benefit and National Holidays and other holidays allowed to the other workers.
While this particular dispute was pending before the Tribunal, the appellant decided to entrust the work, which had till then been performed by these workers in the Water Works Section, to a contractor.
On the employment of the contractor by the Municipality for the self same work, the services of the respondents became unnecessary and the appellant passed the orders of retrenchment.
It is, therefore, clear that by retrenchment of the respondents even the temporary employ ment of the workers ceased while their dispute before the Tribunal was pending in order to improve that temporary and insecure status.
Retrenchment may not, ordinarily, under all circum stances, amount to alteration of the conditions of service.
For instance, when a wage dispute is pending before a Tribu nal and on account of the abolition of a particular depart ment the workers therein have to be retrenched by the em ployer, such a retrenchment cannot amount to alteration of the conditions of service.
In this particular case, howev er, the subject matter: being directly connected with the conversion of the temporary employment into permanent, tampering with the status quo ante of these workers is a clear alteration of the conditions of their service.
They were entitled during the pendency of the proceeding before the Tribunal to continue as temporary employees hoping for a better dispensation in the pending adjudication.
And if the appellant wanted to effect a change of their system in getting the work done through a contractor instead of by these temporary workers, it was incumbent upon the appellant to obtain prior permission of the Tribunal to change the conditions of their employment leading to retrenchment of their services.
The alteration of the method of work culmi nating in termination of the services by way of retrenchment in this ease has a direct impact on the adjudication pro ceeding.
The alteration effected in the temporary employ ment of the respondents which was their condition of service immediately before the commencement of the proceeding before the Tribunal, is in regard to a matter connected with the pending industrial dispute.
The character of the temporary employment of the re spondents being a direct issue before the Tribunal, that condition of employment, however insecure, must subsist during the pendency of the dispute before the Tribunal and cannot be altered to their prejudice by putting an end to that temporary condition.
This could have been done only with the express permission of the Tribunal.
It goes with out saying that the 936 respondents were directly concerned in the pending industri al dispute.
No one also deny that snapping of the temporary employment of the respondents is not to their prejudice.
All the five features adverted to above are present in the instant case.
To permit rupture in employment, in this case, without the prior sanction of the Tribunal will be to set at naught the avowed object of section 33 which is principally directed to preserve the status quo under speci fied circumstances in the, interest of industrial peace during the adjudication.
We are, therefore, clearly of opinion that the appellant has contravened the provisions of section 33(1)(a) of the Act and the complaint under section 33A, at the instance of the respondents, is maintainable.
The submission of Mr. Parekh to the contrary cannot be accepted.
That, however, does not conclude the matter.
The Tribu nal was clearly in error in not adjudicating the complaint on the merits.
It is well settled that in a complaint under section 32A, event if the employer is found to have contra vened the provisions of section 33, the Tribunal has to pronounce upon the merits of the dispute between the par ties. ' The order passed in an application under section 33A is an award similar to one passed in a reference under section 10 of the Act.
The award passed has to be submitted to the Government and the same has to be published under section 17 of the Act.
For the purposes of the Act the complaint under section 33A takes, as it were, the form of a reference of an industrial dispute by the appropriate au thority and the same has to be disposed of in a like manner.
The Tribunal has committed an error of jurisdiction in declining to adjudicate the matter and to make its award on the merits as required under the law.
The High Court was, therefore, not right in dismissing the writ application of the appellant in limine.
We should also.
observe that, in the absence of adjudication on the merits by the Tribunal, the High Court was not right in holding that the retrench ment by the appellant was "a gross act of victimisation".
In the result the order of the High Court is set aside.
It follows that the award of the Tribunal ordering rein statement of the respondents fails and is set aside.
We should also add that the.
observations of the Tribunal with regard to the question of prosecution of the appellant under sections 31 and 32 of the Act were not at all perti nent in an enquiry under section 33A and ought not to have been made.
The writ application in the High Court stands allowed to the extent indicated.
The appeal is allowed as directed in this order.
The complaint under section 33A stands restored to the file of the Tribunal for disposal on the merits in accordance with law and in the light of this judgment.
The appellant, however, shall pay the costs of the respondents as ordered at the time of granting of the Special Leave.
M.R. Appeal allowed.
| IN-Abs | An industrial dispute between the appellant and its workmen including the respondents, was pending before the Industrial Tribunal.
The dispute, inter alia, related to the demand for permanent status of the respondents who were rated workers of the water works section of the Munici pality.
Meanwhile, without obtaining the Tribunal 's prior permission, the appellant retrenched the respondents.
On a complaint by the respondents section 33 A of the Industrial Disputes Act, the Tribunal made an award holding that the appellant had contravened section 33(1)(a) of the Act, and di rected reinstatement of the respondents.
The complaint was not adjudicated on merits.
The appellant filed a writ petition which was dismissed in limine by the High Court.
Allowing the appeal, but agreeing that the appellant had contravened section 33 ( I ) (a) and that the respondents ' com plaint section 3 3 ( 1 ) (a) was maintainable, the Court re stored the respondents ' complaint for disposal on merits by the Tribunal.
HELD: (1) The character of the temporary employment of the respondents being a direct issue before the Tribunal, that condition must subsist and cannot be altered to their prejudice by putting an end to that temporary condition.
This could be done only with the express permission of the Tribunal.
[933 G H] The Court further observed: To permit rupture in employment, in this case, without the prior sanction of the Tribunal will be to.
set at naught the avowed object of section 33 which is principally direct ed to preserve the status quo under specified circumstances in the interest of industrial peace during the adjudication.
[936 A B] (2) In a complaint under section 33 A, even if the employer is found to have Contravened the provisions of section 33, the Tribunal has to pronounce upon the merits of the dispute between the parties.
For the purposes of the Act, the complaint under section 33A takes the form of a reference of an industrial dispute by the appropriate authority and the same has to be disposed of in a like manner.
[936 C D] (3) The Tribunal has committed an error of jurisdiction in ordering reinstatement of the respondents and declining to adjudicate the matter and to make its award on the merits as required under the law.
[936 D]
|
: Criminal Appeal No. 159 of 1974.
(From the Judgment and Order dated 2 1 1974 of the Patna High Court in Govt.
Appeal No. 48/68).
section Shaukat Hussain, for the appellant.
Pramod Swarup, for the respondent.
The Judgment of the Court was delivered by GOSWAMI, J.
The day, April 4, 1966, broke ominously for Lala Barhi (deceased) who used to render physical training and swimming ;lessons to young boys.
One such boy, Sabir Hanfi (PW 9), aged about 'l8 years, went to the house of Lala Barhi (hereinafter, Lala) at Purani Bazar, in the town of Muzaffarpur.
Lala was then asleep.
Sabir Hanfi woke him up and they both went to the Ashram Ghat (known also as Balu Ghat) on the bank of the Gandak river.
There when Lala was cleansing his teeth and washing his face.
, the appellant Rajendra Prasad (hereinafter to be described as the accused) came there with four or five persons.
It is said that the accused had some 'differences with Lala over some money which he had given to him to assault somebody which Lala failed to accomplish.
As his companions were keeping Lala engaged in talk, the accused thrust a dagger on the back of Lala who then called Sabir Hanfi.
lala himself a robust young man.
rushed towards the accused who took to his beels with his companions.
Lala fell down rushing forward a space.
of about forty yards and breathed his last.
Sabir Hanfi and others also ran 'behind Lala to his aid.
Although thirteen witnesses were examined by the prose cution only four of them were eye witnesses to the occur rence.
They are Ram Pukar Sah (PW 1), Parmeshwar Prasad (PW 4), Lachman Prasad (PW 10) and Sabir Hanfi (PW 9).
The Sessions Judge disbelieved all the eye witnesses and acquit ted the accused.
On the other hand the High Court relied on the evidence of PW 9 as being corroborated by PWs 1 and 10.
The High Court, therefore, set aside the acquittal 70 and convicted the accused under section 302, Indian Penal Code, and sentenced him to rigorous imprisonment for life.
Hence this appeal under section 2(a) of the .
PW 4 who lodged the first information report without naming any accused and who did not know the accused before the occurrence could not even identify him at the Test Identification Parade which was held on September 29, 1966.
The evidence of PW 4 is, therefore, of no significance.
The case, therefore, depended upon the evidence of recognition of the accused while running from the place of occurrence by PWs 1, 10 and the direct testimony of PW 9 who knew the accused from before.
The accused was known only to Sabir Hanfi (PW 9) by name.
The other two witnesses did not know the accused from before and saw him only while running away followed by twenty or twenty five other persons.
The evidence of PWs 1 and 10, which we have carefully perused, go to show that they did not know the accused from before.
They however,. identified the accused in the Test Identification Parade held on September 29, 1966, nearly six months after the occurrence.
There is no reason why the Test Parade was delayed so long when the accused had surren dered on June 17, 1966.
As stated earlier, the trial court which had opportunity to see these witnesses disbelieved them by giving certain reasons.
For example, according to the Sessions Judge, these two witnesses had the opportunity to know the accused from before and,.
therefore, their identification in the Test Identification Parade was not considered of such significance.
He further observed that these witnesses saw the accused at the time when he was running away from the place of occurrence and, therefore, "it is highly improbable that they would be able to retain the impression of the assailant of Lala Barhi in their mind for so many months".
The High Court, on the other hand, held that identification by PWs 1 and 10 was reliable.
Thus when two courts have come to a different conclusion on the same evidence, we had ourselves to go through the entire evidence carefully in order to see whether the appreciation of the evidence by the Sessions Judge was so unreasonable anti unrealistic as to entitle the High Court to interfere with the same.
PW 1 is the father of PW 10.
His uncle died on the previous night and both he and his son (PW 10) went for his cremation at Chandwara Ghat.
The cremation was over at about 6.16 A.M. on the morning of the day of occurrence.
They then went to Balu Ghat for a bath.
They saw Lala Barhi doing physical exercise on the bank of the river and they went to take their bath in the river.
After about ten minutes they heard a huIIa `pakro ' `pakro '.
On hearing the hulla they came up to the Bank from the river and saw Lala Barhi running away towards the East and four persons were chasing him and raising a huIIa `pakro ' `pakro '.
They fur ther stated that about twenty or 'twenty five persons fol lowed to catch two or three persons who were chasing the Lala.
They had come out of the water at that time.
PW 10 stated that he could not identify the other companions of Lala because he "saw their back only and not their face".
Since both the 71 witnesses came out of the water on hearing the hulla which was raised only after the assault, it was not possible for these two witnesses to see the stabbing.
Even if they recognised the persons running away, they would not be able to say who, amongst them, had stabbed the deceased.
PW 10 has candidly admitted that he could not recognise the companions of the deceased as they were running ahead and he was watching from behind, If this be the position with regard to the companions of the deceased it is difficult to see how these two witnesses were able to recognise the accused who was running away.
Apart from that there were twenty to twenty five others following the accused with two or three persons thus obstructing a clear view of the ac cused.
In this state of evidence it is impossible to hold, on their evidence, that the learned Sessions Judge did not reach a correct conclusion that identification by these two witnesses was futile for the purpose of establishing the charge against the accused.
We are unable to appreciate how the High Court in this state of evidence could reasonably come to a contrary conclusion with regard to the testimony of these two witnesses.
This leaves PW 9 for consideration.
Although PW 9 knew the assailant by name, there is no mention of the accused 's name in.
the first information report lodged the same day.
at 12.00 noon, five hours after the occurrence, the Thana being only one and a half miles from the place of occurrence.
The accused is described in the first information report as "a dark complexioned healthy young man, about the age of 24/25 years".
It may be that PW 9 is the only witness who had seen the stabbing.
He may be the witness from the beginning of the occurrence till the end and who described the inci dent in detail.
According to him while the deceased was cleansing his teeth the accused came near him with four or five persons and that while some of then kept the de ceased engaged in some conversation the accused stabbed the deceased on his back with a dagger.
The whole case will, therefore, rest on the evidence of this witness who knows the accused from before.
The Sessions Judge has considered him as unreliable for the following reasons : (1) It is highly improbable that if he had seen the incident he would not have rushed to the police station or even stayed at the place of occurrence till the arrival of the po lice.
(2) That on the other hand PW 9 confined himself in his house from 4th April till the evening of the following day when a constable went t6 his house to take him to the police station.
(3) The police at first suspected that he might have a hand in the murder of the de ceased and suspected him and kept him in the police lock up.
(4) The conduct of the witness is very suspicious and no reliance can be placed on his evidence.
6 240SCI/77 72 The High Court has considered the first two grounds as insufficient for holding the witness as unreliable.
It observed that "it is of common knowledge that generally people try to avoid becoming an informant and to be an eye witness of the occurrence for various reason".
With regard to the third and fourth grounds the High Court referred to the station diary entry (exhibit 4) and to the evidence of PW 12 and held as follows : ". it was 'by mistake that PW 9 was arrested by a constable.
P.W. 12 has stated that in fact he was a prosecution witness.
I do not find any valid reason for discrediting the evidence of P.W. 9".
From the evidence of PW 9 and PW 12 and in the context of the station diary entry (exhibit 4), the position emerges as follows : A police officer went to the house of PW 9 in the evening of April 5, 1966, to bring him to the Thana.
He was found by the Officer incharge of the Thana (PW 12) sitting at the police station at 7.30 P.M.
Now let us read the station diary entry (exhibit 4).
Before we quote the.
same we should state that this exhibit has not been correctly trans lated at page 56 Of the Paper Book.
We, therefore, our selves examined the original station diary entry and we will set out the same as correctly translated as under : "XVIII.
Entered in Thana Daily section 186 186.
That this time, Shri G.S. Chaturvedi, Town Inspector, came to Thana and took with him Mohd. Sabir Hanfi alias Funna r/o Saraiya ganj Thana Town the accused (Abhiyukta) in connection with section No. 5(4)66, Sec.
302 IPC.
On search nothing was found on his person except clothes he was wearing.
After all the rules of Hajat were observed he was kept in Hajat".
Some uncertainty was felt by counsel regarding the meaning of the word "hajat".
We have no doubt that the word "hajat" means custody in this context.
Bhargava 's Standard Illustrated Dictionary, Hindi Language, gives the meaning of Hajat, inter alia, as custody, and states thus: "Hajat mein rakhna" means "to keep a culprit in custody".
The High Court, we are afraid, does not appear to have examined the original station diary entry (exhibit 4) with care otherwise it would not have come to the conclusion that it was by mistake that PW 9 was arrested by a constable simply, from the self serving statement of PW 12.
The High Court does not even refer to the fact that a very important recit al in the original entry (exhibit 4), namely, the word "abhivukta" (accused) has been scored out and in its place the word "gavah" (witness) was substituted.
The interpola tion of the word "gavah" (witness) for "abhiyukta" (accused) appeared to be of a different writer from the original writings in the entry.
This is serious tampering with an official record in a criminal case when a man 's life is in jeopardy in a trial for murder under section 302 IPC.
We have also grave suspicion about the date of correction of the entry in exhibit 4. 73 Although the above entry shows that PW 9 was brought to the Thana by the Town Inspector, G.S. Chaturvedi, he was not even examined in the case to show why and under what circumstances PW 9 was brought by him.
This entry in the official record clearly shows that PW 9 was at that stage considered as an accused in connection with this murder case and his person was searched before confining him in the Hajat.
If he was only a witness there was no reason why his person would be searched.
and why he would be kept in the lock up "after all the rules of Hajat were observed".
The High Court completely lost sight of these serious infirmi ties in the prosecution evidence and it was absolutely impermissible to accept the statement of PW l 2 when he stated that PW 9 "had not been arrested" and that "he was only a prosecution witness.
There are some other disquieting features with regard to the evidence of PW 9.
It is not understood why he should have said that a constable brought him to the Thana whereas the entry (exhibit 4) shows that the Town Inspector, Chaturvedi, brought him to the Thana.
If, as the entry shows, he was brought by the Town Inspector, Chaturvedi, and he was kept confined in the lock up as an accused in the murder case, it is difficult to comprehend how at that very stage exhibit 4 could be considered by PW 12 as containing a wrong recital without reference to the Town Inspector.
Besides, PW 12, as he says, had taken charge of the investi gation from Sub Inspector, Gupteshwar Dayal (PW 13) at 11.00 A.M. on April 5, 1966, inspected the place of occurrence, unsuccessfully searched for the suspects Rajendra Prasad, Ram Bilas Sahani and Mohan Jha at their houses,.
examined some witnesses and then reported to the Thana at 7.30 P.M. to find PW 9, the principal witness, sitting there.
Even then he would not record the statement of PW 9.
He admitted during the course of cross .examination that when he first interrogated PW 9 at the Thana he had not recorded his statement.
He did not even record his statement when he came to the Thana from his house at 11.00 P.M. that night, These are very suspicious 'circumstances.
PW 12, however, admitted that he recorded the statement of PW 9 on the following day (6 4 1966) at 12.05 A.N., after having pro duced him before the Superintendent of Police.
PW 9 admits that he was interrogated by the Superintendent of Po1ice for twenty to twenty five minutes.
PW 12 stated in his examination in chief that he allowed PW 9 to go to his house after he had recorded his statement on April 6, 1966, at 12.05 A.N.
From the evidence of PW 12 read with the entry (exhibit '4) it does not appear that PW 9 was freed from police custody at least till his statement was recorded on April 6, 1966.
Again, the statement of PW 9 was recorded by the Magistrate under section 164, Criminal Procedure Code, on April 12, 1966, when perhaps the police had finally decided to treat him as a prosecution witness instead.
of an accused.
This conclusion is irresistible on the state of evidence to which we have referred above.
If under these circumstances the Sessions Judge held that the conduct of this witness was such as would seriously affect his credi bility, the High Court was not at all justified in taking a contrary view even without a proper analysis of the oral and documentary evidence.
When the evidence of recognition of the 74 accused by PWs 1, 10 and 4 is unreliable, no conviction can be based on the sole testimony of a witness like PW 9, on whom the first suspicion fell, without any corroboration.
When a trial court, with full view of the witnesses, acquits an accused after disbelieving direct testimony, it will be essential for the High court, in an appeal against acquittal, to clearly indicate firm and weighty grounds, from the record, for discarding the reasons of the trial court in order to be able to reach a contrary conclusion of guilt of the accused.
The High Court should be able to point out in its judgment that the trial court 's reasons are palpably and unerringly shaky and its own reasons are demonstrably cogent.
As a salutary rule of appreciation of evidence, in an.
appeal against acquittal, it is not legally sufficient that it is just possible for the High Court to take a contrary view about the credibility of witnesses but it is absolutely imperative that the High Court convincingly finds it well nigh impossible for the trial court to reject their testimony.
This is the quintessence of the jurispru dential aspect of criminal justice.
This is not a case where it can be said that the Sessions Judge came to a palpably wrong conclusion on the evidence or that the reasons for acquittal of the accused are manifestly erroneous, shocking one 's sense of justice.
The High Court was not right in interfering with the acquit tal of the accused in this case.
The appeal is, therefore, allowed.
The judgment of the High Court is set aside.
The accused shall be released from detention immediately.
P.H.P. Appeal allowed.
| IN-Abs | P.W. 9 Sabir aged about 18 year went to the house of Lala (deceased) who used to render physical training and swimming lessons to young boys and requested Lala to accom pany him to the bank of a river.
When Lala was cleaning his teeth and washing his face the appellant went there with 4 or 5 persons.
The prosecution case is that those 4 or 5 persons engaged Lala in talk and the appellant thrust a dagger on the back of Lala who died within minutes after the assault.
20 to 25 persons who were there and P.W. 9 and others ran behind the appellant.
The prosecution examined 13 witnesses out of which 4 were eye witnesses, namely, P.W. 1, 4, 9 and 10.
The Sessions Judge disbelieved all the eye witnesses, and acquitted the appellant.
The Sessions judge while acquitting the appellant took the following facts into consideration : (1) P.W. 4 who lodged the First Information Report did not name any accused and, in fact, he did not know the accused before the occur rence and could not even identify him at the test identification parade.
(2) P. Ws 1 and 10 had opportunity to see the accused before and therefore the test identification parade could not be attached much significance.
(3) P. Ws 1 and 2 are ' supposed to have seen the accused at the time when he was running away from the place of occurrence and, therefore, it was highly improbable that they would be able to retain the impression of the accused.
(4) It is highly improbable that P.W. 9 had seen the incident since he did not go to the Police Station nor even stayed at the place of occurrence till the arrival of the police.
On the other hand, he confined himself in his house until a constable came to take him to the police station.
The police in the begin ning suspected him as one of the persons who participated in the murder of the deceased.
His conduct is very suspicious.
The High Court in appeal by the State relied on the evidence of P.W. 9 as being corroborated 'by P. Ws. 1 and 10.
The High Court therefore, set aside the acquit tal and convicted the, accused under section 302 I.P.C. and sentenced him to rigorous imprisonment for life.
Allowing the appeal under section 2(a) of the Supreme Court (Enlargement of Criminal Appeal Jurisdiction) Act, 1970.
HELD: (1) When a trial court, with full view of the witnesses, acquits an accused after disbelieving direct.
testimony it will.
b.e essential for the High Court in an appeal against acquittal to clearly indicate firm and weighty grounds from the record for discarding ' the reasons of the trial court in order to be able to reach a contrary conclusion of guilt of the accused.
The High Court should be able to point out in its judgment that the trial court reasons 69 are palpably and unerringly shaky and its own reasons are demonstrably Cogent.
As a salutary rule of apprecia tion of evidence in an appeal against acquittal it is not legally sufficient that it is just possible for the High Court to take a contrary view about the credibility of witnesses but it is absolutely imperative that the High Court convincingly finds it well nigh impossible for the trial court to reject their testimony.
[74 A C] (2) This is not a case where it can be said that the Sessions Judge came to a palpably wrong conclusion on the evidence or that the reasons for acquittal of the accused are manifestly erroneous, shocking one 's sense of justice.
The High Court was not right in interfering with the acquit tal of the accused in this case.
174 D] (3) Since the Sessions Court and the High Court reached different conclusions from the same evidence this Court went through the entire evidence carefully in order to see wheth er the appreciation of the evidence by the Sessions Judge was so unreasonable and unrealistic as to entitle the High Court to interfere with the same.
[70E F]
|
Criminal Appeals Nos.
15659 of 1973.
(Appeals by special leave from the Judgment and Order dated 3 3 1971 of the Bombay High Court in Criminal Appeals Nos.1475/ 69 and 370 372 of 70).
M.N. Phadke, and M.N. Shroff, for the appellant in all appeals.
Y.S. Chitale, M. Mudgal and Rameshwar Nath, for respond ent in Crl.
A. No. 158/73.
Rameshwar Nath, for respondent in Crl.
A. No. 159/73).
The Judgment of the.
Court was delivered by CHANDRACHUD, J. These four appeals arise out of four prosecutions which were disposed of by a common judgment by the learned Presidence Magistrate, 25th Court, Mazgaon, Bombay.
The facts leading to the prosecution are not in all respects identical in the four 80 cases but it is obvious from the judgments under considera tion that the cases were heard and disposed of on the basis that the variation in the facts would not make difference to the result.
The four respondents in these appeals are shopkeepers in Bombay some run grocery shops while some deal only in oils of different varieties.
The charge against the respondents .is that they failed to display prices of 'vanaspati ' which they were selling in their shops in tinned and loose form.
Section 3 of the , 10 of 1955, empoWers the Central Government, by order, to provide for regulating or prohibiting the production, supply and distri bution or trade and commerce in any essential commodity for the purposes mentioned in sub section
(1) thereof.
Sub section (2) of s.3 specifies various matters in regard to which the Central Government may pass orders contemplated by sub s.(1).
The power conferred by s.3 was delegated by the Central Government to the State Governments in pursuance of the provision contained in section 5.
Section 7 provides for punishment for contravention of an order made under section 3.
In exercise of the powers conferred by section 3 read with section 5 of the the Government of Maharashtra issued the Maharashtra Scheduled Articles (Display and Marking of Prices) Order, 1966".
Clause 3(a) of that order provides that every dealer shall, in respect of the articles specified in Schedule I display a list of prices in the form prescribed in that schedule.
We are concerned with items 15 and 16 of the Schedule which read: "15.
Vanaspati, Tinned" and "16.
Vanaspati, Loose.
" Stated broadly, the defence of the respondents to the charge is that they were selling hydrogenated oils or vege table ghee or vegetable oils and not vanaspati '.
The learned Magistrate acquitted the respondents in all the four cases holding that even if the word 'vanaspati ' may have acquired a local meaning, it could not be said that the order used the word 'vanaspati ' to include hydrogenated oils.
Since the respondents, according to the learned Magis trate, could not be expected to know that they were bound to disclose the prices of hydrogenated oils also and since hydrogenated oils were not included in Schedule I the charge was unsustainable.
The appeals filed by the State of Maharashtra against the orders of acquittal were heard and disposed of by a common judgment dated March 3, 1971 by a learned Single Judge of the High Court.
Observing that there was considera ble force in the contention of the State Government that 'vanaspati ' would include hydrogenated oils also, the learned Judge felt that it was unnecessary to go into that question since the prosecution was not maintainable for another reason.
That reason, according to the learned Judge, was that legislative draftsmen always made a distinc tion between 'contravention ' of law and 'failure to comply or non compliance ' with it.
If the Court is called upon to decide, says the learned Judge, whether a particular contra vention is 81 an offence, it was bound to enquire whether mere non com pliance was also intended to be punished.
Guided by that principle, the learned Judge came to the conclusion that the duty to display prices was "a subsidiary matter to the prohibition which is contained in clause 4 which prohibits a dealer from selling an article at a price higher than the price displayed or from refusing to sell or from withholding from sale such articles at the price displayed or marked.
" The substance of the order was thus thought to be contained in.
clause.
4 and accordingly, the judgment proceeds; "Mere non compliance of clause 3 cannot be an offence punishable as contravention unless there is a contravention of clause 4." Since the intention was said to be to punish contraven tion of clause 4 and not of clause 3 simpIiciter, the learned Judge held that the prosecution was not maintainable and the accused were entitled to an acquittal.
These appeals by special leave are directed against the correct ness of the High Court 's judgment.
It is necessary in the larger public interest to dispel the misunderstanding regarding the true meaning and intend ment of clauses 3 and 4 of the 1966 Order.
We will there fore deal first with the reasoning of the High Court that a mere contravention of clause 3 without the contravention of clause 4 is not contravention within the meaning of section 7 of the and cannot therefore be punished.
As stated earlier, clause 3(a) of the Order of 1966 imposes an obligation on every dealer to display a list of prices of the article specified in Schedule I. Clause 4 of the Order provides that no dealer shah (a) sell or agree or offer for sale any article at a price higher than the price displayed or (b) refuse to sell or withhold from sale such articles to any person at the price displayed or marked.
We find ourselves totally unable to appreciate that there can be no contravention of clause 3(a) unless there is a contravention of clause 4 also.
The two clauses deal with different matters because whereas clause 3 imposes an obli gation on a dealer to display the prices of articles speci fied in Schedule I, clause 4 prohibits him from selling an article at a price higher than the one displayed or from refusing to sell it at the price displayed.
A contravention of clause 3(a) is full and complete by mere reason of the fact that the dealer has failed to display the prices of articles specified in Schedule I.
That contravention does not depend on the consideration whether he has charged a higher price than the price marked or whether he has refused to sell an article at the price displayed.
In other words, the first step which a dealer has to take is to display the prices of articles specified in Schedule I; if he fails to do that, he is guilty of contravention of clause 3(a) which is punishable under section 7(1) of the .
The additional obligation which the dealer has to discharge is to be ready and willing to sell the articles at ,the prices disp1ayed; failure to do so is a different and distinct contravention which also attracts the applica tion of section 7(1).
We find it impossible to subscribe to the view that clauses 3 and 4 of the Order of 1966 are so interlinked that the legislature did not intend to punish the contravention of the former unless such contravention was accompanied by a contravention of the latter provision.
The wedding of 82 the two clauses in this _fashion is entirely unwarranted.
The ground.
on which the High Court has acquitted the re spondents iS therefore untenable and we reject the reasoning in that behalf as unsustainable.
Were we satisfied that the respondents were selling `vanaspati ', tinned or loose, we would have had no hesitation in setting aside the order of acquittal and in convicting the respondents, since the non display of prices is admitted.
That raises the question whether there is evidence to hold that the respondents were dealing in 'vanaspati '.
The evidence on this question is woefully inadequate and we regret to notice that no serious attempt was made by the prosecution to establish the charge.
The articles of which the prices were not displayed were not properly inventoried, which makes it difficult to predicate that the articles bore any particular description.
Panchanamas were made of the articles but except in one case, where the panchanama was exhibited by consent, the panchas were not examined with the result that the panchanama 's remained unproved and therefore unexhibited.
In none of the cases was even a sample taken of the articles displayed for sale.
If that were done, the nature, quality and components of the goods could easily have been proved by analysing the sample chemically.
One could then have ' said with easy facility that what was being sold was 'vanaspati '.
Instead of doing what .was easy and necessary to do, the prosecution offered, as a substitute for its plain duty, the vague recollections of a Rationing Inspector and a Sub Inspector of Police as .to what was being sold by the respondents in their shops.
For illustrating how cavalierly the prosecution ap proached its task, we will take the facts of appeal No. 156 of 1973 in which the respondent is one Hansraj Depar.
The charge framed by the learned Magistrate alleges that the respondent had failed to display the price list of 'vanas pati ghee '.
The charge should have been not in respect of any type of ghee but in respect of 'vanaspati ' which is the item mentioned in Schedule I. The Rationing Inspector, K.N. Joshi (P.W. 1), stated in his evidence that the respondent had not exhibited the price of 'vanaspati ghee ' which again is beside the point.
Nothing at all, not even a sample of the articles alleged as vanaspati, was taken charge of from the shop and the witness admitted that he did not remember what variety of articles were sold in the shop and as to how many tins of what is said to be vanaspati ghee were found therein.
The other witness, Sub Inspector Kurdur (P.W. 2) does say that the respondent was selling vanaspati as also oil and that there were in his shop "3 K.O. tins of Ravi Vanaspati, 2 K.O. tins of prabhat Vanaspati and one loose tin of Malali Vanaspati".
In view of the challenge that what was being sold was not vanaspati and that the tins did not contain vanaspati within the meaning of items 15 and 16 of Schedule I, the prosecution should have led evidence to show that the tins in fact contained vanaspati in the sense in which that expression is used in the Scheduled.
The ipsc dixit of the Sub Inspector who had merely assisted the Rationing Inspector in effecting.
the raid cannot establish the charge which involves a punishment of as long 83 a term as seven years and normally of not less than three months, as provided in section 7(1)(a)(ii) of the .
The prosecution did not make any attempt to establish as to what is the true ,meaning and connotation of the expres sion 'vanaspati ' and what kind 'of articles or goods are comprehended within the scope of that expression.
The witnesses did not even say in their evidence, perfunctory as it is, that the ' word had acquired a popular meaning and was understood locally in a certain sense.
Neither the Act of 1955 nor the Order of 1966 defines the expression 'vanas pati ' and it was beside the point to say that 'vanaspati ' is defined in the Bombay Sales Tax Act and the Prevention of Food Adulteration Rules, 1965 to include hydrogenated oil.
The purpose of the Sales Tax Act is to bring within the tax not as large a number of articles as possible, that.
of the Prevention of Food Adulteration Act and the Rules thereunder is to ensure that the health of the community is not endan gered by adulterated or spurious articles of food while that of the Essential Commodities 'Act with which we are concerned in the instant case is to ensure the.
availability of essential goods to the community at a proper price.
This last Act was passed in order "to provide, in the inter ests of the general public, for the control of the: produc tion, supply and distribution of, and trade and commerce in, certain commodities".
Sub Inspector Kurdur is no expert for the purposes, of this Act and we cannot, without more, accept the dogmatic assertion made by him in one of these cases that vanaspati and hydrogenated oil "mean the same thing.
" Hydrogenation is a specialised process and is described in Encyclopaedia Britannica (1951 ed., Vol 11, p. 978) as "the treatment of a substance with hydrogen so that this combines directly with the substance treated.
The term has, however, developed a more technical and restricted sense.
It is.
now generally used to mean the treatment of an "unsaturated" organic compound with hydrogen, so as to convert it by direct addition to a "saturated" compound.
" The witness, excusably, seems unaware of this scientific sidelight and greater the ignorance, greater the dogma.
If the witness were right, it is difficult to understand why "groundnut oil, Safflower oil, Sesamen oil and Mustard seed oil" and "coconut oil" find a separate and distinct place in Schedule 1 at items 5 and 6.
, Perhaps what the witness guessed, science may show to be true but that has ' to be shown, not guessed.
In State of Bihar vs Bhagirath Sharma(1) a question arose whether motor car tyres were included within the meaning of the expression component parts and accessories of automobiles ' used in a similar order issued in 1967 by the Bihar Government under the .
It was held by this Court that it was not enough that from a broad point of view the tyres and tubes of motor cars may be considered to be covered.by the particular expression.
After considering and comparing the various items in the particular schedule it was held ' by this Court that motor car tyres were not comprehended within the expression.
It is apposite for our purpose to call at (1) [|973] 3 S.C.R. 937.
84 tention to what the Court said in that case, namely, that according to the fundamental principle of criminal jurispru dence which reflects fair play, a dealer must know with reasonable certainty and must have a fair warning as .to what his obligation is, and what act of commission or omis sion on.
his part would constitute a criminal offence.
Bearing in mind this principle the State Government ought to have expressed its intention c]early and unambiguously by including hydrogenated oils within items 15 and 16 which refer to `vanaspati '.
If that were done, a type of predica ment which arises in this case could easily have been avoid ed, and with profit to the community.
We hope this lacuna in the schedule will be rectified expeditiously.
It is to be regretted but we are left with no option save to confirm the acquittal, though for entirely different reasons.
Therefore, while setting aside the reasoning of the High Court that there can be no contravention of clause 3 unless there is also a contravention of clause 4 of the order of 1966, we dismiss.
the appeals and confirm the orders of acquittal on the ground of total lack of evidence showing that the respondents are dealers in 'vanaspati ' and that they had kept 'vanaspati ' for sale in their shops.
S.R. Appeals dis missed.
| IN-Abs | Clause 3(a) of the Maharashtra Scheduled Articles (Display and Marking of Prices) Order, 1966 issued by the Maharashtra Government in exercise of the powers conferred by section 3 read with section 5 of the Essential Commodities Act (Act 10 of 1955) provides that , 'every dealer shall in respect of .
the articles specified in Schedule I display a list of prices in the form prescribed in the Schedule", Schedule 1 lists under items 15 and 16 "Vanaspati tinned" and "Vanaspati loose" respectively.
Clause (4) of the Order provides that no dealer shall (a) sell or agree or offer for sale any article at a price higher than the price dis played or (b) refuse to sell or withhold from sale of such articles to any person at the price displayed or marked.
Section 7 of the Essential Com modities Act provides for punishment for contravention of the order made under section 3.
The four respondents, shopkeepers in Bombay some run grocery shops, while some deal only in oils of different varieties were charged for the offence of failure to dis play prices of vanaspati which they were selling in their shops in tinned 'and loose form.
The defence of the respond ents to the charge is that they were selling hydrogenated oils or vegetable ghee or vegetable oils and not "vanas pati".
The learned Magistrate acquitted the respondents and held that the charge was unsustainable because (1) Even if the word 'vanaspati ' may have acquired a local meaning, it could not be said that the order used the word 'vanaspati ' to include hydrogenated oils.
(2) Since hydrogenated oils were not included in Schedule I, the respondents could not be expected to know that they were bound to disclose the prices of hydrogenated oil.
Dismissing the States ' appeal, the High Court held, on a different reasoning that the prosecution was not maintainable since non complaiance of clause (3) of the Order 1966; cannot be an offence punisha ble as contravention unless there is a contravention of clause 4, inasmuch as the intention of the Legislature which always made a distinction between contravention of law and failure to comply or non compliance with it, was to punish contravention of clause 4 and not of clause 3 simpliciter.
Dismissing the State 's appeal, the Court, HELD: (1) Clauses 3 and 4 of the Maharashtra Scheduled (Display and Marking of Prices) Order, 1966 deal with different matters because whereas clause 3 imposes an obligation on a dealer to display the prices of articles specified in Schedule I clause 4 prohibits him from selling an article at a price higher than the one displayed or from refusing to sell it at the price displayed.
A contravention of clause 3(a) is full and complete by mere reason of the fact that the dealer has failed to display the prices of articles specified in Schedule I.
That contravention does not depend on the consideration where he has charged a higher price than the price marked or whether he has refused to sell an article at the price displayed.
In other words, the first step which a dealer has to take is to display the prices of articles specified in Schedule I; if he fails to do that, he is guilty of contravention of clause 3(a) which is punishable under section 7(1) of the .
The additional obligation which the dealer has to discharge is to be ready and willing to sell articles at the prices displayed.
Failure to do so is a different and distinct contravention which also attracts the application of section 7(1).
The view that clauses 3 and 4 of the Order 1966 are so interlinked that the Legislature did not intend.
to punish the contra 79 vention of the former unless such contravention was accompa nied by a contravention of the latter provision is not correct.
The wedding of the two clauses in this fasion is entirely unwarranted.
[81 E H 82 A] (2) The orders of acquittal, in the instant case, must be confirmed on the ground of total lack of evidence showing that the respondents are dealers in vanaspati and that they had kept vanaspati for sate in their shops.
In view of the challenge that what was being sold was not vanaspati and that the tins did not contain vanaspati within the meaning of items 15 and 16 of Schedule I, the prosecution should have led evidence to show that the tins in fact contained vanaspati in the sense in which that expression is used in the Schedule.
The mere ipse dixit of the Sub Inspector Who had merely assisted the Rationing Inspector in effecting the raid, without any inventory of the articles of which prices were not displayed, without examining the Panchas and with out any sample of the "Vanaspati" alleged to have been sold being taken, cannot establish the charge which involves a punishment of as long a term as seven years and normally of not less than three months, as provided in section 7(1)(a) (iii) of the .
[82 F H, 84 C] (3) Neither the nor the Maharashtra Scheduled Articles (Display and Marking of Prices) Order 1966 defines the expression "Vanaspati" and it was beside the point to say that "Vanaspati"is defined in the Bombay Sales Tax Act and the Prevention of Food Adulter ation Rules.
1965 to include hyarogenated oil since the purposes of these three Acts are quite different.
The prosecution has failed to establish as to what is the true meaning and connotation of the expression "Vanaspati" and what kinds of articles are comprehended within the scope of that expression.
[83 B H] (4) According to the fundamental principle of criminal jurisprudence which reflects fair play, a dealer 'must know with reasonable certainty and must have a fair warning as to what his obligation is, and what act of com mission or omission on his part would constitute a criminal offence.
The State Government ought to have expressed its intention clearly and unambiguously by including hydroge nated oil within items 15 and 16 which refer to "Vanaspati".
If that were done, a type of predicament which arises in this case could easily have been avoided with profit to the community.
[84 A B] State of Bihar vs Bhagirath Sharma, ; referred to: [The Court expressed its hope that the lacuna in the Sched ule I items 15 and 16 of the Maharashtra Scheduled Articles (Display and Marking of Prices) Order, 1966 would be recti fied expeditiously.]
|
Appeals Nos. 3, 30 and 31 of 1953.
Appeal from the Judgment and Order dated the 12th day of September, 1951, of the High Court of Judicature at Bombay in Income tax Reference No. 27 of 1951 arising out of the order dated the 23rd day of November, 1949, of the Income tax Appellate Tribunal in Income tax Appeal No. 122 of 1947 48.
B.J. M. Mackenna (D. H. Dwarka Das and Rajinder Narain, with him) for the appellant in C. A. No. 3 of 1953.
M.C. Setalvad, Attorney General for India, (G. N. Joshi and P. A. Mehta, with him) for the respondent in C. A. No. 3 and for the appellant in C. A. Nos. 30 and 31.
C.K. Daphtary, Solicitor General for India, (R. J. Kolah, N. A. Palkhiwala and 1.
N. Shroff, with him) for therespondent in C. A. No. 30, R. J. Kolah, N. A. Palkhiwala and I. N. Shroff for the respondent in C. A. No. 3 1.
316 1954.
May 14.
The judgment of Das and Bhagwati JJ. was delivered by Bhagwati J. Jagannadhadas J. delivered a separate judgment.
BHAGWATI J.
These appeals arise out of two judgments and orders of the.
High Court of Judicature at Bombay in Income tax References Nos. 23, 24 and 27 of 1951 made by the Income tax Appellate Tribunal under section 66(1) of the Indian Income tax Act and section 21 of the Excess Profits Tax Act.
E. D. Sassoon and Company Ltd., (hereinafter refered to as the Sassoons) were the Managing Agents of (1) E. D. Sassoon United Mills Ltd., under Agreements dated the 24th February, 1920, and the 2nd October, 1934, (2) Elphinstone Spinning and Weaving Mills Company Ltd. under the Agreement dated 23rd May, 1922, and (3) Apollo Mills Ltd., under the Agreement dated the 23rd May, 1922.
The Sassoons agreed to transfer their Managing Agencies of the said Companies to Messrs. Agarwal and Company, Chidambaram Mulraj and Company Ltd., and Rajputana Textile (Agencies) Ltd. respectively by letters dated the 3rd September, 1943, 16th April, 1943, and the 27th April, 1943.
The consent of the shareholders of the respective companies to the Agreements for transfer was duly obtained and the Managing Agencies were ultimately transferred to the respective transferees with effect from the 1st December, 1943, 1st June, 1943, and 1st July, 1943, respectively.
The Sassoons executed in favour of Messrs. Agarwal and Company, Chidambarain Mulraj and Company Ltd., and Rajputana Textile (Agencies) Ltd., formal deeds of assignment and transfer and received from them Rs. 57,80,000, Rs. 12,50,000 and Rs. 6,00,000 respectively on transfers of the Manaoing Agencies, and the net consideration, viz., Rs. 75,77,693, received by them on such transfers was taken by them to the "Capital Reserve Account".
The accounts of the Managing Agency commission payable by the respective Companies to the Managing Agents for the year 1943 were made up in the year 1944 and Messrs. Agarwal and Company received from the E. D. Sassoon United Mills Ltd., a sum of Rs. 27,94,504, Chidambaram Mulraj and Company Ltd., received from the Elphiiistone Weaving and 317 Spinning Mills Company Ltd., a sum of Rs. 2,37,602 and the Rajputana Textile (Agencies) Ltd., received from the Apollo Mills Ltd., a sum of Rs. 3,82,608 as and by way of such commission.
For the assessment year 1944 45 and the chargeable accounting period 1st January, 1943, to the 31st December, 1943, the original income tax and excese profits tax assessments of the Sassoons were made or the 31st May, 1945, at a total income of Rs. 46,48,483.
This income however did not include any part of the Managing Agency commission received by the transferees.
The entire amounts of the Managing Agency commission received by the transferees were assessed by the Income tax Officer for the assessment year 194546 as the income of the transferees.
The transferees appealed to the Appellate Assistant Commissioner who confirmed the orders of the Income tax Officer.
Wher the matter was taken in further appeal to the Income.
tax Appellate Tribunal, the Tribunal by its order dated the 28th December, 1949, accepted the trans.
ferees ' contention that the Managing Agency commission received by them should be apportioned on a proportionate basis and the transferees should be made liable to pay tax only on the commission earned by them during the period that they had worked as the Managing Agents of the respective Companies.
The Income tax Officer and the Excess Profits Tax.
Officer appear to have discovered that the amounts of the Managing Agency commission earned by the Sassoons prior to the dates of the respective transfers were not brought to tax and therefore issued on the 29th June, 1946, notices under section 34 of the Indian Income tax Act and section 15 of the Excess Profits Tax Act upon the Sassoons on the ground that their income from the Managing Agency had escaped assessment.
The Income tax Officer and the Excess Profits Tax Officer wanted to include in the assessable income of the Sassoons Rs. 28,51,934 made up of Rs. 25,61,629 in respect of the Managing Agency of the E. D. Sassoon United Mills Ltd., for the period of 11 months from the 1st January, 1943, to the 30th November, 1943, Rs. 99,001 in respect of the Managing Agency of the 318 Elphinstone spinning and Weaving Mills Ltd for the period of five months from the 1st January, 1943, to the 31st May, 1943, and ]Rs. 1,91,304 in respect of the Managing Agency of the Apollo Mills Ltd., for the period of six months from the 1st January, 1943, to the 30th June, 1943, contending that such Managing Agency commission had accrued to the Sassoons for services rendered so that on the dates on which the Agencies were transferred the Sassoons were entitled to such remuneration from the managed Companies in the form of commission for services rendered up to the dates of the transfers.
In spite of the objection of the Sassoons the Income tax Officer and the Excess Profits Tax Officer determined these sums as their escaped incomes and assessed them accordingly.
The Sassoons appealed to the Appellate Assistant Commissioner who dismissed the appeals and further appeals were taken to the Income tax Appellate Tribunal.
The Incometax Appellate Tribunal relied upon its order dated the 28th December, 1949, in the case of the transferees and confirmed the orders of the Appellate Assistant Com missioner.
The Tribunal was of the opinon that the Managing Agency commission was earned for services rendered and therefore it was taxed in the hands of the person who carried on the business of the Managing Agency and not in the hands of the person to whom it was assigned, and that therefore so far as the Sassoons were concerned the Managing Agency commission should be apportioned between them and their transferees.
The Sassoons applied under section 66(1) of the Indian Income tax Act and section 21 of the Excess Profits Tax Act requesting the Tribunal to draw a statement of the case and refer the question of law arising out of the orders to the High Court for its decision.
On the 12th January, 1951, the Tribunal by its statement of the case referred to the High Court one question of law as arising out of its orders, viz., " whether in the circumstances of the case was the Managing Agency commission liable to be apportioned between the assessee Company and the assignee " observing that in its opinion the question was not when the Managing Agency commission accrued but the real question was to whom it accrued.
This reference was made by the 319 Tribunal in R.A. No. 474 of 1950 51, and R.A. No. 475 of 1950 51 referring the question of law thus framed in regard to the Managing Agency commission of the D. Sassoon United Mills Ltd., and the Elphinstone Spinning and Weaving Mills Ltd., the whole of the Managing Agency commission having been paid respectively to Messrs. Agarwal and Company and to Chidambaram Mulraj and Company Ltd., in the year 1944.
This was Income tax Reference No. 27 of 1951.
The Commissioner of Income tax Excess Profits Tax, Bombay City, also required the Tribunal to refer to the High Court the question of law arising out of its order in the appeal of Messrs. Agarwal and Company in which the Tribunal had held as above that the Managing Agency comniission should be apportioned between the Sassoons and the transferees.
The statement of the case was accordingly submitted by the Tribunal on the 12th January, 1951, and the same question as above was referred to the High Court.
This reference was Income tax Reference No. 24 of 1951.
A similar application was made by the Commissioner of Income tax/Excess Profits Tax, Bombay City, for reference in the appeal of Chidambaram Mulraj and Company Ltd. The Tribunal submitted its statement of case also on the same day and referred the very same question to the High Court.
This reference was Income tax Reference No. 23 of 1951.
All these references came for hearing and final disposal before the High Court.
Income tax References Nos.
24 and 27 of 1951 were heard together and one judgment was delivered, answering the question submitted to the High Court in both the references in the affirmative.
Following upon this judgment the High Court also answered in the affirmative the question which had been referred to it by the Tribunal in Income tax Reference No. 23 of 1951.
The decision of the High Court was thus against the contentions which had been urged both by the Sassoons and the Commissioner of Income tax and the Sassoons as well as the Commissioner of Income tax obtained leave under section 66A(3) of the Indian Income tax Act and 320 section 133(1)((c) of the Constitution for filing appeals to this Court.
The appeal of the Sassoons was Civil Appeal No. 3 of 1953, and it was filed against the Commissioner of Income tax, Bombay City.
The appeals of the Commissioner of Income tax against Messrs. Agarwal and Company and Chidambaram Mulraj and Company Ltd., respectively were Civil Appeal No. 30 of 1953, and Civil Appeal No. 31 of 1953.
These appeals have come for hearing and final disposal before us.
All the appeals raise one common question of law, viz., whether in the circumstances of the case the Managing Agency commission was liable to be apportioned between the Sassoons and their respective transferees in the proportion of the services rendered as Managing Agents by each one of them and the decision turns upon the question whether any income had accrued to the Sassoons on the dates of the respective transfers of the Managing Agencies to the transferees or at any time thereafter.
This judgment will (, over our decision in all the appeals.
It will be convenient at this stage to set out the relevant clauses of the respective Managing Agency Agreements and the deeds of assignment and transfer.
The original agreement with the E.D. Sassoon United Mills Ltd., was entered into on the 24th February, 1920, by Sir Edward Sassoon and others carrying on business in partnership in the style and form of Messrs. E.D. Sassoon and Company.
The Managing Agency was transferred with the consent of the Company by E. D. Sassoon and Company to the Sassoons and another Managing Agency Agreement was executed between the Company and the Sassoons on the 2nd October, 1934, appointing and recognising the latter as the Agents of the Company from the lst January, 1921, for the residue of the period and upon the same terms and conditions set out in the original Agreement dated the 24th February, 1920.
Under clause 1 of that Agreement the Sassoons and their assigns were appointed the Agents of the Company for a period of 30 years from the date of the registration thereof and thereafter until they resigned or were removed from office by a special resolution of 321 the Company.
Udder clause.
2 the remuneration of the Sassoons and their assigns was fixed at a commission of 71/2 per cent.
per annum on the annual net profit of the Company after making all proper allowances and deductions from revenue for working expenses charge the able against profits, provided however that if in any year no such commission was earned or it fell short of Rs. 1,20,000 the Company was to pay to them a sum sufficient to make up the minimum remuneration of Rs. 1,20,000 per annum on account of such commission.
The said commission was under clause 2(d) to be due to them yearly on the 31st of March in each and every year.
during the continuance of the Agreement and was to be payable and to be paid immediately after the annual accounts of the Company had been passed by the shareholders.
Under clause 3 the Sassoons and their assigns agreed with the Company that they.
would be and act as the Agents of the Company during the said term for the said remuneration and upon and subject to the terms and conditions therein contained.
Clause 10 of the Agreement provided as under: " It shall be lawful for the said firm to assign this Agreement and the rights of the said firm hereunder to any person, firm or Company having authority by its constitution to become bound by the obligations undertaken by the said firm hereunder and upon such assignment being made and notified to the said Company the said Company shall be bound to recognise the person or firm or Company aforesaid as the Agents of the said Company in like manner as if the name of such person, firm or Company had entered into this Agreement with the said Company and the said Company shall forthwith upon demand by the said firm enter into an Agreement with the person, firm or Company aforesaid appointing such person, firm or Company the Agents of the said Company for the then residue of the term outstanding under the Agreement and with the like powers and authorities remuneration and emoluments and subject to the like terms and conditions as are herein contained.
" The letter dated the 3rd September, 1943, recording the Agreement of transfer of the Managing Agency 322 322 provided that in the event of the transaction being com pleted in its entirety as therein stated the transferees would be entitled to receive the commission payable by the Company under the Managing Agency Agreement in the profits for the calendar year 1943.
The deed of assignment and transfer executed between the Sassoons and Messrs. Agarwal and Company in pursuance of this Agreement on the 26th January, 1945, stated that the Sassoons thereby transferred to Messrs. Agarwal and Company as from the lst December, 1943, their office as Managing Agents of the Company for the unexpired residue of the term created by the said Agreement dated the 24th February, 1920, as also the said Agreements dated the 24th February, 1920, and the 2nd October, 1934, and all their rights and benefits as Managing Agents 'under the said Agreements and Messrs. Agarwal and Company agreed to be the Managing Agents of the Company from the 1 st December, J 943, in place, and stead of the Sassoons for the said unexpired residue of the term with like powers authorities remuneration and emoluments as were contained in the said Agreements.
It may be noted that even though the letter recording the Agreement of transfer expressly provided that the transferees would be entitled to receive the commission payable by the Company under the Managing Agency Agreement on the profits for the calendar year 1943 no such term was incorporated in the deed of assignment and transfer.
The original Agreement entered into by the Elphin stone Spinning and Weaving Mills Company Ltd., was with Messrs. Hajee Mahomed Hajee Esmail and Company and was dated the 24th July, 1919.
The Managing Agency was transferred with the consent of the Company by Messrs. Hajee Mahomed Hajee Esmail and Company to the Sassoons and on the 23rd May, 1922, another Managing, Agency Agreement was executed by the Company in favour of the Sassoons their successors and assigns employing them the Agents of the Com pany from the 1st February, 1922, for the unexpired 'Period of the term of 60 years commencing from the 3rd July, 1919.
Under clause 3 of the Agreement the Company was during the continuance thereof to pay to 323 the Sassoons, their successors and assigns by way of remuneration a commission of ten per cent.
on the net profits of the Company and a further sum of Rs. 1,500 per month.
Under clause 6 the Sassooris, their successors and assigns were to be at liberty to retain, reimburse and pay themselves out of the moneys of the ' Company inter alia all sums due to them for commission and otherwise.
The deed of transfer executed by the Sassoons in favour of Chidambaram Mulraj and Company Ltd., on the 2nd June, 1943, stated that the Sassooins assigned and transferred the Agreement dated the 23rd May, 1922, between themselves and the company for the unexpired residue of the term of sixty years specified therein and the full benefit and advantage thereof together with the benefit of the Agency and the office of the Agents thereunder and the right to receive the remuneration thereafter to become payable by the Company under or by virtue of the said Agreement and together with the benefit of all rights, privileges, powers and authorities given and conferred on the Sassoons there under.
It is significant to observe that before the incometax authorities as also the High Court no distinction was drawn between the provisions of these two Agency Agreements in regard to the right of the Managing Agent to remuneration thereunder and the facts in so far as they related to all the Managing Agencies were treated as similar.
The quantum also was not disputed in each case though the principle of apportionment was in dispute.
The Sassoons were assesse for this "escaped income" on the basis that they had earned the income by rendering services as Managing Agents to the Companies for the respective periods that they continued to be the Managing Agents and the transferees had rendered the services for the balance of the periods completing the full year of accounting and had earned the proportionate commission and therefore the amount of commission which the latter actually received included the Sassoons ' share of commission in respect of which they were not liable to tax but the Sassoons.
The High Court adopted this test of the services rendered by the Sassoons as well as the transferees during the whole of 325 become a debt due by the Companies to the Sassoons and it could not therefore be said to have accrued to them.
The contract of employment was an entire ' and an indivisible contract and the remuneration payable by the Companies to the Sassoons thereunder was payable at stated periods.
It was a condition precedent to the Sassoons earning the remuneration that they fulfilled the terms of their employment, completed the period for which the remuneration was payable to them and the service for the particular period was a condition precedent to their earning the remuneration for that period.
The stated period was that of a year and no remuneration was payable to the Sassoons till the end of the year and unless and until they completed the period of the year they would not be entitled to any commission or remuneration for the year, much less for the broken period.
It was therefore contended that the Sassoons had not earned any commission for the broken periods and that not having earned the same they could not have assigned it to the transferees with the result that when the transferees were paid the commission under the terms of the Managing Agency Agreements, the transferees received the same in their own right even though they had not rendered the services to the Company for the whole of the calendar year 1943.
It was contended that in any event, what.
ever be the position as between the Companies and the transferees, the Sassoons had not earned any part of the Managing Agency commission which had been paid by the Companies to the transferees and were not liable to tax in respect of the same.
It was on the other hand urged on behalf of the transferees that even though under the terms of the deeds of assignment and transfer they were paid by the Companies the whole of the Managing Agency commission for the calendar year 1943 they had merely earned the commission or remuneration for the period of actual services rendered by them to the Company and the portions of the Managing Agency commission proportionate to the services actually rendered by the Sassoons to the Companies had accrued to the Sassoons though it had been ascertained and paid to the transferees in the year 1944.
Even though the asceertainment 326 and the payment came later it made no difference which could be referred to the accrual of the income back to the period during which the income was earn Ltded and accordingly whatever amount was earned by me the Sassoons durin 'g the respective periods that they had acted as the Managing Agents of the Companies had accrued to them during those periods and was received by the transferees only by virtue of the respective deeds of assignment and transfer.
Having been received by the transferees by virtue of the assignment those portions of the Managing Agency commission received by them none the less constituted income which had accrued to the Sassoons and were liable to tax against the Sassoons the assignors and not against them the assignees.
The position of an employee under an entire contract of service has been thus enunciated in Halsbury 's Laws of England Hailsham Edition Vol. 22, page 133, paragraph 221: "When the contract of service is an entire contract, providing for payment on the completion of a definite period of service, or of a definite piece of work, it is a con dition precedent to the recovery of any salary or wages in respect thereof that the service or duty shall be completely performed, unless the employer so alters the contract as to entitle the servant to regard it at an end, in which case the whole sum payable under the contract becomes due, or unless there is a usage that the servant is entitled to wages in proportion to the time actually served.
But when the contract,, though in respect of work terminating at a particular time, is to be construed as providing that remuneration shall accrue due and become vested at stated periods, such remuneration constitutes a, debt recoverable at the end of each such period of service.
" Section 219 of the Indian Contract Act also provides that in the absence of any special contract, payment for the performance of any act is not due to the agent until the completion of such act.
Our attention was drawn in this connection to the case of Boston Deep Sea Fishing and Ice Co. vs Ansell(1).
327 In that case the defendant was employed as the managing director of the company for 5 years, at a yearly salary.
He was dismissed for misconduct before the expiration of the current year and claimed against the company damages for wrongful dismissal and the salary for the quarter which had expired before his dismissal.
His claim for salary was disallowed and it was, held that having been dismissed for misconduct he was not entitled to any part of the unpaid salary for the current year of his service.
Lord Justice Cotton at page 360 posed the question as under: "Can he sue for a proportionate part of the salary for the current year?. . .
What he would have been entitled to if he continued in their service until the end of the year would have been pound 8OO, but in my; opinion that would give him no right of action until the year was completed." Lord Justice Bowen observed at page 364: "As regards his, current salary it is clear and established beyond all doubt by authorities. . . that the servant who is dismissed for wrongful behaviour cannot recover his current salary, that is to say, he cannot recover salary which is not due and payable at the time of his dismissal but which is only to accrue due and become payable at some later date, and on the condition that he had fulfilled his duty as a faithful servant down to that later date.
" The case of Moriarty vs Regents Garage & Engineering Company Limited(1) was particularly relied upon by the learned counsel for the Sassoona.
No question of dismissal or removal for misconduct arose in that case, but the director whose remuneration was fixed "at the rate of pound150 per annum" ceased to be a director on settlement of disputes between himself and the company the director agreeing to accept payment of all money due to him upon his debentures and the debentures being paid off in the middle of the year.
The director sued the company to recover a proportionate part of the pound 150 as his fees for the broken period.
The Deputy County Court Judge gave judgment for the company, (1) (1921] 2 K.B. 766, 328 holding that the director was not entitled to remuneraion for a broken part of a year.
The Divisional Court versed the decision of the Deputy County Court judge and there was a further appeal.
It was held by the Court of Appeal that neither under the Agreement or under the articles was the director entitled to the he claimed.
The question of the applicability of the Apportionment Act was sought to be raised before the appeal Court but was not allowed to be raised in appeal as it had not been done in the County Court.
arriving at this decision Lord Sterndale M.R. stated the position as follows at page 774: "it seems to me that upon the construction of the agreement it must fail.
It is a payment per annum, a payment for a year, And unless he serves for the year the cannot get the payment.
" The decision in Swabey vs Port Darwin Gold Mining to.(1), had been cited before the Court of Appeal in support of the proposition that the director was in such cases entitled to his proportionate remuneration for the broken period.
The Learned Master of the Rolls however observed at page 777: "There is nothing is Swabey vs Port Darwin Gold Mining Co.(1) in my opinion to oblige us to hold that wherever there is power, mutual or one sided, to terminate an agreement in the middle of the year, there must, as a matter of necessity, be inferred a right to rceive payment from day to day, and receive payment for the broken period.
I do not think in this case there re circumstances which oblige me or induce me to raw that inference.
" These authorities as well as the cases of Mapleson vs years(2), and Sanders vs Whittle(3), enunciate the well stablished principle that wages and salaries are not apportionable upon the sudden cessation of a contract of service, which is stated to be still the law in Batt on the Law of Master and Servant, 4th Edn., at page 209 until a hardy litigant successfully seeks in a higher Court a confirmation of the view of McCardie J. expressed in Moriarty 's case(4) as regards the injustice (I) I Meg.
(3) (2) (4) , 329 of denying the benefit of the Apportionment Act to a man who may have been guilty of misconduct.
This rule applies not only when there is a sudden ' cessation of a contract of service by the unilateral act of the master or the servant but also when,, there is such cessation by mutual consent of the parties.
In the former event the servant would be Part deprived of his proportionate wages by his own act or default or he would be able to sue his master for damages for wrongful dismissal, but no claim for proportionate salary or wages would survive under the contract of service.
In the latter event the consensus of opinion between the master and the servant would be sufficient to terminate the contract of service and no claim for proportionate wages or salary would survive unless it was made an express term of the Agreement thus arrived at between the parties.
In either event there would be no question of the servant claiming from his master wages or salary for the broken period.
Learned counsel for the transferees attempted to throw doubt on the correctness of the rule as enunciated above by citing a passage from Palmer 's Company Precedents 16th Edition Vol. 1, page 583, where the learned author discusses the question of apportionment in the case of director 's remuneration payable at so much per annum: "Where the clause provides that a director is to be paid so much per annum, the words 'at the rate of ' being omitted, and he vacates office before the end of a current year, the question whether he can maintain a claim for an apportioned part of the remuneration for that year has given rise to some difference of opinion.
In Swabey vs Port Darwin Gold Mining Company(1), in the Court of Appeal, the article was as follows, and not as stated in the report: 'The directors shall each receive by way of remuneration out of the funds of the Company in each year the sum of pound 2OO, and the chairman in addition pound 100 per annum. ' The words at the rate of ' were not present (as appears from the articles registered 'at Somerset House).
A director resigned in the course of a current year, (i) (1889) I Meg.
43 330 and was held entitled to an apportioned part of the remuneration for that year.
But in Salton vs New Beeston Cycle Co.(1), where the article provided that 'the directors shall ' be entittled to receive by way of remuneration in each year pound 5,000, Cozens Hardy J. held that a director who vacated office before the end of a current year was not entitled to any apportionment.
This case was followed by Wright J. in McConnell 's Claim(2), the words being ,each director shall be paid the sum of pound 300 per annum ' and by Bruce J. in Inman vs Acroyd and Bert(1).
See also Central de Kapp Gold Mines(4).
In these four cases the Court no doubt proceeded on the assumption that the report of Swabey 's case(5) was correct,, and that the article in that case contained the words 'at the rate of. ' Certainly Lord Alverstone C. J. acted on this assumption in Harrison vs British Mutoscope, etc.
, Co.(,).
There the words were 'the sum of E 1,500 per annum.
In 'the meantime Inman vs Acroyd(7) had been taken to the Court of Appeal, and affirmed, but on the ground that it was by the articles left to the directors, to apportion the remuneration at the end of each year.
This case, therefore, really turned on the construction of the particular article, and as it was carefully distinguished from Swabey 's case(5), the authority of that case, on an article omitting the Words 'at the rate of, ' remains unshaken.
" Swabey 's case(5) was referred to by Lord Sterndale M. R. at page 777 in Moriarty case(3) and the learned Master of the Rolls stated that there was nothing in that case which would oblige the Court to hold that wherever there was power, mutual or one sided, to terminate an Agreement in the middle of the year, there must, as a matter of necessity, be inferred a right to receive payment from.
day to day, and receive payment for the broken period.
(i) [1898] I Ch.
775 (2) [1901] I Ch. 728.
(3) ; on appeal [1901] I Q.B., 613.
(4) , 235; J.).
(5) (1889) I Meg.
(6) Times, Nov. 10, (7) [1901] I Q.B. 613.
(8) [1921] 2 H.B,D. 766.
331 It really depended on the circumstances of each case whether to draw that inference or not.
In any event we have not before us under the terms of the Managing Agency Agreements any provision for payment of remuneration " at the rate of " any particular sum a, year and the ratio of the four cases referred to by Palmer in the passage quoted above as also the observations of Lord Sterndale M. R. at page 777 in Moriarty 's case (1) set out above are sufficient to enable us to hold that when the remuneration or commission is ex pressed at so much per annum without anything more it would amount in law to a stipulation for the payment of remuneration per year and the servant would not be entitled to get any remuneration unless and until he has completely performed his contract and such performance would be a condition precedent to the recovery of any wages or salary for that definite period of service.
That would be the position even if the remuneration was to accrue due and becomes vested at stated periods and unless the servant performed the condition and fulfilled his duty as a faithful servant down to that stipulated date or the stated period no salary would accrue due and become payable to him until at the end of such period of service.
We shall now examine the terms of the Managing Agency Agreements with a view to see whether the Sassoons were entitled thereunder to remuneration or commission for the broken periods.
The Agreement between the E. D. Sassoon United Mills Ltd. and the Managing Agents was for a fixed period of 30 years from the date of the registration of the Company and thereafter until they resigned or were removed from their office by a special resolution of the Company and the appointment of the firm of E. D .
Sassoon and Company and their assigns was for the whole period.
E. D. Sassoon and Company and their assigns covenanted and agreed with the Company to be and act as such Agents for the remuneration and upon and subject to the terms and conditions therein contained.
It was lawful for them to assign the agreement and their rights thereunder to any person, firm or 'Company (1) [1921) 2 K.B.D. 766.
332 having authority by its constitution to become bound by these obligations and upon such assignment being made and notified to the Company, the Company was bound to recognise such person, firm or Company as the Agents of the Company in like manner as if the name of such person, firm or Company had appeared in these presents in lieu of the names of the partners of E. D. Sassoon and Company and as if such person, firm or Company had entered into the Agreement with the Company and the Company agreed upon demand to enter into an Agreement appointing such person, firm or Company the Agents of the Company for the then residue of the term outstanding under the Agreement and with the like powers and authorities remuneration and emoluments and subject to the like terms and.
conditions as therein contained.
These provisions of the Agreement showed the continuity of the Managing Agents who were employed as the Agents of the Company for this specified period and under the terms and conditions therein recorded.
The new or the substituted Managing Agents were treated as if they had entered into the Agreement with the Company and their name had appeared in the original Agreement in lieu of E. D. Sassoon and Company who were in the first instance appointed the Agents of the company These Managing Agents described as such were to be paid the remuneration specified in clause 2(a) of the Agreement which was a commission of 71 per cent per annum on the annual net profits of the Company with a stipulation in regard to the minimum remuneration of Rs. 1,20,000 per annum.
Clause 2(d) specified when the said commission was to become due to the Managing Agents and it provided that the commission was to be due to them yearly on the 31st March in each and every year during the continuance of the Agreement.
The commission was thus an annual payment calculated upon the annual net profits of the Company and was to be due to the Managing Agents yearly on the 31st March in each and every year.
Unless and until the annual net profits of the Company were determined the 71/2 per cent.
commission could not be ascertained but the sum none the less became due on 333 the 31st March in each and every year following the close of the accounting year of the Company.
The ' amount of such commission did not become a debt ' owing by the Company to the Managing Agents until the 31st March in each and every year and was to be paid immediately after the annual accounts of the Company had been passed by the shareholders.
The postponement of the date of payment, in this manner however did not prevent the amount of the commission thus ascertained becoming due to the Managing Agents and it was on the 31st March in each and every year that the amount of commission thus calculated at 71 per cent.
# per annum on the annual net profits of the Company became due by the Company to the Managing Agents.
Until and unless the accounting year of the Company had gone by and the Managing Agents had served the Company as their Agents for the full period no part of the Managing Agency commission which was payable per year in the manner aforesaid could become due to them and the performance of the service, for the year was a condition precedent to the Managing Agents being entitled to any part of the remuneration, or commission for the accounting year of the Company.
The Managing Agency Agreement therefore was an entire and indivisible contract stipulating a payment of remuneration or commission per year and enjoined upon the Managing Agents the duty and obligation of rendering the services to the Company for the whole year by way of condition precedent to their earning any remuneration or commission for the particular accounting year.
It was however urged that clause 10 of the Managing Agency Agreement itself contemplated a broken period, because there was nothing therein to prevent the Managing Agents from assigning the Agreement and their rights thereunder at any time in a particular year during the continuance of the Agreement.
If the Managing Agents therefore could assign the Agreement and their rights thereunder it could not be suggested that neither the transferors who could not complete the year of service nor the transferees who had also not rendered the services as the Managing Agents for the 334 whole of the accounting year could earn any remuneration or commission which would be payable to the managing Agents only if they rendered the services to the Company for the whole year.
It therefore followed as a necessary corollary that both the transferors and the transferees would be paid their remuneration or commission and both would be entitled to the proportionate commission for the respective periods during which they rendered services as Managing Agents to the Company.
This argument however ignores the fact that whatever be the position as between the transferor and the transferee, whatever be their arrangements inter, se, whatever be the periods of the year during which they might have served the Company in their capacity as the Managing Agents, the Managing Agents as described in the recitals and clauses I and 3 of the Managing Agency Agreement were one entity and no severance of I such periods of service during the course of a particular year was ever contemplated under the Agreement.
On assignment, the transferee became the Managing Agent as if its name had been inserted in the Managing Agency Agreement from the beginning.
For the future period the transferor effaced itself and the transferee took the place of the transferor and preserved the continuity of the Managing Agency so that whoever happened to satisfy the description of the Managing Agents at the time when the commission for the accounting year became due to the Managing Agents thus described, which was expressly stated to be due yearly on the 31st March in each and every year, became entitled to receive the debt which thus became due and to the payment thereof after the annual accounts of the Company had been passed by the shareholders.
The stipulation for the Company executing in favour of the new or the substituted Managing Agents an Agreement appointing them the Agents of the Company for the then residue of the term outstanding under the Agreement was merely consequential upon the earlier provision therein contained which stated in so many terms that the Company was bound to recognise such new or substituted Managing Agents in like manner as if their names had appeared in the 335 mid Agreement in lieu of the partners of E.D. Sassoon and Company and as if they had entered into the Agreement with the Company.
The rights of such new or substituted.
Agents were created by the very terms of clause 10 of the Agreement and the formal embodiment thereof in the fresh Agreement to be entered into by the Company with them merely confirmed the rights which had already been created in them under that clause.
It was further pointed out that at the end of the Managing Agency Agreement if not earlier, during the continuance thereof there would certainly be a broken period because the period of 30 years stipulated in clause I of the Agreement would certainly expire on some date in February, 1950.
The calendar year would expire on the 31st December, 1949, and there would of necessity be between the date of the expiration of the calendar year and the date of the expiration of the term of the agreement a period of about 2 months which would certainly be a broken period and not a full year.
What would happen however on the expiration of the period of the Managing Agency Agreement cannot affect the construction of the relevant terms of the Agreement which have reference to a year or years during the continuance of the Agreement.
It is unnecessary to speculate as to whether by reason of the fact that E. D. Sassoon and Company must have received the full year 's remuneration or commission at the end of the first accounting year of the Company ending with the 31st December, 1920, they might just as well give up, if need be, their remuneration or commission for the last two months on the expiration of the term of the Managing Agency Agreement.
We see nothing in the terms of the Managing Agency Agreement which would compel or induce us to hold that there must as a matter of necessity be inferred therefrom a right to receive remuneration or commission for a broken period.
Learned counsel for Chidambaram Mulraj and Company Ltd. however sought to distinguish the terms of the Managing Agency Agreement of the Elphinstone Spinning and Weaving Company Ltd. from those of the 336 Managing Agency Agreement of the E. D. Sassoon United Mills Company Ltd. even though as stated 'before no such distinction was made either before the income tax authorities or the High Court.
He contended that there was nothing in the Agency Agreement with the Elphinstone Spinning and Weaving Company Ltd. which corresponded with clauses 2(a), 2(d) and clause 10 of the Agreement between the E. D. Sassoon United Mills and their Managing Agents.
The only term which was to be found in the Agency Agreement of the Elphinstone Spinning and Weaving Company Ltd. was that the Company was during the continuance of the Agreement to pay to the Managing Agents who were there described as E. D. Sassoon and Company Ltd. their successors and their assigns by way of remuneration a commission of ten per cent.
on the net profits of the Company and a further sum of Rs. 1,500 per month.
There was besides clause 6 of the Agreement which conferred upon the Managing Agents the right of retainer, and reimbursement in connection inter alia with all sums due to them for commission or otherwise.
These terms it was submitted did not constitute the payment of remuneration or commission a payment per annum and it was not possible to argue that the Sassoons were not entitled to any remuneration or commission for a broken period thereunder.
It may however be observed that the Managing Agency Agreement with which we are here concerned was the Agreement dated the 23rd May, 1922, between the Company and the Sassoons and the Managing Agents there described were E. D. Sassoon and Company Ltd on behalf of themselves, their successors and assigns.
Clause 1 of the Agreement employed the Sassoons, their successors and assigns the Agents of the Company from the 1 st February, 1,922, for the unexpired portion of the term of 60 years commencing from the 3rd July, 1919, and it was these Managing Agents thus described, viz., the Sassoons, their successors and assigns, who were during the continuance of the Agreement to be remunerated by a commission of 10 per cent.
on the net profits of the Company and the Company agreed to pay such commission to them.
The 337 right of retainer and reimbursement reserved under clause 6 of the Agreement would not carry the transferees any further because it was in respect of all sums due to them for commission or otherwise.
Unless and until the commission became due to them they had no such right of retainer.
It would still have to be determined whether any sum became due to them by way of such commission.
Whether any commission became due to them would depend upon the construction of clause 3 of the Agreement and under that clause the commission calculated at 10 per cent.
of the net profits of the Company was to become due to them and was to be paid by the Company to them during the continuance of the Agreement.
We have got to determine what is the full implication of this clause of the Agreement, "the commission of 10 per cent.
on the net profits of the Company.
" The word "profits" has a welldefined legal meaning as was observed by Lord Justice Fletcher Moulton at page 98 in The Spanish Prospect ing Company Limited(1): "The word 'Profits ' has in my opinion a welldefined legal meaning, and this meaning coincides with the fundamental conception of profits in general parlance, although in mercantile phraseology the word may at times bear meanings indicated by the special context which deviate in some respects from this fundamental signification. 'Profits ' implies a comparison between the state of a business at two specific dates usually separated by an interval of a year.
The fundamental meaning is the amount of gain made by the the business during the year.
This can only be ascertained by a comparison of the assets of the business at the two dates.
" This concept of the term was also adopted by Mr. Justice Mahajan, as he then was, in Commissioner of Income tax, Bombay vs Ahmedbhai Umarbhai and Company, Bombay(2): "Profits of a trade or business are what is gained by the business.
The term implies a comparison between the state of business at two specific dates separated by, an interval of a year and the fundamental (i) [1911] i Ch. D. 92.
44 (2) [1950] i8 I.T.R. 472 at page 5o2.
338 meaning is the amount of gain made by the business during the year and can only be ascertained by a comparison of the assets of the business at the two dates, the increase shown at a later date compared to the ,earlier date represents the profits of the business.
" It was urged before us that there was nothing in the terms of the Agreement which provided that the profits were to be ascertained at the end of every year, and there was nothing to prevent the Company if it so chose from casting its accounts and ascertaining the net profits half yearly or quarterly or even every month by preparing trial balance sheets in that manner.
Theoretically speaking all this may be possible but we have got to construe the Agreements arrived at between business people in a, business sense.
Ordinarily in the case of business or trading concerns accounts of profits are not made except at stated intervals usually separated by a year.
Particularly in the case of limited Companies incorporated under the Indian Companies Act the accounts are cast every year and the net profits earned by the Company are ascertained every year both for the declaration of dividends and for submitting the returns to the income tax authorities.
Under section 131 (I)of the Indian Companies Act of 1913 every Company was required once at least in every year and at intervals of not more than 15 months to cause the accounts to be balanced and a balance sheet to be prepared which was called the annual balance sheet.
The first schedule to the Companies Act which contained the regulations by which unless excluded the affairs of the Company were to be governed provided under Regulation 106 the preparation once at least every year of the profit and loss account for the period and under the Regulation 108 for the balance sheet to be made out in every year and laid before the Company in general meeting.
Having regard to the course of business which prevailed in this Company also so far as it is evidenced by the fact that the account of the Managing Agency commission was made up for the calendar year 1943 and was paid to Chidambaram Mulraj and Company Ltd., who became the Managing Agents in place and stead of the Sasssoons in the year 1944, it is reasonable to assume that the 339 accounts of this Company were throughout made up at the end of every calendar year.
The profit and loss of the Company was then ascertained and a commission of 10 per cent.
on the net profits of the Company was paid to the Managing Agents of the Company for the, time being.
In the case of limited Companies like those before us we would be justified in presuming that normally the accounts are made up every year and even though there may be a theoretical possibility of the accounts being cast half yearly or quarterly or even every month no such procedure would be adopted by the Company.
In any event it would be absurd to suggest that the profits of the Company could accrue from day to day or even from month to month.
The working of the Company from day to day could certainly not indicate any profit or loss.
Even the working of the Company from month to month could not be taken as a reliable guide for this purpose.
If the profit or loss has got to be ascertained by a comparison of the assets at two stated periods, the most businesslike way of doing it would be to do so at stated intervals of one year and that would be a reasonable period to be adopted for the purpose.
In the case of large business concerns like these the working of the Company during a particular month may show profits and the working in a particular month may show loss.
The working during the earlier part of the year may show profit or loss and working in the later part of the year may show loss or profit which would go to counterbalance the profit or loss as the case may be in the earlier part of the year.
It may as well happen that the profits which the Company may appear to have earned during the earlier months of the year or even during the II months of the year may be considerably reduced or even wiped out during the later months or the last months of the year by reason of some catastrophe or unforeseen events.
It would be therefore reasonable to assume that the profit or loss as the case may be should be determined at the end of every year so that on such calculation of net profits the Managing Agents may be paid their remuneration or commission at the percentage stipulated in the Managing Agency Agreement and 340 the shareholders also be paid dividends out of the net profits of the Company.
We are sure that these were the considerations which weighed with the Managing Agents of this Company in not taking up any such contention before the Income tax authorities and the High Court that the remuneration or commission payable to them under the Managing Agency Agreement was not payable per year and the contention put forward before us in this behalf was a clear after thought.
We would be therefore justified in treating the terms and conditions in regard to the payment of Managing Agency Commission in both these Managing Agency Agreements as on a par with each other stipulating for such payment per year on the net annual profits of the Companies.
If this be the true construction of the Managing Agency Agreements it follows that the contract of service between the Companies and the Managing Agents was entire and indivisible, that the remuneration or commission became due by the Companies to the Managing Agents only on completion of a definite period of service and at stated periods, that it was a condition precedent to the recovery of any wages or salary in respect thereof that the service or duty should be completely performed, that such remuneration constituted a debt only at the end of each such period of service and that no remuneration or commission was payable to the Managing Agents for broken periods.
The question still remains whether the remuneration for the broken periods accrued to the Sassoons and the contention which was strenuously urged before us on behalf of the transferees was that the Sassoons had rendered the services in terms of the Managing Agency Agreements to the respective Companies, that the services thus rendered were the source of income and whatever income could be attributed to those services was earned by the Sassoons and accrued to them in the chargeable accounting period though it was ascertained and paid in the year 1944 to the transferees.
The word "earned" has not been used in section 4 of the Income tax Act.
The section talks of " income, 341 profits and gains " from whatever source derived which (a) are received by or on behalf of the assessee, or (b) accrue or arise to the assessee in the taxable territories during the chargeable accounting period.
Neither the word " income " nor the words "is received," "accrues" and " arises " have been defined in the Act.
The Privy Council in Commissioner of Income tax, Bengal vs Shau Wallace & Co.(1) attempted a definition of the term income " in the words following : " Income, their Lordships think, in the Indian Income tax Act, connotes a periodical monetary return ' coming in ' with some sort of regularity, or expected regularity from definite sources.
The source is not necessarily one which is expected to be continuously productive, but it must be one whose object is the production of a definite return excluding anything in the nature of a mere windfall." Mukerji J. has defined these terms in Rogers Pyatt Shellac & Co. vs Secretary of State for India(2): " Now what is income? The term is nowhere defined in the Act.
In the absence of a statutory definition we must take its ordinary dictionary meaning that which comes in as the periodical produce of one 's work, business, lands or investments (considered in reference to its amount and commonly expressed in terms of money) ; annual or periodical receipts accruing to a person or corporation " (Oxford Dictionary).
The word clearly implies the idea of receipt, actual or constructive.
The policy of the Act is to make the amount taxable when it is paid or received either actually or constructively.
i Accrues, ' arises ' and I is received ' are three distinct terms.
So far as receiving of income is concerned there can be no difficulty; it conveys a clear and definite meaning, and I can think of no expression which makes its meaning plainer than the word ' receiving ' itself The words I accrue and arise also are not defined in the Act.
The ordinary dictionary meanings of these words have got to be taken as the meanings attaching to them.
Accruing ' is synonymous with 'arising ' in the sense (i) I.L.R. at p. 1352.
(2) at P. 371 342 of springing as a natural growth or result.
The three Expressions accrues, I arises ' and I is received ' having been used in the section, strictly speaking 'accrues ' should hot be taken as synonymous with I arises ' but on the distinct sense of growing up by way of addition for increase or as an accession or advantage; while the word I arises ' means comes into existence or notice or presents itself.
The former connotes the idea of a growth or accumulation and the latter of the growth or accumulation with a tangible shape so as to be receivable.
It is difficult to say that this distinction has been throughout maintained in the Act and perhaps the two words seem to denote the same idea or ideas very similar, and the difference only lies in this that one is more appropriate than the other when applied to particular cases.
It is clear, however, as pointed out by Fry L.J. in Colquhoun vs Brooks(1), [this part of the decision not having been affected by the reversal of the decision by the House of Lords(2)] that both the words are used in contradistinction to the word " receive " and indicate a right to receive.
They represent a stage anterior to the point of time when the income becomes receivable and connote a character of the income which is more or less inchoate.
One other matter need be referred to in connection with the section.
What is sought to be taxed must be income and it cannot be taxed unless it has arrived at a stage when it can be called 'income '.
" The observations of Lord Justice Fry quoted above by Mukerji J. were made in Colquhoun vs Brooks(1) while construing the provisions of 16 and 17 Victoria Chapter 34 section 2 schedule 'D '.
The words to be construed there were ' profits or gains, arising or accruing ' and it was observed by Lord Justice Fry at page 59: " In the first place, I would observe that the tax is in respect of 'profits or gains arising or accruing.
' I cannot read those words as meaning I received by. ' If the enactment were limited to profits and gains 'received (i) at P. 59.
(2) (I889) 14 APP.
493. 343 by ' the person to be charged, that limitation would apply as much to all Her Majesty 's subjects as to foreigners residing in this country.
The result ' would be that no income tax would be payable upon profits 'which accrued but which were not actually received, although profits might have been earned in the kingdom and might have accrued in the kingdom.
I think, therefore, that the words I arising or accruing are general words descriptive of a right to receive profits.
" To the same effect are the observations of Satyanarayana Rao J. in Commissioner of Income tax, Madras vs Anamallais Timber Trust Ltd.(1) and Mukherjea J. in Commissioner of Income tax, Bombay vs Ahmedbhai Umarbhai & Co., Bombay(2) where this passage from the judgment of Mukerji J. in Roqers Pyatt Shellac & Co. vs Secretary of State for India(3), is approved and adopted.
It is clear therefore that income may accrue to an assesee without the actual receipt of the same.
If the assessee acquires a right to receive the income, the income can be said to have accrued to him though it may be received later on its being ascertained.
The basic conception is that he must have acquired a right to receive the income.
There must be a debt owed to him by somebody.
There must be as is otherwise expressed debitum in presenti, solvendum in futuro; See W. section Try Ltd. vs Johnson (Inspector of Taxes)(4), and Webb vs Stenton and Others, Garnishees(5).
Unless and until there is created in favour of the assessee a debt due by somebody it cannot be said that he has acquired a right to receive the income or that income has accrued to him.
The word "earned" even though it does not appear in section 4 of the Act has been very often used in the course of the judgments by learned Judges both in the High Courts as well as the Supreme Court.
(Vide Commissioner of Income tax, Bombay vs Ahmedbhai Umarbhai & Co., Bombay(6), and Commissioner of Income tax, Madras vs K. R. M. T. T. Thiagaraja Chetty & Co.(7).
(i) 18 I.T.R.1 333 at P. 342.
(5) II Q.B.D. 5i8 at pp.
522 and 527 ' (2) [19501] S.C. R. 335 at P. 389.
(6) [1950] S.C.R. 335 at P. 364.
(3) I I.T.C. 363 at P. 372.
(7) at P. 533.
(4) [1946] I A.E.R. 532 at P. 539.
344 It has also been used by the Judicial Committee of the Privy Council in Commissioners of Taxation vs Kirk(1).
The concept however cannot be divorced from that of income accruing to the assessee.
If income has accrured to the assessee it is certainly earned by him in the sense that he has contributed to its production or the parenthood of the income can be traced to him.
But in order that the income can be said to have accrued to or earned by the assessee it is not only necessary that the assessee must have contributed to its accruing or arising by rendering services or otherwise but he must have created a debt in his favour.
A debt must have come into existence and he must have acquired a right to receive the payment.
Unless and until his contribution or parenthood is effective in bringing into existence a debt or a right to receive the payment or in other words a debitum in presenti, solvendum in futuro it cannot be said that any income has accrued to him.
The mere expression "earned" in the sense of rendering the services etc., by itself is of no avail.
If therefore on the construction of the Managing Agency Agreements we cannot come to the conclusion that the Sassoons had created any debt in their favour or had acquired a right to receive the payments from the Companies as at the date of the transfers of the Managing Agencies in favour of the transferees no income can be said to have accrued to them.
They had no doubt rendered services as Managing Agents of the Companies for the broken periods.
But unless and until they completed their performance, viz., the completion of the definite period of service of a year which was a condition precedent to their being entitled to receive the remuneration or commission stipulated thereunder, no debt payable by the Companies was created in their favour and they had no right to receive any payment from the Companies.
No remuneration or commission could therefore be said to have accrued to them at the dates of the respective transfers.
It was however urged that even though no income can be said to have accrued to the Sassoons at the date of the respective transfers which could be the (1) at p. 592, 345 subject matter of any assignment by them in favour of the transferees, the moment the remuneration or commission was ascertained at the end of the calendar year and became a debt due to the Managing Agents under the terms of the Managing Agency Agreements it could be referred back to the period in which it was earned and the portions of the remuneration or commission which were earned by the Sassoons during the broken period could certainly then be said to be the income which had accrued to them during the chargeable accounting period.
Reliance was placed is support of this position on Commissioners of Inland Revenue vs Gardner Mountain & D ' Ambrumenil, Ltd.(1).
The assessee in that case carried on inter alia the business of underwriting Agents, and entered into Agreements with certain underwriters at Lloyds under which it was entitled to receive as remuneration for its services in conducting the Agency, commissions on the net profits of each year 's underwriting.
The Agreements provided that " accounts should be kept for the period ending 31st December in each year and that each such account shall be made up and balanced at the end of the second clear year from the expiration of the period or year to which it relates and the amount then remaining to the credit of the account shall be taken to represent the amount of the net profit of the period or year to which it relates and the commission payable to the Company shall be calculated and paid thereon.
" The accounts for the underwriting done in the calendar year 1936 were made up at the end of 1938 and the question that arose was whether the assessee was liable to additional assessment in respect of the commission on under writer 's profits from the policies underwritten in the calendar year 1936 in the year in which the policies were underwritten or in the year when the accounts were thus made up.
The assessee contended that the contracts into which it entered were executory contracts, under which its services were not completed or paid for, as regards commission, until the conclusion of the relevant account; that the profit in the form of commission was (I) 45 346.
not ascertainable or earned, and did not arise, until that time and that the additional assessment which was made in the year in which the policies were underwritten should accordingly be discharged.
The Special ,Commissioner allowed the assessee 's contention and, discharged the additional assessment.
The decision of the Special Commissioners was confirmed on appeal by Macnaghten J. in the King 's Bench Division of the High Court.
The Court of Appeal however reversed this decision and a further appeal was taken by the assessee to the House of Lords.
The House of Lords held that on the true construction of the Agreements, the commissions in question were earned by the assessee in the year in which the policies were underwritten, and must be brought into account accordingly and confirmed the decision of the Court of Appeal.
It may be noted that the charge was on profits arising in each chargeable accounting period and the profits were to be taken to be the actual profits arising in the chargeable accounting period.
The ratio of the decision was that the commission paid was remuneration for services completely performed in the particular year, that, the assessee had at the end of the year done everything it had to do to earn it and that it was remuneration for work done and completely done in the particular year though it was ascertained and paid two years later.
Viscount Simon in his speech at page 93 stated that the assessee had acquired a legal right to be paid in futuro and that the principle was to refer back to the year in which it was earned so far as possible remuneration subsequently received even though it could only be precisely calculated.
afterwards.
Lord Wright in his speech at page 94 said that it was necessary to determine in what year the Commission was earned, or in the language of the Act, in what year the assessee 's profits arose and observed at page 96 : "I agree with the Court of Appeal in thinking that the necessary conclusion from that must be that the right to the commission is treated as a vested right which has accrued at the time when the risk was underwritten, It has then been earned, though the profits resulting from the insurance cannot be then 347 ascertained, but in practice are not ascertained until the end of two years beyond the date of underwriting.
The right is vested, though its valuation is postponed, ' and is not merely postponed but depends on all the contingencies which, are inevitable in any insurance risk, losses which may or may not happen, returns of premium, premiums to be arranged for additional risks, reinsurance, and the whole catalogue of uncertain future factors.
All these have to be brought into account according to ordinary commercial practice and understanding.
But the delays and difficulties which there may be in any particular case, however they may affect the profit, do not affect the right for what it eventually proves to be worth.
" Lord Simonds in his speech at page 110 stated:" It is clear to me that the commission is wholly earned in year 1 in respect of the profits of that year 's underwriting.
If so, I should have thought that it was not arguable that that commission did not accrue for income tax purposes in that same year though it was not ascertainable until later.
" The fact that the account of the commission could not be made up until later did not make any difference to the position that the commission had been wholly earned during the chargeable accounting period and the income had accrued to the assessee during that period.
Learned counsel for the transferees also relied upon the decisions in Bangalore Woollen, Cotton and Silk Mills Co., Ltd. vs Commissioner of Income tax, Madras(1), and Turner Morrison and Co., Ltd. vs Commissioner of Income tax, West Bengal(2), to show that as and when the sale proceeds were received by the Company the profits made by the Company were embedded in those sale proceeds and if that was so the percentage of the net profits which was payable by the Companies to the Managing Agents as and by way of commission was similarly embedded in those sale proceeds.
If the profits thus accrued to the Company.
during the chargeable accounting period the commission payable to the Managing Agents also could be said to have accrued to them during that period.
(I) [1950] is I.T.R 423.
(2) 11953) 348 It is no doubt true that the accrual of income does not depend upon its ascertainment or the accounts cast by assessee.
The accounts may be made up at a much later date.
That depends upon the convenience of the assessee and also upon the exigencies of the situation.
The amount of the income, profits or gains may thus be ascertained later on the accounts being made up.
But when the accounts are thus made up the income, profits or gains ascertained as the result of the account are referred back to the chargeable accounting period during which they have accrued or arisen and the assessee is liable to tax in respect of the same during that chargeable accounting period.
"The computation of the profits whenever it may take place cannot possibly be allowed to suspend their accrual. :. . . . ". "The quantification of the commission is not a condition precedent to ' its accrual." (Per Ghulam Hassan J., in Commissioner of Income tax, Madras vs K. B. M. T. T. Thiagaraja Chetty and Co.(1).
See also Isaac Holden and Sons, Ltd. vs Commissioners of Inland Revenue(2), and Commissioners of Inland Revenue, vs Newcastle Breweries Ltd.(3).
What has however got to be determined is whether the income, profits or gains accrued to the assessee and in order that the same may accrue to him it is necessary that he must have acquired a right to receive the same or that a right to the income, profits or gains has become vested in him though its valuation may be postponed or though its materialisation.
may depend on the contingency that the making up of the accounts would show income, profits or gains.
The argument that the income, profits or gains are embedded in the sale proceeds as and when received by the Company also does not help the transferees, because the Managing Agents have no share or interest in the sale proceeds received as such.
They are not co sharers with the Company and no part of the sale proceeds belongs to them.
Nor is there any ground for saying that the Company are the trustees for the business or any of the assets for the Managing Agents.
The Managing Agents cannot therefore be said to have acquired a (1) at P. 534.
(2) 12 Tax Cases 768.
(3) 12 Tax Cases 927.
349 right to receive any commission unless and until the accounts are made up at the end of the year, the net profits ascertained and the amount of commission due by the Company to the Managing Agents thus determined.
(See Commissioners of Inland Revenue vs Lebus(1) ).
It is cleat therefore that no part of the Managing Agency commission had accrued to the Sassoons at the dates of the respective transfers of the Agencies to the transferees.
The two decisions which were sought to be distinguished by the High Court in the judgments under appeal also support this conclusion.
In the unreported decision of the High Court of Bombay in Commissioner of Excess Profits Tax, Bombay City vs Messrs. P. N. Mehta and Sons(1), the Managing Agency Agreement was couched in the very same terms as that of the E. D. Sassoon United Mills Company Ltd. The Managing Agents were to be paid 10 per cent.
of the net annual profits made by the Company with a guaranteed minimum commission of Rs. 15,000 per annum.
The accounting year of the Company was the calendar year.
The Tribunal had held that the annual profits could only be ascertained when the accounts of the Company were made up and it was then that the 10 per cent.
commission would accrue to the Managing Agents.
The contention of the Department was that as the Managing Agents worked as such from day to day and helped the Company to earn profits, profits accrued to them from day to day and not at the end of the year.
This contention was negatived by the High Court : "It is only on net annual profits that the Managing Agents are entitled to any commission.
A Company may have worked 'for six months at a loss, for the remaining six months it may make a large profit so as to wipe off the loss, and have a net profit to show.
It is only as a result of the working of the Mills for the whole year that it will be possible to ascertain whether the Mills have worked at a loss or at a profit, and what the profit was.
Therefore, the Managing Agents are only entitled to a commission on the result of the (1) [ 1946] i A.E.R. 476 ; S.C. 27 Tax Cases 136.
(2) [1950] I.T.Ref.
No. 19 Of 1950.
350 working of the Mills for a whole year.
If the working shows a net annual profit which gives them a commission of more than Rs. 15,000 on the basis of 10 per cent.
, they are entitled to that amount.
If, on the ,other hand, the working does not show a profit, which entitles them to a comnission of Rs. 15,000 they are in any case entitled to that amount.
Therefore in our opinion, the Tribunal rightly held that the accrual of the commission was at the end of the calendar year, which was the year maintained by the Mills and not from time to time as contended by the Depart ment.
" In the case of Salt and Industries Agencies Ltd., Bombay vs Commissioner of Income tax, Bombay City(1),, the question for the consideration of the Court no doubt was what was the place where the profits had accrued.
In determining the place where the profits had accrued it was however necessary to find when the profits had accrued to the assessee and it was held that, what was conclusive of the matter was the consideration as to when the right to Managing Agency com mission arose and when did the Company become liable to pay Managing Agency commission to the Managing Agents and it was further held that it was only when all the accounts of the working of the Company were submitted to the head office in Bombay and the profit was determined that it could be said that a right to receive a commission at the rate specified in the Managing Agency Agreement had arisen and the Managing Agents became entitled to a certain specified commission.
These considerations are germane to the question which we have to decide in these appeals and support the conclusion which we have already arrived at, that the right to receive the commission would arise and the income, profits or gains would accrue to the Managing Agents only at the end of the calendar year which was the terminus a quo for the making up of the accounts and ascertaining the net profits earned by the Company.
We fail to see how these cases which were relied upon by the Revenue before the High Court could, be distinguished in the manner in which it was done.
(i) iS I.T.R. 58. 351 We were invited by the learned counsel for the Sassoons to approach the question from another point of view and that was that what had been transferred by the Sassoons to the transferees was a source of income, viz., the Managing Agency which was to run for the unexpired residue of the term.
It was urged that where a source of income was transferred any income which accrued from that source after the date of the transfer was the transferees ' income and not of the transferors, and that it was immaterial (a) that at the date of the transfer there was an expectation that at a future date income would accrue, (b) that the transferor by the work before the transfer had contributed to create any income which might eventually accrue and (c) that because of the expectation of income a higher price had been paid for the transfer.
Reliance was placed in this connection on the case Of Commissioners of Inland Revenue vs Forrest (1).
In that case the assessee purchased certain shares on the 25th November, 1919, and paid an excess price " to cover the portion of the dividend accrued to date.
" A dividend of 10 per cent.
for the period ending on 28th February, 1920, was declared on the 13th May, 1920.
The contention of the assessee was that the dividend should be treated as capital in view of the terms of the contract of purchase and not included in the computation of his income.
Under the provisions of the Incometax Act the dividends which were receivable by him 'were required to be included in the computation of his income.
The learned Judges however discussed the legal effect of such a transaction of the purchase of shares.
Lord Ormidale observed at page 709: " The value of the shares had to be determined as a matter of bargain between the parties, and the purchaser thought that it was not unreasonable that he should pay something over par for them because of the possibility, not the certainty but the possibility, of a dividend six months afterwards being paid upon the shares so purchased by him." Lord Anderson observed at page 710: (i) 8 Tax Cases 704.
352 He buys two things with his money.
He buys, in the first place, a share of the assets of the industrial concern proportionate to the number of shares which he hat; purchased; and he also buys the right to participate in any profits which the Company may make in the future.
Now, when a transaction of this nature is entered into during the currency of the financial year of the industrial concern it is obvious that what happens is this, that not only is a part of the assets purchased outright but that a chance is bought as well a chance of sharing in any profits which may be made during the currency of that financial year.
" Wigmore (H. M. Inspector of Taxes) vs, Thomas Summerson and Sons, Limited (1) was the case of a vendor of war loan stock bearing interest payable without deduction of tax.
The sale was effected on the 10th April, 1923, with interest rights.
The vendor was assessed for the year 1923 24 in respect of the amount of interest said to have accrued on the stock in the period between the last payment of interest.
and the sale of the stock, it being contended that the price received by the vendor on sale of stock included this interest.
The purchasers said that they were not liable to tax in respect of the income which had been accruing on the security they had purchased in a period anterior to the date on which they purchased.
It was observed that the truth of the matter was that the vendor did not receive interest and interest was the subject matter of the tax.
But he received the price of an expectancy of interest which was not the subject of taxation.
It was not argued that the interest accrued de die in them and the vendor was held not assessable in respect of the interest accrued at the date of the sale of the stock.
Commissioners of Ihland Revenue vs Pilcher (2) was the case of the gale of an orchard inclusive of the year 's fruit crop.
The assessee had valued the cherries which were on the trees at pound 2,500 and had pat a man immediately in the orchard after he had purchased it at the. auction.
He commenced to pick the fruit on the 25th May, 1942, and completed the operations on the (i) 9 Tax Cases 577.
(2) 3 i Tax Cases 314.
353 12th June, 1942.
He realised pound, 2,903 as the price of the cherries.
This sum was brought into the profit and loss account as a trading receipt and the contention of the assessee was that in computing his profits he was entitled to charge the sum of i 2,500 being the purchase price of the cherries sold for pound 2,903 which sum had been brought into credit as a trading receipt.
This contention was negatived and it was observed by Lord Justice Jenkins at page 332 " It is a well settled principle that outlay on the purchase of an income bearing asset is in the nature of capital outlay, and no part of the capital so laid out can, for income tax purposes, be set off as expenditure against income accruing from the asset in question.
" There is a further passage in the judgment of Jenkins L. J. at page 335 which is very instructive.
It had been contended that the revenue should look at the transaction from the assessee 's point of view and should consider it in a manner favourable to him.
This contention was dealt with in the manner following: One has to remember that this transaction concerned not merely Mr. Pilcher but also the vendor of the orchard.
Mr. Pilcher was able to buy the orchard complete with the cherries from the vendor and by that means, according to his own calculation, the cherries stood him in pound 2,500.
It by no means follows that if he had been minded to buy the cherries from the vendor apart from the land, as a separate transaction, the vendor would have been willing to sell them to him for pound 2,500, or at any price.
The difference is obviously a material one from the vendor 's point of view because, dealing with the matter as he did, he was selling a capital asset, and the resulting capital receipt, prima facie, would attract no tax.
If he sold the cherries separately in the way of trade he would at once have created an income receipt on which, prima facie, tax would have been exigible.
Therefore the alteration in the form of the bargain required to make it more favourable to Mr. Pilcheer from the tax point of view would have involved an alteration not merely of form but of substance owing to its adverse effect on 46 354 the tax situation of the vendor, and it cannot be assumed that the bargain thus altered would have been one to which Mr. Pilcher could have secured the vendor 's agreement.
" These observations throw considerable light on the situation obtaining,in the cases before us.
It will be remembered that the total amount of Rs. 75,77,693 received by the Sassoons on the transfers of the Managing Agencies was taken by them to the " Capital Reserve Account.
" No part of that amount was treated by them as a receipt of income and it is debatable whether any part of the same could have been allocated as a receipt of income even though the transferees had desired to do so.
All that the transferees obtained under the deeds of assignment and transfer executed by the Sassoons in their favour was an income bearing asset consisting of the office of Managing Agents, the Managing Agency Agreement and all the rights and benefits as such Managing Agents under the Agreements and no part of the consideration paid by the transferees to the Sassoons could be allocated as a receipt of income by reason of their contribution towards the earning of the commission in the shape of services rendered by them as Managing Agents of the Companies for the broken periods.
What the transferees obtained under the deeds of assignment and transfer was the expectancy of earning a commission in the event of the condition precedent by way of complete performance of the obligation of the Managing Agents under the Managing Agency Agreements being fulfilled and a debt arising in favour of the Managing Agents at the end of the stated periods of service contingent on the ascertainment of net profits as a result of the working of the Company during the calendar year.
The last case to which we were referred by the learned counsel for the Sassoons was The City of London Contract Corporation, Limited vs Styles (Surveyor of Paxes) (1).
The part of the business taken over by the assessee in that case consisted of unexecuted and partly executed contracts.
The contracts were executed after the date of the purchase by the assessee and the (1) 2 Tax cases.
239, 355 assessee sought to deduct the price paid for the contracts from the profits arising from their performance.
This deduction was not allowed because whatever price the assessee paid for the purchase of the business was treated as the capital which had been invested for the purpose of acquiring that business and the assessee could not deduct from the net profits of the working of the business after the date of the purchase any part of the capital which had been thus invested by it.
This result was achieved even though in the purchase of unexecuted contracts there was included the part of the work done towards the performance of the contracts by the vendors.
The assessee derived the benefit from such partial execution of the contracts by the vendors; nevertheless the value of such work was not treated as any income which had accrued to the vendors and which the assessee was entitled to deduct from its profits arising from the performance by it of those unexecuted contracts.
Learned counsel on behalf of the transferees contended that all these cases were concerned with the question whether the income derived by the assessee out of the income bearing asset after the date of the purchase could be treated as a capital expenditure so far as it formed part of the consideration paid by the assessee to the vendors and in none of these cases were the Courts concerned with the question that arises before us, viz., whether any part of the income which was actually received by the assessees could be said to have accrued to the vendor.
Even though the question did not arise in terms it is nonetheless involved in the consideration of the question whether the assessee was liable to pay the income tax on the whole of the income thus derived by him.
As was pointed out by Jenkins L. J. in Commissioner of Inland Revenue and vs Pilcher(1), quoted above, the vendor 's point of view cannot be neglected and once you come to the conclusion that the assesse alone is liable it necessarily follows that the vendor certainly has nothing to do with the same.
If it were otherwise the vendor would certainly be liable to tax and no purchaser would miss the opportunity of avoiding his liability for that portion of (i) 31 Tax Cases 314 at P. 335.
356 the income which can be said to have accrued to the vendor.
As a matter of fact such a contention was taken by the purchasers in Wigmore (H.M. Inspector of Taxes) vs Thomas Summerson and Sons Limited(1), where they declined to be assessed for tax in respect of income which had been accruing on the securities they had purchased in a period anterior to the date at which they did purchase.
This contention however did not prevail and the vendors were held not assessable in respect of the interest accrued on the date of the sale of the stock.
It is therefore clear that the Sassoons had not earned any income for the broken periods nor had any income accrued to them in respect of the same, and what they transferred to the transferees under the respective deeds of assignment and transfer did not include any income, which they had earned or had accrued to them and which the transferees by virtue of the assignment in their favour were in a position to collect.
If any debt had accrued due to the Sassoons by the respective Companies at the dates of respective transfers of Managing Agencies such debt would certainly have been the subject matter of assignment.
But it what was transferred by the Sassoons, to the respective transferees were merely expectations of earning commission and not any part of the commission actually earned by them or which had accrued to them under the terms of the Managing Agency Agreements, what the transferees received from the Companies under the terms of the Managing Agency Agreements which were thus transferred to them would be their income and no part of such income could ever be said to have accrued to the Sassoons, during the chargeable accounting period.
In view of the above it is unnecessary to deal with the contention which was urged by the learned counsel for the Sassoons that ever be an assignment of income the assignee and not the assignor would be liable to pay the tax.
He referred us to the case of the Commissioner of Income tax, Bombay Presidency vs Tata Sons Ltd.(2), in support of this contention of his and he also referred us to note 'G ' at page 209 in (i) 9 Tax Cases 577.
(2) 357 Simon 's Income tax, 2nd Edn., Vol.
II, where the ratio of Parkins vs Warwick (H.M. Inspector of Taxes)(1), relied upon by the High Court in the judgments under, appeal has been criticised.
We do not however think it necessary to go into this question, as in our opinion there were no debts due by the Companies to the Sassoons which were assigned under the respective deeds of transfer and assignment.
The only question which remains to consider is whether section 36 of the Transfer of Property Act imports the principle of apportionment in regard to the commission received by the transferees herein.
Section 36 of the Transfer of Property Act provides "In the Absence of a contract or local usage to the contrary, all rents, annuities, pensions, dividends and other periodical payments in the nature of income shall, upon the transfer of the interest of the person entitled to receive such payments, be deemed, as between the transferor and the transferee, to accrue due from day to day, and to be apportionable accordingly, but to be payable on the days appointed for the payment thereof.
" It may be noted that the section applies in the absence of a contract or local usage to the contrary and also applies as between the transferor and the transferee.
There is no room for the application of these provisions as between the subject and the Crown.
(Vide The Commissioners of Inland Revenue vs Henderson 's Executors(2)).
The contract to the contrary must of necessity be as between the transferor and the transferee and it is only when there is no such contract to the contrary that the rents, annuities, pensions, dividends and other periodical payments in the nature of income become apportionable as between the transferor and transferee, deemed to accrue due from day to day and be apportionable accordingly.
The deeds of assignment and transfer executed by the Sassoons in favour of the transferees transferred all the rights and benefits under the Agency Agreement to the transferees and there was no question of apportionment of any commission between the Sassoons and the transferees.
In fact the transfer claimed to retain and did retain (1) [I943] (2) i6 Tax CaseS 282 at P. 291, 358 the whole of the commission, which had been paid by the Companies to them in the year 1944 and the Sassoons never claimed any part of it as having been earned by them.
Whatever was their contribution .towards the earning of that commission during the whole of the calendar year 1943 was the subjectmatter of the assignment in favour of the transferees and that was sufficient to spell out a contract to the contrary as provided in section 36 of the Transfer of Property Act.
Section 26(2) of the Indian Income tax Act also does not help the transferees because it is only when the person succeeded has acquired an actual share of the income profits or gains of the previous year that he is liable to tax in respect of it and as set out herein above no part of the commission actually accrued to or became a debt due by the Company to the Sassoons on the dates of the respective transfers of the Managing Agencies to the transferees.
In order to attract the operation of section 26(2) the person succeeded must have had an actual share in the income, profits or gains of the previous year and on the construction of the Agreements the Sassoons cannot be said to have acquired any share in commission for the broken periods.
The whole difficulty has arisen because the High Court could could not reconcile itself to the situation that the transferee had not worked for the whole calendar year and yet they would be held entitled to the whole income of the year of account; whereas the transfers had worked for the broken periods and yet they would be held disentitled to any share in the income for the year.
If the work done by the transferors as well as the transferees during the respective periods of the, year were taken to be the criterion the result would certainly be anomalous.
But the true test under section 4(1)(a) of the Income tax Act is not whether the transferors and the transferees had worked for any particular periods of the year but whether any income had accrued to the transferors and the transferees within the chargeable accounting period.
It is not the work done or the services rendered by the person but the income 359 received or the income which has accrued to the person within the chargeable accounting period that is the subject matter of taxation.
That is the proper method of approach while considering the taxability or otherwise of income and no considerations of the work done for broken periods or contribution made towards the ultimate income derived from the source of income nor any equitable considerations can make any difference to the position which rests entirely on a strict interpretation of the provisions of section 4(1)(a) of the Income tax Act.
The result therefore is that the question referred by the Tribunal to the High Court must be answered in the negative.
All the appeals will accordingly be allowed.
But as regards the costs, under the peculiar circumstances of these appeals where the Commissioner of Income tax, Bombay, has supported the Sassoons in Civil Appeal No. 3 of 1953 and the brunt of the attack in Civil Appeals Nos. 30 of 1953 and 31 of 1953 has been borne not by the Commissioner of the Income tax who is the appellant in both, but by the Sassoons, the proper order should be that each party should bear pay his own costs here as well as in the Court below JAGANNADHADAS J.
I am unable to agree with the judgment just delivered on behalf of both my learned brothers.
It is with considerable regret that I feel constrained to write a separate judgment expressing the reasons for my not being able to agree with them in spite of my profound respect for their views.
These three are appeals against a judgment of the Bombay High Court by leave granted under section 66A(2) of the Indian Income tax Act.
They arise out of a set of facts mostly common.
E. D. Sassoon and Company, Ltd. now in voluntary liquidation (hereinafter referred to as the Sassoonal had the Managing Agency of three Mills (1) F.D. Sassoon United Mills Ltd. (2) Elphinstone Spinning and We having Mills Company, Ltd., and (3) The Apollo Mills Ltd. With the 360 consent of the Mill Companies and by virtue of clauses in the Managing Agency Agreements enabling thereunto, the Sassoons transferred the Managing Agency of the three Mills to three other Companies during the course of the calendar year 1943 as follows: (1) to Agarwal and Company, Ltd. (hereinafter referred to as Agarwals) on the 1st December, 1943, (2) to Chidambaram Mulraj and Company, Ltd. (hereinafter referred to as Chidambarams) on the 1st June 1943, and (3) to Rajputana Textile (Agencies) Ltd., on the 1st july, 1943.
The assessments with which we are concerned are those of (1) Sassoons, (2) Agarwals, and (3) Chidam barams and relate to income by way of Managing Agency remuneration paid in the year 1944 by the Mill Companies to the respective assignee Companies for the calendar year 1943.
For Sassoons and Agarwals the assessment year was 1944 45 and the accounting year was the calendar year 1943.
For Chidambarams the assessment year was 1945 46 and the chargeable accounting period was from 1st July, 1943, to 30th June, 1944.
The tax was assessed on the basis not of receipts but of accrual.
The income tax authorities treated the total remuneration for the entire year 1943 in each case as income which accrued to the assigneeCompanies in the respective accounting periods.
The assignee Companies objected on the ground that part of the remuneration, up to the date of the respective assignments, accrued to the assignor Company, viz., Sassoons and that they were, therefore, liable to be assessed only in respect of the balance of the remuneration referable to the portion of the calendar year 1943 subsequent to the respective dates of the assignments.
The objection was overruled and the assessments were made.
On appeals to the Income tax Appellate Tribunal, their contention was accepted and the assessments were modified.
It may be mentioned that the Rajputans Textiles (Agencies) Ltd. does not appear to have filed any appeal to the Tribunal.
Meanwhile (presumably by way of caution) the income tax authorities issued notices to the assignor Company, viz., Sassoons, under section 34 of the Indian Income tax Act and assessed it in respect of the proportionate part 361 of the year 's Managing Agency commission up to the date of the respective assignments.
The Sassoons objected to this before the income tax.authorities, but the objection was overruled.
It has been stated to us in the case filed by the Sassoons in this Court that the entire net consideration for the three assignments was taken by them into their accounts as capital reserve.
But this finds no mention in the Tribunal 's statement of the case to the High Court.
How the Sassoons made entries in their own accounts is not decisive and has not been relied on before us.
On their objection being overruled, the Sassoons filed an appeal to the Income.
tax Appellate Tribunal.
The Tribunal rejected the appeal in view of the decision they had already given in the appeals filed by the two assignee Companies, Agarwals and Chidambarams.
The three Companies concerned obtained references to the High Court under section 66 of the Indian Income tax Act.
The question referred by the Tribunal in each of the three cases was the same and is as follows: " Whether in the circumstances of the case; was the Managing Agency commission liable to be apportioned between the assessee Company and the assignee (or assignor, as the case may be).
" The High Court answered the question against the Sassoons and in favour of the other two.
What the High Court held was in substance that (1) the Managing Agency remuneration for the year in question accrued as the joint income of both the assignor and the assignee and was apportionable between them, and (2) the assignee Companies received the assignor 's share of the joint income by virtue of the assignments of the assignor 's share and hence to that extent it was not their taxable income but continued to be the taxable income of the assignor ' There are thus three appeals, one by the Sassoons against the Income tax Commissioner and the other two by the Income tax Commissioner against Agarwals and Chidambarams respectively.
In the first of the appeals, the Income tax Commissioner supports the position taken up by the Sassoons, while in the other two the Commissioner is the appellant and contests the position taken by the 47 362 Agarwals and the Chidambarams.
Thus it will be seen that though in form the three appeals are each between the Income tax Commissioner and one of the three Companies, in fact they raise a controversy between the assignor Company, the Sassoons, on the one side and the two assignee Companies, the Agarwals and the Chidambarams on the other, the Commissioner supporting the Sassoons and opposing the other two.
The arguments before us covered a wide range and were advanced on the assumption that what the High Court held was that the Sassoons became entitled on the.
very date of the respective assignments to a proportionate share of the year 's remuneration for the Managing Agency, and that accordingly that share accrued to the Sassoons as their taxable income, then and there, and did not cease to be such notwithstanding the assignment thereof The case was accordingly debated before us as though the decision turned upon the question whether any income could accrue to the Sassoons on the dates of the respective transfers of the Managing Agency to the transferees.
It is necessary, therefore, to clarify, at the outset, what the question was which was directly raised on the reference made to the High Court and what, in the view of the High Court, was the date When a share of the year 's remuneration accrued to the Sassoons as its income.
It appears to me that the judgment of the High Court taken as a whole is based only on the view that the entire Managing Agency remuneration for the year accrued on the completion of 'the year, i.e., on the 31st December, 1943, and that when it so accrued it accrued both to the assignor and to the assignee together.
This appears from the following passage of the judgment of the High.
Court.
" In order to levy income tax it is not enough to enquire when a particular income accrues.
What is more important and what is more pertinent is to enquire whose income it is which is sought to be taxed.
Assuming that this particular income accrued on the 31st December and till 31st December there was nothing earned, even so, when.
the income does accrue the question still remains to be answered as to whose 363 income it is which has accrued on the 31st December, 1943.
" It appears to me also that it is on the footing of the accrual on the completion of the year that the High Court dealt with the question of assignment of the, income as appears from the following passage: " And clearly one of the rights which E. D. Sassoon and Company, Ltd. had, was to receive the Managing.
Agency commission (share therein ?) when it accrued on 31st December. . .
They transferred that right.
" From these passages it appears to me clear that the High Court proceeded on the view that income accrued at the end of the year to both together and that what passed to the assignee under the assignment included a future right of the assignor to a share in the remuneration, when it accrued on the completion of the year, and not on the view that the assignment operated as the transfer of a present right to such a share on the very date of the assignment.
It is in view of the assumption that the remuneration for the year accrued only on the 31st December that the Income tax Appellate Tribunal also took care to say, in making their reference to the High Court, as follows: " The question is not when the Managing Agency commission accrued.
The real question is to whom it accrued.
" It appears to me, therefore, that it is not correct to approach the consideration of this case as though, the decision therein turns directly upon the question whether any income had accrued to the Sassoons on the dates of the respective transfers of the Managing Agency to the transferees.
In the arguments before us, considerable stress was laid by learned counsel appearing for the Sassoons on the fact that the Managing Agency Agreements with which we are concerned provide for annual remuneration for an year 's work.
It was pointed out that the remuneration payable was fixed as commission at a certain specified percentage of the net profits of the respective Mill Companies.
So far as the Sassoons United Mills Ltd., are concerned, whose Managing Agency had been 364 assigned to Agarwals, the commission was in terms stated in the Agency Agreement to be per annum and on the annual net profits of the Company.
So far as Elphinstone Spinning and Weaving Mills Company,Ltd., are concerned, whose Managing Agency was assigned to Chidambarams.
, the remuneration, is merely stated in the corresponding Agreement to be a percentage of the net profits of the company, but is not in terms stated to be per annum or on the annual net profits.
But there can be no reasonable doubt that as a matter of construction, the remuneration in the latter case also must be taken to be per annum and on the annual net profits, notwithstanding some argument before us to the contrary.
Having regard to this basic fact, the following are, in substance, the arguments put forward before us by learned counsel for the assignor Sassoons.
(1) The Managing Agency commission was payable in respect of services for an entire calendar year and not for a portion thereof and therefore no commission became due to the Sassoons for the services rendered by them to the respective Mill Companies for broken periods of the year up to the dates of the respective assignments.
(2) Since no remuneration became a debt due to the Sassoons from any of the Mill Companies on the dates of the respective assignments, no taxable income accrued to them for the broken periods.
(3) By the dates of the respective assignments, the Sassoons had only a bare expectancy, if any, to receive remuneration for the broken period and this expectancy could not be the subject matter of any assignment, and (4) The true legal position, therefore, is that what was assigned was an income bearing asset, viz., the Managing Agency which was the source of income and which entitled the respective assignees to receive all the remuneration for the year payable under the Managing Agency Agreement subsequent to the respective dates of assignment.
Accordingly the same became in its entirety taxable income in the hands of the respective assignees and no portion of it accrued at any time as taxable income of the assignor Sassoons.
In the view that I take of the High Court 's judgment as to the date of accrual of the income and as to 365 the scope of the question presented on the references the first three of the above arguments do not appear, to me to call for any examination.
In the present case no question arises as to the enforceability of the claim for a proportionate share of the remuneration by, the assignor from the very date of assignment.
Nor does any question arise as to the non payability of remuneration on account of non completion of the work.
The year 's work has been completed by the assignee Company in continuation of that of the assignor Company.
The total remuneration for the year has in fact been paid into the hands of the assignee Company.
The only questions, therefore, are (1) whether the money so received accrued by way of remuneration for the year 's work and became taxable income on the 31st December, 1943, (2) if so, whether.
it was the joint income of the assignor and the assignee or the, sole income of the assignee, and (3) whether the assignment operated to transfer the assignor 's share of the income on its accrual.
The answer to the first of the above questions seem$ to me to admit of no doubt.
The remuneration was for the year 's work.
The year 's work was completed on the expiry of the year.
The right to receive the remuneration became, therefore, vested on the 31st December, 1943.
It is true that in Agarwal 's case there is a clause ' in the original Managing Agency Agreement that "the Managing Agency commission shall be due yearly on the 31 st day of March in each and every year and shall be payable and be paid immediately after the annual accounts of the Mill Company have been passed, by the shareholders.
" It has been urged, in reliance on this clause that the accrual of the income, in so far as the case of Agarwals is concerned, is not on the 31st December, but on the 31st March next.
In the first place such a contention in so far as it relates to the date of accrual, is not permissible in view of the clarification in the order of reference made by the Tribunal to the High Court and: in view of the specific and categorical language of some ' of the grounds in the statements of the case filed.
366 before us both by Sassoons and the Income tax Commissioner showing 31st December, 1943, as the date of accrual of the entire remuneration.
(Vide paragraphs 19(1), 26(a) and (g) of the Sassoons ' statement, and paragraphs 12, 15(1), (2) and (5) of the Income tax Commissioner s statement, in Civil Appeal No. 3 of 1953).
But even if the contention be permissible and granting the view strenuously urged on behalf of the appellant Sassoons that there is no accrual of income until there exists a right to receive it, I do not think that the clause in question has any relevancy so far as the date of accrual of income is concerned.
Accrual of income for purposes of taxation, does not depend on the question ' as to when the income becomes payable.
It depends only on when a vested right to receive the income arises.
(See Commissioners of Inland Revenue vs Gardner Mountain and D ' Ambrumenil Ltd., (1)).
The accrual is accordingly complete when the right to the remuneration becomes vested by the occurrence of all the events on which the remuneration depends.
A mere clause that the remuneration shall be due at a later date, notwithstanding ' that all the events on which the remuneration depends have occurred, can only have the effect of postponing the liability for payment and not of postponing the vesting of the right to income.
The requirement of lapse of further time after the occurrence of all the qualifying events is not itself an additional event which imports any element of contingency in the right.
It appears to me, therefore, that the above clause which has been relied upon whatever the reason may be for the distinction which the language seeks to suggest between due and payable can have no bearing on the date of the accrual and cannot have the affect of postponing the accrual from the 31st December to 31st March.
But even otherwise, this does not at all affect.
the final conclusion in this case reached by the High Court of Bombay.
If the view of the High Court is correct that the ncome accrued both to the assignor and to the assignee after the completion of the year 's work it seems to matter little whether that accrual is on the 31st December or on the 31st March next.
(1) 367 by the High Court that the assignments operated to transfer to the assignee the assignor 's share of the year 's remuneration after it accrued to him as his income and whether it continues to remain the assignor 's taxable income in spite of the assignment, may also be shortly dealt with.
If the High Court be right in its view that the remuneration accrued both to the assignor and to the assignee together, whenever it may ' be, then it is clear that on the respective dates of the assignment,, the assignor bad a future right to a share of the remuneration on the completion of the year.
If so, there is ample authority for the position that the assignment of such a future right is valid and becomes operative by way of attaching itself to the right when it springs up.
(See Bansidhar vs Sant Lal (1), Misri Lal vs Mozhar Hossain (2), Palaniappa vs Lakshmanan (3) and Baldeo vs Miller (4).) The validity of such an assignment as between the assignor and the assignee and the effect thereof on the assignor 's future right may also be supported with reference to the principle of estoppel feeding title which finds recognition in section 43 of the Transfer of Property Act.
For the further position, ViZ., that a person continues to be liable for tax in respect of accrued income notwithstanding assignment thereof operating on or after such accrual, there is authority in Parkins vs Warwick (5).
This view is confirmed by the following passages in the Privy Council case in Pondicherry Railway Co. Ltd. vs commissioner of Income tax, Madras (6).
" Profits on their coming into existence attract tax at that point and the revenue is not concerned with the subsequent application of the profits.
" The destination of the profits or the charge which has been made on those profits by previous agreement or otherwise is perfectly immaterial." (Quoted out of an extract from the case in Gresham Life Assurance Society vs Styles(7)).
(1) I.L.R.1o All I33.
(2) I.L.R. (3) I (4) I.L R. (5) 25 Tax Cases gig.
(6) A.I.R. 1931 P.C. i65 at 170.
(7) [I892] A.C. 309. 368 clear recongnition of the principle that when once income accrues to a person, an assignment operative in respect thereof, does not affect his taxability for that income.
It may be mentioned that it is not seriously disputed that the consideration for each assignment included the value of the prospective advantage of collecting the remuneration for the entire year, i.e., in the sense that the actual consideration paid was higher than what it might have been if the assignment had taken place at the very commencement of the year.
The only substantial question, therefore, which this case raises is whether the view taken by the High Court, that the remuneration for the year accrued as income both to the assignor and the assignee, is correct.
It is apparently as an answer to this question that learned counsel appearing for the Sassoons put forward the argument No. 4 above enumerated, viz., that the assignment of Managing Agency is the transfer of an income bearing asset and that all income received subsequent to the date of assignment is entirely the assignee 's taxable income.
It is the validity of this argument that now requires examination.
The cases that have been relied on in support of this argument are the following : The Commissioners of Inland Revenue vs Forrest(1); Wigmore vs Thomas Summerson(2); and Commissioners of Inland Revenue vs Pilcher(3).
Commissioners of Inland Revenue vs Forrest(1) is a case of purchase of certain shares and the income derived therefrom and is analogous to the second head of income chargeable to income tax under section 6, of the Indian Income tax Act, viz., Securities.
The income therefrom is directly referable only to the ownership of the shares or securities.
Mere lapse of time makes income payable and the taxation depends on the receipt of the income.
Wigmore vs Thomas Summerson(2) is also a case similar to the above.
Commissioners of In.
land Revenue vs Pilcher(3) is the case of a sale of an orchard inclusive of the year 's fruit crop, which by the date of the sale does not appear to have become ripe.
(i) 8 Tax Cases 704.
(2) 9 Tax Cases 577 (3) 3T Tax Cases 314.
369 enough to be treated as a severable item of property.
This was a case of property whose.
ownership itself, in the ordinary course and by lapse of time, gives rise to income and is analogous to head No. 3 of section 6 of ' the Indian Income tax Act.
It is interesting to note, that in this case, the learned Judges make a distinction between fructus industriales and fructus naturales and point out that the fruits derived from the orchard being cherries are fructus naturales and not fructus industrials.
That the result might have been different if it was fructus industriales appears clearly, at least so far as Lord Justice Singleton and Lord Justice Tucker are concerned.
In the case of fructus industriales the income does not arise by mere ownership but as a result of further investment and labour which may be the effective source of income.
These decisions refer only to cases where the sole or effective source of income is mere ownership and taxability depends on receipt of the income.
Another case that has been relied on before us is the City of London Contract Corporation vs Styles(1).
That was a case where one Company purchased as a going concern the business carried on by another Company, as contractors for public works.
It was claimed that the assignee Company was entitled to deduction from their taxable income for a portion of the purchase price which may be attributed to the purchase of the right, title and interest to, and the benefit of, certain building contracts of the Company, from the execution of which, a portion of the net profits of the Company arose.
This was negatived on the ground that the entire purchase price was capital investment and that what all was received later on was income derived by the execution of the contracts so purchased.
This, so far as it goes, may seem to suggest by implication that there may be a purchase of contracts yet to be executed and that the benefit of the entire profits therefrom is to be treated as income in the hands of the purchaser.
The report of this case, however, does not indicate clearly whether the contracts, whose benefit was purchased were partially executed and if so, whether the partial execution (1) 2 Tax Cases 239, 370 was substantial or negligible.
The statement of the facts of the case at page 241 of the report shows that the business which was purchased consisted entirely " of partially executed or wholly unexecuted contracts, and of the rights thereunder and the benefits to accrue therefrom.
" If the business consisted of only unexecuted contracts, this case is not an authority for the position contended for on behalf of the Sassoons.
But in any case, even if some of the contracts were partially executed there is nothing to show that the execution was of any such extent as to have become a substantial source of income.
It may also be noted that this decision is a direct authority only on what is capital expenditure and what is revenue expenditure for pur poses of deduction.
The point in the form relevant for the present case was not raised there and cannot be taken to have been decided.
It is interesting to notice that in Simon 's Income tax, Vol. 2, (1949 Edn.), page 188, paragraph 222, the following passage appears.
" In City of London Contract Corporation Ltd. vs Styles(1) where the Company acquired a business including a number of unexecuted contracts, it was held that the sum paid for the contracts could not be deducted in computing the Company 's profits, on the ground that the whole of the purchase price of the business was a sum ' employed or intended to be employed as capital in such trade '.
" Similarly in Spicer and Pegler 's Income tax and Profits tax (20th Edn.), at page 116 it is stated as follows : " Cost of unexecuted contracts taken over with a business (in arriving at the profits from the performance of the contracts)" and the case of City of London Contract Corporation vs Styles(1) is quoted as authority.
These standard textbooks also show that this case has been treated as having reference to unexecuted contracts (and not to partially executed contracts) and as being authority for the question as to what are Permissible deductions from taxable income of business concerns, (I) 2 Tax CaseS 239.
371 The above cases, therefore, cannot be treated as in any way supporting the contention put forward by learned counsel for the appellant Sassoons that in the case of an assignment of Managing Agency the entire remuneration for the year 's work accrues as a matter of law to the assignee and is his sole income, on the ground that the Agency is the source of income and that in this respect it is to be treated as an income bearing asset.
No specific authority has been cited ' before us covering the case of a Managing Agency nor can the case in City of London Contract Corporation vs Styles(1) be treated as an authority showing that in the case of an assignment of partially executed contracts the remuneration or profits relatable to such partial execution is necesarily the income of the assignee.
The question thus raised has, therefore, to be examined on principle.
On such examination it appears to me that the argument advanced in this behalf is based on a fundamental misconception.
Income of the kind with which we are concerned in this case does not arise by virtue of any mere ownership of an asset.
What produces income is not the ownership of the Managing Agency but the actual work turned out for the benefit of the principal.
It is not the fact of a Company having obtained the right to work as a Managing Agent that produces the income but it is the continuous functioning of the Company, as the Managing Agent, in terms of the contract of Agency, that produces the income.
Hence, it is the rendering of the service of the Managing Agency or the carrying out of the Managing Agency business, which is the effective and direct source of income.
This is not to say that work or service is the subject of taxation.
It is the remuneration that is the subject of tax and work is the source of the remuneration.
Hence in such a case service or work is the source of income and not.
the ownership of the right to work.
The above legal position has been very succinctly brought out by Lord Finlay, though in another context, in John Smith & Son vs Moore(2) in the following passage: (1) 2 Tax Cases 239.
(2) (1921] 2 A.C. I3 at 25.
372 "The business makes no profits.
The profits are not fruits yielded by a tree spontaneously.
They are the result of the operations carried on by the owner of 'the business for the time being." Therefore, on principle, apart from authority, it appears to me to be erroneous to treat the Managing Agency.
Agreement as by itself the direct source of income and to treat it as an income producing asset.
An examination of the provisions of the Indian Income tax Act clearly bears out this view.
Sections 3 and 4 of the Income tax Act are the charging sections.
The charge is (in so far, as it is relevant for purposes of this case) on the income of the previous year (a) which is received by the assessee within the taxable territory, or (b) which accrued or arose within the taxable territory to a resident assessee.
As stated at the outset the assessment in the present case is based on accrual and not on receipt.
Computation of the taxable income is governed by the provisions of Chapter III of the Act.
Section 6 thereof enumerates the following heads of income as being chargeable to income tax.
(1) Salaries, (2) Interest on securities, (3) Income from property, (4) Profits and gains of business, profession or vocation, (5) Income from other sources.
The residual item (5) may for the present purposes be left out.
Of the other four heads, items 2 and 3 are the only items in which the taxable income is directly related to the ownership of an asset.
In the present case the computation of the taxable income 'has no relation to those items but may conceivably fall under head No. 1 or head No. 4.
At this stage, it is necessary to observe that, though, so far, in the above discussion, the Managing Agency has been referred to as service and the commission therefor as remuneration, for purposes of convenience, the true nature of the functioning of a Managing Agent, where it is, a firm or a Company, which so functions, has been recently held by this Court in Lakshminarayan Ram Gopal and Son, Ltd. vs The Government of Hyderabad(1) to be a business and the remuneration to be income by way of profits or gains from the business.
The i) Civil Appeals Nos. 292 and 312 Of 1050 of the Suprem Court of India.
373 income, therefore; falls under head No. 4 and the com petation thereof has to be made under section 10 of the Income tax Act.
Sub section (1) of that section runs as follows: "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.
" Now, in computing the taxable income of the assignee, can it reasonably be said that the remuneration for the entire year is the income of the assignee and that it is the profits and gains of the business carried on by the assignee, when as a fact he stepped into the position of the Managing Agent only on some date in the course of the year by virtue of the assignment.
It appears to me that before income can be attributed under this head to an assessee, it must relate to the business carried on by the assessee himself In the present case, therefore, the profits and gains of the whole year seem to me clearly to relate to the business carried on both by the assignor and the assignee taken together and are hence taxable as income accruing to both and apportionable as such between them.
The importance of not overlooking the significance of the phrase "carried on by him" in subsection (1) of section 10, though in a different context, has been emphasised by the Privy Council in Commissioner of Income tax, Bengal vs Shaw Wallace and Co.(1).
A recent decision of this Court in the Liquidators of Pursa Limited vs Commissioner of Incometax, Bihar(2) also emphasises this and explains that the phrase "carried on by him" in section 10(1) of the Indian Income tax Act "connotes the.
fundamental idea of the continuous exercise of an activity as the essential constituent of that which is to produce the taxable income.
" This phrase appears to me also clearly to connote the idea that the taxable income is that of the very assessee or the combination of assessee whose continuous activity produces the income.
Where, as in this case, that continuity is kept up by two persons successively, it appears to tile (i) I.L.R. (2) Civil Appeal NO.
33 Of 1953.
374 that under this section, the profits and gains are the assessable income of both together.
This is in accord with the well accepted notion, under the normal law, that if two persons jointly carry out a work or conduct a business, the total remuneration in fact earned for the work or the total gains made on that business belongs to both of them as their joint property and that such property has to be apportioned between them on some equitable basis.
This is quite independent of any question as to whether the claim for remuneration for the work or for the emoluments of the business can be individually or jointly enforced as against the person who is liable to pay.
It cannot be disputed that in the absence of any specific contract to the contrary between the persons who contribute to the work or business, the fruit of such work or of such business is the joint property of both, when the same has in fact been realised.
Nor can it be said that this holds good only in cases where both the persons concurrently join together to earn the remuneration for the work or the profits of the business.
There is no reason in law why the same principle should not be equally applicable where the two together contribute to the total work or to the total business in succession as in this case and not in concurrence.
If, what arises on such continuous and successive functioning of two persons is the joint remuneration of both, there can be no doubt that such remuneration would be apportionable between them on some equitable basis on the principle that joint property is normally severable.
To such a situation section 26(2) of the Income tax Act would also clearly apply.
That section no doubt indicates nothing as to the principle of apportionment.
But there is no difficulty in the present case since it is agreed that the apportionment, if any, is to be timewise.
This also prima facie is the only equitable way of apportionment on the facts of this case.
At this stage it becomes necessary to notice certain provisions of the relevant Managing Agency Agreements which have been strongly relied on as supporting the view contrary to what I have indicated above.
Reliance 375 has been placed on two provisions of the Managing Agency Agreement between the Sassoon United Mills Ltd. and the Sassoons which are relevant only in the appeal relating to the Agarwals.
The first of these provisions is the one already noticed in another context, viz., clause 2 (d) of the Agency Agreement which, runs as follows: "The said commission shall be due to the said firm yearly on the 31st day of March in each and every year during the continuance of this Agreement. . .
It is urged that this term stamps the Managing Agency Agreement with the characteristic of an incomebearing asset which vests solely in, the assignee the right to the entire income payable after the date of assignment.
But it appears to me that a term of this kind has reference only to the payment aspect of the.
money which constitutes remuneration and has no, bearing on the question as to whose income it is for purposes of taxation.
Taxable income must be derived from specified sources indicated in the Indian Incometax Act.
Since the mere ownership of Managing Agency cannot as a matter of law be treated as the source of ' income, as explained above, any term in the Managing Agency Agreement between the principal and the agent entitling only the assignee to receive the year 's remuneration and negativing to the assignor any direct recourse to his quondam principal for his share of the income, cannot have the effect of denying to the assignor a substantial right to a share in the remuneration, if otherwise he has a vested right thereto.
A distinction exists in law between the right to receive or get payment of a certain amount of money and the right to the money itself.
The right to enforce payment of money may belong to one person.
But the beneficial right in that money may belong wholly or partially to another.
Benami contracts are familar examples of such a case.
Instances of joint rights in money or money 's worth enforceable only at the instance of one out of the persons entitled, in special situations, are easily conceivable.
It may be true that there is no accrual of income unless there is a vested right to receive the money which constitutes income.
But this 376 proposition has relevance only to the factum or date of accrual but not necessarily to the ownership of the income on such accrual.
None of the cases that have been cited before us in support of the proposition that there is no accrual of income unless there is a right to receive it negative this view.
In the course of the arguments repeated stress has been laid on the proposition that there is no accrual of income 'Unless there is a right to receive the income.
This may be so.
But it does not follow that the very person who has the right to receive the money which constitutes the income is the owner of that money or that the income accrues to him alone.
That must depend on the substantive rights, if any, applicable to a particular situation.
A term in a Managing Agency Agreement between the principal and the agent as to the person to whom the remuneration is payable or is to become due can only have been meant as a protection of the principal in respect of multiplicity of claims against himself and cannot settle the substantive rights between persons who may have contributed to earn the remuneration.
The second provision relied on is clause 10 of the Managing Agency Agreement with which the case of Agarwals is concerned.
Clause 10 of the agreement runs as follows: "It shall be lawful for the said firm to assign this agreement and the rights of the said firm hereunder to any person, firm or Company having authority by its constitution to become bound by the obligations undertaken by the said firm hereunder and upon such assignment being made and notified to the said Company shall be bound to recognise the person or firm or Company aforesaid as the Agents of the said Company in like manner as if the name of such person, firm or Company had appeared in these presents in lieu of the names of the partners in the said firm and as if such person, firm or Company, had entered into this Agreement with the said Company and the said Company shall forthwith upon demand by the said firm enter into an Agreement with the person firm or Company aforesaid appointing such person firm of Company the 377 Agents of the said Company for the then residue of the term outstanding under the Agreement and with the like powers and authorities remuneration and emoluments and subject to the like terms and conditions as are herein contained.
" Stress has been laid on the underlined portion of the above clause.
It is urged that this as well as clauses I and 3 of the Managing Agency Agreement show that the assignor and the assignee are to be treated as one entity and that on assignment the assignee becomes the Managing Agent as if his name had been inserted in the Managing Agency Agreement from the beginning, and that the continuity of the Managing Agency was preserved thereby and that whoever satisfies the description of the Managing Agent at the time when the commission for the year becomes due, is also the person entitled to the amount by way of remuneration not, as per this argument by virtue of any mutual arrangement between the assignor and the assignee, but by the very terms of the Managing Agency which is the source of income.
It is urged.
therefore, that this feature stamps the Managing Agency as an income bearing asset.
In substance, therefore, this argument amounts to saying that by virtue of this clause the service of the assignee subsequent to the date of assignment can be tacked on to the service of the assignor for the earlier portion of the year, so as to constitute it service for the entire year which earns the remuneration, as the sole property of the assignee, i.e., that the assignment has to be given retrospective operation from the commencement of the year in respect of the work so far done.
But if this clause is to be construed as having such retrospective operation, it must, on the very terms of the underlined portion, become so operative from the original commencement 2of the Agreement itself and not from any particular date or event thereafter.
There is no reason to confine such retrospective operation only to the inchoate advantage for remuneration arising from partly finished work of the year.
The underlined portion of the clause, if it is to ' have retrospective effect at all, is comprehensive enough to take within its ambit every othere claim,which may have accrued but remained 49 378 unpaid, commencing from the initial stage of the Agency.
On this construction, therefore, the right to. ,very such claim would pass to the assignee.
Such a result would obviously be untenable and no reason exists why the retrospective operation, to be imputed to this clause, should be confined to the limited extent which serves the argument put forward in this behalf by the appellant Sassoons.
It appears to me, therefore, quite clear on a fair reading of the entire clause 10 of the Managing Agency Agreement that the only effect thereof is to bring about the result specifically stated in the second portion of that clause (which has been side lined) i.e. that on assignment, the assignee firm shall be entitled to demand and obtain from the principal Company a fresh Managing Agency Agreement in its own favour for the residue of the term outstanding and with like powers authorities remuneration and emoluments and subject to the like terms and conditions.
In my opinion all that the clause 10 taken as a whole means is no more than that the assignee is entitled to demand a fresh Agreement on the same terms and that even without a fresh Agreement being formally executed as between the principal Mill Company and the assignee company their mutual rights and obligations will be governed by the old Agreement for the residue of the term with the assignee Company 's name substituted for the assignor Company 's name.
Such effect can only be prospective and not retrospective.
There can be no doubt, however, that though any mere clause in the Managing Agency Agreement that the employer is to be responsible only to the assignee for the payment of the entire year 's remuneration is not by itself enough to vest in the assignee a beneficial right to the remuneration of the year, such a right may arise by virtue of a specific or implied term as between the transferor and the transferee, either as part of the deed of transfer or independent thereof.
It may be mentioned that in the Agarwals ' case there was such a specific term in the Agreement preliminary to the actual assignment.
But learned counsel for the Sassoons expressly disclaimed it on the ground that it was not incorporated in the deed of transfer and was, 379 in any case, superfluous and did not rely on it.
In his view the right of the assignee to receive the entire remuneration did not depend on any specific term between the assignor and the assignee, but on the fact that what was transferred is an income bearing asset which carried with it a right to the entire income that falls due after the date of assignment.
It is on account of the insistence on this view, that, as I apprehend, learned counsel for the Sassoons disclaimed the above mentioned special term between the assignor and the assignee as being superfluous.
He seems to have sought thereby to obviate the consequence of the contention that the assignor 's share of remuneration became the assignee 's by virtue of the specific assignment thereof operating thereon 'on its accrual and that hence it remained the taxable income of the assignor.
It may be mentioned in this context that clause 10 of the Managing Agency Agreement in Agarwals ' case has been relied on by learned counsel for Agarwals to show that while, it may be, that in the normal run of events the contract for remuneration under the Managing Agency Agreement is an indivisible contract for a whole year 's remuneration on the completion of a whole year 's work, this clause necessarily implied divisibility of contract and of the remuneration in the year of assignment since the assignment necessarily took place with the consent of the principal Mill Company.
(Vide section 87 B(c) of the Indian Companies Act).
This argument was advanced to support the contention that the Sassoon 's share of the year 's income accrued on the very date of assignment.
Since, however, in my view that was not the basis of the judgment of the High Court as explained above and since such an argument is not, in my opinion, open, having regard to the statement of the case by the Income tax Appellate Tribunal as well as of the statements of appellants and respondents herein, I do not consider it necessary to deal with that argument.
In my view, therefore, the continuous and successive functioning by both the assignor and the assignee under the Managing Agency Agreement was the effective source of the year 's income.
That income accrued on the completion of the year and was the joint income 380 of both the assignor and the assignee.
The prior assignments in the course of the year operated as assign ments of this future right to a share of the income.
It is only by virtue of inter se arrangement between the assignor and the assignee, resulting from the transactions of assignment, that the assignee had the right to collect the entire income.
Nevertheless, the share in this income which accrued to the Sassoons on the completion of the year remained the taxable income of the Sassoons and they were rightly taxed in respect thereof.
The very strenuous arguments of learned counsel for Sassoons to counter the above view are based on the insistence that the Managing Agency is like property which per se produces income and, on ignoring the distinction between right to receive the income and right to the ownership of the income and on treating the former as settling the question of the person to whom income accrues.
In my opinion these arguments are unsustainable and the conclusion reached by the learned Judges of the Bombay High Court is correct.
The appeals are, therefore, liable to be dismissed.
I express no opinion on any of the other points raised.
Appeals allowed.
| IN-Abs | The Sassoons had entered into three Managing Agency agree ments as the Managing Agents of three different companies.
They transferred their Managing Agencies to three other companies by formal deeds of assignment and transfer on several dates during the accounting year.
The question for determination was whether in the circum.
stances of the case the Managing Agency commission was liable to be apportioned between the Sassoons and their respective transferees in the proportion of the services rendered as Managing Agents by each of them for the respective portions of the accounting year and the decision turned upon the question whether any income had accrued to the Sassoons for the purpose of income tax on the dates of the respective transfers of the Managing Agencies to the transferees.
Under clause 2(d) of the Managing Agency agreements, the commission to the Sassoons as Managing Agents was to be due to them yearly on the 31st of March in each and every year and was to be payable immediately after the annual accounts of the company had been passed by the shareholders.
Held per S.R. DAS and BHAGWATI JJ.
(JAGANNADHADAS J. dissenting).answering the question in the negative, that on the 41 314 construction of the Managing Agency agreements, the contract of service between the companies and the Managing Agents was entire and indivisible, that the remuneration or commission became due by the companies to the Managing Agents only on the completion of a definite period of service and at stated intervals, that it was a condition precedent to the recovery of any wages or salary in respect thereof that the service or duty should be completely performed, that such debt constituted a debt only at the end of each period of service and that no remuneration or commission was payable to the Managing Agents for broken periods.
The Sassoons had not earned any income for the broken periods nor had any income accrued to them in respect of the same and what they transferred to the transferees under the respective deeds of assignment and transfer did not include any income which they had earned or had accrued to them during the chargeable accounting period and which the transferees by virtue of the assignment in their favour were in a position to collect.
The true test under section 4(1)(a) of the Indian Income tax Act, for the purpose of ascertaining liability for income tax in the case of transfer of Managing Agency is not whether the transferore and the transferees had worked for any particular periods of the year but whether any income had accrued to the transferors and the transferees within the chargeable accounting period.
The word "profit" in section 4 of the Indian Income tax Act has a well defined legal meaning.
The term implies a comparison between the state of business at two specific dates usually separated by an interval of a year.
The fundamental meaning is the amount of gain made by the business during the year.
"Income" connotes a periodical monetary return "coming in" with some sort of regularity, or expected regularity from definite sources.
The source is not necessarily expected to be continuously productive but its object is the production of a definite return excluding anything in the nature of windfall.
The word "income" clearly implies the idea of receipt, actual or constructive.
The words "accrues", "arises" and "is received" are three distinct terms.
The word "accrues" conveys the distinct sense of growing up by way of addition or increase or as an accession or advantage connoting the idea of a growth or accumulation.
The word "arises" means comes into existence or notice or presents itself and conveys the idea of the growth or accumulation with a tangible shape so as to be receivable.
Both the words "accrues" and " arises" are used in contradistinction to the word "receive" and indicate a right to receive income.
The accrual of income to an asseseee does not mean the actual receipt of the same by him and it may be received later on .
its being ascertained.
The word "earned" does not appear in section 4 of the Income tax Act but it has been very often used in the course of judgments by learned Judges.
It conveys the concept of income accruing to the assesses, 315 Per JAGANNADHADAS J.
In the present case the profits and gains of the whole year clearly related to the business carried oil both by the assignor and the assignee token together and were hence taxable as income accruing to both and apportionsble as such between them.
The phrase "carried on by him" in section 10(1) of the Indian Income tax Act connotes the fundamental idea of the continuous exercise of an activity as an essential constituent of that which is to produce the taxable income and that the taxable income is that of the 'very assessee or the combination of assessees whose continuous activity produces the income.
Therefore the continuous and successive functioning by both the assignor and the assignee under the Managing Agency agreement was the effective source of the year 's income.
That income accrued on the completion of the year and was the joint income of both the assignor and the assignee.
The prior assignments in the course of the year operated as assignments of this future right to a share of the income.
It was only by virtue of inter se arrangement between the assignor and the assignee resulting from the transaction of assignment, that the assignee had the right to collect the entire income.
But the share in this income which accrued to the Sassoons on the completion of the year remained the taxable income of the Sassoons and they were rightly taxed in respect thereof.
Case law discussed.
|
ivil Appeal No. 1539 of 1970.
(Appeal by Special Leave from the Award dated 1/31 10 69 of the Industrial Tribunal Allahabad in Ref.
No. 20/58 'published in the U.P. Gazette dated the 10th Jan. 1970).
I. N. Shroff, for the appellant.
P.H. Parekh, for the respondent.
KRISHNA IYER, J. A dispute between the appellant mill (the Strawboard Manufacturing Company Ltd) and its workmen, regarding a scheme of gratuity, was referred to the Indus trial Tribunal, way back in February 1958, and, long 19 years later, this Court is pronouncing on the validity of the award made by the Tribunal in favour of the workmen: Small wonder the respondent workmen, after this tiring and traumatic tantalization, have not turned up to argue their cause, although Shri Parekh, as amicus curiae, has filled the gap.
Such an unhappy and not infrequent phenomenon as considerable delay in adjudication and implementation is destructive of industrial peace and productive of disen chantment with labour jurisprudence.
Naturally, even consti tutional provisions and governmental decisions about labour and concern for its welfare cease to achieve the desired goals when the legal process limps and lingers and rights turn illusory ' when remedies prove elusive.
The life of rights is remedies and a jurisprudence of ready reliefs alone can inhibit the weaker numbers of our land asking the disturbing question: 'Is Law Dead ? '.
Dicey wrote long ago: "The saw ubi jus ibi remedium, becomes from this point of view something much more important than a mere tautological proposi tion.
In its bearing upon constitutional law, it means that the Englishmen whose labors gradually formed the complicated set of laws and institutions which we call the Constitu tion, fixed their minds far more intently on providing remedies for the enforcement of particular rights or for averting definite wrongs, than upon any declarations of the Rights of Man or Englishmen." (Jurisprudence of Remedies: University of Pennsylvania Law Review, Vol. 117, Nov. 1968.
p.l, 16).
It is more than rhetoric to say that courts belong to the people.
93 'Judges occupy the public 's bench of justice.
They implement the public 's sense of justice '.
If the Courts are the fulcrum of the justice system, there is a strong case for the reform of Court methodology and bestowal of atten tion on efficient management of judicial administration.
Otherwise, the courts may be so overloaded or so mismanaged that they grind to a halt and citizens ' exercise of their rights discouraged or frustrated.
The vital aspects of the jurisprudence of remedies include speeding the pace o[ litigation 'from the cradle to the grave '.
We are reluc tant to make these self critical observation 's about putting our house in order, but when the consumers of justice like workmen lose interest in the judicial process and are ab sent, legislative unawareness of research and development as to the needs of courts and simplification and acceleration of the judicative apparatus become matters of national concern.
Law 's delays are in some measure, caused by legis lative inaction in ,making competent, radical change in the procedural laws and sufficient financing and modernising of the justice system as a high priority programme.
The chequered career of this lis and its zigzag climb up the precipice of justice contextually deserves brief narra tion.
The order of reference was made early in 1958, the usual processual exercise before the Tribunal resulted in an award on May 1, 1958 where the tribunal refused the relief bearing on gratuity.
The disappointed workers challenged the award before the High Court which set it aside in Novem ber 1963 too long a hibernation in the High Court for a labour dispute where prompt adjudication is the essence of industrial peace.
Anyway, when the case came back to the tribunal, its decision took another six inscrutable years and, on October 31, 1969 a fresh award was made whereunder the tribunal framed a gratuity scheme and gave the guide lines thereof.
This time the appellant mill straight came to the Supreme Court with the present appeal for which special leave was granted in a limited way, in the sense that it was confined to the question 'whether the correct principles on which ' gratuity should be payable have been followed in this case or not.
It is a fact, though unfortu nate, that this labour litigation arrived in this Court in 1970 but its final chapter is being written by this judgment only in 1977.
And it is noteworthy that the facts are brief, the legal issues small, the arguments brief and this judgment, but for general observations and traditional reference to rulings cited at the bar, could have been judiciously abbreviated.
The main battle at the bar has been over the correct principles in a scheme of gratuity for factory workers and further whether those principles have been departed from under the award assailed by the appellant.
We may mention.
at this stage, that the Parliament has enacted the , which has come into force with effect from September 16, 1972.
Section 4(5) of the said Act gives an option to the workers to choose between the gratui ty scheme under the award and the one under the statute.
Had the workers been represented before this Court it might have been possible for us finally to close this controversy or even produce a reasonable solution by discussion and negotiation and persuade them to opt for 94 one or the other scheme.
Early finality, credible certainty and mutually assented solutions, are the finer processes of conflict resolution a pursuit which baffles us here because of labour 's absence.
All that we can do, therefore, is to adjudicate upon the correctness or otherwise of the princi ples which have gone into the gratuity scheme prepared by the tribunal in the light of the rulings of this Court and the canons of industrial law.
We now proceed to itemise the grounds of attack levelled by Shri I.N. Shroff for the appellant .and assay their worth in the light of the submissions in defence of the award made by Shri P.H. Parekh appearing as amicus curiae.
Even here we may place on record our appreciation of Shri Parekh 's services to the Court and the fairness of Shri Shroff in making his points on behalf of the appelant.
The only dispute, which has ramified into a few issues, relates to the gratuity scheme the tribunal has framed.
Shri Parekh is right in drawing our attention in limine to the financial.
insignificance, for the appellant, of the subject matter of this lis and the consequential disinclina tion we must display to disturb the award.
He has urged that the total annual impact on the industry by the imple mentation of the award is of ,the order of Rs. 3,000/ to a substantial part of which the management has no objection.
What is more, the appellant is prosperous enough to distrib ute dividends around 20% over the years.
Further, since 1972 an obligatory statutory gratuity scheme has come into force with the result that the economic consequences of this litigation, even if the appellant loses are marginal or nil.
This makes us ponder whether, in matters of less than grave moment, this court should, as part of high judicial policy to arrest the tidal flow of unsubstantial litigation, turn away at the portals those who invoke our jurisdiction to examine every case where some legal principle has been wrongly decided, regardless of a sense of 'summit court ' perspective and the rare use of its reserve power so as to preempt a docket explosion and the injustice of delayed justice and invest the High Courts and high tribunals with final legal wisdom.
The amplitude of article 136 is ,meant more for exceptional situations than to serve as hospitable basket to receive all challenges to seemingly erroneous judgments in the country.
As stated earlier, we are confronted by an industrial dispute and are called upon .to apply the principles of industrial jurisprudence with its primary concern for peace among the parties, contentment of the worker 's, the end product being increased production informed by distributive justice.
Law, especially Labour Law, is the art of economic order sustained by social justice.
It aims at pragmatic success, but is guided by value realities.
It believes in relativity and rejects absolutes.
The recent constitutional amendment (article 43A) which emphasizes the workers ' role in production as partners in the process, read in the light of the earlier accent on workers ' rights and social justice, gives a new status and sensitivity to industrial jurispru dence in our 'socialist republic '.
This social philosophy must inform interpretation and adjudication, a caveat needed because precedents become time barred when societal ethos progresses.
We 95 are not called upon to interpret an Act since, in this area of law, the came in on a later date.
Judge made law rules the roost.
Even so, are we fattered by inflexible norms halLowed by dated decisions ? Not in this jurisdiction. 'The golden rule ' in a rapidly changing system, 'is that there are no golden rules '.
We should be guided by realistic judicial responses to societal problems, against the back drop of the new, radical values implied in 'social justice ' to labour, the production backbone of the nation, adjusted to the environs of the particular industry and its economics and kindered circumstances.
The dynamics of labour law, rather than the bonded of old time case law answers questions of current justice.
Cardozo had cautioned in his 'The Nature of the Judicial Process ': "That court best serves the law which recognizes that the rules of law which grew up on a remote generation may, in the fullness of experience, by found to serve another genera tion badly, and which discards the old rule when it finds that another rule of law repre sents what should be according to the estab lished and settled judgment of society, and no considerable property rights have become vested in reliance upon the old rule.
It is thus great writers upon the common law have discovered the source and method of its growth, and in its growth found its health and life.
It is not and i, should not be stationary.
Change of this character should not be left to the legislature.
If judges have woefully misinterpreted the mores of their day, or if the mores of their day are no longer those of ours, they ought not to tie, in helpless submission, the hands of their successors." (Cardozo: The Nature of the Judicial Process: Yale University Press pp.
151 152).
Indeed, we are stating no new proposition since the profu sion of decisions assiduously presented before us states, in sum, that each case has to be decided; on the updated justice of the fact situations therein and the only law that we can reasonably discern from the rUlings we have read is that there is no law but only justice, dependent on a varie ty of socio economic variables, that the tribunal 's award, if his performance is not perverse in the process or the end product.
must be left well alone by this Court even.
if some juristic failing or factual peccadillo can be discovered.
A quest for error and an inclination for correction, frequent ly exercised by higher Courts will do double injury.
It will take away the necessary initiative of the tribunal to produce satisfactory results.
It will delay the finality of industrial adjudication and thereby defeat the paramount purpose of early re adjustment.
Judicial decentralization claims its price and it must be paid by ignoring errors less than grave.
Once this perspective is clear, our non inter ference with this award is just.
Moreover, an industrial tribunal must act on a legal horse sense, rather than on juristic abstractions, on rugged fairness rather than on refined legalisms.
It is shop floor justice.
not five star loveliness.
The weaker qualify for protective order, in the over all view of the matter.
96 Gratuity for workers is no longer a gift but a right.
It is a vague, humanitarian expression of distributive justice to partners in production for long, meritorious service.
We have, therefore, adopt a broad and generous approach to the problems posed before us by Shri Shroff without being mechanistically precedent bound or finically looked into evidence.
Speaking generally, Shri Shroff focussed his fire power firstly on the qualifying period of five years for earning gratuity as against ten years sanctified in some earlier rulings and, secondly, on the basic wage, as contrasted with the 'consolidated ' wage being treated as the base for the computation of gratuity.
He did cite half a dozen of more cases of this court in support which, on closer scrutiny and studied in the light of other citations Shri Parekh emphasized, stand neutralized.
The Tribunal has itself referred to many rulings of this Court, noted the features of the industry in question, the high dividends and 'the low wages and reached a via media which we may regard as a prudent judicial resolution of the simple conflict.
The flavour of the social milleu, the raw realities of industrial conditions and the locale and life style out there, are sensed by the tribunal better than a distant court of last resort primarily specialising in declaration of law.
So we are loathe to upset the scheme unless the tribunal is grievously or egregiously in error.
Shri Shroff staked his case on case law alone and culled passages which upheld basic wages as basic and ten year service for eligibility.
Even here, we must mention that the basic wage at the relevant time (revised subsequently) was in the miserable range of Rs. 20/ per mensem and to calcu late gratuity on this pitiful rate, when after 'long.
and meritorious service ' the worker bids farewell to his labour life in the industry, is to be callous to basic justice.
The Human Today cannot be held captive by the less than human yesterday in a crucial area of social jus tice.
So viewed, we are constrained to negative the two preliminary contentions urged by Shri Shroff while agreeing with him on the smaller points of clarification sought.
We reproduce, at this stage, the decretal part of the award: "The award, therefore, is that the employers should be required to frame a scheme of gratuity for their workmen.
The details of the gratuity scheme are as under: (a)On death of a workman while 15 days wages for each in continous service or on att completed year of service ainment of the age of superann subject to a maximum of uation or on retirement or 15 months.
resignation due to continued ill health or on being incapi citated, 97 (b) On voluntary abandoment 15 days wages for each os service by a workman completaed year of cont in case not falling under inious service subject (a) or termination of to the condition that no service by employers gratuity will be payable on a total service of less than 5 years ,but this condition will not apply in case of resign ation or discharge on the grounds of physical disa blement or incapacity (i) For the purposes of gratuity of a period of six months or over shall be reckoned as 'one year ' while a period less than 6 months will be ignored.
(ii) Gratuity shall be payable to the nominee of the workman in case of his death or to his legal heirs, if no one has been nominated by the workman in this behalf.
(iii) 'Wages ' shall mean and include basic wages and dear food allowance but shall not include bonus.
(iv) Gratuity will not be.
allowed to a work man in case of a serious misconduct committed by him such as insubordination, acts involving moral turpitude, etc.
In case of damage to the property of employers or financial loss, the a,mount to the extent of loss shall be liable to be deducted from the amount of the gratuity.
(v) The basis of payment of gratuity shall be average earnings of a workman during the last three years.
" One of the leading cases both sides referred to is the Delhi Cloth & General Mills Co., vs Workmen & Ors.(1) In this decision the court did make the point: "That gratuity is not in its present day concept merely a gift made by the employer in his own discretion.
The workmen have in course of time acquired a right to gratuity on determination of employment provided the employer can afford, having regard to his financial conditions to pay it.
" Shah, J. speaking for the Court, also empha sized what we have already adverted to: "We consider it right to observe that in adjudication of industrial disputes settled legal principles have little play; the awards made by industrial tribunals are often the result of ad hoc determination of dispnted questions, and each determination for.as a precedent for determination of other dis pute.
An attempt to search for principle from the law built up on those precedents is a futile exercise.
To the (1) ; 98 Courts accustomed to apply settled principles to facts determined by the application of the judicial process, an essay into the unsur veyed expenses of the law of industrial rela tions with neither a compass.nor a guide, but only the pillars of precedents is a disheart ening experience.
The Constitution has howev er invested this Court with the power to sit in appeal over the awards of Industrial Tribu nals which are, it is said, rounded on the somewhat hazy background of maintenance of industrial peace, which secures the prosperity of the industry and the improvement of the conditions of workmen employed in the indus try, and in the absence of principles, prece dents may have to be adopted as guides some what reluctantly to.
secure some reasonable degree of uniformity of harmony in the proc ess.
" Several decisions which were referred to at the bar have been touched upon in the above case.
At the end of the consideration of these cases, the Court made two pregnant observations which we extract: "We may repeat that in .matters relat ing to the grant of gratuity and even general ly in the settlement of disputes arising out of industrial relations, there are no fixed principles, on the application of which the problems arising before the Tribunal or the Courts may be determined and often precedents of cases determined ad hoc are utilised to build up claims or to resist them.
It would in the circumstances be futile to attempt to reduce the grounds of the decisions given by the Industrial Tribunals, the Labour Appel late Tribunals and the High Courts to the dimensions of any recognised principle.
" x x x x x "It is not easy to extract any principle from these cases; as precedents they are conflicting.
" These cautionary signals guide us too in the instant case.
It is true that on account of the peculiar circumstances affecting the textile industry in the whole country the Court felt that the Tribunal was in error in relating gratu ity to the consolidated wage in.
stead of the basic wage.
The emphasis in the ruling is on the facts and circumstances affecting the particular industry and the promotion of industrial peace in that field.
Rightly, if we may say so with respect, did the Court high light the view that deter mination of gratuity is hot based on any definite rules and each case must depend upon the prosperity of the concern, needs of the work, men and the prevailing economic condi tions, examined in the light of the auxiliary benefits which the workmen may get on determination of employment.
In short, the core of the matter is the totally of the circumstances and the stage of evolution of industrial relations at a given time What held good a decade ago may be given the go by years later.
99 Another leading case on the question of gratuity is the British Paints(1) where, after referring to the special features of the particular industry.
and the other benefit schemes enjoyed by the employees, the Court referred to May & Baker where basic wages were treated as the basis and British India Corporation where 'gross salary i.e., basic wages plus dearness allowance ' was held to be the basis.
It may be noted that in this case the minimum qualifying serv ice for gratuity was held to be 5 years except in cases where termination resulted from resignation by the employee.
In Hydro Engineers(2) this Court apparently upheld the contentions now urged before us by Shri Shroff but stressed that no hard and fast rule could be laid down and each case must be decided on its own circumstances.
In Hindustan Antibiotics(3), again, this Court high lighted the relevant circumstances upon which the discre tion of the Tribunal could play, viz., the stability of the concern, the profits made in the past, the future prospects and capacity etc.
This Court declined to disturb the gratu ity scheme in that case even though the wages which formed the basis of the gratuity included dearness allowance.
In Bengal Chemical & Pharmaceutical Works Ltd., Calcut ta(4) a Bench of this Court entered the caveat which we have underscored in the earlier part of this judgment that: "a free and liberal exercise of the power under article 136 may materially affect the fundamental basis of such decisions, namely, quick solution to such disputes to achieve industrial peace.
Though article 136 is couched in widest terms, it is necessary for this Court to exercise its discretionary jurisdic tion only in cases where awards are made in violation of the principles of natural jus tice, causing substantial and grave injustice to parties or raises an important principle of industrial law requiring elucidation and final decision by this Court and discloses such other exceptional or special circumstances which merit the consideration of this Court.
" It was also mentioned, what is not oft remembered when interfering with awards, that the Industrial Disputes Act is "intended to be a self contained one and it seeks to achieve social justice on the basis of collective bargaining, conciliation and arbitration.
Awards are given on circum stances peculiar to each dispute and the tribunals are, to a large extent, free from the restrictions of technical considerations imposed on courts." (1) (2) ; (3) (4) [1959] Suppl.
S.C.R. 136.
100 This approach is what we earlier described as the Tribu nal 's legal hunch or horse sense.
Even Gqziabad Engineer ing Co.,(1) on which Shri Shroff heavily relied, accepts the position that while gratuity is usually related to the basic wage, a departure by relating it to the consolidated wage may be made if there be some strong evidence or excep tional circumstance justifying that course.
Calcutta Insurance Co. Ltd. (2) also placed accent on the practical approach in industrial adjudication and did not interfere with the qualifying service of 5 years except in the case of resignation by the employee where the quali fying period was raised to 10 years.
This survey of the cosmos of case law can expand, but no service will be rendered by that exercise.
All that we need say is that there is nothing fundamentally flawsome in the 5 year period being fixed as qualifying service.
The real reason why some cases like British Paints required a qualifying period of 10 years was that a longer minimum period for earning gratuity in the case of voluntary retire ment or resignation would ensure that workmen do not leave one concern for another after putting in the short minimum service qualifying for gratuity.
We think that current conditions must control the tribu nal 's conscience in finalizing the terms of the gratuity scheme.
Taking things as they are, in our country presently there is unemployment at the level of workers that being the category we are concerned with.
Colossal unemployment means that the worker will not leave his employment merely because he has qualified himself for gratuity.
In an econo, mic situation where there is a glut of labour in the market and unemployment stares the working class in the face it is theoretical to contend that employees will hop from industry to industry unless the qualifying period for earning gratui ty is raised to 10 years.
The tribunal was realistic in fixing 5 years as the period of eligibility.
Our industrial realities do not provide for easy mobility of labour.
What is more, the sense of national consciousness in this field is reflected in the which fixes a period of 5 years as the qualify ing period for earning gratuity.
Decisions have been brought to our notice some of which refer to basic wages and others to consolidated wages as the foundation for computation of gratuity.
These are matters of discretion and the "feel" of the circumstances prevalent in the industry by the Tribunal and, unless it has gone haywire in the exercise of its discretion the award should stand.
We see that in the also, not basic wages but 'gross wages inclusive of dearness allowance, have been taken as the basis.
This, incidental ly, reflects the industrial sense in the country which has been crystallised into legislation.
(1) ; (2)[1967] 2 S.C.R. 596.
101 All things considered, we are disinclined to alter the award on the two critical issues on which it was challenged.
However, there are certain minor clarifications which will eliminate ambiguity and, on that both sides are agreed.
We clarify that wages will mean and include basic wages and dearness allowance and nothing else.
This corresponds to Sec.
2(s) of the Act.
Likewise, we declare that qualify ing service is continuous service (counted with reference to completed years) as defined in Sec. 2(c).
We hold that the award will operate as directed therein i.e. from the date of reference of the dispute.
Both sides agree, in their state ment of the case, that in clause (a) of the award the ex pression due to continued ill health or on being incapaci tated ' governs only resignation although we feel on compas sionate grounds it should govern both situations.
The ambi guity must be resolved in favour of the workers.
In regard to the other conflicts of construction possible, as set out in grounds 7 and 8 of the appellant 's statement of case, we resolve them in favour Of the workmen, abandonment of serv ice being too recondite and the amount involved too trivial for variation by this Court.
Shri I.N. Shroff fairly stated that the Court may make an order regarding costs.
We direct that the appellant do pay the respondents costs which we quantify at Rs. 2000/ .
Out of this sum.
Rs. 1000/will be paid direct to Shri Parekh who has assisted the Court on behalf of the workers and the balance of Rs. 1000/ shall be drawn by the present Presi dent of the Respondent Union.
Our parting thought is that negotiating settlements should be vigorously and systemati cally pursued even by tribunals since litigation, escalat ing.
from deck to deck upto this Court, defeats both, whoev er wins or loses.
This must be a sobering influence on Labour and Management and agencies of conflictresolutions.
That is a legal beacon that can brighten the dark tunnel of industrial conflict and promote national production cheered by shared wealth.
| IN-Abs | In an industrial dispute between the appellant mill and its workmen relating to the payment of gratuity, the Indus trial Tribunal framed a gratuity scheme and gave the neces sary guidelines for its implementation.
Special leave was granted to the appellant by this Court on the limited ques tion whether the correct principles on which gratuity should be payable had been followed in this case or not.
Since the making of the award, the was passed, which, by section 4(5) gave an option to the workers to choose between the gratuity scheme under the award and the one under the statute.
The workers, however, did not put in their appearance in this Court.
It was contended on behalf of the appellant that the qualifying period of service for earning gratuity was ten years and for calculating the amount of gratuity basic wages without adding dearness allowance should be the basis as laid down by some decisions of this Court and the tribu nal was wrong in holding 5 years as the qualifying service and basic wages and dearness allowance as the basis for calculating the amount of gratuity.
HELD: There is nothing fundamentally flawsome in the 5 year period being fixed as the qualifying service.
The Tribunal was realistic in fixing the period of eligible qualifying service as continUoUs service counted with refer ence to the completed years as defined in section 2(c) of the Act.
[100 C&F] (1) In some cases, this Court highlighted the view that the determination of gratuity is not based on any definite rules and each case must depend upon the prosperity of the concern, the needs of the workmen and the prevailing econom ic conditions examined in the light of the auxiliary bene fits which the workmen may get on determination of employ ment.
It was also held that stability of the concern, profits made 'in the past, the future prospects and capacity should be the relevant circumstances which the Tribunal should take into account in giving its award.
Awards are ' given on circumstances peculiar to each dispute and the Tribunals are, to a large extent, free from the restrictions of technical considerations imposed on courts.
In short, the approach of the Tribunal should be what may be de scribed as its legal hunch or horse sense.
Cases like Gaziabad Engineering Co. accept the position that.
while gratuity is usually related to the basic wage, a departure may be made by relating it to the consolidated wage if there be some strong evidence or exceptional circumstances justifying that course.
The real reason why some cases like British Paints required a qualifying period of 10 years was that a longer minimum period for earning gratuity in the case of voluntary retirement or resignation would ensure that workmen did not leave one concern for another after putting in the short minimum service qualifying for gratuity.
But current conditions must control the Tribu nal 's conscience in finalizing the terms of the gratuity scheme.
Colossal unemployment at all levels of workers in the country today means that a worker will not leave his employment merely because he has qualified himself for gratuity In an economic situation where there is a glut of labour in the market and unemployment stares the working class in the face it is theoretical to contend that employ ees will hop from industry to industry unless the qualifying period for earning gratuity is raised to 10 years.
[98 H; 99D; lOO A, D, E, F.] (2) Wages will mean and include basic wages and dearness allowance and nothing else.
This corresponds to section 2(s) of the Act.
Some of the decisions refer to basic wages and others to consolidated wages as the foundation for 92 computation of gratuity.
These are matters of discretion and the "feel" of the circumstances prevalent in the indus try by the Tribunal and, unless it has gone wrong in the exercise of its discretion the award should stand.
In the also it is not basic wages but gross wages inclusive of dearness allowance which had been taken as the basis.
[101 B; 100 G H] Delhi Cloth & General Mills Co. vs Workmen & Ors. ; , British Paints , Hydro Engi neers ; , Hindustan Antibiotics, , Bengal Chemical & Pharamaceutical Works Ltd., [1959] Suppl.
2 SCR 136, Gaziabad Engineering Co., and Calcutta Insurance Co. Ltd. ; re ferred to.
|
: Criminal Appeal No. 24 of 1972.
(Appeal by Special Leave from the Judgment and Order dated 22 10 1971 of the Madhya Pradesh High Court (Indore Bench) in Crl.
A. No. 292/70).
R.L. Kohli, R.C. Kohli and A.G. Ratnaparkhi, for the appel lant.
M.K. Khan and S.K. Dhingra, for respondent No. 1.
Ram Panjwani and H.S. Parihar, for respondent No. 2.
The Judgment of the Court was delivered by GOSWAMI, J.
This appeal by special leave is directed against the judgment of the High Court of Madhya Pradesh convicting the appellant under section 409, Indian Penal Code, and sentencing him to one 110 year 's rigorous imprisonment and to a fine of Rs. 250/ , in default further rigorous imprisonment for three months, in appeal against acquittal at the instance of the complainant (first respondent herein).
The appellant is a senior lawyer of 25 years ' standing in Indore and the complainant was acting as his junior.
The complainant 's father, Dinubhai, was the senior partner of a firm of Chartered Accountant, M/s. Dinubhai & Co., with its registered office in Bombay and a branch office in Indore.
The Indore office was looked after by the second partner, M.C. Mehta.
It appears that the firm was dissolved on July 5, 1960, when Mehta ceased to be a partner and Dinubhai appointed the appellant as counsel and attorney for filing suits and for recovering dues from various parties.
Dinub hai filed a suit, being suit No. 13 of 1962, for recovery of Rs. 12,500/ in the court of the Third Additional District Judge, Indore, impleading M.C. Mehta and one Chandulal Shah as defendants in that suit.
Although the suit was decreed, it appears there were two cross appeals against the decree in the High Court, one by Dinubhai and the other by Chandu lal Shah.
The appellant was appearing for Dinubhai in both the appeals.
He received some amounts in advance from Dinubhai and submitted a statement of account of Shri Dinubhai (exhibit P 1) dated February 9, 1965, wherein two items, namely, Rs. 210/ and Rs. 110/ were mentioned as being towards "paper book charges" respectively on 21 4 1964 and 22 9 1964.
The entry on 22 9 1964 shows that the amount of Rs. 110/ is one of several items mentioned therein as expenses incurred in the appeal flied by Chandu lal Shah against Dinubhai.
So far as the items mentioned in exhibit P 1 on 21 4 1964 including the last item of Rs. 210/ , there is no mention whether the expenditure was actually incurred on that date.
The complainant was not pulling on well with his father for some reason or other and also parted company with his senior, the appellant.
He filed a complaint against the appellant on December 8, 1967, making allegations under sections 409, 468 and 474 IPC.
Ultimately the appellant was charged under section 409 IPC with regard to the amounts of Rs. 210/ and Rs. 110/ which were mentioned in the statement of account (exhibit P 1) received by the complainant on February 10, 1965.
The complainant examined himself and a clerk of the High Court to prove that no paper book charges were deposited on the dates mentioned in the ac counts.
On the other hand a sum of Rs. 26.50 was deposited as paper book charges on March 18, 1965, in the particular appeal.
The appellant denied the charge and stated that there was a typing error in the accounts and the actual figures should have been Rs. 211/(and not Rs. 210/ ) and Rs. 10/ (and not Rs. 110/ ).
When the appellant 's attention had been drawn to these amounts he admitted these to be typing errors and asked for adjustment of the amount of Rs. 300/ towards his fees in the case of Kothari Book Depot.
It is rather curious that a criminal complaint should have been lodged against the appellant nearly three years after the receipt of the accounts by the complainant.
111 The trial court acquitted the accused (appellant herein) by observing as follows : "To sum up, the prosecution has been launched after inordinate unexplained delay, there is no clear and conclusive evidence of the criminal intention and dishonest mental act of the accused, the real aggrieved person has not come with the complainant but has already sought the alternative remedy in Civil Court which is being already pursued.
The question whether or not the adjustment made by the accused towards his fees was proper can more appropriately be decided by Civil Court.
Accused having reasonable claim against the complainant for any equivalent sum of money, his user of the disputed sum for his own purpose will not amount to criminal breach of trust".
The High Court, on the other hand, held that the charge was established against the accused and set aside the ac quittal.
The High Court held that the explanation of the accused did not appear to be true and, therefore, could not be accepted.
It further held that it was clear that on the dates mentioned in the accounts no amounts were deposited as paper book charges in the High Court.
The High Court con cluded as follows : "Consequently it cannot be doubted that the respondent, who as an agent of the com plainant 's father was entrusted with the amounts, showed false expenses and thereby kept the amounts with himself.
In the face of these facts and also on the finding that the explanation given by the respondent cannot be accepted, the respondent cannot escape con viction under section 409 I.P.C. as that was the only charge framed against him by the trying Magistrate".
The statement of account (exhibit P.I ) as well as the correspondence between the appellant and the complainant 's father, who was client, dearly show that there was mutual accounting and adjustment between them.
The mere fact that certain amounts were in the hands of the appellant and the accounts submitted were incorrect would not lead to the inevitable conclusion that the appellant committed criminal breach of trust in respect of these items.
The complainant, who was a junior attached to him and was looking after his cases could himself easily find out the discrepancies in the accounts and in a normal course he would have drawn the attention of his senior on receipt of the statement of account in February 1965.
The accused in his statement under section 342, Criminal Procedure Code, stated, inter alia, as follows : "Typing error has occurred in the statement of account of exhibit P 1.
The differ ence of Rs. 300.00 which has occurred, has been adjusted against my fees in Kothari Book Depot 's case at the instance of Suryakant.
I have given a receipt for it which is in possession of Suryakant.
Surya kant used to maintain account of Court expenses of Dinub hai 's cases in a register.
That register is with Suryakant.
112 Suryakant used to remain present in the court on each date along with me.
He knows every thing.
Nothing is concealed from him.
There is Gadbad of money between Suryakant and his father.
Hence on the instigation of other people this false case has been launched.
Suryakant had got typed the statement of account exhibit P I from the register".
On one side we have the solitary statement of the complainant.
Even his father is not there to corroborate him or even to show that he authorised him to file the com plaint.
As against his statement, we have the explanation of the appellant.
The trial court who had an opportunity to see the complainant giving evidence did not choose to rely on his version of the case and preferred to accept the explanation of the appellant.
In this state of the evidence we fail to see how the High Court, in an appeal against acquittal, thought it possible to hold the charge as proved.
While the complaint was filed on December 8, 1967, a few months earlier on May 16, 1967, a lawyer 's notice was ad dressed to the appellant on behalf of Dinubhai.
We may extract the following passage from that letter: "My client has instructed me to call upon you to remit to him the balance of Rs. 1700/ lying with you (after deducting your fees of Rs. 3300/ from the amount of Rs. 5,000/ paid to you) within 24 hours of the receipt of this reply otherwise my client will not only place the matter before the Bar Council of M.P. but, if so advised, will also file a suit for its recovery against you at your cost and consequences which please note".
This would clearly show that neither Dinubhai nor his lawyer ever thought of attributing any dishonest intention or criminal intent to the appellant.
In view of this letter it is not possible to accept the sole testimony of the complainant imputing dishonest intention on the part of the appellant.
We are clearly of opinion that there was no sufficient ground for the High Court to interfere with the acquittal in this case when the reasons given by the trial court were weighty and cogent and there was no compelling justification to take a contrary view.
At the conclusion of the argument by Mr. Khan on behalf of the complainant pressing for conviction of the appellant, Mr. Panjwani,appearing on behalf of the State, fairly enough, did not think it proper to support the judgment of the High Court.
In the result the appeal is allowed.
The judgment of the High Court is set aside.
The appellant shall be dis charged from his bail bond.
P.B.R. Appeal allowed.
| IN-Abs | The appellant was a lawyer, under whom the complainant (first respondent) was a junior.
The appellant was engaged as counsel in certain cases by the complainant 's father.
The appellant submitted statement of accounts to the complain ant 's father in respect of the sums spent by him in the suits.
After a lapse of three years the complainant filed a complaint against the appellant making allegations under sections 409, 468 and 474 I.P.C. The trial Court acquitted him holding that the prosecution had been launched after inordi nate delay and that there was no clear and conclusive evi dence of criminal intention and dishonest mental act on the appellant 's part.
The High Court, on appeal, set aside the acquittal holding that the appellant 's explanation in regard to the discrepancies was not true and could not be accepted.
Allowing the appeal to this Court, HELD: There was no sufficient ground for the High Court to interfere with the acquittal in this case when the rea sons given by the trial Court were weighty and cogent and there was no compelling justification to take a contrary view.
[112 F] The mere fact that certain amounts were in the hands of the appellant and the accounts submitted were incorrect would not lead to the conclusion that the appellant commit ted criminal breach of trust.
[111 F] In the instant case, the complainant was a junior of the appellant and he could himself easily find out the discrep ancy in the accounts and could have drawn the appellant 's attention to it.
The complainant 's father did not authorise him to file the complaint nor was he examined to corroborate the complainant.
Secondly, in a notice issued to the appel lant by the complainant 's father the latter did not at tribute any dishonest intention or criminal intent on for mer 's part.
The High Court was wrong in holding the charge as proved and in reversing the order of the trial Court.
[111 G; 112 C]
|
Appeal No. 721 of 1972.
(From the Judgment and Order dated 13.10.1970 of the Punjab & Haryana High Court in Civil Writ No. 1831 of 1968).
K.S. Suri, for the appellants.
R.S. Sharma and A. D. Mathur, for the respondent.
The Judgment of the Court was delivered by SARKARIA, J.
The short question involved in this appeal on certificate, directed against a judgment of the High Court of Punjab and Haryana is: Whether the sales made to.
a dealer who has applied for registration under the Punjab General Sales Tax Act 1948, before his application is al lowed, are to be treated as sales to an unregistered dealer or registered dealer, when the registration is effected from the date of the application ? M/s.
Patiala Biscuits Manufacturers Pvt.
Ltd. (hereinaf ter referred to as the assessees) appointed M/s. Rajpura Biscuit Company as their sole selling agents.
The agents made an application on 1.1.1966 in the appropriate form for registration as a dealer under the Punjab General Sales Tax Act, 1948 (hereinafter called the Act).
On the same day, the agents (referred hereafter as the purchasing dealer) made a similar application for obtaining registration cer tificate, under the Central Sales Tax Act.
The appropriate Assessing Authority accepted both these applications and on March 27, 1966 issued the registration Certificate with effect from 1.1.1966.
The assessees filed their return for the quarter ending March 31, 1966 in April, 1966 and claimed deductions under section 5(2)(a)(ii) in respect of sales of the value of Rs. 32,56,267.35 made by them between 1 1 1966 to 31 3 1966 to the purchasing dealer.
The Assessing Authority, Patiala rejected this claim and assessed tax, amounting to Rs. 1,99,558.94.
on the proceeds of the sales made by the asses sees to the purchasing dealer between 1.1.1966 and 27.3.1966.
The reason given by the Assessing Authority for refusing this relief to the assessees was that during this period, the purchasing dealer was not in possession 87 of the registration certificate, the same having been issued only on March 27, 1966.
The assesses impugned the validity of this order of the Assessing Authority by a writ petition in the High Court, under Articles 226/227 of the Constitution.
The High Court held that since the certificate of registration had been granted with effect from 1 1 1966, which was the date of the application, it could not be said that the sales during this period commencing from 1.1.1966, were made to an unregis tered dealer.
It further noted that apart from the asses sees, the purchasing dealer had also, been taxed with regard to the same transactions resulting in double taxation which was against the basic scheme of the Act, the Rules and the notifications issued thereunder.
On these premises, the High Court allowed the writ petition and quashed the im pugned order to the extent to which it was contrary to s.5(2)(a)(ii) of the Act in respect of sales made between 1.1.1966 and 27.3.1966.
The High Court however granted a certificate under article 133(1)(a) and (c) of the Constitu tion, on the basis of which the Revenue has come in appeal to this Court.
It would be appropriate to have, at the outset, a look at the relevant provisions of the Act and the Rules.
The material provision is in section 5(2) (a) (ii) which reads as under: "In this Act the expression "taxable turnover" means the part of a dealer 's gross turnover during any period which remains after deducting therefrom: (a) his turnover during that period on . . (i) . . (ii) sales to a registered dealer of goods . declared by him in a prescribed form as being intended for re sale in the State of Punjab . .
Provided that in case of such sales, a declaration duly filled up and signed by the register dealer to whom the goods are sold and containing prescribed particulars on a pre scribed form (obtained from the prescribed authority) is furnished by the dealer who sells the goods.
" Section 7 provides for the registration of dealers.
It says: "(1) No dealer shall, while being liable to pay tax under this Act, carry on business as a dealer unless he has been registered and possesses a registration certificate.
(2) Every dealer required by sub section (1) to be registered dealer shall make appli cation in this behalf in the prescribed manner to the prescribed authority.
(3) If the said authority is satisfied that an application for registration is in order, he shall, in accordance with 7 240SCI/77 88 such rules and on payment of such fees as may be prescribed, register the application and grant him a certificate of registration in the prescribed forms which may specify the class or classes of goods for the purpose of sub clause (ii) of clause (a) of subsection (2) of section 5.
(4) . (5) When any dealer has paid the amount of penalty imposed under section 23 in respect of any contravention of sub section (1) of this section, the Commissioner shall register such dealer and grant him a certificate of regis tration, and such registration shah take effect as it had been made under sub section (3) of this section on the dealer 's applica tion.
In case a dealer commits default is not getting himself registered as required by Sec. 7, certain consequences follow.
Under s.11(6) such a defaulting dealer is liable to be assessed on the basis of best judgment and the Assessing Authority may, in addition to the tax so assessed, impose on him by way of penalty a sum not exceeding one and half times that amount.
Such a defaulter is further liable to prosecution under section 23 (1) for carrying on business as a dealer in contravention of the provisions of section 7(1), and on conviction, he can be sentenced to fine not exceeding Rs. 1,000/ .
The application for registration has to be made to the appropriate Authority in the prescribed Form.
The manner in which such an application is to be dealt with by the Authority is provided in Rule 5 of the Punjab General Sales Tax Rules, 1949 framed under the Act.
This Rule as it stood before the amendment of October 10, 1966 was as follows: "When the appropriate Assessing Authori ty, after making any enquiry that he may think necessary, is satisfied that the applicant is a bona fide dealer and has correctly given all the requisite information that he has deposit ed the registration fee into the appropriate Government treasury and that the application is in order, he shall register the dealer and shall issue a Certificate of registration in Form S.T.III or S.T. IV according as the dealer has one or more than one place of business in Punjab.
" Rule 5 was amended by Punjab Government Notification No. GSR237/PA 46/48/S 27/Amd(5)/66 dated 10th October, 1966, and in place of the last sentence commencing with the words "in .Form S.T . "of the old Rule, the following was substituted: " . in Form S.T. IV which shall be valid from the date of receipt of application for registration by the Assess 89 ing Authority or from the date of commencement of the liability to pay tax, whichever is later.
" Ride 26 provides: "A dealer, who wishes to deduct from his gross turnover the amount in respect of a sale on the ground that he is entitled to make such deduction under the provisions of subclause (ii) of clause (a) of sub section (2) of section 5 of the Act, shall, on demand, pro duce in respect of such a sate the copy of the relevant cash memo or bill, according as the sale is a cash sale or a sale on credit, and a declaration in writing in Form S.T. XXII by the purchasing dealer or by his agent, that the goods in question are intended for re sale in the State of Punjab or such goods are specified in his certificate of registration for use by him in the manufacture in the State.
of Punjab of any goods for sale.
" Rule 26 was also amended later.
The amended Rule is, in substance, the same, excepting that it was clarified that the dealer claiming deduction has to produce the declaration of the purchasing dealer, in the prescribed form, at the time of assessment.
The main contention of Shri K.S. Suri, learned Counsel for the appellant is that the declaration form prescribed under the old Rule 26, as it stood at the material time, required the purchasing dealer to specify at the time of the sale, in the prescribed Form S.T. XXII, the number of the registration certificate.
Stress has also been placed on the words "registered and possesses" used in sub section (1) of Sec. 7, which according to Counsel, indicate that a dealer having a taxable turnover, cannot validly carry on his business, unless he is actually registered and is in physical possession of the registration certificate issued under Sec. 7.
A compliance with the aforesaid mandatory requirement of section 7(1) and Rule 26, Form XXII proceeds the argument could be possible only if at the time of the sales in question, the purchasing dealer as well as the selling dealer, both, were in actual possession of the requisite registration certificates.
Shri Suri has adopted the reasoning of the Sales Tax Tribunal in Appeal No. 109 of 1967 68 (M/s. Darshan Soap Mills, Batala Road, Amritsar vs The State) decided on 12 2 1968.
It is contended that Rule 5, as it stood at the material time, did not empower the registering Authority to grant the registration Certificate retrospectively, with effect from the date of the application.
It is maintained such a power was conferred on the Authority, only by the Punjab Govern ment Notification No. GSR 237/PA 46/48/S 27 Amd.(5)/16 with prospective effect from October 10, 1966.
Taking the last point first, we are of opinion that the amendment of Rule 5 by the Punjab Government Notification, dated October 10, 1966, did not confer any new or additional power on the registering Authority.
The power to grant the registration Certificate with effect from the date of the application was already there.
The amendment was only clarificatory of the law as it stood prior to it.
It only 90 made explicit which was formerly implicit.
A definite indication is available in the language of sub section (5) read with sub sections (2) and (3) of section 7, .
itself, that the registering Authority had the power to give effect to the registration from the date of making the application.
Be that at it may, the words "has been registered and possesses a registration certificate" used in sub section
(1 ) of section 7 have to be construed in accord with the general tenor of the Section as a whole, and in a manner which would avoid oppressive, unreasonable and anomalous results.
As rightly pointed out in Chandra Industries vs The Punjab State and ors.(1), it could never be the intention of the Legislature that a dealer liable to pay tax who has in compliance with the requirements of sub sections (2) and (3) of section 7, "done all which lay in power to obtain the regis tration certificate, should pull down his shutters and keep his business closed under pain of being punished under section 23(1) and await indefinitely the pleasure and leisure of the prescribed authority in issuing the registration certifi cate.
Adoption such a construction would be to make the applicant liable to punishment for the laches and delays of the authority and its office." As regards the requirement enjoined by the Form pre scribed under Rule.
26, to enter the number of the registra tion certificate in the declaration of the purchasing dealer at the time of sale, the same has to be viewed with rea sonable flexibility and reconciled with Rule 5 as clarified by the Notification, dated October 10, 1966.
Thus con strued harmoniously with the related statutory provisions, the requirement of Rule 26 will be substantially satisfied, if the number of the registration certificate granted subsequently, but covering retrospectively the period of the sales in respect of which deduction is claimed is supplied by the claimant along with the declaration of the purchasing dealer at the time of assessment to the Assessing Authority.
It is thus clear as daylight that at the relevant time, also, the registering Authority was fully competent to issue the registration certificate to the dealer with retrospective effect from the date of filing the applica tion.
A perusal of the registration certificate would show that it was, in terms, made effective from January 1, 1966.
This is manifest from the words "the dealer is liable to pay tax w.e.f.
1.1.1966" used by the Authority, prominently, in the heading of the Certificate.
It necessarily follows, therefore, that during the period from 1.1.1966 to 27.3.1966, also, the purchasing dealer was a registered dealer possessing a registration Certificate within the Contemplation of section 7(1) of the Act.
This being the correct position, the assessees; were enti tled to the deduction under section 5(2)(a)(ii) of the Act in respect of the sales made by them to the purchasing dealer during the whole of the quarter ending 31st March 1966.
The High Court was therefore, right in determining the question posed, in favour of the assessees and against the Revenue.
The appeal fails and is dismissed with costs.
P.B.R Appeal dismissed.
| IN-Abs | According to section 5(2)(a)(ii) of the Punjab General Sales Tax Act, 1948, taxable turnover means the part of a deal er 's gross turnover during any period which remains after deducting therefrom the turnover during that period, on sales to a registered dealer of goods declared by him in a prescribed form as being intended for re sale in the State.
Section 7(1) provides that no dealer shall carry on business as a dealer unless he has been registered and possesses a registration certificate.
Rule 5 of the Punjab General Sales Tax Rules, 1949 as amended in October 1966 provides that the certificate of registration issued by the Assessing Authority shall be valid from the date of receipt by him of the application for registration or from the date of Commencement of the liability to pay tax whichever is later.
Rule 26 provides that a dealer claiming deduction under section 5(2)(a)(ii) shall produce on demand the cash memos or bill and a declaration in writing by the purchasing dealer that the goods specified in the certificate of regis tration are for use by him.
The assessee (respondent) and the purchasing dealer, the sole selling agent of the assessee, made applications on January 1, 1966 for registration as dealers.
The registra tion certificates were issued to them on March 27, 1966 with retrospective effect from January 1, 1966.
The Assessing Authority rejected the assessee 's claim for deduction under section 5(2)(a)(ii) of sales made by them to the purchasing dealer on the ground that during the period between January 1 and March 31, 1966, the purchasing dealer was not in possession of the registration certificate.
In a petition under article 226 of the Constitution the High Court held that since the certificate of registration had been granted with effect from January 1, 1966, i.e. the date of application, it could not be said that the sales during the quarter were to an unregistered dealer.
On appeal it was contended that to be entitled to deduc tion under the Act both the purchasing and selling dealers 'should be in physical possession Of the registration cer tificate at the time of sale.
Dismissing the appeal, HELD: The assessees were entitled to deduction under section 5(2)(a)(ii) in respect of sales made by them to the purchas ing dealer during the quarter.
[90 G] (a) At the relevant time, the registering authority was fully competent to issue the registration certificate to the dealer with retrospective effect from the date of filing of the application.
The amendment of r. 5 made in October 1966 did not confer any new or additional power on the registering authority but was only clarificatory of the law.
The language of section 7 is clear that the registering authority had the power to give effect to the registration from the date of making the application.
[90 F; A] 86 (b) The words "has been registered and possesses a registra tion certificate" in section 7(1) should be construed in accord with the general tenor of the section as a whole, and in a manner which would avoid oppressive, unreasonable and anomalous results.
So construed it could never be the intention of the legislature that a dealer liable to pay tax, who has in compliance with the requirements of section 7(2) and (3) done all which lay in his power to obtain the regis tration certificate, should pull down his shutters and keep his business closed under pain of being punished and await indefinitely the pleasure and leisure of the prescribed authority in issuing the registration certificate.
Adoption of such a construction would be to make an applicant liable to punishment for the laches and delays of the authority and its office.
[90 B C] Chandra Industries vs The Punjab State & Ors. 29, S.T.O. 558, approved.
(c) The requirement of r. 26 will be substantially satisfied if the number of the registration certificate is supplied by the claimant alongwith the declaration of the purchasing dealer at the time of assessment to the Assessing Authority.
[90 E]
|
: Criminal Appeal No. 343 of 1976.
(Appeal by Special Leave from the Judgment and Order dated 27 1 1975 of the Rajasthan High Court in D.B. Crl.
Appeal No. 575/74) S.M. Jain, I. Makwana and D. Shandari, for the appellant.
Doongar Singh and S.K. Garnbhir, for the respondents.
The Judgment of the Court was delivered by GOSWAMI, J.
The respondents were tried by the Sessions Judge, Merta (Rajasthan) for offences under sections 302, 302/149 and some other minor sections of the Indian Penal Code.
Respondent Goparam was acquitted of all the charges.
The other respondents also were acquitted of the charges under .sections 302 and 302/149, IPC.
Respondent Sangram was convicted under section 304 Part 11, IPC.
Respondent Dayal ram was convicted under section 324 IPC.
Respondents Budharam and Ramdeen were convicted under section 323 140 Being aggrieved by the judgment of the Sessions Judge, the State of Rajasthan preferred an appeal against acquittal of the major charges under section 378 of the Code of Crimi nal Procedure, 1973.
The Sessions Judge delivered the judgment on March 30, 1974 and the Code of Criminal Procedure, 1973, came into force from April 1, 1974.
The appeal was, therefore, preferred under the new Code.
It appears that the State of Rajasthan preferred a petition for leave to appeal under section 378(3) of the Code of Criminal Procedure, 1973, on June 27, 1974, which was within the period of limitation prescribed under article 114(b) of the .
Article 114(a) of the , provides for a period of limitation for appeal from.
an order of acquittal under subsection (1) or sub section (2) of section 417 of the Code of Criminal Procedure, 1898 (hereinafter to be described as the Old Code).
The being an act of the year 1963, does not naturally refer to section 378 of the Code of Criminal Procedure Code, 1973.
Section 378 of the Code of Criminal Procedure, 1973, is equivalent to section 417 of the Old Code with an important difference in case of appeal against acquittal by the State.
Under the Old Code there was no provision for taking leave of the High Court by the State for presentation of an appeal to the High Court against an original or appellate order of acquittal.
There was, however, provision for obtaining special leave to appeal under section 417(3) of the Old Code against an order of acquittal in any case instituted upon complaint.
With some changes about limitation, with which we are not con cerned, provision for special leave to appeal in any case instituted upon complaint has been retained in the new Code.
Unlike in the Old Code, section 378(3) provides that no appeal under sub section (1) or sub section (2) thereof shall be entertained except with the leave of the High Court.
Such a. provision for obtaining leave of the High Court by the State was absent in the Old Code.
Since the State flied an appeal against acquittal in this case soon after the coming into force of the new Code, the State of Rajasthan preferred an application describing it as a petition for leave to appeal under section 378(3) of the Code of Criminal Procedure, 1973, with a prayer "to accept this petition to file an appeal in the present case . "Although the application was described as one under section 387(3) of the Code of Criminal Procedure, all the facts and other requisites for a memorandum of appeal, including the grounds on which the appeal was rounded, were given in as great a detail as was necessary.
The High Court after hearing the State granted leave to appeal on August 16, 1974.
The State thereafter filed again a petition of appeal on September 10, 1974.
This date is clearly.
beyond the period of ninety days prescribed under article 114(e) of the .
The High Court dismissed the appeal on January 27, 1975 as time barred.
In view of section 8 of the , it is not disputed before us that article 114(a) is applicable in this case.
The respondents, however, submit that the petition of appeal should have 141 been presented within ninety days of the judgment of the Sessions Judge which was on March 30, 1974.
Since that was not done and there was not even an application for condona tion of delay, the High Court had no alternative then to dismiss the appeal as time barred.
The respondents further add that it was the practice of the Rajasthan High Court to present a memorandum of appeal after obtaining leave of the High Court.
It was, therefore, incumbent upon the appellant to have preferred the petition of appeal within ninety days as prescribed under the law.
The High Court also while refusing leave to appeal to the Supreme Court observed in its order that "the practice of this court is that separate memo of appeal has to be filed in all matters relating to the grant of leave to appeal under section 378 Cr. P C.".
It is difficult to appreciate the reference to practice, by the High Court, so far as appeals by State are concerned when the new Code of Criminal Procedure, for the first time, provided for obtaining leave to appeal by the State only from April 1, 1974.
It is admitted that there are no rules laid down by the High Court in the matter of application for leave to appeal by the State.
It is, therefore, not possi ble to decide the matter relying upon the so called practice soon after the provision has been introduced.
The matter will, therefore, have to be decided in terms of section 378(1) and (3) of the Code of Criminal Procedure, 1973.
Section 378(1), so far as it is material for our purpose, provides that the State Government may direct the Public Prosecutor to present an appeal to the High Court from an original or appellate order of acquittal.
Sub section (3) of that section provides that such an appeal shall not be entertained except with the leave of the High Court.
Under the law it will be perfectly in order if a composite application is made giving the necessary facts and circumstances of the case along with the grounds which may be urged in the appeal with a prayer for leave to entertain the appeal.
It is not necessary, as a matter of law, that an application for leave to entertain the appeal should be lodged first and only after grant of leave by the High Court an appeal may be preferred against the order of acquittal.
If such a procedure is adopted, as above, it is likely, as it has happened in this case, the appeal may be time barred if the High Court takes more than ninety days for disposal of the application for leave.
The possibility that the High Court may always in such cases condone the delay on applica tion filed before it does not, in law, solve the legal issue.
The right conferred by section 378(1), Cr.
P.C., upon the State to prefer an appeal against acquittal will be jeopardised if such a procedure is adopted, for in certain cases it may so happen that the High Court may refuse to exercise its discretion to condone the delay.
The right conferred under the section cannot be put in peril by an interpretation of section 378, Cr.
P.C. which is likely to affect adversely or even perhaps to destroy that right.
Besides, under article 114 of the , in an appeal from an order of acquittal by the State, the period of limitation is 142 ninety days from the date of the order appealed from; where as in an appeal from an order of acquittal, in any case instituted upon complaint, the period is thirty days from the date of the grant of special Leave.
Thus there is a clear distinction between the two types of appeals with regard to terminus a quo under article 114 It is there fore, not fiecessary to wait until the grant of leave by the High Court to present a memorandum of appeal against acquit tal at the instance of the State.
Thus appeal can be filed by the State within ninety days from the date of the order of acquittal and a prayer may be included in that appeal for entertaining the appeal under sub section (3) of section 378, Cr.
If the leave sought for is not granted by the High Court, the appeal is not entertained and stands dis missed.
We are, therefore, clearly of opinion that the application for leave to appeal, which was made by the State in this case, is equivalent to a memorandum of appeal under section 373(1) read with sub section (3) of that section of the Code of Criminal Procedure 1973.
The fact that the application mentioned section 378(3) is not deci sive of the true character of the applicant1on which to all intents and purposes was a memorandum of appeal.
There was There was therefore, no need for presentation of a second petition of appeal nor for an application for condonation of delay in this case.
The petition of appeal was filed within time and the High Court committed an error of law in dismissing the same as time barred.
In the result the appeal is allowed.
The order of the High Court is set aside.
The petition of appeal of June 27, 1974, shall be restored to the file of the High Court and treated as a memorandum of appeal under section 378(1) of the Code of Criminal Procedure, 1973, and, since leave had already been granted by the High Court, the appeal will be disposed of in accordance with law.
Appeal allowed.
| IN-Abs | The State filed an application under section 378(3) of the Cr.P.C, 1973, for leave to appeal against the acquittal of the respondents, of the charges under section 302 and 302/149 I.P.C., by the Trial Court.
The application, although made under section 378(3) contained all the requisites for a memoran dum of appeal.
The High Court granted the appellant leave to the appeal, but dismissed the appeal filed thereafter, on the ground that it had not been filed within ninety days of the date of judgment appealed from, and was therefore time barred under article 114(a) of the .
Allowing the appeal by special leave the Court, HELD (1) The High Court has not laid down any rules in the matter of application for leave to appeal by the State.
The matter will have to be decided in terms of section 378(1) and (3) of the Code of Criminal Procedure, 1973.
An appeal can be filed by the State within ninety days from the date of the order of acquittal, and a prayer may be included in that appeal for entertaining the appeal under sub section (3) of section 378 Cr.
The appeal may otherwise become time barred if the High Court takes more than ninety days for disposal of the application for leave, and refuses to exercise its jurisdiction to condone the delay.
The right conferred under the section cannot be put in peril by an interpretation of section 378, Cr.
P.C. which is likely to affect adversely or even perhaps to destroy that right.
[141 C H] (2) The fact that the appellant 's application mentioned section 378(3) is not decisive of the true character of the application which to all intents and purposes was a memoran dum of appeal.
[142 C D]
|
: Criminal Appeal No. 190 of 1976.
(Appeal by Special Leave from the Judgment and Order dated 15 7 1975 of the Madras High Court in Criminal Appeal No. 162/ 75.
Vineet Kumar and M. Mudgal, for the appellant.
A.V. Rangam and Miss A. Subhashni, for respondent No. 1 K. Jayaram and K. Ram Kurnar, for respondents Nos. 2 4.
The Judgment of the Court was delivered by CHANDRACHUD, J.
The appellant, Palaniappa Gounder, was convicted by the learned Principal Sessions Judge, Salem, under section 302 of the Penal Code and was sentenced to death on the charge that on August 23, 1974 he had committed the murder of one Sengoda Goundar.
Two appellant 's son and daughter in law were convicted by the learned Judge for abetting the murder and were sentenced to life imprisonment.
The three accused filed an appeal in the High Court of Madras which upheld the appellant 's conviction under section 392 but reduced the sentence from death to imprisonment of life.
However, while reducing the substantive sentence the High Court imposed a fine of Rs. 20,000/ on the appellant and directed that out of the fine, if realised, a sum of Rs, 15,000/ should be paid to the son and daughters of the deceased under section 357(1) (c) of the Criminal Procedure Code, 2 of 1974.
The other two accused were acquitted by the High Court.
We are not concerned in this appeal with the legality of the appellant 's conviction or with the acquittal of his daughter and son in law.
The special leave granted by this Court is limited to the question of the propriety of the fine imposed by the High Court.
The reason and occasion for imposing the sentence of fine was that an application was filed before the High Court under section 482 of the Criminal Procedure Code by a son and two daughters of the decased praying that the appellant, his son and daughter in law be asked to pay to them, as heirs of the deceased, compensation in the stun of Rs. 40,000/ for the death of their father.
Section 482 of the Code under which the heirs of the deceased filed the application for compensation corresponds to section 561 A of the Criminal Procedure Code of 1898.
It saves the inherent powers of the High Court to make such orders as may be necessary to give effect to any order under the Code or to prevent abuse of the process of any Court or otherwise to secure the ends of justice.
A provision 134 which saves the inherent powers of a Court cannot over ride any express provision contained in the statute which saves that .power.
This is put in another form by saying that if there is an express provision in a statute governing a par ticUlar subject matter there is no scope for invoking or exercising the inherent powers of the Court because the Court ought to apply the provisions of the statute which arc made advisedly to govern the particUlar subject matter.
From this it will be clear that the application made by the heirs of the deceased for compensation could not have been made under section 482 since section 357 expressly confers power on the court to pass an order for payment of compensation in the circumstances mentioned therein.
That did not, howev er, affect the power of the High Court to deal with the application because though the application was wrongly described as having been made under section 482 the High Court could deal with it as if it were made under section 357 of the Code.
That in fact is what the High Court proceeded to do, for it passed the order of compensation not under section 482 but under section 357(1)(c) of the Code.
Section 357 of the Code of Criminal Procedure, 2 of 1974, reads thus: "357.
Order to pay compensation.
(1) When a Court imposes a sentence of fine or a sentence (including a sentence of death) of which fine forms a part, the Court may, when passing judgment, order the whole or any part of the fine recovered to be applied : (a) in derraying the expenses properly incurred in the prosecution; (b) in the payment to any person of compen sation for any loss or injury caused by the offence, when compensation is, in the opinion of the Court, recoverable by such person in a Civil Court; (c) when any person is convicted of any offence for having caused the death of another person or of having abetted the commission of such an offence, in paying compensation to the persons who are, under the (13 of 1855), entitled to recover damages from the person sentenced for the loss resulting to them from such death; (d) when any person is convicted of any offence which illdudes theft, criminal misappropriation, criminal breach of trust, or cheating, or of having dishonestly received or retained, or of having voluntarily assist ed in disposing of, stolen property knowing or having reasons to believe the same to be stolen, in compensating any bona fide purchas er of such property for the loss of the same if such property is restored to the possession of the person entitled thereto.
135 (2) If the fine is imposed in a case which iS subject to appeal, no such payment shall be made before the period allowed for presenting the appeal has elapsed or of an appeal be presented, before the decision of the appeal.
(3) When a Court imposes a sentence, of which fine does not form a Part, the Court may, when passing judgment, order the accused person to pay, by way of compensation, such amount as may be specified in the order to the person who has suffered any loss or injury by reason of the act for which the accused person has been so sentenced.
(4) An order under this section may also be made by an Appellate Court or by the High Court or Court of Sessions when exercising its powers of revision.
(5) At the time of awarding compensation in any subsequent civil suit relating to the same matter, the Court shall take into account any sum paid or recovered as compensation under this section.
" Clauses (a), (b) and (d) of section 357(1) need not be con sidered firstly because the High Court has passed the order of compensation trader cl.
(c) and secondly because those clauses have no application.
No order having been passed by the High Court for derraying the expenses incurred in the prosecution cl.
(a) does not come for consideration.
Clause (b) has no application to cases in which the heirs of a person whose death has been caused apply for compensation because that clause deals with the payment of compensation to the very person to whom.
any loss or injury has been caused as a result of the offence committed against him or his property and when compensation is recoverable by such person in a Civil Court.
Clause (d) deals with a different Class of cases altogether and need not detain us.
Clause (c) of section 357(1) under which the High Court has passed the order for compensation enables the Court to direct that the whole or any part of the fine recovered may be applied in paying compensation to the persons who are under the entitled to recover damages from the person sentenced for the loss resulting to them from the death of the person whose heirs, as described in the Act of 1855, they claim to be.
Since under the Act of 1855, persons who may be compensated are the wife, hus band, parent (including grand parents) and child (including grand children and step children), the application filed in the High Court was maintainable at the instance of the son and daughters of the deceased.
It cannot however be overlooked that the order for compensation can be passed under section 357(1)(c) only when "a Court imposes a sentence of fine or a sentence (including a sentence of death) of which fine forms a part".
We are concerned in this appeal to examine primarily the legality and propriety of.
the sentence of fine imposed by the High Court because upon that would depend the efficacy and indeed the very existence of the order for payment of com pensation to the heirs of the deceased.
The compensa tion, as 10 240SC1/77 136 provided in the section, has to come out of the fine.
Therefore, if on a proper application of the principles of sentencing, the fine imposed by the High Court is.found to be excessive and has therefore to be reduced, the order regarding the payment of compensation must suffer a corre sponding variation.
There can be no doubt that for the offence of murder Courts have the power to impose a sentence of fine under section 302 of the Penal Code.
That section provides that whoever commits murder shah be punished with death, or imprisonment for life, and "shall also be liable to fine".
That is why section.
357(1) of the Code speaks of "a sentence (includ ing a sentence of death) of which fine forms a part.
" That is only an instance of the practical application of section 302 under which not only a sentence of imprisonment for life but even a sentence of death can legitimately be combined with a sentence of fine.
But legitimacy is not to be confused with propriety and the fact that the Court possesses a certain power does not mean that it must always exercise it.
Though, therefore, the High Court had, the power to impose on the appellant a sentence of fine alongwith the sentence of life imprisonment the question still arises whether a sentence of fine of Rs. 20,000/ is justified in the circumstances of the case.
Economic offences are generally visited with heavy fines because an offender who has enriched himself unconscionably or unjustifiably by violating economic laws can be assumed legitimately to possess the means to pay that fine.
He must disgorge his iII gotten wealth.
But quite different con siderations would, in the generality of cases, apply to matters of the present kind.
Thought there is power to combine a sentence of death with a sentence of fine that power in sparingly exercised because the sentence of death is an extreme penalty to impose and adding to that grave penalty a sentence of fine is hardly calculated to serve any social purpose.
In fact the common trend of sentencing is that even a sentence of life imprisonment is seldom combined with a heavy sentence of fine.
We cannot, of course, go so far as to express approval of the unqualified view taken in some of the cases that a sentence of fine for an offence of murder is wholly "inapposite" (See, for example, State vs Pandurang Shinde(1), but before imposing the sentence of fine, particularly a heavy fine, alongwith the sentence of death or life imprisonment, one must pause to consider whether the sentence of fine is at all called for and if so, what is a proper or adequate fine to impose in the circum stances of the case.
As observed by this Court in Adam Ii Umar Dalal vs The State of Bombay, (2) determination of the right measure of punishment is often a point of great diffi culty and no hard and fast rule can ' be laid down, it being a matter of discretion which is to be guided by a variety of considerations but the court must always bear in mind the necessity of maintaining a proportion between the offence and the penalty proposed for it.
Speaking for the Court Mahajan J. observed in that case that: "in imposing a fine it is necessary to have as much regard to the pecuniary circumstances of the accused persons as to the (1) A.I.R. [1956] Bom. 711,714.
(2) 137 character and magnitude of the offence, and where a substan tial term of imprisonment is inflicted, an excessive fine should not accompany it except in exceptional cases" (p. 177).
Though that case related to an economic offence, this Court reduced the sentence of fine from Rs. 42,300/ to Rs 4,000/ on the ground that due regard was not paid by the lower Court to the principles governing the imposition of a sentence of fine.
The High Court imposed in the instant case a fine of Rs. 20,000/on the ground that "the deceased was aged about 48 years and was actively supervising the cultivation of the family lands and would have lived for another 15 to 20 years with his abilities in tact, and the loss to the dependents, viz., the son and daughters would be about Rs. 20,000/ ".
Except for the bald and bare statements contained in the petition for compensation filed by the heirs of the de ceased, there is no warrant for the assumption made by the High Court as regards the retention of "abilities in tact" or as regards the extent of "loss to the dependents".
It appears to us that the High Court first considered what compensation ought to be awarded to the heirs of the deceased and then imposed by way of fine an amount which was higher than the compensation because the compensation has to come out of the amount of fine.
Apart from the fact that even the compensation was not fixed on any reliable data, the High Court, with respect, put the cart before the horse in leaving the propriety of fine to depend upon the amount of compensation.
The first concern of the Court, after recording an order of conviction, ought to be to determine the proper sentence to pass.
The sentence must be propor tionate to the nature of the offence and the sentence, including the sentence of fine, must not be unduly exces sive.
In fact, the primary object of imposing a fine is not to ensure that the offender will undergo the sentence in default of payment of fine but to see that the fine is realized, which can happen only when the fine is not unduly excessive having regard to all the circumstances of the case, including the means of the offender.
Section 357(1) (c) of the new Code corresponds to s.545(1) (bb) of the Code of 1898 which was introduced by section 110 of Amending Act 26 of 1955.
The statement of objects and reasons of that Act shows that the Joint Committee took the view that, in suitable cases, the person who causes death should compensate the heirs and dependents of the deceased for the loss resulting from the death.
The Joint Committee was in full agreement with the view that in a case where death has resulted from homicide, the Court should award compensation to the heirs of the deceased because that would result "in settling the claim once for all by doing away with the need for a further claim in a civil Court, needless worry and expense to both sides of the party".
The views of the Joint Committee incorporated in the State ment of Objects and Reasons to the Amending Act of 1955 arc undoubtedly entitled to consideration but those views only reflect that there should reside in the criminal Court the power in appropriate cases to pass an order of compensation in favour of the heirs of the 138 deceased.
It cannot, however, be overlooked that since by section 35:7 (1) (c) of the new Code and its precursor, section 545(1)(bb) of the old Code, compensation can only come out of fine, it is always necessary to consider in the first instance whether the sentence of line is at all called for, particularly when the offender is sentenced to death or life imprisonment.
If so, the fine must not be excessive, having regard to all the circumstances of the case like motivation of the offence, the pecuniary gain likely to have been made by the offender by committing the offence and his means to pay the fine.
The High Court, instead of applying its mind to these factors, considered only what compensation the heirs of the deceased ought to receive.
And that question it decided on inadequate data.
in view Of the fact that the appellant was under the sentence of death since its imposition by the Sessions Court and its reduction to life imprisonment by the High Court and since a sentence of life imprisonment has been imposed on the appellant, that being the only other sentence permissible under the law, the fine of Rs. 20,000 imposed by the High Court seems to us unduly excessive.
In the circumstances we reduce it to a sum of Rs. 3,000/ and direct that the fine or so much of it as is recovered shall be paid to the son and daughters of the deceased who had flied the petition in that behalf in the High Court.
S.R. Appeal allowed in part.
| IN-Abs | The appellant was convicted by the Sessions Judge.
Salem for an offence under section 302 I.P.C. and was sentenced to death.
The High Court modified the sentence of death to one of life imprisonment.
However, exercising its powers under section 367(4) of the Criminal Procedure Code, 1973, the High Court imposed a fine of Rs. 20,000/ under section 357(1)(c) of the Code.
Special Leave was granted, by the court, limiting it into the question of propriety of the fine im posed by the High Court.
Allowing the appeal in part and reducing the fine the Court, HELD: (i) A saving provision which saves the inherent powers of the court cannot over ride an express provision contained in the statute which saves that power.
That did not however affect the power of the High Court to deal with the application merely because the application was wrongly described as having been made under a wrong section.
In the instant case, the High Court correctly passed an order of compensation not under 5.
482 but under section 357(1)(c) of the Code and the application filed in the High Court was main tainable at the instance of the son and daughter of the deceased.
[133 H, 135 F G] (ii) Under section 302 LP.C. not only a sentence of imprisonment for life but even a sentence of death can legitimately be combined with a sentence of fine.
For the offence of murder, the court do have the power to impose the sentence of fine.
[136 B C] (iii) Legitimacy is not to he confused with propriety and the fact that the court possesses a certain power does not mean that it must exercise it.
Though there is power to combine a sentence of death with a sentence of fine that power is to be sparingly exercised because the sentence of death is an extreme penalty to impose and adding to that grave penalty a sentence of fine is hardly calculated to serve any social purpose.
[136 C E] (iv) The first concern of the court, after recording an order of conviction, ought to he to determine the proper sentence to pass.
The sentence must be proportionate to the nature of the offence and the sentence, including the sentence of fine, must not be unduly excessive.
In fact, the primary object of imposing a fine is not to ensure that the offender will undergo the sentence in default of payment of fine but to see that the fine is realised which can happen only when the fine is not unduly excessive, having regard to all the circumstances of the case, including the means of the offender.
[137 D F] (v) Since by section 357(1)(c) of the code of 1973 and its pre cursor section 545(1)(bb) of the code of 1898 compensation can only come out of fine, it is always necessary to consider in the first instance whether the sentence of fine is at all called for, particularly when the offender is sentenced to death or life imprisonment.
If so, the fine must not be execessive, having regard to all the circumstances of the case like motivation of the offence, the pecuniary gain likely to have been made by the offender by committing the offence and his means to pay the fine.
The High Court in the instant case instead of applying its mind to these fac tors, considered only what compensation the heirs ought to receive.
There is no warrant for the assumption made by the High Court as regards the retention of "abilities in fact" or as regards the "extent of loss to the dependants.
" [137 A C, 138 A C] 133 State vs Pandurang Shinde, A.I.R. [1956] Born 711, 714 referred to.
Adamji Umar Dalai vs The State of Bombay, , applied.
(vi) In view of the fact that the appellant was under the sentence of death since its imposition by the Sessions Court and its reduction to life imprisonment by the High Court since a sentence of life imprisonment has been imposed on the appellant that being the only other sentence permis sible under the law, the fine of Rs. 20,000 is unduly exces sive and a sum of Rs. would meet the ends of justice.
[138 C D]
|
N: Criminal Appeal Nos.
345 346 of 1976.
(Appeals by Special Leave from the Judgment and Order dated 30 9 1975 of the Karnataka High Court in Crl.
Peti tions Nos. 248 and 253 of 1975).
D. Mookherjee, and B.R.G.K. Achar, for the Appellant, Frank Anthony, K.B. Rohtagi and M.N. Kashyap, for the Respondents.
The Judgment of the Court was delivered by CHANDRACHUD, J.
These two appeals by social leave arise out of a judgment dated september 30, 1975 rendered by the High Court 115 of Karnataka in Criminal Petitions Nos. 248 and 253 of 1975.
By the aforesaid judgment the High Court in the exercise of its inherent powers has quashed proceedings initiated by the State of Karnataka appellant herein, against the respond ents.
The incident out of which these proceedings arise took place on December 6, 1973 in the Central Avenue of the Indian Telephone Industries Colony, Bangalore.
Thyagaraja Iyer, accused No. 1, who was an employee of the Indian ' Telephone Industries Ltd. was dismissed from service on September 20, 1973 on the allegation that he had assaulted a Canteen supervisor.
The complainant Ajit Dutt, Works Manager of the Crossbar Division, attempted to serve the dismissal order on him but he refused to accept it and threatened the complainant that he, the complainant, was primarily responsible for the dismissal and would have to answer the consequences.
It is alleged that the I.T.I. Employees ' Union took up cudgels on his behalf and re solved to support his cause.
The case of the prosecution is that accused Nos. 1 and 8 to 20 conspired to commit the murder of the complainant and that in pursuance of that conspiracy accused Nos. 1, 8 and 10 hired accused Nos. 2, a notorious criminal, to execute the object of the conspiracy.
Accused No. 2 in turn engaged the services of accused Nos. 3 to 7 and eventually on the morning of December 6, 1973 accused Nos. 1 to 6 are alleged to have assaulted the complainant with knives, thereby committing offences under sections 324, 326 and 307 read with section 34.
of the Penal Code.
Accused No. 2 was charged separately under section 307 or in the alternative under section 326, Penal Code.
By his order dated October 23, 1974 the learned Metro politan Magistrate, V Court, Bangalore directed all the 20 accused to take their trial before the Sessions Court for offences under section 324, 326 and 307 read with section 34 of the Penal Code.
At the commencement of the trial before the learned First Additional District and Sessions Judge, Bangalore, two preliminary questions were raised, one by the prosecution and the other by the, accused.
It was contended by the prosecution that the specification of particular sections in the committal order did not preclude the Sessions Court from framing a new charge under section 120 B of the Penal Code.
On the other hand it was contended by the accused that there was no sufficient ground for proceeding with the prosecu tion and therefore they ought to be discharged.
The learned Additional Sessions Judge accepted the contention of the prosecution that he had the power to frame a charge under section 120 B.
The correctness of that view was not challenged before us by Mr. Frank Anthony who appears on behalf of the accused.
That is as it ought to be because the power of the Sessions Court to frame an appropriate charge is not tram melled by the specifications contained in the committal order.
The Sessions Court, being seized of the case, has jurisdiction to frame appropriate charges as the facts may justify or the circumstances may warrant.
The contention of the accused that they ought to be discharged was accepted by the learned Additional Sessions Judge partly.
lie held that there was no case against accused Nos. 11, 12 and 16 and that 116 they were therefore entitled to be discharged.
By an order dated August 8, 1975 the, learned Judge.
discharged those three.
accused in the.
exercise of his powers under section 227 of the Code of Criminal Procedure, 1973.
We are informed that the correctness of that order is under challenge before the High Court in a proceeding taken by the State of Karna taka.
We are not concerned with that order in these ap peals.
After discharging accused Nos. 11, 12 and 16 the learned.
Judge, turning to the case against the remaining accused, observed that there was "some material to hold that they have had something to do with the incident which occurred on 6 12 1973 in the I.T.I. Colony Bangalore".
The learned Judge adjourned the case to September 1, 1975 "for framing specific charges as made out from the material on record against the rest of the accused persons." Two revision petitions were filed against this order, one by accused Nos.
10, 13, 14 and 15 and the other by accused Nos.
17 to 20.
Those petitions were allowed by the High 'Court on the view that there was no sufficient ground for proceeding against the petitioners before it.
The High Court accordingly quashed the proceedings in regard to.
them which has led to these appeals.
Mr. Mookerjee who. appears on behalf of the State of Karnataka contends that the High Court ought not to have exercised its; powers to quash the proceedings against the respondents without giving to the Sessions Court, which was seized of the case, an opportunity to consider whether there was sufficient material on the record on which to frame charges against the respondents.
It is argued that the Sessions Court had adjourned the case for a consideration of that very question and it was not proper for the High Court to withdraw the case, as it were, and to exercise its ex traordinary powers, thereby preventing the Trial Court from examining the sufficiency of the material which it is the primary duty and function of that Court to examine.
There is some apparent justification for this grievance because the language in which the sessions Court couched its order would seem to suggest that it had adjourned the case to September 1, 1975 for consideration of the question as to.
whether there was sufficient ground for proceeding against the respondents.
But a careful reading of the Sessions Courts judgment would reveal that while discharg ing accused Nos. 11, 12 and 16 it came, to the conclusion that insofar as the other accused were.
concerned there was some material to hold that they were connected with the incident.
The case was, therefore, adjourned by the Court for flaming specific charges against them.
In other words, the learned Judge adjourned the case not for deciding wheth er any charge at all could be framed against the remaining accused but for the purpose of deciding as to which charge or charges could appropriately be framed on the basis of the material before him.
The grievance therefore that the High Court interfered with the sessions Court 's order prematurely is not justified.
The second limb of Mr. Mookerjee 's argument is that in any event the High Court could not take upon itself the task of assessing or appreciating the weight of material on the record in order to find whether any charges could be legiti mately framed against the respondents.
So 117 long as there is some material on the record to connect the accused with the crime, says.
the learned counsel, the case must go on and the High Court has no jurisdiction.
to put a precipitate or premature end to the proceedings on the belief that the prosecution is not likely to succeed.
This, in our opinion, is too broad a proposition to accept.
Section 227 of the Code of Criminal Procedure, 2 of 1974, provides that: "If, upon consideration of the record of the case and the documents submitted there with, and after hearing the submissions of the accused and the prosecution in this be half, the Judge considers that there is not sufficient ground for proceeding against the accused, he shall discharge the accused and record his reasons for so doing." This section is contained in Chapter XVIII called "Trial Before a Court of Sessions".
It is clear from the provi sion that the Sessions Court has the power to discharge an accused if after perusing the record and hearing the parties he comes to the conclusion, for reasons to be re corded, that there is not sufficient ground for proceeding against the accused.
The object of the provision which requires the Sessions Judge to record his reasons is to enable the superior court to examine the correctness of the reasons for which the Sessions Judge has held that there is of is not sufficient ground for proceeding against the accused.
The High Court therefore is entitled to go into the reasons given by the Sessions Judge in support of his order and to determine for itself whether the order is justified by the facts and circumstances of the case.
Section 482 of the New Code, which corresponds to section 561 A of the Code of 1898, provides that: "Nothing in this Code shall be deemed to limit or affect the inherent powers of the High Court to make such orders as may be necessary to give effect to any order under this Code or to prevent abuse of the process of any Court or otherwise to secure the ends of justice.
" In the, exercise of this.
whole some power, the High Court is entitled to quash a proceeding if it comes to the conclu sion that allowing the proceeding to continue would be an abuse of the process of the Court or that the; ends of justice require that the proceeding ought to be quashed.
The saving of the High Court 's inherent powers, both in civil and criminal matters, is designed to.
achieve a salu tary public purpose which is that a court proceeding ought not to be permitted to degenerate into weapon of harassment or persecution.
In a criminal case, the veiled object behind a lame prosecution, the very nature of the material on which the structure of the prosecution rests and the like would justify the High Court in quashing the proceeding in the interest of justice.
The ends of justice are higher than the, ends of mere law though justice has got to be.
administered according to laws made by the, legislature.
The compelling necessity for making these observations is that without a proper realisation of the object and pur pose of the provision which seeks to.
save the inherent powers of the High Court to do justice between the State and its.
subjects, it would be impossible.
to appreciate the width and contours of that salient jurisdiction.
118 Let us then turn to the facts of the case to see, wheth er the High Court was justified in holding that the proceed ings against the respondents ought to be quashed in order to prevent abuse of the process of the court and in order to secure the ends of justice.
We asked the State counsel time and again to point out any data or material on the basis of which a reasonable likelihood of the respondents being convicted of any offence in connection with the attempted murder of the complainant could be predicated.
A few bits here and a few bits there on which the prosecution proposes to rely are woefully inadequate for connecting the respond ents with the crime, howsoever, skilfully one may attempt to weave those bits into a presentable whole.
There is no material on the record on which any tribunal could reason ably convict the respondents for any offence connected with the assault on the complainant.
It is undisputed that the respondents were nowhere near the scene of offence at the time of the assault.
What is alleged against them is, that they had conspired to commit that assault.
This, we think, is one of those cases in which a charge of conspiracy is hit upon for the mere reason that evidence of direct involvement of the accused is lacking.
we have been taken through the statements recorded by the police during the course of investigation and the other material.
The worst that can be said against the respondents on the basis thereof is that they used to meet one another frequently after the dismissal of accused No. 1 and prior to the commission of the assault on the complainant.
Why they met, what they said, and whether they held any deliberations at all, are matters on which no witness has said a word.
In the circumstances, it would be a sheer waste of public time and money to permit the proceedings to continue against the respondents.
The High Court was therefore justified in holding that for meeting the ends of justice the proceedings against the respondents ought to be quashed.
Learned counsel for the State Government relies upon a decision of this Court in R.P. Kapur vs The State of Punjab (1) in which it was held that in the exercise of its inher ent jurisdiction under section 561A of the Code of 1898, the High Court cannot embark upon an enquiry as to whether the evi dence in the case is reliable or not.
That may be so.
But in the instant case the question is not whether any reli ance can be placed on the veracity of this or that particu lar witness.
The fact of the matter is that there is no material on the record on the basis of which any tribunal could reasonably come to the conclusion that the respondents are in any manner connected with, the incident leading to the prosecution.
Gajendragadkar, J., who spoke for the Court in Kapur 's(1) case observes in his judgment that it was not possible, desirable or expedient to lay down any inflexible rule which would govern the exercise of the High Court 's inherent jurisdiction.
The three instances cited in the judgment as to when the High Court would be justified in exercising its inherent jurisdiction are only illustrative and can in the very nature of things not be regarded as exhaustive.
Considerations justifying the exercise of inherent powers for securing the ends of justice naturally vary from case to (1) 119 case and a jurisdiction as wholesome as the one conferred by section 482 ought not to be encased within the strait jacket of a rigid formula.
On the other hand, the decisions cited.
by learned counsel for the respondents in Vadilal Panchaly.
D.D. Gha digaonkar(1) and Cen tarS, Spinning & Manufacturing Co. vs State of Maharashtra(2) show that it is wrong to say that at the stage of flaming charges the court cannot apply.
its judicial mind to the consideration whether or not there is any ground for presuming the commission of the offence by the accused.
As observed in the latter case, the order framing a charge affects a person 's liberty substantially and therefore it is the duty of the court to consider judi cially whether the material warrants the framing of the charge.
It cannot blindly accept the decision of the prose cution that the accused be.
asked to face a trial.
In Vadilal Panchal 's case.
(supra) section 203 of the old Code was under consideration, which provided that the Magistrate could dismiss a complaint if after considering certain matters mentioned in the section there was in his judgment no sufficient ground for proceeding with the case.
To art extent section 227 of the new Code contains an analogous power which is conferred on the Sessions Court.
It was held by this Court, while considering the true scope of section 203 of the old Code that the Magistrate.
was not bound to accept the result of an enquiry or investigation and that he must apply his judicial mind to the material on which he had to form his judgment.
These decisions show that for ' the purpose of determining whether there is sufficient ground for proceeding against an accused the court possesses a comparatively wider discretion in the exercise of which.
it can determine the question whether the material on the record, if unrebutted, is such on the: basis of which a conviction can be said reasonably to be possible.
We are therefore in agreement with the view of the High Court that the material on which.
the prosecution proposes.to rely against the respondents is wholly inade quate to.
sustain the charge that they are in any manner connected with the assault on the complainant.
We would, however, like to observe that nothing in our judgment or in the .judgment of the High Court should be taken as detract ing from the case of the prosecution, to.
which we have not applied our mind, as against accused Nos. 1 to 9.
The case against those accused must take its due and lawful course.
The appeals are accordingly dismissed.
S.R. Appeals dismissed.
(1) A.I.R. 1969 S.C. 1113.
| IN-Abs | The apellants are accused Nos. 10, 13, 14, 15 and 17 to 20 before the Sessions Court for trial under various offences, viz., . 324, 326, and 307 read with section 34 of the Penal Code.
While discharging accused Nos. 11, 12 and 16 u/s 227 of the Criminal Procedure Code 1973, on 8.8.1975, the learned Sessions Judge observed that there was "some materi al to hold that the remaining accused have had something to do with the incident which occurred on 6.12.1973 in I.T.I. Colony, Banglore" and adjourned the case to September 1, 1975, "for framing specific charges as made out from the material on record against the rest of the accused person .
Two revision petitions were filed against this order, one by accussed Nos. 10, 13, 14 and 15 and the other by accused Nos.
17 to 20.
These petitions were allowed by the High Court on the view that there was no sufficient ground for proceeding against the petitioners before it.
The High Court accordingly quashed the the proceedings in regard to them.
In appeal by Special Leave, the appellant State contended: (1) The High Court ought not to have exercised its power to quash the proceedings against the respondent without giving to the Sessions Court, which was seized of the case, an opportunity to consider whether there was sufficient material on the record on which to frame charges against the respondents.
(ii) In any event the High Court could not take upon itself the task of assessing or appreci ating the weight of material on the record in order to find whether any charges could be legitimately framed against the respondents.
Dismissing the appeal, the Court HELD: (1) The High Court was justified in holding that for meeting the ends of justice the proceedings against the respondents ought to be quashed.
It would be a sheer waste of public time and money to permit the proceedings to continue against the respondent, when there is no material on the record on which any tribunal could reasonably convict them for any offence connected with the assault on the com plainant.
This is one of these cases in which a charge of conspiracy is hit upon for the mere reason that evidence of direct involvement of the accused is lacking.
[118 A, D E] (2) The saving of the High Court 's inherent powers, both in civil and criminal matters, is designed to achieve a Salutary public purpose which is that a Court proceedings ought not to be permitted to degenerate into a weapon of harassment or persecution.
In a criminal case, the veiled object behind a lame prosecution, the very nature of the material on which the structure of the prosecution rests and the like would justify the High Court in quashing the pro ceeding in the interest of justice.
[117 F G] (3) Considerations justifying the exercise of inherent powers for securing the ends of justice vary from case to case and a jurisdiction as wholesome as the one conferred by section 482 ought not to be encased within the strait jacket of a rigid formula.
The three instances ' cited in the Judgment to when the High Court would be justified in exercising its inherent jurisdiction are only illustrative and can in the very nature of things not be regarded as exhaustive.
[118 F H, 119 A] 114 R.P. Kapur vs State of Punjab explained. (4) It is wrong to say that at the stage of framing charges the Court cannot apply its judicial mind to the consideration whether or not there is any ground for presum ing the commission of the offence.
[119 B] (5) While considering whether there is sufficient ground for proceeding against an accused.
the court pos sesses a comparatively wider discretion in the exercise of which it can determine the question whether the material on the record.
if unrebutted, is such on the basis of which a conviction can be said reasonably to be possible.
[119 B E] Vadilal Panchal vs D. D. Ghadigaonkar ; ; Century Spinning & Manufacturing, Co. vs State of Maharashtra applied.
(6) In the instant case the High Court is right in its view that the materials on which the prosecution proposed to rely against the respondents is wholly inadequate to sustain the charge that they are in any manner connected with the assault on the complainant.
[119 E F] (7) The grievance that the High Court interfered with the Sessions ' Court 's order prematurely is not justified.
The case was adjourned by the Sessions Judge not for deciding whether any charge at all could be framed against the remaining accused, but for the purpose of deciding as to which charge or charges could appropriately be framed on the basis of the material before him.
[116 G H] (8) The object of section 227 of the Code of Criminal Procedure, Act 2 of 1974, is to enable the superior Court to examine the correctness of the reasons for which the Sessions Judge has held that there is not sufficient ground for proceed ing against the accused.
[117 C D] (9) The High Court is entitled to go into the reasons given by the Sessions Judge in support of his order and to determine for itself whether the order is justified by the facts and circumstances of the case.
[117 D E] .
(10) In the exercise of the wholesome power u/s 482 of the Act 2 of 1974 (section 561 of 1898 Code), the High Court is entitled to quash a proceeding if it comes to the conclusion that allowing the proceeding to continue would be an abuse of the process of the Court or that the ends of justice require that the proceeding ought to be quashed.
[117 E F] Observations: The ends of justice are higher than the ends of mere law though justice has got to be administered according to laws made by the legislature.
Without a proper realisation of the object and purpose of the provision which seeks to save the inherent powers of the High Court to do justice between the State and its subjects, it would be impossible to appreciate the width and contours of that salient jurisdiction.
[117 G H]
|
Appeal No. 950 of 1972.
(From the Judgment and Order dated the 5 7 1971 of the Calcutta High Court in Appeal No. 130/71).
N.R. Khaitan, A.T. Patra and Praveen Kumar, for the appel lant.
126 Lal Narain Sinha, Sol.
General, S.N. Prasad and Girish Chandra not present for respondents.
The Judgment of the Court was delivered by BHAGWATI, J.
The appellant ,owns a jute mill situate at Rajgunj, Railway Station Andul, District Howrah in the State of West Bengal and among other jute products, it manufac tures jute carpet backing cloth at its jute nUll.
The appellant exported diverse quantities of jutecarpet backing cloth manufactured by it to various countries during the period 13th July 1966 to 30th November 1966.
There was a Tax Credit certificate Scheme framed by the Central Gov ernment under Section 280 ZE read with Section 200 ZC of the Income 'tax Act 1962.
The Scheme was called the Tax Credit Certificate (Exports) Scheme 1965.
The Scheme pro vided for grant of Tax Credit Certificate in respect of certain categories of goods or merchandise specified in column 2 which were exported to destinations specified in column 4 and the dates of export of which fell after 28th February 1965, for an amount calculated at the rates speci fied in column 3 of the Table attached to the Scheme.
Jute carpet backing cloth was covered by Item 1 in column 2 of the Table which specified "goods made of jute not otherwise specified".
If the Scheme had remained unamended, the appellant would have been entitled to tax credit certifi cates in respect of the exports made by it of jute carpet backing material, but a notification was issued by the Central Government on 6th June, 1966 in exercise of the powers conferred by Section 280 ZE read with Section 200 ZC, whereby paragraph 3 of the Scheme which .provided for grant of tax credit certificates was amended by re numbering that paragraph as sub paragraph (1) and adding a sub paragraph (2) to the following g effect: "No certificate shall be granted under sub paragraph (1) in respect of any sale proceeds referred to in that sub paragraph or part of such sale proceeds, received after the 5th day of June 1966 in India in according with the Foreign Exchange Regulation Act, 1947 (VII of 1947) and the rules made thereunder".
This amendment had the effect of disentitling an ex porter to taxcredit certificate in respect of goods or merchandise exported by him in all cases where sale proceeds or part thereof were received in India after 5th June, 1966.
The necessity for making this amendment in the Scheme arose on account of devaluation of the Indian rupee which was made by the Central Government, as it was felt that in view of the devaluation it was not necessary to give any further incentive for export.
But it was 'soon realised that this amendment of the Scheme might work hardship in those cases where goods or ' merchandise were exported before 5th June 1966 on the faith of the Scheme but for some reason or the other, the sale proceeds were not received until after that date and, therefore, a second notification dated 8th Au gust, 1966 was issued by the Central Government further.
amending the scheme in exercise of the powers conferred under Section 280 ZE read with Section 280 ZC by deleting sub paragraph (2) and instead, adding a proviso which pro vided for grant of tax credit certify 127 cate in respect of goods or merchandise exported on or before 5th June 1966 even if the said proceeds were re ceived after that date and declared that in ease of goods exported after 5th June 1966 the ' rate specified in column 3 of the Table shall be deemed to be nil and no certificate shall be granted in respect of such goods or merchandise.
The exports of jute carpet backing cloth made by the appel lant were admittedly after 5th June, 1966 and hence both the notifications adversely affected the appellant by disentitling it to tax credit certificates in respect of these exports.
The appellant, therefore, filed a Writ Petition in the High Court of Calcutta for a writ of manda mus for quashing and setting aside both the Notifications and directing the Central Government to consider the appli cation of the appellant for tax credit certificates in respect of the exports without taking into account the two Notifications.
Though there were several grounds on which the validity of these two Notifications was challenged in the Writ Petition before the High Court, only one ground was pressed before us on behalf of the appellant and we shall, therefore, refer only to that ground.
That ground was that both the Notifications were outside the power conferred on the Central Government under Seetion 260 ZE read with Section 280 ZC, since the Central Government had no power under these Sections to make a scheme providing that no tax credit certificate shaft be granted in case of any goods or merchandise at all.
This ground found favour with the single Judge of the High Court but on appeal under clause 15 of the Letters Patent, a Division Bench of the High Court took a different view and negatived the chal lenge.
Since the writ petition was dismissed by the Division Bench, the appellant preferred the present appeal after obtaining a certificate of fitness from the High Court.
The Indian Income Tax Act 1922 as originally enacted, did not contain the fasciculus of Sections under Chapter XXII providing for grant of tax credit certificates.
This Chapter comprising Sections 280 ZC and 280 ZE was inserted by the Finance Act 1965 with effect from lst April 1965 with a view to providing incentive for export purpose of which Section 280 ZC and 280 ZE are material, reads as follows : "280 ZC.
(1) Subject to the provisions of this Section, a person who exports any goods or merchandise out of India after the 28th day of February.
1965 and receives the sale proceeds thereon in India in according with the Foreign Exchange Regulation Act, 1947 (VII of 1947) and the rules made there under shall be granted a tax credit certifi cate for an amount calculated at a rate not exceeding fifteen per cent, on the amount of such sale proceeds.
(2) The goods or merchandise in respect of which a tax credit certificate shall be granted under sub section (1) (including the destination of their export) and the rate at which the amount of such certificate shall be calculated shall be such as ,may be specified in the Scheme: Provided that different rates may be specified in respect of different goods or merchandise.
128 (3) In specifying the goods or merchan dise (including the destination of their export) and the rates, the Central Government shall have regard to the following factors, namely: (a) the cost of manufacture or production of such goods or merchandise and prices of similar goods in the foreign markets;.
(b) the need to develop foreign markets for such goods or merchandise; (c) the need to earn foreign exchange; (d) any other relevant factor".
Section 280 ZE conferred power on the Central Government to frame one or more scheme or schemes to be called tax credit Certificate scheme or schemes in the following words: "(1) The Central Government shaH, by notification in the Official Gazette, frame one or more scheme or schemes to be called tax credit certificate scheme or schemes in rela tion to tax credit certificates to be grant ed under this Chapter.
(2) A scheme framed under sub section (1) may provide for : (a) the form and manner in which, and the authority to which, applications for the grant of tax credit certificates shall be made; (b) the form in which, and the intervals at which and the authority by which, such cer tificates shall be issued; (c) the verification of any information or particulars furnished, or contained in any application made, by or on behalf of any person entitled to tax credit certificates; (d) the determination of the rights and obligations of a person to whom such certifi cate has been granted and the circumstances in which any right in or title to the said certificate may be transferred to.
or devolve on any other person by succession or otherwise; (e) the determination of the rights and obligation of persons who jointly subscribe to an eligible issue of capital; (f) the determination of the rights and obligation of persons who subscribe to an eligible Issue of capital, on behalf, or for the benefit, of any other person; 129 (g) the appointment of any officer.
of Government or of the Reserve Bank of India to exercise any rights or perform any duties in connection with the grant of the said certifi cates; (h) the goods or merchandise and the rate or rates for the purposes of section 280 ZC and section 280 ZD and the destination of the export of such goods or merchandise for the purposes of section 280 ZC; (i) any other matter which may be neces sary or proper for the effective implementa tion of the provisions of this Chapter or the scheme.
(3)The Central Government may, by noti fication in the Official Gazette, and to, amend, vary or rescind any scheme made under this section".
It was in exercise of the power conferred on the Central Government under Section, 280 ZE read with section 280 ZC that the Central Government made the Tax Credit Certificate (Exports) Scheme, 1965.
The first Notification dated 6th June 1966 amended paragraph 3 of the Scheme by providing that no tax credit certificate shall be granted in respect of exports where the sale proceeds were received after 5th June, 1966.
This provision was.
relaxed by ' the second Notification dated 8th August 1966 by providing that in case of exports made on or before 5th June 1966 tax credit cer tificate shall be granted according to the provisions of the Scheme even if the Sale proceeds were received after that date, but in respect of exports made after 5th June, 1966, the rate specified in column 3 of Table A shall be nil and no tax credit certificate shall be granted in respect of such exports.
The argument urged on behalf of the appellant was that it was not competent to the Central Government to provide in the Scheme framed under Section 280 ZE read with Section 280 ZC that no tax credit certificate shah be granted in respect of exports of any goods or merchandise.
The only power, which, according to the appellant, the Central Government had under these two.
Sections, was to frame a scheme speci fying some goods or merchandise the export of which would entitle an exporter to tax credit certificate.
The appel lant conceded that the Central Government was.
not bound to specify any particular category of goods or merchandise in the Scheme framed by it but the limited contention was that some goods or merchandise must be specified in the Scheme and since in the present case the Scheme as amended provid ed that tax credit certificates shall not be granted in respect of exports of any goods or merchandise, the two Notifications making this amendment in the Scheme were ultra vires the power of the Central Government under Sections 280 ZE and 280 ZC.
This contention, though it found favour with the single Judge of the Calcutta High Court who heard the Writ Petition in the first 130 instance, is in our opinion wholly without force and cannot be sustained.
A mere look at the scheme of the provisions of Section 280 ZC and 280 ZE is sufficient to expose the invalidity of this contention.
Sub section (1) of Section 280 ZC undoubtedly provides that a person who exports any goods or merchandise out of India after 28th February 1965 and receives the sale proceeds thereof in India in accordance with the Foreign Exchange Regulation Act, 1947 and the rules made thereunder, shall be granted a tax credit certificate for an amount calculated at a rate not exceeding 15 per cent of the amount of such sale proceeds.
But this fight conferred on an exporter is subject to the other provisions of Section ZC and these other provisions include sub sections (2) & (3).
Sub sec tion (2) provides in so many terms that the goods or merch andise in respect of which a tax credit certificate shall be granted under sub section (1) and the rate at which the amount of such certificate shall be calculated, shall be such as may be specified in the Scheme.
It is, thus, left to the Scheme to be framed by the Central Government to specify the goods or merchandise in respect of which an exporter, shall be entitled to tax credit certificate as also the rate at which the amount of such certificate shall be calculated.
It is.
not in respect of every category of goods or merchandise that an exporter can claim to be enti tled to tax credit certificate but it is only in ' respect of such goods or merchandise as are specified in the Scheme.
The policy and the principle which would guide the Central Government in selecting the goods or merchandise for this purpose are set out in sub section (3) which provides that in specifying the goods or merchandise as also the rates, the Central Government shall have regard to the various factors set out in that sub section.
These are the factors which would influence the choice of the Central Government in selecting the goods or merchandise for the purpose of grant of tax credit certificate and also in determining the rates at which tax credit certificate should be given.
Sec tion 280 ZE, sub section (1) confers power on the Central Government to frame one or more Schemes in relation to tax credit certificate to be granted under Section 280 ZC and under sub section (2), such scheme or schemes may provide inter alia for the goods or merchandise and the rate or rates for the purposes of Section 280 ZC.
We fail to see how any obligation can be spelt out from these provisions re quiring the Central Government to frame a scheme specifying the goods or merchandise in respecter of which tax credit certificate shall be granted.
It would indeed be absurd to suggest that the Central Government is under an obligation to make a scheme and the requirement of the statute would be satisfied so long as the Central requirement specifies some goods or merchandise in the Scheme.
There is no reason why the Central Government should not be entitled to say that having regard to the factors set out in sub section (3) of section 280 ZC it does not think it desirable that tax credit certificate should be granted in respect of any goods or merchandise for the time being Sub section (3) of Section 280 ZC confers power on the Central Government in so many terms to rescind a Scheme made by it ,and that also supports the view that the Central Government may keeping in view the factors set out in sub section (3) of Section 280 ZC, 131 decline to make a scheme or provide in the scheme that there shall be no goods or merchandise in respect of which tax credit certificate shall be granted.
In the circumstances we think that the Division Bench of the High Court was right in holding that the Central Government was entitled to issue the two impugned Notifications directing that no tax credit certificates shall be granted in respect of goods or merchandise exported on or after 5th June, 1966.
We accordingly dismiss the appeal with costs.
S.R. Appeal dismissed.
| IN-Abs | The jute carpet backing cloth manufactured by the appel lant in its jute mills and exported was covered by Item 1 in column 2 which specified "goods made of jute not other wise specified" of the Table appended to the Tax Credit Certificate (Exports) Scheme, 1965.
The notification issued by the Central Government in exercise of the powers vested under section 280ZE read with section 280ZC, dated 6 6 1966 and 8 8 1966, provided that no tax credit certificate shall be issued in respect of any goods exported after 5 6 1966.
The appellant, who exported diverse quantities of jute carpet backing cloth manufactured by it to various countries during the period 13 7 1966 and 30 11 1966, filed a writ petition in the Calcutta High Court for a writ of mandamus for quash ing and setting aside both the Notifications and directing the Central Government to consider the application of the applicant for tax credit certificate in respect of the exports without taking into account the two Notifications.
The ground of challenge was that the two Notifications were outside the powers conferred on the Central Government u/s 280ZE read with section 280 ZC, since the Central ' Government had no power under those sections to make a scheme providing that no tax credit certificate shall be granted in case of any goods or merchandise at all.
The single Judge granted mandamus, but the Division Bench on appeal took a different view and negatived the challenge.
Dismissing the appeal by certificate the Court, HELD: (i) The Division Bench of the High Court was right in holding that the Central Government was entitled to issue the two Notifications directing that no tax credit certifi cates shall be granted in respect of goods or merchan dise exported on or after 5 6 1966.
[131 A B] (ii) No obligation can be spelt out from Ss.
280 ZC and 280 ZE requiring the Central Government to frame a scheme specifying the goods or merchandise in respect of which tax credit certificate shall be granted.
The Central Government was entitled to say that having regard to the factors set out in subsection (3) of section 280 ZC, it does not think it desirable that tax credit certificate should be granted in respect of any goods or merchandise for the time being.
[130 F H]
|
Appeal No. 284 of 1972.
(From the Judgment and Order dated 3 5 1971 of the Delhi High Court in I.T. Case No. 6 D of 1964) A.K. Sen, V.S. Desai and Bishamber Lal, for the appellant.
G.C. Sharma and S.P. Nayar, for the respondent.
The Judgment of the Court was delivered by BHAGWATI, J.
This is an appeal by special leave direct ed against the Judgment of the Delhi High Court answering in favour of the Revenue a question which was directed to be referred by the Tribunal under section 66(2) of the Indian Income Tax Act, 1922.
The controversy between the parties arises out of an assessment made on the assessee as a Hindu Undivided Family for the assessment year 1948 49, the corre sponding accounting year being the financial year 1947 48.
The assessee was at the material time a Hindu Undivided Family with one Roshan Lal as its manager and karta.
Till June 1947 the assessee was carrying on business in gold and jewellery at Chowk Surjan Singh in Lahore.
In view of the impending partition of India Roshan Lal decided to move out of Lahore and accordingly he transferred a sum of Rs. 12,094/ from the account of the assessee with the Lahore Branch of the Punjab National Bank Ltd. to the New Delhi Branch of that bank in June 1947.
He also transferred from the Lahore 156 Branch of the punjab National Bank Ltd. to the branch of that bank at New Delhi two sums of Rs. 13,000/ and Rs. 6,000/ , the former in his own name and the latter in the name of his wife and obtained fixed deposit receipts for these two amounts from the New Delhi Branch of the Bank in July 1947.
He left Lahore in June 1947 and proceeded to Mussoorie but on his way he stopped at Amritsar for a few days.
He opened an account with the Amritsar Branch of the Imperial Bank of India by depositing a sum of Rs. 300/ with a view to obtaining a locker in the safe deposit vault where he could deposit for sale custody a trunk which he had brought with him from Lahore containing gold ornaments, jewellery and cash.
It seems that a locker was not avail able and hence he deposited the trunk in a sealed condition with the Amritsar Branch of the Imperial Bank of India on 25th june, 1947.
The sealed trunk, according to the asses see, contained gold ornaments of the value of Rs. 1,19,320/ , gold rawa of the value of Rs. 1,69,020/ and stones of the value of Rs. 4,000/ .
Roshan Lal then went to Mussoorie via Haridwar and stayed at Mussoorie until about October 1947.
The case of the assessee was that during this period Roshan Lal did not carry on any business nor did he have any other means of income.
In October 1947 Roshan Lal came over to Delhi and rented a house in Kinari Bazar with a view to settling down in Delhi.
He started looking for suitable premises for commencing business and it was only in February 1948 that he succeeded in securing suitable prem ises at Dariba Kalan in Delhi.
He then started gold and jewellery business in these premises in the name and style of Roshan Di Hatti on 30th March, 1948.
The business was joint family business of the assessee and the first entry made in the books of account of the assessee was dated 30th March, 1948 and it was as follows: Gold Ornaments Rs. 1,19,320/ Gold Rawa Rs. 1,69,020/ Stones Rs. 4,000/ Bank balance with the Imperial Bank of India, Delhi Rs. 35,053/ Bank balance with Hindustan Commercial Bank, Delhi Rs. 221/ Cash Rs. 2,800/ .
The assessee thus brought in an aggregate capital of Rs. 3,33,414/in the business on 30th March, 1948.
It appears that the assessee prospered in this gold and jewellery business of Roshan Di Hatti but it did not file any return of income nor paid any income tax.
It came to the notice of the Income Tax Officer some time in the beginning of 1957 that the assessee had made considerable income in its gold and jewellery business but had failed to pay any tax on such income and hence the Income Tax Officer issued a notice to the assessee under section 34(1)(a) of the Indian Income Tax Act, 1922 for bringing the income of the assessee for the assessment year 1948 49 to tax.
The assessee filed its return of income and in the course of the assessment pro ceedings, the Income Tax Officer, called upon the assessee to explain the nature and source of the capital of Rs. 3,33,414/ brought by it into the business on 30th March, 1948.
The assessee pointed 157 out that gold rawa, ornaments and cash representing this capital were brought by Roshan Lal when he migrated from Lahore and they were kept in a sealed trunk with the Amrit sar Branch o[ the Imperial Bank of India and when Roshan Lal came over to Delhi in October 1947, he.
deposited the same in a locker in the safe deposit vault of Hindustan Commer cial Bank at Delhi and when the business of the assessee was commenced, he surrendered the locker and brought the entire gold, jewellery and cash into the business.
It was empha sised by the assessee as a supportive fact that after Roshan Lal migrated from Lahore in June 1947 until the assessee started the business of Roshan Di Hatti on 30th March, 1948, neither the assessee nor Roshan Lal had any other business or means of income from which the assets of Rs. 3,33,414/ could have been earned.
This explanation was given in the course of various statements made by the asses see from time to time before the Income Tax Officer.
The assessee also examined Hira Lal, Father in law of Roshan Lal and filed affidavits of Mulk Ram, Bills Mal, Dalai, Wazir Chand, Devidas Mehra and Panna Lal before the Income Tax Officer for the purpose of showing that the assessee was having a large gold and jewellery business in Lahore before migration and that it did not carry on any business in India before starting the business of Roshan Di Hatti on 30th March, 1948.
The Income Tax Officer also examined Prem Nath and Kishan Chand, brothers of Roshan Lal.
The statement of Prem Nath was to the effect that their father was a man of ordinary means who was almost reduced to penury by about 1940 and that he had given a sum of Rs. 2000/ to his son Roshan Lal for starting gold and jewellery business in 1935 and he had also subsequently lent some monies to Roshan Lal at nominal interest.
Prem Nath deposed that for the purpose of the business of the assessee, Roshan Lal was occupying a shop belonging to his father but he was not paying rent though demanded on the ground that he did not have sufficient income to pay the rent It was also stated by Prem Nath that before the partition of the country the standard of living of Roshan Lal and his family was no higher than that of Prem Nath who was getting a salary of Rs. 150/ per month.
The statement of Prem Nath was clear ly directed towards showing that the assessee did not have any flourishing business or large income prior to partition.
The Income Tax Officer, on the basis of this material before him, rejected the explanation offered by the assessee and came to the conclusion that it was not possible to believe that the assessee had been able to accumulate capital to the extent of Rs. 3,33,414/ out of income from the business carried on by it in Lahore and since the nature and source of the capital of Rs. 3,33,414/ credited in the books of account of the business on 30th March, 1948 was not satis factorily explained, the Income Tax Officer, gave credit only for a sum of Rs. 20,000/ and treated the balance of Rs. 3,13,414/ as income of the assessee from undisclosed sources.
The assessee appealed against this order of the Income Tax Officer and on appeal, the Appellate Assistant Commis sioner took the view that, on the facts as disclosed by the material placed on record in the proceedings, a much larger allowance should have been made in respect of the capital brought by the assessee from Lahore and he allowed a further sum of Rs. 80,000/ .
The reason given by the Appellate 158 Assistant Commissioner for taking this view are a little material and they may be reproduced as follows: "There is documentary evidence to show that assessee transferred an amount of Rs. 12,094/ from the Punjab National Bank account at Lahore to the same bank in New Delhi in June 1947.
It is also seen that he also transferred two amounts Rs. 13,000/ in his own name and Rs. 6,000/in his wife 's name from the Punjab National Bank, Lahore, to the same Bank at Minto Road, New Delhi and fixed deposit receipts were taken for this total sum of Rs. 19,000/from the Delhi Bank in July 1947.
All these monies including the realised fixed deposits later on went into the asses see 's account with the State Bank of India which reveals a credit balance of Rs. 35,053/ as on 30 3 1948.
This at least shows that the assessee was not a man of very small means while he was at Lahore.
He was having four accounts in different banks at Lahore.
The particulars, however, are not available and it is also stated that most of these accounts were very small; but even then a man of very modest means would not normally have so many bank accounts.
Moreover, while at Lahore Shri Roshan Lal had taken life insur ance Policies Rs. 22,000/ .
A number of letters and receipts regarding business trans actions in Lahore were also filed which indi cate that the Lahore business was not as small as the Income Tax Officer has taken it to be.
There are some papers which relate to deals worth Rs. 10,000/ or more at one time.
There are also several vouchers relating to adver tisement charges paid at Lahore All these things together with the fact that the asses see was in position to transfer a sum of Rs. 31,000/ approx.
through banks indicate that he was doing fairly well in the business at Lahore.
How he could have managed to evade tax at Lahore for all these years, is a mys tery; but from the circumstances of the case it appears that the assessee had certainly assessable incomes while he was doing business there during the pre partition period.
There is another factor which has also to be given its due weight.
While leaving Lahore and coming over to India in JUne 1947, the assessee stopped for few days at Amritsar.
There on the 25th June, 1947 he deposited a sealed box with the State Bank of India Amritsar Branch.
This box was withdrawn by him on the 20 10 47.
These facts are corroborated by the bank certificate.
The assessee claims that he had considerable amount of jewellery and gold etc.
(part of his trading stock in Lahore) as well as cash, in this box that is why he did not take the risk of carrying.
it with him on his way to Mussoo rie, but kept in deposit with the State Bank at Amritsar till such time.
as he was able to settle down in India.
The contents of the seated box are unknown to the bank and so it is not possible to ascertain what the box actually contained.
But it is reasonable to 159 presume that there must have been something quite valuable in the box as otherwise the assessee would not have kept it in the custody of a bank like State Bank of India.
It must also be noted that as early as June, 1947, the assessee hired a locker in the Hindustan Commercial Bank Ltd., New Delhi.
It is clear therefore, that when in June, 1947, the asses see was leaving Lahore he must have had with him quite a substantial amount either in the form of jewellery etc., or cash, as otherwise he would not have taken the precaution of either depositing the sealed box with the State Bank of India at Amritsar or opening a locker in a New Delhi Bank.
Considering all the evidence discussed above, I am of the opinion that the Income Tax Officer 's allowance of Rs. 20,000/ only as capital brought over from Pakistan is too low.
It is true that the capital disclosed in the books as on 30 3 1948 is mostly unverifiable and even assuming that the assessee was doing reasonably well in his business at Lahore, there are hardly any reasons to believe that he could have accumulated so much capital and could have brought all that capital safely into India; but the circumstances of the case do in my view justify a much larger allowance for old capital than has been allowed by the Income Tax Officer.
In my opinion, a reduction of the. assessment by Rs. 80 '000/will meet the requirement of the case.
" The Appellate Assistant Commissioner thus reduced the figure undisclosed income of the assessee to Rs. 2,33,414/ .
But this relief was not enough and the assessee pre ferred a further appeal to the Tribunal.
When the appeal came to.
be heard by the Tribunal, Roshan Lal, who was present at the hearing, was asked by the Members of the Tribunal as to how he had brought gold and jewellery from Lahore and he stated that it was brought in train in a box of the size of 2 1/2 'x l1/2 'x 1 ' and he was then asked what was the weight of the box, to which he replied stating that the weight of the contents of the box was about eight seers.
The Tribunal then, after hearing the arguments of the par ties, rejected the appeal.
The main arguments which weighed with the Tribunal in negativing the appeal of the assessee were: first, if the weight of the contents of the box was only eight seers, the value of gold and jewellery in the box could not be more than Rs. 66,000/ at the then current rate of gold at Rs. 90/ per tola; secondly, the Government of India had issued a Press Note in January 1952 requiring all evacuees to declare the amounts of money brought by them from Pakistan and assuring them that in case they did so, no further enquiries would be made from them as to how they had earned the same and whether they had paid any tax on it and yet the assessee had not declared 'before the Revenue au thorities until the commencement of the assessment proceed ings in 1957 that it had brought the capital of Rs. 2,33,414/ from Pakistan; thirdly, the assessee claimed to have a flourishing business in Lahore in the course of which it was supposed to have earned enough to enable it to save a capital of Rs. 3,33,414/ and yet it had not filed 160 any income tax return nor was it ever assessed to income tax in Lahore and fourthly, the depositions of Mulk Ram, Billa Mal, Dalai, Wazir Chand, Devidas Mehra and Panna Lal were vague and based on hearsay and they had no evidentiary value in the absence of contemporaneous primary evidence.
The Tribunal, accordingly, held that the assessee could not have brought assets worth more than Rs. 1,00,000/ from Lahore and the estimate made by the Appellate Assistant Commissioner did not call for any interference and in this view, the Tribunal confirmed the assessment of the bal ance of Rs. 2,33,414/ as the undisclosed income of the assessee for the assessment year 1948 49.
The assessee applied to the Tribunal for referring to the High Court the question of law arising out of its order but the Tribunal declined to make a reference on the ground that in its opinion no question of law arose out of its order.
This led to the making of an application to the High Court under section 66(2), but the High Court also took the same view and rejected the application.
The assessee there upon preferred an appeal to this Court by special leave and in the appeal, an order was made by this Court referring the following question for the opinion of the High Court: Whether there was material for coming to the conclusion that Rs. 2,33,414/ , out of the capital of Rs. 3,33,414/credited in the books of account of the assessee on 31st March, 1948, represented income from undis closed source ? Pursuant to this order the Tribunal stated a case for the opinion of the High Court and the High Court answered the question referred to it in favour of the Revenue by holding that there was material on the basis of which the Tribunal could come to the conclusion that Rs. 2,33,414/ represented the undisclosed income of the assessee.
Hence the present appeal by the assessee with special leave ob tained from this Court.
Now, the law is well settled that the onus of proving the source of a sum of money found to have been received by an assessee is on him.
If he disputes the liability for tax, it is for him to show either that the receipt was not income or that if it was, it was exempt from taxation under the provi sions of the Act.
In the absence of such proof, the Revenue is entitled to treat it as taxable income.
This was laid down as far back as 1958 when this Court pointed out in A. Govindarajulu Mudaliar vs Commissioner of Income tax (1) that "there is ample authority for the position that where an assessee fails to prove satisfactorily the source and nature of certain amount of cash received during the ac counting year, the Income Tax Officer is entitled to draw the inference that the receipts are of an assessable nature".
To put it differently, where the nature and source of a receipt, whether it be of money or of other property, cannot be satisfactorily explained by the assessee, it is open to the Revenue to hold that it is the income of the assessee and no further burden lies on the Revenue to show that that income is from any particular source.
Vide Com missioner of Income Tax, U.P. vs Devi Prasad Vishwanath Prasad(2).
Here, (1) (2) 161 in the present case, the assessee introduces in the books of account of its business on 30th March, 1948, capital of Rs. 3,33,414/ which consisted of gold rawa, gold ornaments, stones and cash.
The burden of accounting for the receipt of these assets was clearly on the assessee and if the assessee failed to prove satisfactorily the nature and source of these ' assets, the Revenue could legitimately hold that these assets represented the undisclosed income of the assessee.
The assessee offered the explanation that these assets had been brought by Roshan Lal when he migrated from Lahore in June 1947 and they represented the entire savings of the assessee in Pakistan.
This explanation was disbe lieved.
by the Tribunal which took the view that, on the material on record, it was not possible to hold that the assessee must have brought more than Rs. 1,00,000/ from Lahore and hence the Tribunal added the balance of Rs. 2,33,414/ as undisclosed income of the assessee.
This conclusion reached by the Tribunal was clearly a finding of fact and hence it could be assailed only if it was shown that the Tribunal had acted without any material or upon a view of the facts which could not reasonably be entertained or the facts found were such that no person acting judicial ly and properly instructed as to the relevant law would have come to that determination.
Vide Mehta Parikh & Co. vs Commissioner of Income Tax, Bombay(1).
Let us consider what were the primary facts established by the material on record.
The assessee was admittedly carrying on the business of Roshan Di Hatti in Lahore from 1935 until June 1947 when Roshan Lal migrated from Lahore.
It is true that the assessee was not paying any Income tax in Lahore but, as pointed out by the Appellate Assistant Commissioner in his order, a number of letters and receipts regarding business transactions in Lahore were filed by the assessee which showed that the business in Lahore was not small and there were documents and papers which referred to.
dealings involving Rs. 10,000/ or more at a time and there were also several vouchers produced by the assessee relating to advertising charges paid at Lahore.
The busi ness carried on by the assessee at Lahore was, therefore, a reasonably large business though its extent could not be verified by any reliable material produced by the assessee.
The assessee undoubtedly filed affidavits of Mulk Ram, Billa Mal, Dalai, Wazir Chand, Devidas Mehra and Panna Lal, but, as commented upon by the Tribunal, these affidavits were vague and could not be regarded as having much evidentiary value.
Still they did go to show that the Lahore business of the assessee was a fairly large business.
The Tribunal was no doubt right in commenting that primary evidence with regard to the extent of the Lahore business of the assessee was not forthcoming, but it must be remembered that the assessee was being called upon to prove the extent of its business in a territory from which the members of the Hindu Undivided Family had to flee for their lives and from where it was totally impossible to produce any primary evidence.
Be that as it may, it was found as a fact by the Appellate Assistant Commissioner and this finding was not disturbed by the Tribunal that the assessee "was doing fairly well in the business in Lahore".
Roshan Lal, in anticipation of the partition of the country which was soon to follow, decided to move out of Lahore in June 1947 at a time when massacre and holocaust had not yet started 162 and he was in a position to remove his belongings.
He migrated from Lahore with all his belongings and came over to Amritsar and he brought with him a trunk which he wanted to keep in a locker in Safe Deposit Vault of the Imperial Bank of India.
He could not obtain a locker and hence he deposited the sealed trunk with the Amritsar Branch of the State Bank of India instead of carrying it with him to Mussoorie.
There is no documentary evidence to show as to what were the contents of the sealed trunk but, as pointed out by the Appellate Assistant Commissioner and not dissented by the Tribunal, "it is reasonable to presume that there must have been something quite valuable in the box as otherwise the assessee would not have kept the custo dy of a bank like the State Bank of India".
There can be no doubt, as observed by the Appellate Assistant Commissioner, and not disputed by the Tribunal that the assessee "must have had with him quite a substantial amount either in the form of jewellery etc.
or cash, or otherwise he would not have taken the precaution of either depositing the sealed box with the State Bank of India, Amritsar opening a locker in a New Delhi Bank".
The clear finding of the Appellate ASsistant Commissioner, affirmed by the Tribunal, therefore, was that Roshan Lal did bring ornaments, jewellery and cash with him when he migrated from Lahore in June 1947 and kept the same in a sealed trunk with the Amritsar Branch of the State Bank of India.
If that be so, then on what material could it be said that the ornaments, jewellery and cash brought by the assessee and kept in the sealed trunk were of the value of only Rs. 1,00,000/ and no more.
What were the materials on the basis of which the claim of the assessee that Roshan Lal had brought gold, ornaments and cash of the value of Rs. 3,33,414/ could be rejected ? The only materials relied upon by the Tribunal was that the assessee had never filed any income tax return nor ever paid any tax on the income of its business in Lahore and the presumption must, therefore, be that the assessee did not earn any assessable income before migration from Lahore.
Now, it is true that where an assessee has not paid income tax, the presumption ordinarily must be that the assessee had no assessable income, but here the fact remains that the assessee transferred no less than an aggregate sum of Rs. 31,094/ from Lahore to New Delhi and also brought sub stantial amount either in the form of jewellery etc.
or cash" and deposited the same in a sealed trunk with the Imperial Bank of India, Amritsar Branch in June 1947.
obviously the assessee could not have done unless it had a reasonably large business in Lahore and, therefore, the fact that the assessee did not pay income tax in Lahore cannot have much evidentiary value.
All that it would show is that, as pointed out by the Tribunal, "the assessee has not been very straightforward in his dealings with the income tax departments".
The Tribunal also relied upon certain answers given by Roshan Lal when he was questioned by the Members of the Tribunal at the hearing of the appeal.
It must be pointed out straight away that 163 these answers given by Roshan Lal could not be relied upon by the Tribunal for the purpose of coming to any conclusion adverse to the assessee, because there is a procedure pre scribed in Rules 29. 30 and 31 of the Income Tax Appellate Tribunal Rules for taking additional evidence before the Tribunal and if the Members of the Tribunal wanted to exam ine Roshan Lal on any aspects of the case they should have followed this procedure.
But unfortunately the Members of the Tribunal, disregarding the prescribed procedure, put questions to Roshan Lal in an informal manner unauthorised by the Rules.
The answers given by Roshan Lal could not in the circumstances form part of the record and the Tribunal was not entitled to reply upon the same in arriving at its findings of fact.
It may be noted that the High Court also took the view that the procedure adopted by the Tribunal was irregular and the answers given by Roshan Lal should be left out of account.
One other circumstance on which the Tribunal relied was that notwithstanding the Press Note issued by the Government of India in January 1952 the assessee did not declare that.
it had brought assets of the value of Rs. 3,33,4/4/ from Pakistan and this circumstance, according to the Tribunal, cast considerable doubt on the version put forward by the assessee.
Now, the Press Note of Government of India was not produced before us but we will assume that it did promise a certain concession to the evacuees.
who declared the assets brought by them from Pakistan.
Even so, we fail to see how it could be utilised as a circumstance militating against the explanation of the assessee.
Both according to the Appellate Assistant Commissioner as well as the Tribunal, the assessee did bring assets worth Rs. 1,00,000/ from Lahore in June 1947 and these assets were admittedly not disclosed by the assessee despite the Press Note issued by the Government of India.
Then, how could any inference be drawn from the non disclosure of the assets by the assessee that the assessee must not have brought assets represent in the balance of Rs 2,33 414/ 9 Whether the assets brought by the assessee were Rs 1,00,000/ or Rs. 3,33,414/ the fact remains that they were not disclosed by the assessee despite the Press Note of the Government of India and hence no adverse reference could be drawn from the fact of non disclosure of the assets by the assessee.
It will, therefore, be seen that there was no mate rial on the basis of which the Tribunal could come to the conclusion that though the assessee had a fairly large business in Lahore and had brought its entire ornaments, jewellery and cash from Lahore and deposited the same in a sealed trunk with the Amritsar Branch of the Imperial Bank of Inaia, these ornaments, jewellery and cash were worth not more than Rs. 1,00,000/ .
One may also ask the question that if the assessee did not bring assets worth more than Rs. l,00,000/ from Lahore, where and how did it get the remaining assets of the value of Rs 2 33 414/ ? Roshan Lal had come away from Lahore as a refugee and conditions in post partition India were also highly unsettled and the clear and undoubted evidence was that neither Roshan Lal nor the assessee had any business or other means of 164 income in India until 30th March, 1948.
In this situation, it is impossible to believe that the assessee could have earned such a huge amount of profit as Rs. 2,33,414/ within a few months, even if it be assumed that some business was started by it in October 1947 when Roshan Lal came down to Delhi.
The utter improbability, amounting almost to, impossibility, of the assessee having earned such a large amount of Rs. 2,33,414./ as profit within a few months in the disturbed conditions which then prevailed in India was a circumstance which ought to have been taken into account by the Tribunal but which the Tribunal unfortunately failed to do.
It may be pointed out that it was not the case of the Revenue that the books of account of the business were subsequently written up and the entry crediting the capital of Rs. 3,33,4.14/ on 30th March, 1948 was not a genuine entry and the undisclosed profits of the subsequent years were sought to be concealed by the showing a bogus entry of Rs. 3,33,414/ as capital contribution on 30th March, 1948.
If such had been the case, the present argument as to the improbability of the assessee having earned such a huge amount of Rs. 2,33,414/ within a few months, would not have been available to the assessee.
But the Revenue did not dispute the correctness of the entry and accepted that assets worth Rs. 3,33,414/ were introduced in the business on 30th March, 1948 and sought to include the amount of Rs. 3,33,414/ representing the value of these assets as undis closed income of the assessee for the assessment year 194849.
The only question could, therefore, be whether these assets were brought by the assessee from Lahore in June 1947 or they represented the concealed income earned by the assessee during the period June 1947 to 30th March, 1948.
The impossibility of the assessee having earned such a huge amount of profit within a a few months immediately after migration to India in the disturbed and unsettled conditions which then prevailed must, therefore, necessarily support the inference that the assessee must have brought these assets from Lahore.
We are, therefore, of the view that in reaching the conclusion that out of the capital of Rs. 3,33,414/ I credited in the books of the assessee on 30th March, 1948, assets of the value of Rs. 2,33,414/represented undisclosed income of the assessee for the assessment year 1948 49, the Tribunal acted without any material or in any event, the finding of fact reached by the Tribunal was unreasonable or such that no person acting judicially and properly instruct ed as to the relevant law would come to such finding.
We accordingly allow the appeal, set aside the order of the High Court and answer the question referred by the Tribunal in the negative.
The 'Commissioner will pay the costs of the appeal to the assessee.
P.H.P. Appeal allowed.
| IN-Abs | The assessee, a Hindu Undivided Family, was carrying on business in gold and jewellery in Lahore till June 1947.
In view of the impending partition of India Roshan Lal decided to move out of Lahore and accordingly transferred sums of Rs. 12,094/ , Rs. 13,000/ and Rs. 6,000/ from Lahore Banks to New Delhi Banks.
He left Lahore and pro ceeded to Mussoorie in June, 1947.
On his way, he stopped at Amritsar for a few days and opened an account with the Imperial Bank of India with a view to obtaining a locker in the Safe Deposit Vault but a locker was not available and hence he deposited a trunk which he had brought from Lahore containing gold ornaments, jewellery and cash with the Imperial Bank of India.
The assessee came to Delhi in October, 19.,7.
and rented a house.
In February, 1948.
he succeeded in securing business premises and started busi ness on 30.3.1948.
The first entry in the books of account on 30.3.1948 showed gold ornaments of Rs. 1,19,320/ , Gold Rawa Rs. 1,69,020/ Stones worth Rs. 4,000/ Bank balance with the Imperial Bank of India, Delhi Rs. 35,053/ Bank Balance with Hindustan Commercial Bank.
Delhi Rs. 221/ and Cash of Rs. 2.800/.
The assessee thus brought in an aggre gate capital of Rs. 3,33,414/ in the business on 30.3.1948.
in 1957.
it came to the notice of the Income Tax Officer that the assessee had made considerable income in his gold and jewellery business but had failed to pay any tax on such income and hence issued a notice to the assessee under section 34(1)(a) of the Indian Income Tax Act, 1922, for bringing the income of the assessee for the assessment year 1948 49 to tax.
The assessee flied his return.
In the course of the assessment proceedings the I.T.O. called upon the assessee to explain the nature and source of the capital of Rs. 3,33,414/ .
The assessee contended that he brought the gold Rawa, ornaments and cash representing the capital when he migrated from Lahore and they were kept in a sealed trunk with the bank at Amritsar and thereafter brought over to Delhi and deposited in the Safe Deposit Vault of Hindustan Commercial Bank at Delhi.
When the business of the asses see was commenced,he surrendered the locker and brought the entire gold, jewellery and cash into the business.
The assessee observed that till he started his business in March 1948, neither the ,assessee nor Roshan Lal had any other business or means of income from which the amount of Rs. 3,33,414/ could have been earned.
The assessee examined some witnesses.
The ITO also examined the broth ers of Roshan Lal who stated that the father of Roshan Lal was a man of ordinary means who was almost reduced to penury by about 1940 and that he had given a sum of Rs. 2000/ to his son Roshan Lal for starting gold and jewellery business in 1935 and he had also subsequently lent some tooroes to Roshan Lal on nominal interest.
The Income Tax Officer rejected the explanation offered by the assessee and came to the conclusion that it was not possible to believe that the assessee had been able to accumulate capital to the extent of Rs. 3.33,414/ out of income from the business carried on.
The Income Tax Officer gave credit for a sum of Rs. 20,000/ and treated the balance of Rs. 154 3,30,414/ as income of the assessee from undis closed source.
On appeal,the Appellate Assistant Commis sioner allowed a further sum of Rs. 80,000./ on the follow ing grounds: (1) That the assessee transferred a sum of Rs.12,004/ ,Rs./3,000/ and Rs. 6,000/ from Banks as Lahore to the Bank at New Delhi.
This shows that the assessee was not a man of very small means while he was at La hore.
(2) He was having accounts in 4 different Banks and a man of very modest means would not have normally so many Bank accounts.
(3) While at Lahore.
Roshan Lal had taken Life Insurance Policies worth Rs. 22.000/ .
A number of letters and receipts regarding business transactions in Lahore Indicated that the Lahore business was not as small as the Income Tax Officer had taken it to be.
The assessee stopped at Amritsar and opened an account and took Safe Deposit Vault where he deposited a sealed box.
It is reasonable to presume that there must have been something quite valuable in the box.
A further appeal filed by the assessee to the Tribunal failed.
The tribunal, when the appeal came to be heard, put a question to Roshan Lal as to how he had brought gold and jewellery from Lahore and enquired about the weight of the box.
The Tribunal after hearing the arguments of the parties rejected the appeal.
The main arguments which weighed with the Tribunal were: (1) that the weight of the box was too less: (2) that the assessee did not disclose his assets under the scheme of the Government of India published in the Press Note in January 1952, requiring all evacuees to declare the amounts of money brought by them from Paki stan.
(3) that the assessee did not file any income tax returns in Lahore.
The High Court con firmed the finding of the Tribunal in the reference.
Allowing the appeal, HELD: (1) The law is well settled that the onus of proving the source of a sum of money found to have been received by an assessee is on him.
[160 E] A A.Govindaralulu Mudaliar vs Commissioner of Income Tax and Commissioner of Income Tax, U.P. vs Devi Prasad Vishwanath Prasad followed.
(2) The conclusion of the Tribunal on a finding of fact can be assailed only if it is shown that the Tribunal had acted without any matenal or upon a view of the facts which could not reasonably be entertained or the facts found were such that no person acting judicially and properly instructed as to the relevant law would have come to that determination.
[161 C D].
Mehta Parikh & Co. vs Commissioner of Income Tax Bombay , followed.
(3) The Tribunal was right in commenting that primary evidence with regard to the extent of the Lahore business of the assessee was not forthcoming but it must be remem bered that the assessee was being called upon to prove the extent of his business m a territory from which the member of the Hindu undivided family had to .flee for their lives and from where it was totally impossible to produce any primary evidence. The.
finding of the AAC that the assessee was doing fairly well m the business m Lahore was not disturbed by the Tribunal. The .AAC found that it was reasonable to presume to at there Was something.
quite valuable m the box .and this finding was also not dissented by the Tnbunal.
There was no material to show that the orna 155 ments, jewellery and cash brought by the assessee and kept in the sealed trunk were of the value of only Rs. 1 lac and not more.
The circumstances that the assessee had not filed any Income Tax return could be of no avail to the Revenue because admittedly the assessee had brought substan tial amount from Lahore.
[161 D G] (4) The Tribunal was wrong in relying upon certain answers given by Roshan Lal, about the weight of the sealed box when he was questioned by the Tribunal at the hearing of the appeal.
It must be pointed out straightway that the answer given by Roshan Lal could not be relied on by the Tribunal because there is a procedure prescribed in rules 29.
30 and 31 of the Income Tax Appellate Tribunal Rules for taking additional evidence before the Tribunal and if the members of the Tribunal wanted to examine Roshan Lal on any aspects of the case.
they should have followed this procedure.
The answers given by Roshan Lal disregarding the perscribed procedure could not form part of the record and the Tribunal was not entitled to rely upon the same.
[162 H, 163 A C] (5) The Tribunal erred in relying on the Press Note be cause admittedly the assessee had brought a sum of Rs. 1 lac to India and even that was not declared to the Government of India.
[163 E F] (6) There was no material on the basis of which the Tribunal could come to the conclusion that the ornaments.
jewellery and cash were not worth than Rs. 1 lac.
It was not proved that Roshan Lal or the assessee had any business or other means of income in India until 30.3.1948.
The genuineness of the entry of March 1948 was also not chal lenged.
It is utterly improbably amounting almost to impossibility that the assessee could have earned such a large amount of Rs. 2.33.414/ as profit within a few months in the disturbed conditions which then prevailed in India.
[164 B E] (7) The Tribunal acted without any material and in any event, the finding of fact reached by the Tribunal was unreasonable or such that no person acting judicially and properly instructed as to the relevant law would come to such finding.
[164 F G]
|
Civil Appeal Nos.
1546 1551 of 1971.
(From 1he Judgment and Order dated 20 12 1968 of the Calcutta High Court in Appeals from Original Orders Nos.
556 559, 571 and 572 of 1967) 150 Lal Narain Sinha, Sol.
General and G.S. Chatterice, for the appellants.
Purushottam Chatterjee and Ratbin Des, for the respondents.
The Judgment of the Court was delivered by BHAGWATI, J.
The short question which arises for deter mination in these appeals is whether green ginger falls within the category of goods described as "vegetables, green or dried, commonly known as "sabji, tarkeri or ask" in Item (6) of Schedule I to the Bengal Finance (Sales Tax) Act, 1941.
If it is covered by this description, it would be exempt from sales tax imposed under the provisions of that Act.
The Sales Tax authorities held that green ginger is used to.
add Havour and.
taste to food and it is, therefore, not vegetable commonly known as sabji, tarkeri or ask".
The orders of the Sales Tax authorities were challenged in a writ petition filed under article 226 of the Constitution and a Single Judge of the High Court who.
heard the writ petition disagreed with the view taken by the Sales Tax authorities and held that green ginger is vegetable within the meaning of that expression as used in Item (6) of the First Schedule to the Act.
This view of the learned Single ' Judge was affirmed by a Division Bench of the High Court on appeal under clause (15) of the Letters Patent.
Hence the present appeal by the State with special leave obtained from this Court.
The Bengal Finance (Sales Tax) Act, 1941 levies sales tax on the taxable turnover of a dealer computed in accord ance with the provisions of that Act.
Section 6, sub sec tion (1) provides that no tax shall be payable under the Act on the sale of goods specified in the first column of Sched ule I, subject to the conditions and exceptions, if any, set out in the corresponding entry in the second column thereof and Item (6) of Schedule I specifies in the first column "vegetable, green or dried, commonly known as "Sabji, tar kari or ask" so that No. tax is payable on the sale of goods falling within this category, subject to the exception set out in the second column, namely, that they would be liable to bear tax "when sold in sealed containers.
" It was common ground in the present case that green ginger was not sold by the assessee in sealed containers and the only question which, therefore, requires to be considered is whether green ginger can be regarded as vegetable commonly known as 'sabji, tarkari or sak '.
Now, the word 'vegetable ' is not defined in the Act but it is well settled as a result of several decisions of this Court of which we may mention only two, namely, Ram avatar Budhaiprasad vs Assistant Sales Tax Officer, kola(1) and M/s Motipur Jamindary Co. Ltd. vs State of Bihar(2)) that this word, being a word of every day use, must be construed not in any technical sense, nor from any botanical point of view, but as understood in common par lance.
The question which arose in Ramavatar 's case (supra) was whether betel leaves are "vegetables" (1) ; (2) ; 151 and this court held that they are not included within that term.
This Court quoted with approval the following passage from the judgment of the High Court of Madhya Pradesh in Madhya Pradesh Pan Merchants ' Association, Santra Market, Nagput vs State of Madhya Pradesh(1): "In our opinion, the word "vegetables" cannot be given the comprehensive meaning the term bears in natural history and has not been given that meaning in taxing statutes before.
The term "vegetables" is to be understood as commonly understood denoting those classes of vegetable matter which are grown in kitchen gardens and are used for the table.", and observed that "the word 'vegetable ' in taxing statutes is to be understood as in common parlance i.e. denoting class of vegetables which are grown in a kitchen garden or in a farm and are used for the table".
This meaning of the word 'vegetable ' was reiterated by this Court in Motipur zamindary case (supra) where this Court was called upon to consider whether sugarcane can be regarded as vegetable and it was held by this Court that sugarcane cannot be said to fail within the definition of the word 'vegetable '.
It is interesting to note that the same principle of construction in relation to words used in a taxing statute has also been adopted in English, Canadian and American courts.
Pollock B. pointed out in Grenfell vs I.R.C.(2) that "if a statute contains language which is capable of being construed in a popular sense, such a statute is not to be construed according to the strict or technical meaning of the language contained in it, but is to be construed in its popular sense, meaning, of course, by the words "popular sense" that sense which people conversant with the subject matter with which the statute is dealing would attribute to it. '" So also the Supreme Court of Canada said in Planters Nut and Chocolate Co. Ltd. vs The King,(3) while interpret ing the words 'fruit ' and 'vegetable ' in the Excise Act: "They are ordinary words in every day use and are, there fore, to be construed according to their popular sense".
The same rule was expressed in slightly different language by Story, J., in 200 Chests of Tea(4) where the learned Judge said that "the particular words used by the Legisla ture in the denomination of articles are to be understood according to the common commercial understanding of the terms used, and not in their scientific or technical sense, for the Legislature does "not suppose our merchants to be naturalists, or geologists, or botanists" ".
It will, therefore, be seen that the word 'vegetable ' in Item (6) of Schedule I to the Act must be construed as understood in common parlance and it must be given its popular sense meaning "that sense which people conversant with the subject matter with which the statute is dealing would attribute to it" and so construed, it denotes those classes of vegetables which are grown in a kitchen garden or in a farm and are used for the table.
Now, obviously green ginger is a vegetable (1) 7 S.T.C. 99 at 102.
(2) at 248.
(3) (4) (1824), 9 Wheaton (U.S.) 430 at 438.
11 240SCI/77 152 grown in a kitchen garden or in a farm and is used for the table.
It may not be used as a principal item of the meal but it certainly forms part of the meal as a subsidiary item.
It is an item which is ordinarily sold by a vegetable vendor and both the vegetable vendor who every day deals in vegetables and the housewife who.
daily goes to the market to purchase vegetables would unhesitatingly re and green ginger as vegetable.
The assessee in fact placed evidence before the Sales Tax authorities showing that the Railway authorities also treated green ginger as vegetable for the purpose of railway tariff and charged for the carriage of green ginger at the reduced rate applicable to vegetables and even the Corporation of Calcutta included green ginger in the category of vegetables in the market bulletin pub lished by it fortnightly showing the rates in the municipal market.
There can, therefore, be little doubt that green ginger is generally regarded as included within the meaning of the word 'vegetable ' as understood in common parlance.
That a part, we find that Item (6) speaks not simply of vegetables but "vegetables commonly known as sabji, tar kari or sak" and the Division Bench of the High Court held green ginger to fall within the meaning of the words "sabji, tarkari or sak".
We should certainly be very slow to disturb a meaning placed on these words in Bengali language by two judges of the High Court who may reasonably be expected to be quite conversant with that language.
We are accordingly of the view that green ginger is included within the meaning of the words "vegetables commonly known as sabji, tarkari or sak" in Item (6) of Schedule I and its sales must be held to be, exempt from tax under section 6 of the Act.
The result is that the appeals fail and are dismissed with costs.
Costs will be only m one set.
S.R. Appeals dismissed.
| IN-Abs | Section 6(1) of the Bengal Finance (Sales Tax) Act 1941 exempts from tax liability "vegetables, green or dried commonly known as subji, tarkari or sak" when not sold in sealed containers.
The Sales Tax Authorities levied sales tax on "green ginger" sold by the respondents, taking the view that inasmuch as green ginger is.
used to add flavour and taste to food.
it is not "vegetable commonly known as subji, tarkari or sak".
A writ petition challenging the validity of the orders of assessment was allowed by the Calcutta High Court which held that green ginger is vegeta ble within the meaning of that expression as used in Item 6 of the First Schedule to the Bengal Finance (Sales Tax) Act, 1941.
Dismissing the State appeals by Special Leave the Court, HELD: (1) Green ginger is included.
within the meaning of the words "vegetables commonly known as subji, tarkari or sak" in Item 6 of Schedule I and its sales are exempt from tax under section 6 of the Bengal Finance (Sales Tax) Act, 1941.
[152 D] (2) The word "vegetable" though not defined in the Act, being a word of every day use, must be construed not in any technical sense, nor from any botanical point of view but as understood m common parlance i.e. denoting class of vegeta bles which are grown in a kitchen garden or in a farm and are used for the table.
The word "vegetable" in Item 6 of Schedule I to the Act, so construed, by giving its popular sense meaning, "that sense which people conversant with the subject matter with which the statute is dealing would attribute to it" denotes those classes of vegetables which are grown in a kitchen garden or in a farm and are used for the table.
Green ginger obviously is a vegetable grown in a kitchen garden or in a farm and it is used for the table.
It may not be used as a principal item of the meal, but it certainly forms part of the meal as a subsidiary item.
Green ginger is generally regarded as included within the meaning of the word "vegetable" as understood in common parlance.
1[150 F H, 151 G H, 152 A] Ramavatar Badhaiprasad vs Assistant Sales Tax Officer Akola, ; ; M/s. Motipur Zamindary Co. Ltd. vs State of Bihar ; , applied.
Madhya Pradesh Pan Merchants ' Association, Santra Mar ket, Nagpur vs State of Madhya Pradesh 7 S.T. Cases 99 at 102, referred to.
Grenfell vs I.R.C. at 248; Planters Nut and Chocolate Co. Ltd. vs The King ; 200 Chests of Tea (1824) 9 Wheaton (U.S.) 430, at 438 quoted with approval.
|
N: Criminal Appeal Nos.
178179 and 228 of 1975.
(From the Judgment and Order dated 10 4 1975 of the Punjab and Haryana High Court in Criminal Appeal No. 40 of 1972).
Frank Anthony, Herjinder Singh and S.N. Singh, for appellant No. 1 in Crl.
A.178/75 and appellants in Crl. 179/75 and Appellants Nos.
1 2 in Crl.
A.228/75.
A.K. Sen, and Herjinder Singh for appellant No. 2 in Crl.
A.178/75.
R.L. Kohli, Rameshwar Nath and Miss Manju Malhotra for appellant No. 3 in Crl.
A. No. 228/75.
O.P. Sharma and Miss Kusum Chaudhury, for the respondents in all the appeals.
The Judgment of the Court was delivered by GOSWAMI, J.
These appeals under the Supreme Court (Enlargement of Criminal Appellate Jurisdiction) Act, 1976, are directed against the judgment and order of the High Court of Punjab and Haryana convicting five of the appel lants (Satbir Singh, Paramjit Singh, Harbhajan Singh, Shiv Narain and M.p.
Singh) under section 302/120B, Indian Penal Code, and sentencing them to imprisonment for life.
Satbir Singh was also convicted on the sole testimony of Puran Singh under section 364 IPC and sentenced to rigorous im prisonment for seven years and fine.
The remaining eight appellants (Ajit Singh, Darshan Singh, Arjan Singh, Baghal Singh, Tara Singh, Dial Singh, Bachan Singh and Malook Singh) were convicted under section 364 IPC and sentenced to seven years rigorous imprisonment and fine.
They had all earlier been acquitted by the Additional Sessions Judge, Amritsar.
This case throws a lurid light on smuggling activities at the international India Pakistan border near Amritsar.
Amongst the appellants (hereinafter to be described as the accused) M.P. Singh was an Inspector of the Border Security Force (BSF), Shiv Narain was a Sub Inspector (BSF) and Harbhajan Singh was a Constable (BSF).
Accused Ajit Singh is the father of the two accused, Satbir Singh and Paramjit Singh.
Ajit Singh is alleged to be a big 'smuggler indulging in his smuggling activities at the India Pakistan border with his two sons and the other accused persons, namely, Darshan Singh, Arian Singh, Baghal Singh, Tara Singh, Dial Singh, Bachan Singh and Malook Singh.
It is alleged that Inspector M.P. Singh, S.I. Shiv Narain and Constable Harbhajan Singh, along with other BSF personnel were conniving at the smuggling activities of Ajit Singh and party and were reaping their illegal harvest:.
197 Shingara Singh and his son Hardip Singh and Kartar Singh are the three deceased whose murders form the subject matter of this case.
While the dead bodies of Hardip Singh and Kartar Singh were found that of Shingara Singh was not available.
Puran Singh (PW 3) son of Shingara Singh (deceased) was a member of the gang of smugglers headed by accused Ajit Singh and in the course of smuggling activities there was a quarrel with regard to the sharing of money to the extent of Rs. 15,000/ which was said to be his due and which Ajit Singh and party were not paying.
A few months prior to July 6, 1970, the date of occurrence, when accused Satbir Singh, Jasbir Singh and ten or twelve labourers along with Puran Singh smuggled 15 jackets of gold each weighing 1000 tolas from Pakistan into Indian territory with the connivance of Inspector M.P. Singh and S.I. Shiv Narain (BSF), Puran Singh succeeded in slipping away under the cover of darkness with two jackets of gold.
The gold with which Puran Singh fled away was then worth about Rs. 5 to 6 lakhs.
May 20, 1970: A report was lodged by Shingara Singh deceased, at Police Station, Gharinda, alleging that his son Puran Singh (PW 3) who had been carrying on smuggling activ ities with the sons of accused Ajit Singh was taken away by accused Satbir Singh and some others (not before us) on May 6, 1970, in a car.
He did not then suspect anything.
But now he had a firm suspicion that Satbir Singh, Jasbir Singh and Paramjit Singh, sons of Ajit Singh of Village Burj, Rajinder Singh and Makhan Singh, had abducted his son Puran Singh over a dispute about .the smuggled gold and they had kept him concealed at some unknown place with the intention to kill him.
On receipt of this report a case under section 364 IPC was registered by S.I. Baldev.
Singh (PW 63) at Police Station, Gharinda (exhibit P.P.Y.).
July 7, 1970: A report was sent to Police Station, Gharinda by accused Shiv Narain, S.I. (BSF) about an en counter of BSF with smugglers on the mid night of July 6, 1970, on the border of India Pakistan at Border Pillar No. 100 near Amritsar that "two sikh young men" fall dead to the fire opened by the Border Security Force of the Indian side.
July 17, 1970: The first information report (exhibit PPZ/R) of the present case was registered by Police Station, Gha rinda, on the report dated July 12, 1970 (exhibit P.P.Z.) of D.S.P. Surjit Singh (PW 64) which, inter alia, disclosed: "I heard a rumour on 8th July, 1970, on my return from casual leave that three persons namely Shingara singh son of Inder Singh, Kartar Singh son of Mangal Singh and Hardip Singh son of Shingara Singh jats residents of Ranike, Police Station Gharinda had been abducted forcibly by Ajit singh of Burj and his sons residents of village Burj, Police Station Gharinda and party from near Crystal Chowk, Amritsar and that they had, been shown killed in an encounter in connivance with Border Security Force and Pak Rangers".
198 This report of D.S.P. Surjit Singh has discounted the en counter story as a fib but yet it continued to be the de fence of the accused.
According to the trial court "the encounter version appears to be true".
Were the three persons, Shingara Singh, Hardip Singh and Kartar Singh, killed in an encounter with the BSF or mur dered in pursuance of a conspiracy .to abduct and murder ? While the first part of the question need not even be proved, the second part must needs be proved to the hilt.
The prosecution case further is that Puran Singh after having been taken away from his village was taken to the Haveli of Ajit Singh where he was asked about the gold which he had stolen away.
Puran Singh informed the accused persons that he 'had delivered the gold to his brother, Hardip Singh.
It is alleged that Puran Singh was afterwards taken to the border and left with accused M.P. Singh and accused Shiv Narain who later on handed over 'him to Shaffi and Yakub, two Pakistan smugglers and the latter took him to village Dial (Pakistan).
Puran Singh was brought to the Indian side of the border on the night intervening 6th and 7th July, 1970, but was again taken back to Pakistan where from he could manage to escape and cross over to the Indian side of border only on November 6, 1970, to figure as an eye witness to the murder of his father.
It is alleged that on July 6, 1970, Shingara Singh, Hardip Singh and Kartar Singh (all deceased) along.with Harnam Singh (PW 5) went.
to Amritsar.
Shingara Singh and Hardip Singh had gone to attend court, Kartar Singh to sell his vegetables and Harnam Singh to attend to his wife, Smt.
Piaro, who was a patient in the V.J. Hospital.
After being free from their work at about 1.00 p.m. the three deceased along with Harnam Singh (PW 5) went towards the V.J. Hospital.
When they had reached Crystal Chowk on way to the Vijay Hospital a big vehicle and a car came from the side of the Railway Station, in which accused Ajit Singh, Jasbir Singh (absconder), accused Satbir Singh, Satara (absconder), accused Paramjit Singh, accused Baghal Singh, accused_ Tara Singh, accused Arian Singh, accused Bachan Singh, accused Darshan Singh, Pritu.
(Pritam Singh) (acquitted), accused Malook Singh and accused Dial Singh with two other; Jetsons in police uniforms (Pamma and Malki at) were travelling. 'These persons were armed with guns and revolvers.
The accused came out of the vehicle and physi cally lifted Shingara Singh, Hardip Singh and Kartar Singh and whisked them away in the said vehicles.
It is alleged that the deceased persons were first taken to the HaveIi of Ajit Singh in village Burj where they were belaboured and later on, blindfolded and tied, removed to the Indo Pakistan border where on that night some goods were to be exchanged between the accused with Balkar Singh (PW 4) and the Pakis tani smugglers.
Accused M.P. Singh was also present there.
At about mid night all of them including accused Shiv Narain and accused Harbhajan Singh moved near Pillar No. 100.
This party handed over 1 1/4 maunds of silver to Yakub and Shaffi, Pakistani smugglers and received gold in return Hardip Singh and Kartar Singh were brought by accused Satbir Singh and others towards Indian side of the border but Shingara Singh 199 was left behind with the Pakistani smugglers.
Balkar Singh (PW 4) then enquired as to why Shingara Singh had been handed over to Pakistanis.
At that moment accused Shiv Narain fired two shots with very light pistol.
Accused Harbhajan Singh, accused M.P. Singh, accused Paramjit Singh and accused Satbir Singh also fired shots at Hardip Singh and Kartar Singh from a distance of 25 yards who then dropped dead.
Accused Jasbir Singh (absconder) came there and untied their hand 's and removed the cloth covering their eyes.
A rifle was placed near the dead body of Hatdip Singh and a Kitpan was placed near the dead body of Kartar Singh.
Balkar Singh (PW 4) also heard the sound of a fire shot in Pakistan territory when Ajit Singh (accused) said that Shingara Singh had also been killed.
According to the prosecution to justify the killing of Hardip Singh and Kartar Singh, accused M.P. Singh, accused Shiv Narain and accused Harbhajan Singh with other officials of BSF, manipulated an encounter story and got a false case registered at Police Station, Gharinda, on July 7, 1970 (exhibit P.P. O/1) on a "ruqa" having been sent by S.I. Shiv Narain (accused) falsely alleging, inter alia, that on a secret information having been received by Inspector M.P. Singh (accused) that some Smugglers would bring some goods from Pakistan to India they conducted an.
ambush behind Burj (Border Pillar) No. 100 on the night intervening 6th and 7th July, 1970, and during the process in defence the Naka party fired which resulted in killing of two persons who were subsequently identified as Hardip Singh and Kartar Singh.
The accused persons were charged under section 364/120B IPC for abducting Puran Singh.
They were also charged under section 364/120B IPC for abducting Shingara Singh, Hardip Singh and Kartar Singh.
They were further charged under section 302/102B IPC for causing the death of Kartar Singh and Hardip Singh.
They were also charged under section 109 IPC for abetting the murder of Shingara Singh which offence was committed in consequence of the abetment.
The prosecution examined 68 witnesses.
The accused denied the charges and the BSF accused suggested a motive for the prosecution by alleging animus against the D.S.P. Surjit Singh (PW 64).
According to them Kartar Singh and Hardip Singh were killed as a result of an encounter with smugglers on the border.
The Sessions Judge giving his reasons for not accepting the evidence of the eye witnesses and other material evi dence acquitted all the accused.
The High Court on appeal confirmed the acquittal of two accused, namely, Pritam Singh and Mehar Singh, but convicted the appellants as mentioned above.
With regard to the charge under section 302/120B IPC the case will depend upon the evidence of Puran Singh (PW 3) and the extrajudicial confession by the accused, Shiv Narain and Harbhajan 14 240SCI/77 200 Singh, before R.K. Kapur (PW 41).
With regard to the charge under section 364 IPC the prosecution rests upon Hamare Singh (PW 5) and also upon the evidence of Gurdial Singh (PW 10), Inspector Gurmukh Singh (PW 11) and Constable Amrik Singh (PW 46) with regard to the Roznamcha entry (exhibit PP.
We may also note here that Puran Singh (PW 3) and Balkar Singh (PW 4) were the two eye witnesses to the murder and Balkar Singh (PW 4) was disbelieved both by the Sessions Judge and the High Court.
Harnam Singh (PW 5) is an eye witness to abduction.
We should also note that Gutdip Singh (PW 14), Atma Singh (PW 27) and Mohinder Singh (PW 28) who were witnesses with regard to the charge of abduction were also disbelieved both by the Sessions Judge and the High Court.
Harnam Singh (PW 5) who is the eye witness to abduc tion was disbelieved by the Sessions Judge but partly be lieved by the High Court.
In the above state of the evidence Mr. Sharma appearing on behalf of the state rests his case on the evidence of Puran Singh (PW 3) and the extra judiCial confession made by the accused Shiv Narain and Harbhajan Singh before R.K. Kapur (PW 41) with regard to the murder charge under sec tion 302/120B IPC.
He also relies upon the Roznamcha and the recoveries.
We will therefore first examine the reasons given by the Sessions Judge for acquitting the accused.
After narrating the facts deposed to by Puran Singh (PW 3) the Sessions Judge held that "the story on the face of it appears to be false".
According to Puran Singh (PW 3) the accused took him away to Ajit Singh 's Haveli and then to the Indo Paki stan border only with a view t9 recover the gold which he had earlier managed to steal away.
_ The Sessions Judge took note of the fact that Puran Singh had told the accused that the gold was lying with his brother, Hardip Singh.
It was, therefore, inconceivable that this clue with regard to the gold would not be pursued by the accused and Hardip Singh would be left out and Puran Singh alone would be taken away.
This witness even after he had Seen the murder of his father Shingara Singh, on July 6, 1970, stayed in Pakistan for about four months without disclosing this fact to any body nor did he communicate about it to any of his rela tions.
Although this witness said that he crossed from Pakistan to India only on November 6, 1970, after the mur der, and was arrested and interrogated by S.I. Jai Ram (PW 58) and was also prosecuted for crossing the border, there is no evidence from any police officer, nor even from S.I. Jai Ram (PW 58).
No documentary evidence, which would have been available if his statement Was true, was produced in the case.
Apart from that, this witness stated that he was arrested by S.I. Jai Ram and he narrated the entire occur rence to him.
S.I. Jai Ram does not Support him.
On the other hand he had earlier stated before the committing Magistrate that he did not tell anything about the said murders to S.I. Jai Ram.
The Sessions Judge also note several discrepancies in his evidence and finally came to the conclusion that he was not actually present at the ' time of the murders nor was he abducted by the accused as alleged.
201 The High Court does not appear to have closely consid ered the treasons given by the SesSions Judge for disbeliev ing the testimony of Puran Singh.
it is difficult to appre ciate how the High Court can say that the statement of this witness "seems to be quite natural" in view of the infirmities pointed out by the Sessions Judge.
After exam ining the entire discussion of the evidence of this witness by the High Court, we are not satisfied that the High Court was right in relying upon the testimony of this witness.
It is pointed out that the High Court was not correct in observing that "it is not disputed that he (Puran Singh) is being tried for having come to Indian territory on November 6, 1970 and the moment he entered the Indian territory, he was taken into custody and his statement was recorded by the police".
On the other hand the Sessions Judge found just to the contrary and there is no reference in the judgment of the High Court to the discussion by the Sessions Judge with regard to this aspect.
We have next to see the reasons given by the Sessions Judge for disbelieving the testimony of Harnam Singh (PW 5).
This witness gave evidence about the abduction of the three deceased from the Crystal Chowk, near V.J. Hospital, Amrit sar.
The witness is a near relation of the deceased and he admitted that when the three deceased were abducted he suspected that the accused might inflict injuries on their person.
Even so he did not go for police assistance nor did he inform even Mangal Singh (PW 17), father of the deceased .Kartar Singh, about the occurrence although the latter was residing with him in the same house.
He also did not ask the relations of the deceased to 'lodge any report with the police.
Crystal Chowk is a busy commercial area where there are shops and some residential houses and the shops were open at the time of the incident.
Even so this witness stated that there were no shops or bazar near the place of occurrence.
This witness named five accused persons including two absconders and stated that he knew them by names about one year prior to the occurrence.
Since he had named accused Paramjit Singh and accused Satbir Singh in the committing court he was asked there to identify these two accused.
He, however, wrongly pointed towards accused M.P. Singh as Paramjit Singh and accused Pritam Singh as Satbir Singh.
Accused M.P. Singh was not even alleged to be present at Amritsar at the time of abduction.
Although this witness stated that he informed Kabal Singh (PW 6) brother of Shingara Singh, Kabal Singh did not corroborate him on this point.
Further, Harnam Singh (PW 5) states about abduction of the three deceased from Crystal Chowk.
The High Court accepts his evidence as being corroborated by witnesses regarding his presence at Amritsar with the three deceased persons.
It is difficult to see how because his presence at Amritsar is proved the further fact about the abduction of the three deceased from Crystal Chowk is also established.
There is no corroboration whatsoever of this part of the story.
If the High Court has to look for corroboration of the evidence of Harnam Singh even about his presence at Amritsar on its own reasoning, the principal part of the prosecution case about abduction depending upon his sole testimony cannot be held to be established.
The 202 High Court also seeks to find corroboration of this 'part of the case from Roznamcha of July 6, 1970 (exhibit P.P. A) wherein a certain information from an undisclosed source was re ceived at 2.00 P.M. by Gurdial Singh (PW 10) to the effect "that there was some fight between some smugglers near Crystal Chowk or some legislator had been abducted".
This information is hearsay in absence of the informant.
name of the informant is not even disclosed.
Apart from this, this Roznamcha does not corroborate Harnam Singh (PW 5) with regard to his statement that the three deceased persons were abducted by the accused from Crystal Chowk.
The High Court did not fail to observe that the reasons given by the witness for his belated examination by the police as "padding obviously. at the instance of the po lice".
Even so, the High Court explained away the fact ' of Harnam Singh 's not reporting to the police 'in a very unusu al way.
The High Court observed firstly that it was natural for the witness not to be involved in the dispute of smugglers and secondly that there was no use informing the police as no petty police officer would take action against the international smugglers.
The High Court went on to record that "it appears in the present day administration that no petty police officer is likely to take responsibil ity in ' the matter of prosecuting international smugglers without having the blessings of the highest police officer in the district and even above".
Witnesses, like Harnam Singh, were, therefore, according to the High Court "help less".
We cannot commend this line of approach in a crimi nal case in order to find jurisdiction for conviction on shaky testimony by making a virtue of the inalertness of the police administration.
The witness cannot be relied upon by resort to a kind of special pleading in his aid.
We find that the High Court has not given any cogent reason for taking a different view with regarding to the appreciation of evidence of this witness by the Sessions Judge.
About recovery of fire arms and gold at the instance of some of the accused, the case rested on the evidence of the police officers alone.
The other search witnesses were declared hostile on account of their not supporting the prosecution.
The Sessions Judge did not feel it safe to act upon the testimony of police witnesses including Inspector Bachan Singh (PW 68) in the matter of disclosure statement as well as of recovery of the fire arms and of gold in absence of corroboration by independent witnesses.
The High Court held that there was no reason to disbelieve the police witnesses.
But when both the Sessions Judge and the High Court seem to be in agreement in finding that there was "padding" by the police in respect of evidence produced in the case, it could not be said that the Sessions Judge was so grievously in error that contrary appreciation of the evidence was compelling under the circumstances.
There is also the evidence with regard to extra judicial confessions said to have been made by the accused Shiv Narain and Harbhajan Singh before R.K. Kapur (PW 41), the Commandant of the Border Security Force.
The Sessions Judge has considered that evidence as inadmissible under section 24 of the Evidence Act.
203 The High Court, differing from the opinion of the Ses sions Judge, held the extra judicial confession as admissi ble in evidence since, according to the High Court, "it cannot be held that he (Kapur) gave any threat; inducement or promise to the accused".
The High Court observed: .lm10 "When this (warning) was conveyed to the ac cused by Shri Handa D.S.P., the accused still stuck to the encounter versions and made their statements in writing supporting the encounter version.
The said threat of Shri Kapur P.W. did not work and the accused stuck to their old story .
It was on 19th July, 1970 that Shiv Narain and Harbhajan Singh were questioned separately when he told them that they should come" out with the truth otherwise .they would them~ selves be responsible for their actions and if they had done anything wrong, they would go to jail.
Instead of giving them any promise of help, he in fact told them that if they were in the wrong, they would go to jail .
From the statement of this witness, which I have gone through minutely, it is difficult to hold that he gave any inducement, threat or promise to the accused persons and that the ac cused persons made the confessions in pursuance thereof".
Section 24 of the Indian Evidence Act provides that a confession made by an accused person is irrelevant in a criminal proceeding, if the making of the confession appears to the court to have been caused by any inducement, threat or promise, having reference to the charge against the accused person, proceeding from a person in authority and sufficient, in the opinion of the court, to give the accused person grounds, which would appear to.
him reasonable, for supposing that by making it he would gain any advantage or avoid any evil of a temporal nature in reference to the proceedings against him.
Indeed, Mr. Kapur was a person in authority being the Commandant of the rank of a Senior Superintendent of Police and the confessing accused were his subordinates.
Apart from this, it appears from his evidence that the oral confessional statements were not readily forthcoming from the accused persons but they had to be interrogated on several occasions.
He further advised D.S.P. Handa to interrogate them "with a warning that they should state the truth otherwise they would not be supported by me".
Mr. Kapur further admitted in his cross examination that he "did tell Mr. Handa on telephone on 10th July, 1970 that he should give a warning to Border Security Force people to come out with truth otherwise they themselves would be responsible for their actions".
Mr. Kapur also himself "enquired from M.P. Singh and Shiv Narain accused about the matter on 19th July, 1970 telling them that now that the case has been registered they should state the truth".
In deciding whether a particular confession attracts the frown of section 24 of the Evidence Act, the question has ,to be considered 204 from the point of view Of the confessing accused as to how the inducement, threat or promise proceeding from a person in authority would operate in his mind.
It is true that Mr. Kapur, in his evidence, denied having held out: to the accused any inducement, threat or promise.
We, however, find.
that on July 1 7, 1970, the police gave a go by to the encounter story and the present case was registered against the accused.
Two days after, on July 19, 1970, Mr. Kapur having already failed to get any confessional statement from the accused through other agen cy, took upon himself to question accused Shiv Narain and Harbhajan Singh separately and this time he succeeded in securing confessional statements.
When the two accused were questioned.
separately after several abortive attempts to secure confessions, can it be said that there ' was no in ducement, threat or promise of some kind proceeding from.
Mr. Kapur to have made any impact on their minds 'resulting in the confessions ? Mr. Kapur having stated to the accused on July 19, 1970, that "now that the case has been regis tered they should state the truth", it is difficult to hold that by this statement he would not generate in the minds of the accused some hope and assurance that if ' they told the "truth" they would receive his "support" which he had earli er ' conveyed to them through D.S.P. Handa.
It is true that in the course of cross examination Mr. Kapur stated that he had told the accused that if they had done anything wrong they would go to jail.
But having regard to the effect of the totality of the evidence of this witness, we are unable to hold that the confessions made by the accused before Mr. Kapur on July 19, 1970, were free from the taint of infirmi ty within the mischief of section 24 of the Evidence Act. ' We are, therefore, clearly of opinion that the extra judi cial confessions by the two accused, Shiv Narain and Harbha jan Singh, have to be completely excluded from consideration being hit by section 24 of the Evidence Act.
Similarly not much can be made of abscondence of certain accused when other material evidence connecting the accused with the crime has failed in this case.
A serious infirmity in the judgment of the High Court is that it has not at all considered the reasons given by the Sessions Judge for acquitting the accused.
The High Court has given its own reasons for convicting the appellants but that is not enough in an appeal against ' acquittal.
As a practical proposition, in an appeal against acquit tal, it is always necessary that the .reasons given by the trial court for recording an acquittal should be examined by the High Court.
If the conclusions of the trial court are not based upon any evidence or they are such as no reasona ble body of men, properly instructed in law, can reach, on the evidence, or they are so palpably wrong as to shock the sense of justice, the High Court will be justified in taking a contrary view by giving its own reasons.
It is not enough that it is just Possible for the High Court to take a con trary view.
While interfering with acquittal the judg ment of the High Court should demonstrate clearly 205 the unworthiness of the conclusions of the trial court having regard to all the relevant evidence in record.
We are unable to say in these appeals that the High Court has followed these salutary principles in dealing with an appeal against acquittal.
We may also observe that the High Court need not have mentioned the fact that the Sessions Judge was "suspended on account of corruption charges".
If we may say so, it was absolutely unnecessary to refer to this in disposing of the appeal.
We are clearly of opinion that this was not a fit case where the High Court should have interfered with the acquit tal of any of the appellants.
The appeals are allowed.
The judgment and order of the High Court are set aside and the appellants are acquitted of all the charges.
The appel lants, Satbir Singh, Paramjit Singh, Harbhajan Singh, Shiv Narain and M.P. Singh shall be released from detention forthwith.
The remaining appellants, Ajit Singh, Darshan Singh, Arjan Singh, Baghal Singh, Tara Singh, Dial Singh, Bachan Singh and Malook Singh, who have been on bail shall be discharged from their bail bonds S.R. Appeals allowed.
| IN-Abs | All the accused were tried for offences section 302/120B and 364 I.P.C., but acquitted by the Additional Sessions Judge, Amritsar.
On State 's appeal against acquittal, the High Court convicted five of the appellants (Satbir Singh, Paramjit Singh, Harbhajan Singh, Shiv Narain and M.P. Singh) under section 302/120B I.P.C. and sentenced them to imprisonment for life.
Satbir Singh was also convicted on the sole testimony of Puran Singh (PW3) section 364 I.P.C. and sen tenced to rigorous imprisonment for seven years and fine.
The High Court held the extra judicial confessions made by Shiv Narain and Harbhajan Singh before R.K. Kapur (PW 41) the commander Border Security Force as admissible in evi dence before convicting them and rejected the plea of en counter on the Indo Pakistan border.
The High Court con victed the remaining eight appellants (Ajit Singh, Darshan Singh, Arian Singh, Baghal Singh, Tara Singh, Dial Singh, Bachan Singh and Malook Singh) section 364 I.P.C. and sentenced them also to rigorous imprisonment for seven years with fine.
Allowing the appeals under the Supreme Court (Enlarge ment of Criminal Appellate Jurisdiction) Act, 1971, the Court, HELD: (1) This was not a fit case where the High Court should have interfered with the acquittal of any of the appellants.
The High Court has not at all considered the reasons given by the Sessions Judge for acquitting the accused.
It has given its own reasons for convicting the appellants but that is not enough in an appeal against acquittal.
[205 B C] (2) As a practical proposition, in an appeal against acquittal, it is always necessary that the reasons given by the trial court for according an acquittal should be exam ined by the High Court.
If the conclusions of the trial court are not based upon any evidence or they are such as no reasonable 'body of men, properly instructed in law can reach, on the evidence, or they are so palpably wrong as to shock 'the sense of justice, the High Court will be justi fied in taking a contrary view by giving its own reasons.
It is not enough that it is just possible for the High Court to take a contrary view.
While interfering with acquittal the judgment of the High Court should demonstrate clearly the unworthiness of the conclusions of the trial court having regard to all the relevant evidence in record.
The High Court has followed these salutary principles in dealing with an appeal against acquittal.
[204 G H, 205 A] (3) In deciding whether a particular confession attracts the frown of section 24 of the Evidence Act, the question has to be considered from the point of view of the confess ing accused as to how the inducement.
threat or pro raise proceeding from a person in authority would operate in his mind.
In the instant case, the extra judicial confessions by the two accused Shiv Narain and Harbhajan Singh, have to be completely excluded from consideration being hit by section 24 of the Evidence Act.
When the two accused were questioned separately after several abortive attempts to secure confes sions it cannot be said that there was no inducement, threat or promise of some kind.
[203 H 204 A, E] 196 Observation: The witness cannot be relied upon by resort to a kind of special pleading.
in his aid.
The line of approach in a criminal case in order to find justification for conviction on .shaky testimony by making a virtue of the inalertness of the police administration is not to be commended.
|
iminal Appeal No. 62 of 1954.
Appeal by special leave from the Judgment and 0rder dated the 10th June 1953 of the Punjab High Court at Simla in Criminal Revision No. 86 of 1953 arising out of the Judgment and Order dated the 7th January 1953 of the Court of Sessions Judge, Karnal in Criminal Appeal No. 355 of 1952.
N. C. Chatterjee, (Vir Sen Sawhney and Rajinder Narain, with him) for the appellant.
Gopal Singh and P. G. Gokhale, for the respondent.
1014 1955.
November 24.
The Judgment of the Court was delivered by VENKATARAMA AYYAR J.
The appellant was a candidate for election to the House of the People from the Karnal Reserved Constituency during the last General Elections.
The proviso to section 33(3) of the Representation of the People Act (XLIII of 1951), omitting what is not material, enacts "that in a constituency where any seat is reserved for the Scheduled Castes, no candidate shall be deemed to be qualified to be chosen to fill that seat unless his nomi nation paper is accompanied by a declaration verified in the prescribed manner that the candidate is a member of the Scheduled Castes for which the seat has been so reserved and the declaration specifies the particular caste of which the candidate is a member and also the area in relation to which such caste is one of the Scheduled Castes".
Rule 6 of the Election Rules provides that the declaration referred to in the above proviso shall be verified by the candidate on oath or solemn affirmation before a Magistrate.
Schedule If contains the form of nomination paper to be used, with the terms in which the declaration is to be made by the candidate and verified by the Magistrate.
On 5 11 1951 the appellant signed two nomination papers, each containing the following declaration: "I hereby declare that I am a member of the Balmiki Caste which has been declared to be a Scheduled Caste in the State of Punjab".
The Balmiki Caste is one of the castes declared to be a Scheduled Caste under the "Constitution (Scheduled Castes) Order, 1950".
The above declaration was made on solemn affirmation before the First Class Magistrate, Karnal, and the nomination paper& with the above declaration were filed before the District Magistrate, Karnal, who was the returning officer.
One Jai Ram Sarup, a member of the Chamar caste, which is one of the Scheduled Castes, was also a candidate for the seat, and he raised the objection that the appellant was not a Balmiki by caste, and that he was therefore not qualified to stand for election to the re served Constituency.
Acting on the declaration afore 1015 said, the returning officer overruled the objection, and accepted the nomination paper of the appellant as valid.
At the polling, the appellant got the majority of votes, and on 6 3 1952 he was declared duly elected.
On 27 8 1952 Jai Ram Sarup filed the application out of which the present appeal arises, under sections 476 and 195 of the Code of Criminal Procedure before the District Magistrate, who functioned as the returning officer.
He therein alleged that the declaration made by the appellant that he belonged to the Balmiki caste was false, that, in fact, be was born a Muslim and had been converted to Hinduism, and that therefore "in the interests of justice" and "for safeguarding the interests of the Scheduled Castes", proceedings should be taken for his prosecution.
In his counter affidavit the appellant stated: "I am not a Muhammadan by birth.
On the other hand, I was born in Balmiki Hindu family.
I am a Hindu".
The District Magistrate held an enquiry in which one Prith Singh Azad, President of the Depressed Classes, Delhi, gave evidence that the appellant was a Muslim of the name of Khaliq Sadiq, that in 1938 he applied to the Suddhi Sabha to be converted to Hinduism, that be was so converted, and that thereafter he came to be known as Virindar Kumar.
In cross examination, he stated that the appellant bad admitted before him that he was a Muslim by birth.
He added that he bad two Muslim wives living at the time of the conversion.
The applicant, Jai Ram Sarup, also produced ten letters stated to be in the handwriting of the appellant in proof of the above facts.
On 17 9 1952 the Magistrate passed an order that there was a prima facie case for taking action, and on 29 9 1952 he filed a complaint before the First Class Magistrate, Karnal, charging the appellant with offences under sections 181, 182 and 193 of the Indian Penal Code.
Against this order, the appellant preferred an appeal to the Court of the Sessions Judge, Karnal, who dismissed the same on the ground that the returning officer was not a Court,, that the proceedings before 1016 him did not fall under section 476, and that there fore no appeal lay under section 476 B.
The appellant took the matter in revision before the High Court, Punjab, and that was heard by Harnam Singh, J., who held, differing from the Sessions Judge, that the returning officer was a Court, and that his order was therefore appealable.
He, however, held that on the merits there was no case for interference, and accordingly dismissed the revision.
It is against this order that the present appeal by special leave is directed.
On behalf of the appellant Mr. N. C. Chatterjee argues that having held that the order of the returning officer was appealable, the learned Judge ought to have remanded the case for hearing by the Sessions Judge on the merits, and that his own disposal of the matter was summary and perfunctory.
The contention of Mr. Gopal Singh for the respondent is that the view of the Sessions Judge that the returning officer was not a court and that his order was not, therefore, appealable was correct ', and that further the order of the High Court in revision declining to inter fere on the merits was not liable to be questioned in special appeal in this Court.
The first question that arises for our decision is whether the order of the District Magistrate passed on 17 9 1952 as returning officer is open to appeal.
The statutory provisions bearing on this point are sections 195, 476 and 476 B of the Code of Criminal Procedure.
Section 195(1)(a) provides that no court shall take cognizance of any offence punishable under sections 172 to 188 of the Indian Penal Code except on the complaint in writing of the public officer concerned or of his superior.
Section 195(1)(b) enacts that no Court shall take cognizance of the offences mentioned therein, where such offence is committed in, or in relation to, any proceeding in any Court, except on the complaint in writing of such Court or a Court to which it is subordinate.
The offence under section 193 is one of those mentioned in section 195 (1) (b).
Section 476 prescribes the procedure to be followed where a Court is moved to lay a complaint, and that applies 1017 only to offences mentioned in sections 195(1) (b) and 195(1) (c) and not to those mentioned in section 195(1) (a).
Section 476 B provides for an appeal from an order passed under section 476 to the appropriate Court.
The result then is that if the complaint relates to offences mentioned in sections 195(1) (b) and 195(1) (c), an appeal would be competent, but not if it relates to offences mentioned in section 195(1) (a).
Now, the order of the Magistrate dated 17 9 1952 directs that the appellant should be prosecuted for offences under sections 181, 182 and 193.
There is no dispute that the order in so far as it relates to offences under sections 181 and 182 is not appealable, as they fall directly under section 195(1) (a).
The controversy is only as regards the charge under section 193.
Section 193 makes it an offence to give false evidence whether it be in a judicial proceeding or not, and it likewise makes it an offence to fabricate false evidence for use in a judicial proceeding or elsewhere.
If the offence is not committed in a judicial proceeding, then it will fall outside section 195(1)(b), which applies only when it is committed in or in relation to a proceeding in Court, and there is in consequence no bar to a complaint being made in respect thereof unaffected by the restrictions contained in section 195(1) (b).
But if the offence under section 193 is committed in or in relation to a proceeding in Court, then it will fall under section 195 (1) (b), and the order directing prosecution under section 476 will be appealable under section 476 B.
The point for decision therefore is whether the returning officer in deciding on the validity of a nomination paper under section 36 of the Act can be held to act as a Court.
The question thus raised does not appear to be covered by authority, and has to be decided on the true character of the functions of the returning officer and the nature and the extent of his powers.
"There has been much difference of opinion as to the precise) character of the office of a returning officer, viz., as to whether he is a judicial or ministerial officer", says Parker on Election Agent and Returning Officer, Fifth Edition, page 30.
The true 1018 view, according to him, is that he partakes of both characters, and that in determining objections to nomination papers, he is a judicial officer.
That is also the view taken in Indian decisions.
But before we can hold that the proceedings before a returning officer resulting in the acceptance or rejection of a nomination paper fall within section 195(1)(b) of the Code of Criminal Procedure, it must be shown not merely that they are judicial in character but that further he is acting as a Court in respect thereof.
It is a familiar feature of modern legislation to set up bodies and tribunals, and entrust to them work of a judicial character, but they are not Courts in the accepted sense of that term, though they may possess, as observed by Lord Sankey, L.C. in Shell Company of Australia vs Federal Commissioner of Taxation(1), some of the trappings of a Court.
The distinction between Courts and tribunals exercising quasi judicial functions is well established, though whether an authority constituted by a particular enactment falls within one category or the other may, on the provisions of that enactment, be open to argument.
There has been considerable discussion in the Courts in England and Australia as to what are the essential characteristics of a Court as distinguished from a tribunal exercising quasi judicial functions.
Vide Shell Company of Australia vs Federal Commissioner of Taxation(1), R. vs London County Council(2), Cooper vs Wilson(3), Huddart Parker and Co. vs Moorehead(4), and Rola Co. vs The Commonwealth(5).
In this Court, the question was considered in some fulness in Bharat Bank Ltd. vs Employees of Bharat Bank Ltd.(6).
It is unnecessary to traverse the same ground once again.
It may be stated broadly that what distinguishes a Court from a quasi judicial tribunal is that it is charged with a duty to decide disputes in a judicial manner and declare the rights of parties in a definitive judgment.
To decide in a judicial manner involves that the parties are entitled as (1) ,296.
(3) (5) ; (2) (4) ; (6) ; 1019 a matter of right to be heard in support of their claim and to adduce evidence in proof of it.
And it also imports an obligation on the part of the authority to decide the matter on a consideration of the evidence adduced and in accordance with law.
When a question therefore arises as to whether an authority created by an Act is a Court as distinguished from a quasi judicial tribunal, what has to be decided is whether having regard to the provisions of the Act it possesses all the attributes of a Court.
We have now to decide whether in view of the principles above stated and the functions and powers entrusted to the returning officer under the Act, be is a court.
The statutory provision bearing on this matter is section 36.
Under section 36(2), the returning officer has to examine the nomination paper and decide all objections which may be made thereto.
This power is undoubtedly judicial in character.
But in exercising this power, he is authorised to come to a decision "after such summary enquiry, if any, as he thinks necessary".
That means that the parties have no right to insist on producing evidence which they may desire to adduce in support of their case.
There is no machinery provided for summoning of witnesses, or of compelling production of documents in an enquiry under section 36.
The returning officer is entitled to act suo motu in the matter.
When one compares this procedure with that prescribed for trial of election petitions by the Election Tribunal under sections 90 and 92 of the Act, the difference between the two becomes marked.
While the proceedings before the Election Tribunal approximate in all essential matters to proceedings in civil courts, the proceedings under section 36 present a different picture.
There is no lis, in which persons with opposing claims are entitled to have their rights adjudicated in a judicial manner, but an enquiry such as is usually conducted by an ad hoc tribunal entrusted with a quasi judicial power.
In other words, the function of the returning officer acting under section 36 is judicial in character, but he is not to act judicially in discharging it.
We are of opinion that the returning officer deciding on 129 1020 the validity of a nomination paper is not a Court for the purpose of section 195 (1) (b) of the Code of Criminal Procedure, and the result is that even as regards the charge under section 193, the order of the Magistrate was not appealable, as the offence was not committed in or in relation to any proceeding in a Court.
In this view, the learned Sessions Judge was right in dismissing the appeal as incompetent, and the question argued by Mr. N. C. Chatterjee that the learned Judge of the High Court ought to have remanded the case for hearing by the Sessions Judge on the merits does not arise.
It was next argued for the appellant that as the application for initiating prosecution under section 193 was made under section 476 on the assumption that the returning officer was a court, the order passed thereon must, in the view that he was not a Court, be quashed as without jurisdiction.
But then, it should be noted that the application was presented under section 195 also, and it was necessary to move the returning officer under section 195(1)(a) with reference to the offences under sections 181 and 182, and there could be no question of quashing the order as without jurisdiction.
Even as regards section 193, the position is this: It has no doubt been held that section 476 must be taken to be exhaustive of all the powers of a Court as such to Jay a complaint, and that a complaint filed by it otherwise than under that section should not be entertained.
But there is abundant authority that section 476 does not preclude the officer presiding over a Court from himself preferring a complaint, and that the jurisdiction.
of the Magistrate before whom the complaint is laid to try it like any other complaint is not taken away by that section.
Vide Meher Singh vs Emperor(1) , Emperor vs Nanak Chand(2), Har Prasad vs Emperor(3) and Channu Lal vs Rex(4).
There is thus no legal impediment to a returning officer filing a complaint under sections 181 and 182 as provided in section 195 (1) (a) and charging the accused therein with also an offence (1) A.I.R. 1933 Lah. 884.
(3) A.I.R. 1947 All. 139.
(2) A.I.R. 1943 Lah. 208.
(4) 1021 under section 193.
In this connection, it should be mentioned that the appellant himself took the objection before the Magistrate that qua returning officer he was not a Court and that the proceedings under section 476 were incompetent, and that that was overruled on the ground that it was an enabling section.
There is, therefore, no ground for holding that the order dated 17 9 1952 was without jurisdiction.
It was finally contended that the Magistrate was under a misapprehension in stating that the appellant had declared that he was born a Balmiki, whereas, in fact, he only declared that he was a Balmiki by caste.
But it was the appellant himself who pleaded in his counter affidavit that he was not a Muslim by birth, and was born in a Balmiki Hindu family, and the observation of the Magistrate has ob vious reference to what was pleaded and argued by the appellant.
And it should also be noted that no objection was taken either in the grounds of appeal to the Sessions Court or in revision to the High Court with reference to the above remark.
Moreover, the charge as laid in the complaint is that the declaration of the appellant in the nomination paper that he "was a member of the Balmiki caste" was false.
There is accordingly no substance in this contention.
It must be emphasised that in the view that the order of the Magistrate dated 17 9 1952 was final, this appeal being really directed against that order there must be exceptional grounds before we can interfere with it in special appeal, and none such has been established.
On the other hand, whether action should be taken under section 195 is a matter primarily for the Court which hears the application, and its discretion is not to be lightly interfered with in appeal, even when that is competent.
But where, as here, the legislature does not provide for an appeal, it is preposterous on the part of the appellant to invite this Court to interfere in special appeal.
This appeal is accordingly dismissed.
| IN-Abs | Held that a Returning Officer acting under se. 33 and 36 of the Representation of the People Act, 1951 and deciding on the validity or otherwise of a nomination paper is not a court within the meaning of sections 195(1)(b), 476 and 476 B of the Code of Criminal Procedure.
Shell Co. of Australia vs Federal Commissioner of Taxation ([1931] A.C. 275 at 296), B. vs London County Council ([1931] 2 K.B. 215), Cooper vs Wilson ([1937] 2 K.B. 309), Huddart Parker and Co. vs Moorehead ([1908] ; , Rola Co. vs The Commonwealth ([1944] ; , Bharat Bank Ltd. vs Employees of Bharat Bank Ltd. ([1950] S.C.R. 459), Mehar Singh vs Emperor, (A.I.R. , Emperor vs Nanak Chand (A I.R. , Har Prasad vs Emperor, (A.I.R. 1947 All. 139) and Channu Lal vs Rex ([1950] , referred to.
|
N: Review Petition No. 2 of 1977.
(Petition for review of this Court 's order dated 22 9 1976 in Crl.
M.P. Nos.
1567, 1600 1601/76).
Sital A.K. Dhar, for the petitioner.
R.N. Sachthey, for the respondent.
The Judgment of the Court was delivered by KRISHNA IYER, J.
If 'survival after death ' may aptly describe any litigative phenomenon, the present review proceeding may well qualify for that quaint claim.
The relief of review relates to the death penalty imposed upon the petitioner by the trial court, confirmed in appeal, and dismissed even at the stage of special leave by this Court.
In the ordinary course, judicial finality, has thus been affixed on the capital sentence so awarded although Presi dential clemency, which has been sought and negatived, may still be open under Article 72 of Constitution.
Mercy, like divinity, is amenable to unending exercise but in this mundane matter it is for the Head of State to act and not for the apex Court.
Sombre sentencing is the Fifth Act in the tragedy of a murder trial and, for the Judges of the Supreme Court, assumes a grim seriousness and poignant gravity since the petitioner 's final appeal for judicial commutation, if rejected, may perhaps prove imminently fatal to his life.
Even so, vhen we chronicle the events connected with the judicial proceedings in this Court it will be realised that our review power has repeatedly been invoked in vain ' and naturally a further exercise of the same power must be justified by the compelling pressure o[ fresh circumstances within the limits of the law.
The nature of the judicial process, even at the tallest tower, is such that, to use Gardozo 's elegant expressions, 'a judge even when he is free, is still not wholly free; he is not to innovate at pleasure; he is not a knight errant, roaming at will in pursuit of his own ideal of beauty of of goodness; he is to draw inspiration from consecrated principles '.
Where the Judge 's values and those prevailing in society clash, the judge must, in theory give way to the 'objective right '.
174 The focus, therefore; must turn on the existence of grounds of manifest miscarriage of justice unavailable on the earlier occasions.
Before that, a brief reference may be made to the 'criminal ' facts.
A treacherous murder of a tender school boy by the petitioner, the circumstances of which were so heartless and heinous, terminated condiguly at the trial court and the High Court, the extreme penalty having been visited on the offender for his horrendous killing.
This Court refused special leave to appeal, drawing the dark curtain ' on the criminal proceedings.
The petitioner struggled to extricate himself from the executioner by a sequence of desperate steps.
On his behalf, a motion for re hearing the special leave petition was fruitlessly made to this Court.
A review petition was made again to this Court in vain.
Yet another, out of the same motive but with modified reliefs, was made and dismissed.
Then followed an application for directions regarding remand of the case to the court of sessions for reconsideration of the sentence in the light of section 235(3) of the Code of Criminal Procedure, 1973.
Dismissal of this proceeding did not deter the petitioner from persisting in moving this Court.
That is how the present review peti tion has been put in on his behalf by his father.
Mercy petitions to the President punctuated the court proceedings but they too were turned down.
The convict, nevertheless, clung on and.
as stated earlier, his pathetic persistence in the plea for commutation has been pressed before us by counsel on two scores.
He has urged that a decision of this Court in Santa Singh vs State of Punjab(1) of which he was not aware at the earlier stages entitles.
him to a remand to the Sessions Court for reconsideration of the sentence of death.
Secondly, he has also pressed upon us personal and social circumstances which have re ceived judicial approval as justifying the imposition of the lesser sentence of life imprisonment even where the offence of murder has been made out.
In the ordinary course, the supplicant 's forensic battle for life must be repelled by us since this Court has refused leave, rejected review petitions and denied reconsideration.
Even so, realising that by this prolonging proceeding he is longing for dear life and clutching at legal straws, we have desisted from a dramatic rejection of the petition outright, anxious to set if there be some tenable ground which reason ably warrants judicial interdicts to halt the hangman 's halter.
We were willing to strain, within permissible limits, to blend leniency with legality. 'The last breath ' is the last hold of the law on the living to do justice and at that point judges, while hating the crime, do not hate the man who committed it, such being the humanism of penal justice.
Circuit Judge Christmas Humphreys told the B.B.C. Reporter recently that a judge looks "at the man in the dock in a different way, not just a criminal to be punished, but a fellow human being, another form of life who is also a form of the same one life as oneself".
In the context of Karuna and punishment for Karma the same Judge said: (1) Criminal Appeal No. 230 of 1976 decided on 17 8 76.
175 "The two things are not incompatible.
You do punish him for what he did, but you bring in a quality of what is sometimes called mercy, rather than an emotional hate against the man for doing something harmful.
You feel with him; that is what compassion means." (The Listener, d/25.11.1976, P. 692) But if the harsh frontiers ' of the criminal are clearly drawn, to travel beyond is out of bounds for the court.
The focus of counsel 's first submission was turned on the compassion of the Code of Criminal Procedure, 1972 which obligates the court, under section 235, to hear the convict on the question of sentence.
The provision is salutary although its application to the present case is moot, in the light of.
section 484 of the Code.
Without pausing to decide whether the new Code applies, we have extended to the petitioners the benefit of the benignant provision and allowed his counsel to present the circumstances he relies on to activate our commiserative jurisdiction.
It is true that the New Code provides many additional facilities for persons accused of crime.
, the paramount idea being to avoid an innocent man being mistakenly found guilty or punished disproportionately.
In the present case, the conviction has become conclusive and only the question of sentence is being argued for extenuating consideration.
Even so, sometimes one is led to wonder whether the words of Learned Hand have some relevance to the Indian system.
The learned Judge said of the American system: "Under our criminal Procedure, the accused has every advantage.
While the prose cution is held rigidly to the charge, the accused need not disclose the barest outline of his defence.
He is immune from questioning or comment on his silence; he cannot be con victed when there is the least fair doubt in the minds of anyone of the 12 Jurers.
Our procedure has always been haunted by the ghost of the innocent man convicted.
It is an unreal dream.
What we need to fear is the archaic formalism and the watery sentiment that obstructs, delays and defeats the prose cution of crime".
We advert to this aspect only to emphasize a sense of perspective in the judiciary when applying the protective procedural provisions of the Code.
Sentencing under the Indian scheme, is not yet realistically forward looking nor correctionally flexible but Parliament in its wisdom, may examine this inadequacy.
The penalty of death is an irrevocable process and naturally our pensive thought was turned to the moral jural aspects of the utility and futility of this deadly sanction of State against citizen of hanging a human being into a cold oadaver.
The miscellany of ideological sociological jural considerations, although not pertinent within the 176 narrow horizon of a court of law, has a fascinating and portentous significance when we remind ourselves that the Supreme Court goes beyond chopping little law into spacious jurisprudence on great occasions and our Penal Code is itself under review before Parliament.
This prolegomenon to the principles of capital sentence is our alibi for a brief divagation into the basics of infliction of death as a weapon of extinction society uses against its terribly deviant members as beyond deterrence.
Is the death penalty a purposeful punitive strategy or legitimate legal weapon, viewed against the advanced peno logical goals of reformation, deterrence and social defence ? Why is death terrifying and what are the objects of punishment served by its infliction ? The literature on doing justice at the sentencing stage is profound and proliferating and penological controversy on death penalty has led to a Great Divide among sociologists, jurists and spiritualists.
To go eggregiously wrong on punishment is to commit the crime ' of sentence and, natural ly, since taking the life of the prisoner neither prevents him nor reforms him (for he is no more), theories supporting capital punishment prove self defeating.
Moreover, the irreversible step of extinguishing the offender 's life leave society with no opportunity to retrieve him if 'the ' convic tion and punishment be found later to be rounded on flawsome evidence ' or the sentence is discovered to be induced by some phoney aggravation, except the poor consolation of posthumous rehabilitation as has been done in a few other countries for which there is no procedure in our system.
May be, these are campaign points of abolitionists against capital sentence.
Envisioned from another fundamentally different angle, is the dread of death penalty a deterrant ? Socrates would not recant, Jesus would not plead, St. Joan would not deny with the cup of poison, bleeding crucifixion and burning stakes starting them in the face as punishment.
Why, Higher Truth, acting through its inspired agents, taunts human law; for, then the body 'gives little purchase over the soul, as Gandhiji demonstrated by defiance of British Indian 'justice '.
And, more dramatically yet dimly, psychic, electronic and medical explorations, scientifically conducted, are reportedly revealing through fascinating flashes of research and recording and extraordinary but tested investigations into rebirth, that death is only discarnation, not utter dissolution, that after 'death ' we survive and act in a demonstrable, subtle dimension of existence.
No longer is this thesis projected as faith but sought to be proved as fact.
If, in the not distant future, the greatest of all man 's fears fear of death is dispelled by the finding of poetic science proving that you live after 'death ' and can communicate with the 'living ', that the confusion between discarnation and death can be scientifi cally explored and cleared, a revolution in the penological programmes of society would have dawned.
The trans physi cal human future, as sciences unravel, may make our current penal strategies obsolescent.
At Court, current criminal law binds us willy nilly and we have to abandon the subject suggestively.
The basic issue 'What is death ? ', may engage us psycho criminologically, although a wee bit digressively for a moment, to assess the 177 social impact of the death penalty.
By and large, humankind holds fast to the belief that death is a total extinction of dear life and views its arrival through the executioner 's rope or electric chair or firing squad with awesome horror.
With poetic pragmatism, Shakespeare expressed this common feeling when he referred, in the context of death, to 'that undiscovered country from whose journ no traveller returns '.
There are others, however and among them are ancient seers, modern divines and several psychic researchers in institutes who regard as super senSory.
Reality or scientific verity that there is life after life, that the phenonmenon of death may even have a liberating effect, that the grosset exist ence is in corporeal life and the subtler in the incorporeal state and life death life is a continuum.
Our sages assert with vision that deathbound littleness iS not all we are and great death as integral to the life process.
Many scien tists are investigating what happens after death and lifting the dark veil with luminous evidence of ethenic survival.
Even so, most men even pious ones are earthy materialists, and, in our work a day world, take it an axiom that it is given to us to live but once.
The law, a people 's practical scheme, which operates on the behavioral patterns and psyche of the humdrum run of mortals, steers clear of super scientific and mystic may be and grounds itself on the hard headed realist 's view that the sentence of death is the maximum punishment as it puts the criminal out of material existence.
Indeed, it is a fiercely final step for mortals and, in a sense, abhorrent because survival after death, though slowly, murkily, falteringly, gaining scientific, ground, is still suspect and has not made headway into the thoughtways of jurisprudes and legislators, rationalists and practical people.
If after life and re birth are verities, as many poetic scientists claim to prove beyond easy dis missal both penology and criminology will undergo re evalu ation.
For, as punishment 'death penalty ' will cease to be terrible and criminologyically, crime will be inescapably punished 'in this life or on re birth, These futuristic projections are of no practical consequence now.
Jurispru dence has to react to and build upon established belief systems, branches of human knowledge and behavioral sciences.
But these problems are more Tomorrow 's challenge to philosophers, spiritualists, social and mental scientists, fundamental thinkers, parliamentarians and penal reformers.
The Bench, with all its will to break through, is bound by a jurisdictional servitude.
This fetter is, as stressed by Government counsel, that if there is no legal ground for the alleged grievance, the Court cannot grant relief.
The Court enters a province of 'powerless power ' and finds itself in a quandary between codified law and progressive thought.
The latter beckons, but the former binds.
We divagated into the import and portent of life and after life on capital sentence not because these distant, dubious searches have immediate legal standing but merely to show how we may be swept off our feet if we chase 'tomorrow ' theories, especially since law in court is hard realism.
To day for the condemned prisoner, the day of execution is the dreadful last day of life.
Even so, critics like Bec caria have said 'the death penalty cannot be useful, because of 178 the example of barbarity it gives men .
It seems to me absurd that laws which are an expression of the public will, which detest and punish homicide, should themselves commit it '.
On the other hand, the deterrent and retributive theorists prevail amongst penologists and lextalionis con tinues in sublimated form Orthodox jurists have shared the view of Genesis 9:6: "Whosoever sheddeth a man 's blood, so shall his blood be shed." To epitomize, in this blurred area of criminal jurisprudence we are lost in the conflict between ideals, theories and research findings and the subject remains so fluid that legislative decision making and jurisprudential debate must crystallize into a Code before the Court can activise these norms or incorporate them as judge made law.
The plea of counsel against death penalty has topical favour and echoes the recent American debate.
To abbrevi ate.the discussion, We content ourselves with adverting to the judicial division of opinion in the Supreme Court of U.S.A. in Gregg vs Georgia (decided on July2, 1976) wherein Mr. Justice Brennan, in his dissenting Judgment,drove home his point thus: "I emphasize only that foremost among the moral concepts ' recognized in our cases and inherent in the clause is the primary moral principle that the state, even as it punish es, must treat its citizens in a manner con sistent with their intrinsic worth as human beings a punishment must not be so severe as to be degrading to human dignity.
A judicial determination whether the punishment of death comports with human dignity is therefore not only permitted but compelled by the clause.
Death is not only an unusually severe punishment, unusual in its pain, in its finality, and in its enormity, but it serves no penal purpose more effectively than a less severe punishment; therefore the principle inherent in the clause that prohibits point less infliction of excessive punishment when less severe punishment can adequately achieve the same purposes invalidates the punishment.
" Mr. Justice Marshall added the weight of his opinion: "The two purposes that sustain the death penalty as non excessive in the court 's view are general deterrence and retribution.
The Enrlich study, in short, is of little, if any assistance in assessing the deterrent impact of the death penalty.
The evidence I reviewed in Furman remains convincing in my view, that 'capital punishment is not neces sary as a deterrent to crime in our society.
The justification for the death penalty must be found elsewhere.
The other principal purpose said to be served by the death penalty is retribution.
The notion that retribution can serve as a moral justification for the sanction of death finds credence in the opinion of my brothers Stewart, Powell, 179 and Stevens, and that of my brother White in Roberts vs Louisians.
It is thin notion that I find to be the most disturbing aspect of to day 's unfortunate decision.
The foregoing contentions that socie ty 's expression of moral outrage through the imposition of the death penalty preempts the citizenry from taking the law into its own hands and reinforces moral values are not retributive ' in the purest sense.
They are essentially utilitarian in that they portray the death penalty as valuable because of its beneficial results.
These justifications for the death penalty are inadequate because the penalty is, quite clearly I think not neces sary to the accomplishment of those results.
There remains for consideration, howev er, what might be termed the purely retribu tive justification for .the death penalty that the death penalty is appropri ate, not because of its beneficial effect on Society, but because the taking of the murder er 's life is itself morally good.
Some of the language of the plurality 's opinion appears positively to embrace this notion of retribu tion for its own sake as a justification for capital punishment." These American views of eminent judges deserve deferential notice but do not aid us in the decision of this Indian Appeal which relates to implementation of a valid sentence since, under the Indian Code, death penalty.
has been ruled to be constitutional.
The law having sanctioned it and this Court haying refused special leave against conviction and sentence.
in this very case, it is a vanquished cause to argue for a vague illegality vitiating capital sentence as such.
To that extent the pall must fall.
Counsel for the petitioner brought to our notice a number of recent decisions of this Court where judges have expressed themselves in favour of a sentencing policy of life term as against death penalty.
In Ediga Annamma ; the Court pointed to the retreat of death penalty as part of punitive strategy in many countries of the world.
Counsel cited rulings of this Court to show that where the murderer too young or too old or the haunting horror of being hanged has been hovering over his head for a few years or the condemned prisoner is the sole bread winner of the whole family, the lesser sen tence of life imprisonment should be the judicial choice.
He brought to our notice the social and personal circumstances in the present case relevant to the above approach.
Undoubtedly, the prisoner was a young man around 21/22 years when he committ`d the crime.
He claims that his young wife will be helpless, that upon him depends the family for livelihood, that his mother is blind, that all of them will have a miserable, indigent life If, the petitioner were to be extinguished from earthly existence.
He also emphasised that since 1974 the sentence of death had been shattering his morale.
It must, however, be pointed out that counsel for the State refuted some of the more important of these grounds and went to the extent of even stating that the petitioner 's wife had remarried.
180 In Ediga Annamma this Court, while noticing the social and personal circumstances possessing an extenuating impact, has equally clearly highlighted that in India under present conditions deterrence through death penalty may not be a time barred punishment in some frightful areas of barbarous murder.
Illustratively, the Court has mentioned that the brutal features of the crime and the hapless and helpless state of the victim steel the heart of the law to impose the sterner sentence.
The law is thus harsh and humane and when faced with arguments about the social invalidity of the death penalty the personal predilections of the Judge must bow to the law as by this Court declared, adopting the noble words of Justice Stenley Mosk of California uttered in a death sen tence case: "As Judge, I am bound to the law as I find it to be and not as fervently wish it to be".
(The Yale Law Journal No. 6, p. 1138).
A learned writer on the Indian Constitution has observed : " . judges must enforce the laws, whatever they be, and decide according to the best of their lights; but the laws are not always just, and the lights are not always luminous.
Nor, again are judicial methods always adequate to secure justice.
" We have given deep consideration to the many circumstances pressed by the petitioner 's counsel to review our earlier orders dismissing review and refusing special leave to appeal.
While we agree that Judges, like others are falli ble and their findings are not 'untouchably ' sacrosanct, we disagree that on an overall view of the many circumstances of the crime and the criminal in the present case, the sentence of death should be departed from.
Recognized grounds such as manifest injustice induced by obvious curial error or oversight, or new and important matter .not reasonably within the ken or reach of the party seeking review on the prior occasion, may warrant interfer ence, to further justice.
The scenario of events in this case rules out the arguments urged by counsel.
Hearing is obligatory at the sentencing stage under the New Criminal Procedure Code.
The humanist principle of individualising punishment to suit the person and his circumstances is best served by hearing is obligatory at the sentencing stage under the New Criminal imposed.
In the present case, the date of commencement of the trial ,might rule out the applicability of the new Code.
Moreover, he had already come to this Court seeking special leave to appeal at a time when the new Code was in force.
He did not urge the ground of denial of opportunity to be heard at the sentencing stage.
Assuming indulgently in his favour that he came to know the correct law on this branch only after the decision of this Court in Shant Singh (Supra), his earlier application for review was disposed of after that ruling was rendered by this Court.
Even then the present grievance of non hearing was not pressed.
He has missed the bus and his contention based on the new Code is of doubtful substance.
Even so, having regard to the compassion that must temper the rigour of rigid 181 rules we have allowed counsel a fresh opportunity to put forward before us, after taking instructions from his cli ent, all the circumstances the Court should consider by way of ameliorative gesture and reduction of the death penalty to a life term incaraceration.
The heinousness of the crime is a relevant factor in the choice of the sentence.
The circumstances of the crime, especially social pressures which induce the crime which we may epitomise as a just sentence in an unjust society ' are another consideration.
The criminal, not the crime, must figure prominently in shaping the sentence where a reform of the individual, rehabilitation into society and other measures to prevent recurrence, are weighty factors.
The Penal Code does not give the Judge a free hand where murder has been made out.
The choice is painfully not quite scientifically though limited to but two alternatives.
We have given reasons why, as the law now stands, we decline to demolish the death sentence.
We therefore, dismiss the review peti tion.
The judicial fate notwithstanding, there are some cir cumstances suggestive of a claim to Presidential clemency.
The two jurisdictions are different, although some consider ations may overlap.
We particularly mention this because it may still be open to the petitioner to invoke the mercy power of the President and his success or failure in that endeavour may decide the arrival or otherwise of his dooms day.
With these observations we leave the 'death penalty ' Judicially 'untouched '.
S.R. Review petition dismissed.
| IN-Abs | The petitioner was convicted u/s 302 I.P.C. and sen tenced to death by the. trial court which was confirmed by the High Court.
The Special Leave application, to this Court was dismissed.
A further petition for rehearing and a review petition thereafter having 'been dismissed, a peti tion for directions regarding demand of the case to the court of Sessions for reconsideration of the sentence in the light of s.235(3) of the Criminal Procedure Code 1973, was made, simultaneously with mercy petitions to the Presi dent.
The mercy petitions to the President and the peti tion for direction to tiffs Court having been rejected the petitioner 's father moved the instant review petition.
Dismissing the petition the Court.
HELD: (1) This court 's review power has repeatedly been invoked ire vain and naturally a further exercise of the same power must be justified by the compelling pressure of fresh circumstances within the limits of law.
Recognised grounds such as manifest injustice induced by obvious curial error or oversight or new and important matter not reasona bly within the ken or reach of the party seeking review on the prior occasion, may warrant interference to further justice.
(2) Under the Indian Penal Code death penalty has been ruled to be constitutional.
The law having sanctioned it and this Court having refused special leave against convic tion and sentence in this very case, it is a vanquished cause to argue for a vague illegality vitiating capital sentence as such.
[179 D E] Gregg vs Georoia, U.S. Supreme Court decided on July 2, 1976 held not applicable.
(3) In India under present conditions deterrence through death penalty may not be a time barred punishment in some frightful areas of barbarous murder.
illustratively the court has mentioned that the brutal features of the crime and the hapless and helpless state of the victim steel the heart of the law to impose the sterner sentence.
[180 A B] Ediga Annamina vs State of A.P., ; ex plained.
(4) The law is thus harsh and humane and when faced with arguments about the social invalidity of the death penalty the personal predilections of the judge must bow to the law.
The Bench with all its will to break through is bound by a jurisdictional servitude.
This fetter is that if there is no legal ground for the alleged grievances the court cannot grant relief.
The court enters a province of "powerless power" and finds itself in a quandary between codified law and progressive thought.
The latter beckons, but the former binds [180 B, 177 F G] (5) Hearing is obligatory at the sentencing stage under the new Criminal Procedure Code.
The humanist principle of individualising punishment to suit the person and his cir cumstances is best served by hearing the culprit even on the nature and quantum of the penalty to be imposed.
(6) The heinousness of the crime is a relevant factor in the choice of the sentence.
The circumstances of the crime, especially social pressures which induce the crime which may be epitomised as "a just sentence in an unjust society" are another considerations.
The criminal.
not the crime.
must figure prominently in shaping the sentence where a reform of the individual, rehabilitation into society and other meas ures to prevent recurrence, are weighty factors.
Sombre sentencing is the Fifth Act in the tragedy of a murder trial and for the judges of the Supreme Court, assumes a grim seriousness and poignant gravity.
The Penal Code does not give the judge a free hand where murder has been made out.
The choice is painfully not quite scientifical ly though limited to but two alternatives.
A C] Observation: [Sentencing under the Indian scheme is not yet realistically forward looking nor correctionally flexi ble, but Parliament in its wisdom may examine this inadequa cy].
|
Civil Appeal No. 967 of 1975.
(From the judgment and order dated 13 2 1974 of the Calcut ta High Court in Copyright No. 2/73).
A.K. Sen, E.P. Skons James, J. 1.
Mehta, J. Roy Choud hary, S.K. Mehta, K.R. Nagaraja and P.N. Puri, for the appellant.
section Chaudhury, R.K. Bachawat, D.K. Sinha, H.S. Parihar and I. N. Shroff, for respondents 1 5 and 12 and 22.
J.C. Bhat, Atul Munim and B.R. Agarwala, for respondents 6 8.
B. Sen, B.K. Bachawat, D.K. Sinha, H.S. Parihar and I. N. Shroff, for respondents 12 and 22.
J.L. Nain, Atul Munim and B. R. Agarwala, for re spondent No. 19.
, V.R. Krishna Iyer, J. also gave a separate opin ion.
JASWANT SINGH, J.
This appeal by certificate granted under Article 133(1) of the Constitution by the High Court of Judicature at Calcutta which is directed against its judgment dated February 13, 1974, raises the following substantial question of law of general importance : "Whether in view of the provisions of the , an existing and future rights of music . composer, lyricist is capable of assignment and whether the producer of a cinematograph film can defeat the same by engaging the same person.
" The facts giving rise to the appeal are: The Indian Performing Right Society Ltd. (hereinafter referred to for the sake of brevity as 'the IPRS '), the appellant before us, was incorporated in the State of Maharashtra on August 23, 1959, as a company limited by guarantee, for the purpose of carrying on business in India of issuing or granting li cences for performance in public of all existing and future Indian Musical works in which copyright subsists in India.
The incorporation of the IPRS was in terms of section 2(r) of the , 211 1957 (Act 14 of 1957) (hereinafter referred to as 'the Act ') which was enacted after taking into consideration the Report of the (British) Copyright Committee,1952, the suggestions of the various Ministries of the Government of India and the State Governments, the Indian Universities and certain interested industries and associations who were invited to send their comments on the subjects of copyright.
The IPRS has amongst its members the composers of musical works, authors of literary and dramatic works and artists.
In accordance with the provisions of section 33 of the Act, the IPRS published on September 27, 1969 and November 29, 1969 in the 'Statesman ' and the Gazette of India respectively a tariff laying down the fees, charges and royalties that it proposed to collect for the grant of licences far perform ance in public of works in respect of which it claimed to be an assignee of copyrights and to have authority to grant the aforesaid licences.
A number of persons including various associations of producers of cinematograph films who claimed to be the owners of such films including the sound track thereof and the Cinematograph Exhibitors Association of India filed objections in respect of the aforesaid tariff in accordance with the provisions of section 34 of the Act repudiating the claim of the IPRS that it had on behalf of its members authority to grant licences for.
performance in public of all existing and future musical works which are incorporated in the sound track of cinematograph films in which copyright may subsist in India or the right to collect in relation thereto any fees, charges or royalties.
The association of producers averted inter alia that their members engaged composers and sound writers under contracts of service for composing songs to be utilised in their films; that the musical works prepared by the composers of lyric and music under contract of service with their mem bers producers of the cinematograph films having been utilised and incorporated in the sound track of the cinemat ograph films produced by the latter, all the rights which subsisted in the composers and their works including the right to perform them in public became the property of the producers of the cinematograph films and no copyright sub sisted in the composers which they could assign to and become the basis of the claim of the IPRS under section 33 of the Act; that their members i.e. the producers of cine matograph films being the authors and first owners of the copyright in the cinematograph films produced by them had the exclusive right inter alia to cause the said films in so far as the same consisted of sounds (which include musical works) to be heard in public as also the exclusive right to make records embodying the sound track of the films produced by them (including any musical work incorporated therein) and to cause the said records to be beard in public; that in the making of a cinematograph film as contemplated by the Act a composer composes a lyric or music under a contract of service or for valuable consideration which is substantial a music director sets it to tunes and imparts music to it and a singer sings the same but none of them nor any one of their aforesaid works can and have any separate copyrights; that motion picture is the combination of all arts and music in the sound track which cannot be detached from the film itself; that the purpose of making a motion picture is not only to complete it but also to publicly exhibit it through out the world; that having regard to the provisions of the Act the ' copyright in the case of 212 a cinematograph film vests in the owner of the film as defined in section 2(d) (v) of the Act; and that in the premises any assignment purporting to have been made in favour of the IPRS was void and of no effect and was incapa ble of conferring any rights whatsoever in such musical works on the IPRS.
The Cinematograph Exhibitors Association of India also filed objections challenging the right of the IPRS to charge fees and royalties in respect of performance in public of the musical works incorporated in the sound track of the films.
Besides raising contentions identical to those raised by various associations of producers they averred that copyright in a cinematograph film which vested in the producers meant copyright in the entirety of the film as an integrated unit including the musical work incorporated in the sound track of the film and the right to perform the work in public; that in accordance with the agreement with the distributors of films the exhibition of cinematograph film includes the right to play in public the music which is an integral part and parcel of the film; that the producers lease out copyrights of public performance of the films vested in them to the distributors who give those rights to the exhibitors an agreement and that when an exhibitor takes a licence for exhibition, it is complete in all respects and a third party like the IPRS cannot claim any licence fee from the exhibitors.
On the aforesaid objections being referred to it for determination under section 35 of the Act, the Copyright Board expressed the view that in the absence of proof to the contrary, the composers of lyrics and music retained the copyright in their musical works incorporated in the sound track of cinematograph films provided such lyrical and musical works were printed or written and that they could assign the performing right in public to the IPRS.
The Copyright Board further held that the tariff as published by the IPRS was reasonable and the IPRS had the right to grant licences for the public performance of music in the sound track of copyrighted Indian cinematograph films and it could collect fees, royalties and charges in respect of those films with effect from the date on which the tariff was published in the Gazette of India.
Aggrieved by the decision of the Copyright Board, the objectors preferred an appeal under section 72 of the Act to the High Court which allowed the same holding that unless there is a contract to the contrary, a composer who composes a lyric or music for the first time for valuable considera tion for a cinematograph film does not acquire any copyright either in respect of film or its sound track which he is capable of assigning and that under proviso.
(b) to section 17 of the Act, the owner of the film at whose instance, the composition is made, becomes the first owner of the copy right in the composition.
The High Court further held that "the composer can claim a copyright in his work only if there is an express agreement between him and the owner of the cinematograph film reserving his copyright".
The High Court also held that "though section 18 of the Act confers power to make a contract of assignment, the power can be exercised only when 213 there is an 'existing or future right to be assigned and that in the circumstances of the present case, assignment, if any, of the copyright in any future work is of no effect".
Dissatisfied with this decision, the IPRS has,as already stated, come up in appeal to this Court.
The copyright law in our country being fairly complicat ed because of the involved language in which some of its provisions are couched and the case being of first impres sion, learned counsel for the parties have tried hard to help us in solving the knotty points by advancing copious and able arguments.
Appearing on behalf of the appellant, Mr. Ashok Sen has urged that the author (composer) of a literary or musical work has copyright which includes inter alia the exclusive right (a) to perform the work in public 'and (b) to make any cinematograph film or a record in respect of the work; that copyright in a literary or musical work is infringed by any person if without a licence granted to him by the owner of the copyright, he makes a cinematograph film in respect of the work or performs the work in public by exhibiting the cinematograph film; that if a person desires to exhibit in public a cinematograph film containing a musical work, he has to take the permission not only of the owner of the copyright in the cinematograph film but also the permission of the owner of the copyright in the literary or musical work which is incorporated in the cinematograph film, as according to section 1. 3 (4) of the Act, the copyright in a cinematograph film or a record does not affect the separate copyright in any work i.n respect of which or a substantial part of which, the film, or as the case may be, the record is made; that the provisions of section 17(b) of the Act have no application to a literary or musical work or the separate copyright therein and do not take away the copyright in a literary or musical work em bodied in a cinematograph film; that the only modes in which the author of a literary or musical work ceases to be the owner of copyright m the work are (a) by assignment, '(b) by relinquishment and (c) by the composer composing the work in 'the course of his employment under a contract of service with an employer in which case, the employer becomes the owner of the copyright in the musical work; that in the case of an assignment of copyright in future work and the employ ment of the author to produce a work under a contract of service, the question of priorities will be decided ac cording to the principle "where equities are equal, the first in time shall prevail".
Mr. Sachin Chaudhary, learned counsel for respondents 1, 2 and 3, as well as Mr. J.C. Bhat, learned counsel for respondents 6, 7 and 8, and Mr. J.L. Nain, learned counsel for respondent 19, who followed Mr. Chaudhary have on the other hand submitted that the dispute in the instant case, according to the petition of appeal, the judgment of the Copyright Board and the judgment of the Calcutta High Court is confined to the sound track associated with a cinemato graph film (which expression, according to Copinger and Skone James on COPYRIGHT, means "any record of sounds which is incorporated in any print, negative, tape or other arti cle on which the film or part of it, in so far as it con sists of visual images, is recorded, or which is issued by the maker 214 Of the film for use in conjunction with such an article"); that the contention advanced on behalf of the appellant that copyright in a literary or musical work incorporated in the sound track of a cinematograph film vests in the composer of literary or musical work and when the cinematograph film is performed i.e. exhibited in public, the composer is entitled to fee or royalty in that behalf and since the appellant is the assignee of the copyright from the composers, it has the right to collect the fee or royalty is entirely unfound ed; that unlike (the law) in England, in India unless a music is notationally written, printed or graphically repro duced, it is not musical work within the meaning of the and there is no copyright 'in songs or orches tral pieces sung or played directly without its notation being written ' that since a 'cinematograph film ' is defined in section 2(f) of the 'Act as including the sound track and the 'cinematograph ' is required to be construed to include any work produced by any process analogous to cine matography, the owner of the cinematograph film is the firt owner of the copyright therein including the right of the composer of the literary or musical work incorporated in the sound track of the film; that in the case of the film in which a lyric (which literally means a short poem directly expressing the poet 's own thoughts and sentiments in stan zas falling within the purview of the expression "literary work" as defined in section 2(0) of the Act) has been plagiarised, there will be copyright in the film vesting in the producer; that the Act confers a separate copyright on a cinematograph film as a film, its author under section 2(d)(v) of the Act being the owner of the film at the time of its completion; that in the case of a lyric or music incorporated in the sound track of a cinematograph film, since under section 2(f) of the Act, cinematograph film includes its sound track and section 13(1)(b) of the Act confers copyright on the cinematograph film and section 14(c) (ii) of the Act confers on the owner of copyright the.
right to cause the film in so far as it consists of visual images to be seen in public and in so far as it consists of songs to be heard in public, it is not necessary for the owner of the cinematograph film to secure the permission of the composer of the lyric or of the music incorporated in the sound track of a cinematograph film for exhibiting or causing the exhibition of the sound portion of the film in public or for causing the records of the sound track of the film to be heard in public.
They have further urged that it is not correct to say that under section 17, proviso (b) in order that the producer of the cinematograph film should have copyright in the literary or musical work incorporated in it, the making of the entire film should be commis sioned.
According to counsel for respondents section 17 proviso (b) will equally apply if someone is commissioned to make any component part of a cinematograph film such as a lyric or musical work i.e. when such component of the film is made at the instance of a film producer for valuable consideration, the copyright for such component shall as well vest in the producer; that as the Act confers a sepa rate copyright on a cinematograph film as a film, the pro ducer can exercise both the rights conferred on him under section 14(1).(c)(ii) of the Act and all that section 13(4) of the Act (when applicable) provides is that the rights created by section 14(1)(a) and (b) shall co exist with those created by section 14(1)(c) and (d) of the Act, e.g. under clause (a), the 215 copyright in a literary work such as a novel entitles its author to make a cinematograph film in respect of the work, and to exercise the remaining rights created by section 14(1)(a) of the Act.
But once he has licensed someone to make a cinematograph film, the licensee shall have the rights provided in clauses (c) and (d) of section 14(1) of the Act in respect of the film.
We have given our earnest consideration to the submis sions made by learned counsel for the parties.
So far as the first part of the question reproduced above is con cerned, there is no dispute between the parties.
Both sides are agreed that in view of the provisions of section 18 of the Act, the material portion of which lays down that "(1) the owner of the copyright in an existing work or the prospective owner of the copyright in a future work may assign to any person the copyright either wholly or partial ly and either generally or subject to limitations and either for the whole term of the copyright or any part thereof; provided that in the case of the assignment of copyright in any future work, the assignment shall take effect only when the work comes into existence, (2)where the assignee of a copyright becomes entitled to any right comprised in the copyright, the assignee as respects the rights so assigned, and the assignor as respects the rights not assigned, shall be treated for the purposes of this Act as the owner of copyright and the provisions of this Act shall have effect accordingly", the first part of the question should be answered in the affirmative.
It is accordingly held that an existing and future right of music . composer and lyricist in their respective 'works ' as defined in the Act is capable of assignment subject to the conditions mentioned in section 18 of the Act, as also in section 19 of the Act which requires an assignment to be in writing, signed by the assignor or by his duly authorised agent.
It is the second part of the question which has been a hot bed of controversy between the parties that has got to be tackled.
The main point for determination in regard to this part of the question is whether the composer of lyric or musical work (which in terms of section 2(p) of the Act means only a notationally written, printed or graphically produced or reproduced music) retains a copyright in the lyric or musical work if he grants a licence or permission to an author (owner) of a cinematograph film for its incor poration in the sound track of a cinematograph film.
For a proper appreciation and determination of the contentions raised before us, it is necessary to notice certain provi sions of the Act.
The terms 'author ', 'Cinematograph film ', 'exclusive licence ', 'infringing copy ', 'musical work ', 'performance ' performing rights society ', 'radio diffusion ' and 'work ' are defined in clauses (d), (f), (j), (m), (p), (q), (r), (v) and (y) respectively of section 2 of the Act as under : "(d) author means, (i) in relation to a literary or dramatic work, the author of the work; 5 240SC I / 7 7 216 (ii) in relation to a musical work, the com poser; (iii) ** ** ** (iv) ** ** ** (v) in relation to a cinematograph film, the owner of the film at the time of its comple tion; and (vi) in relation to a record, the owner of the original plate from which the record is made, at the time of the making of the plate".
"(f) cinematograph film includes the sound track, if any, and "cinematograph" shall be construed as including any work produced by any process analogous to cinematography." "(j) exclusive licence means a licence which confers on the licensee or on the licen see and persons authorised by him.
to the exclusion of all other persons (including the owner of the copyright), any right comprised in the copyright in a work, and "exclusive licensee" shall be construed accordingly." "(m) infringing copy means, (i) in relation to a literary, dramatic, musical or artistic work, a reproduction thereof otherwise than in the form of a cinematograph film; (ii) in relation to a cinematograph film, a copy of the film or a record embodying the recording in any part of the sound track associated with the film; (iii) ** ** ** (iv) ** ** **" "(p) musical work means any combination of melody and harmony or either of them, printed, reduced to writing or otherwise graphically produced or reproduced". "(q) performance includes any mode of visual or acoustic presentation including any such presentation by the exhibition of a cinematograph film, or by means of radiodif fusion, or by the use of a record, or by any other means and, in relation to a lecture, includes the delivery of such lecture". "(r) performing rights society means a society, association or other body, whether incorporated or not, which carries on business in India of issuing or granting licences for the performance in India of any works in which copyright subsists".
217 (v) radio diffusion includes communication to the public by any means of wireless diffu sion whether in the form of sounds or visual images or both".
"(y) work means any of the following works, namely (i) aliterary, dramatic, musical or artistic work; (ii) a cinematograph film; (iii) a record".
Section 13 of the Act provides as follows : "13.
Works in which copyright subsists. (1) Subject to the provisions of this section and the other provisions of this Act, copyright shall subsist throughout India in the following classes of works, that is to say, (a) original literary, dramatic musical and artistic works; (b) cinematograph films; and (c) records.
(2) ** ** ** (3) Copyright shall not subsist (a) in any cinematograph film if a substantial part of the film is an infringement of the copyright in any other work; (b) in any record made in respect of a liter ary, dramatic or musical work, if in making the record, copyright in such work has been infringed.
(4) The copyright in a cinematograph film or a record shall not affect the separate copyright in any work in respect of which or a substantial part of which, the film, or as the case may be, the record is made.
(5) ** ** ** Section 14 of the Act which contains the meaning of the expression "copyright" is to the following effect : "14.
Meaning of copyright.
" (1) For the purposes of this Act: "copyright" means the exclusive right, by virtue of, and subject to the provisions of, this Act, (a) in the case of literary, dramatic or musical work, to do and authorise the doing of any of the following acts, namely (i) to reproduce the work in any material form; (ii) to publish the work; (iii) to perform the work in public; 218 (iv) to produce, reproduce, perform or publish any translation of the work; (v) to make any cinematograph film or a record in respect of the work; (vi) to communicate the work by radio diffu sion or to communicate to the public by a loud speaker or any other similar instrument the radio diffusion of the work; (vii) to make any adaptation of the work; (viii) to do in relation to a translation or an adaptation of the work any of the acts specified in relation to the work in clauses (i) to (vi): (b) ** ** ** (c) in the case of a cinematograph film, to do or authorise the doing of any of the following acts, namely (i) to make a copy of the film; (ii) to cause the film, in so far as it con sists of visual images, to be seen in public and, in so far as it consists of sounds, to be heard in public; (iii) to make any record embodying the record ing in any part of the sound track associated with the film by utilising such sound track; (iv) to communicate the film by radio diffu sion; (d) in the case of a record, to do or authorise the doing of any of the following acts by utilising the record, namely (i) to make any other record embodying the same recording; (ii) to cause the recording embodied in the record to be heard in public; (iii) to communicate the recording embodied in the record by radio diffusion.
(2) Any reference in sub section (1) to the doing of any act in relation to a work or a translation or an adaptation thereof shall include a reference to the doing or that act in relation to a substantial part thereof".
Section 17 of the Act which relates to ownership of copyright provides as under : "17.
First owner of copyright.
Subject to the provisions of this Act, the author of a work shall be the first owner of the copyright therein; Provided that 219 (a) in the case of a literary, dramatic or artistic work made by the author in the course of his employment by the proprietor of a newspaper, magazine or similar periodical under a contract of service or apprenticeship, for the purpose of publication in a newspaper, magazine or similar periodical, the said proprietor shall, in the absence of any agree ment to the contrary.
be the first owner of the copyright in the work in so far as the copyright relates to the publication of the work in any newspaper, magazine or similar periodical, or to the reproduction of the work for the purpose of its being so published, but in all other respects the author shall be the first owner of the copyright in the work; (b) Subject to the provisions of clause (a), in the case of a photograph taken, or a paint ing or portrait drawn, or an engraving or a cinematograph film made.
for valuable consid eration at the instance of any person, such person shall, in the absence of any agreement to the contrary, be the first owner of the copyright therein; (c) in the case of a work made in the course of the author 's employment under a contract of service or apprenticeship, to which clause (a) or clause (b) does not apply, the employer shall, in the absence of any agreement to the contrary, be the first owner of the copyright therein; (d) ** ** ** (e) ** ** ** Sections 22 and 26 of the Act which deal with the term of copyright in musical and other works and cinematograph films are to the following effect : "22.
Term of copyright in published liter ary, dramatic musical and artistic works.
Except as otherwise hereinafter pro vided, copyright shall subsist in any liter ary, dramatic, musical or artistic work (other than a photograph) published within the life time of the author until fifty years from the beginning of the calendar year following the year in which the author dies.
Explanation.
In this section, the refer ence to the author shall, in the case of a work of Joint authorship, be construed as a reference to the author who dies last .
Term of copyright in cinematograph films.
In the case of a cinematograph film, copyright shall subsist until fifty years from the beginning of the calendar year next fol lowing the year in which the film is pub lished".
220 Section 30 of the Act which deals with grant of licences by owners of copyright runs thus : "30.
Licences by owners of copyright.
The owner of the copyright in any existing work or the prospective owner of the copyright in any future work may grant any interest in the right by licence in writing signed by him or by his duly authorised agent: Provided that in the case of a licence relating to copyright in any future work, the licence shall take effect only when the work comes into existence.
Explanation.
When a person to whom a licence relating to copyright in any future work is granted under this section dies before the work comes into existence, his legal representatives shall, in the absence of any provision to the contrary in the licence, is entitled to the benefit of the licence".
The interpretation clause (f) of section 2 reproduced above, which is not exhaustive, leaves no room for doubt when read in conjunction with section 14(1)(c)(iii) that the term "cinematograph film" includes a sound track associated with the film.
In the light of these provisions, it cannot be disputed that a "cinematograph film" is to be taken to include the sounds embodied in a sound track which is asso ciated with the film.
Section 13 recognises 'cinematograph film ' as a distinct and separate class of 'work ' and de clares that copyright shall subsist therein throughout India.
Section 14 which enumerates the fights that subsist in various classes of works mentioned in section 13 provides that copyright in case of a literary or musical work means inter alia (a) the right to perform or cause the performance of the work in public and (b) to make or authorise the making of a cinematograph film or a record in respect of the work.
It also provides that copyright in case of cinemato graph film means.
among other rights, the right of exhibit ing or causing the exhibition m public of the cinematograph film i.e. of causing the film in so far as it consists of visual images to be seen in public and in so far it consists of sounds to be heard in public.
Section 13(4) on which Mr. Ashok Sen has leaned heavily in support of his contentions lays down that the copyright in a cinematograph film or a record shall not affect the separate copyright in any work in respect of which or a substantial part of which, the film, or as the case may be, the record is made.
Though a conflict may at first sight seem to exist between section 13(4) and section 14(1) (a) (iii) on the one hand and sec tion 14(1) (c) (ii) on the other, a close scrutiny and a harmonious and rational instead of a mechanical construction of the said provisions cannot but lead to the irresistible conclusion that once the author of a lyric or a musical work parts with a portion of his copyright by authorising a film producer to make a cinematograph film in respect of his work and thereby to have, his work incorporated or recorded on the sound track of a cinematograph film, the latter acquires by virtue of section 14(1) '(e) of the Act on completion of the cinematograph film a copyright which gives 221 him the exclusive right inter alia of performing the work in public i.e. to cause the film in so far as it consists of visual images to be seen in public and in so far as it consists of the acoustic portion including a lyric or a musical work to be heard in public without securing any further permission of the author (composer) of the lyric or a musical work for the performance of the work in pub lic.
In other words, a distinct copyright in the aforesaid circumstances comes to vest in the cinematograph film as a whole which in the words of British Copyright Committee set up in 1951 relates both to copying the film and to its performance in public.
Thus if an author (composer) of a lyric or musical work authorises a cinematograph film pro ducer to make a cinematograph film of his composition by recording it on the sound track of a cinematograph film, he cannot complain of the infringement of his copyright if the author (owner) of the cinematograph film causes the lyric or musical work recorded on the sound track of the film to be heard in public and nothing contained in section 13(4) of the Act on which Mr. Ashok Sen has strongly relied can operate to affect the rights acquired by the author (owner) of the film by virtue of section 14(1)(c) of the Act.
The composer of a lyric or a musical work, however, retains the right of performing it in public for profit otherwise than as a part of the cinematograph film and he cannot be re strained from doing so.
In other words, the author (com poser) of lyric or musical work who has authorised a cinematograph film producer to.
make a cinematograph film of his work and has thereby permitted him to appropri ate his work by incorporating or recording it on the sound track of a cinematograph film cannot restrain the author (owner) of the film from causing the acoustic portion of the film to be performed or projected or screened in public for profit or from making any record embodying the recording in any part of the sound track associated with the film by utilising such sound track or from communicating or authorising the communication of the film by radio diffu sion, as section 14(1)(c) of the Act expressly permits the owner of the copyright of the cinematograph film to do all these things.
In such cases, the author (owner) of the cinematograph film cannot be said to wrongfully appropriate anything which belongs to the composer of the lyric or musical work.
Any other construction would not only render the express provisions of clauses (f), (m), (y) of section 2, section 13(1)(b) and section 14(1)(c) of the Act otiose but would also defeat the intention of the Legislature, which in view of the growing importance of the cinemato graph film as a powerful media of expression, and the highly complex technical and scientific process and heavy capital outlay involved in its production, has sought to recognise it as a separate entity and to treat a record embodying the recording in any part of the sound track associated with the film by utilising such sound track as something distinct from a record as ordinarily understood.
On a conspectus of the scheme of the Act as disclosed in the provisions reproduced above particularly clauses (d)(v), (f) (m), (v)and (y) of section 2, sections 13(1) and 14(1)(c), provisos (b)and (c) to section 17 and sections 22 and 26 of the Act, it is, therefore, abundantly clear that a protectable copyright (comprising a 222 bundle of exclusive rights mentioned in section 14(1)(c) of the Act) comes to vest in a cinematograph film on its com pletion which is said to take place when the visual portion and audible portion are synchronized.
This takes us to the core of the question namely, wheth er the producer of a cinematograph film can defeat the right of the composer of music . or lyricst by engaging him.
The key to the solution of this question lies in provisos (b) and (c) to section 17 of the Act reproduced above which put the matter beyond doubt.
According to the first of these provisos viz. proviso (b) when a cinematograph film producer commissions a composer of music or a lyricst for reward or valuable consideration for the purpose of making his cinematograph film, or composing music or lyric there fore i.e. the sounds for incorporation or absorption in the sound track associated with the film, which as already indicated, are included in a cinematograph film, he becomes the first owner of the copyright therein 'and no copyright subsists in the composer of the lyric or music so composed unless there is a contract to the contrary between the composer of the lyric or music on the one hand and the producer of the cinematograph film on the other.
The same result follows according to aforesaid proviso (c) if the composer of music or lyric is employed under a contract of service or apprentice.ship to compose the work.
It is, therefore, crystal clear that the rights of a music composer or . lyricst Can be defeated by the producer of a cinemat ograph film in the manner laid down in provisos (b) and (c) of section 17 of the Act.
We are fortified in this view by the decision in Wallerstein vs Herbert (1867) Vol.
16, Law Times Reports 453, relied upon by Mr. Sachin Chaudhary where it was held that the music composed for reward by the plain tiff in pursuance of his engagement to give effect to cer tain situations in the drama entitled "Lady Andley 's Secret", which was to be put on the stage was not an inde pendent composition but was merely an accessory to and a Fart and parcel of the drama and the plaintiff did not have any right in the music.
For the foregoing reasons, we do not find any justification to interfere with the order of the High Court.
Conse quently, the appeal fails and is dismissed but in the circumstances of the case without any order as to costs.
KRISHNA IYER, J.
The judgment just delivered is on behalf of the Court, which makes this footnote, in a sense, otiose.
But I do append the abbreviated opinion solely to belight a slightly penumberal area of the law and to voice a need for legislative exploration to protect a category now left in the cold.
A cinematograph is a felicitous blend, a beautiful totality, a constellation of stars, if I may use these lovely imageries to drive home my point, slurring over the rule against mixed metaphor.
Cinema is more.
than long strips of celluloid, more than miracles in photography, more than song, dance and dialogue and indeed, more than dramatic story, exciting plot, gripping situations and marvellous acting.
But it is that 223 ensemble which is the finished product of orchestrated performance by each of the several participants, although the components may, sometimes, in themselves be elegant entities.
Copyright in a cinema film exists in law, but section 13(4) of the Act preserves the separate survival, in its individuality, of a copyright enjoyed by any 'work ' notwith standing its confluence in the film.
This persistence of the aesthetic 'personality ' of the intellectual property cannot cut down the copyright of the film qua film.
The latter right is, as explained earlier in my learned broth er 's judgment, set out indubitably in section 14(1)(c).
True, the exclusive right, otherwise called copyright, in the case of a musical work extends to all the sub rights spelt out in section 14(1)(a).
A harmonious construction of section 14, which is the integral yoga of copyrights in creative works, takes us to the soul of the subject.
The artist enjoys his copyright in the musical work, the filmproducer is the master of his combination of artistic pieces and the two can happily co exist and need not conflict.
What is the modus vivendi ? The solution is simple.
The film producer has the sole right to exercise what is his entitlement under section 14(1)(c) qua film, but he cannot trench on I the composer 's copyright which he does only if the 'music ' is performed or produced or reproduced separately, in violation of section 14(1)(a).
For instance, a film may be caused to be exhibited as a film but the pieces of music cannot be picked out of the sound track and played in the cinema or other theatre.
To do that is the privilege of the composer and that right of his is not crowned in the film copyright except where there is special provision such as in section 17, proviso (c).
So, beyond exhib iting the film as a cinema show, if the producer plays the songs separately to attract an audience or for other reason, he infringes the composer 's copyright.
Anywhere, in a restaurant or aeroplane or radio station or cinema theatre, if a music is played, there comes into play the copyright of the composer or the Performing Arts Society.
These are the boundaries of composite creations of art which are at once individual and collective, viewed from different angles.
In 'a cosmic perspective, a thing of beauty has no boundary and is humanity 's property but in the materialist plane on which artists thrive, private and exclusive estate in art subsists.
Man, the noblest work of the Infinite Artist, strangely enough, battles for the finite products of his art and the secular law, operating on the temporal level, guard ians material works possessing spiritual values.
The enig matic small of Mona, Lisa is the timeless heritage of man kind but, till liberated by the prescribed passage of time, the private copyright of the human maker says, 'hands off '.
The creative intelligence of man is displayed in multiform ways of aesthetic expression but it often happens that economic systems so operate that the priceless divinity which we call artistic or literary creativity in man is exploited and masterS, whose works are invaluable, are victims of piffling payments.
World opinion in defence of the human right to intellectual property led to internation al conventions and municipal laws, commissions, codes and organisations, calculated to protect works of article India responded to this universal need by enacting the .
224 Not the recommendations in conventions but provisions in municipal laws determine enforceable rightS. Our copyright statute protects the composite cinematograph work produced by lay out of heavy money and many talents but does not extinguish the copyrightable component parts in toto.
The music which has merged, through the sound track, into the motion picture, is copyrighted by the producer but, on account of this monopoly, the music composer 's copyright does not perish.
The twin rights can co exiSt, each ful filling itself in its delectable distinctiveness.
Section 14 has, in its careful arrangement of the rights belonging to each copyright, has a certain melody and harmony to miss which is to lose the sense of the Scheme.
A somewhat un Indian feature we noticed in the Indian copyright Act falls to be mentioned.
Of course, when ' our law is intellectual 'borrowing from British reports, as admittedly it is, such exoticism is possible. 'Musical work ', as defined in s.2 ( p) reads: "(p) musical work means any combina tion of melody and harmony or either of them printed, re duced to writing or otherwise graphically produced or reproduced." Therefore, copyrighted music is not the soulful tune, the superb singing, the glorious voice or the wonderful render ing.
It is the melody or harmony reduced to print, writing or graphic form.
The Indian music lovers throng to listen and be enthralled or enchanted by the nada brahma, the sweet concord of sounds, the rags, the bhava, the lava and the sublime or exciting singing.
Printed music is not the glamour or glory of it, by and large, although the content of the poem or the lyric or the song does have appeal.
Strangely enough, 'author ', as defined in s.2(d), in rela tion to a musical work, is only the composer and section 16 confies 'copyright ' to those works which are recognised by the Act.
This means that the composer alone has copyright in a musical work.
The singer has none.
This disentitle ment of the musician or group of musical artists to copy right is un Indian, because the major attraction which lends monetary value to a musical performance is not the music maker, so much as the musician.
Perhaps, both deserve to be recognised by the copyright law.
I make this observation only because act in one sense, depends on the ethos and the aesthetic best of a people; and while universal protection of intellectual and aesthetic property of creators of 'works ' is an international obligation, each country in its law must protect such rights wherever originality is con tributed.
So viewed, apart from the music composer, the singer must be conferred a right.
Of course, law making is the province of Parliament but the Court must communicate to the lawmaker such infirmities as exist in the law extant.
S.R. Appeal dismissed.
| IN-Abs | The appellant society was incorporated in terms of section 2(r) of the (Act 14 of 1957), in the State of Maharashtra on August 23, 1969 as a company limited by guarantee for the purpose of carrying on business in India of issuing or granting licences for performance in public of all existing and future Indian musical works in which copyright within the meaning of section 13 subsists in India.
The appellant company has amongst its members the composers of musical works, authors of literary and dramatic works and artistes.
In accordance with the provisions of section 33 of the Copyright Act, the appellant published on September 27, 1969 and November 29, 1969 in the "Statesman" and the Gazette of India respectively a tariff laying down the fees, charges and royalties that it proposed to collect for the grant of licences for performance in public of works in respect of which it claimed to be an assignee of copy rights and to have authority to grant the aforesaid li cences.
A number of persons including various associations of producers of cinematograph films including the sound track thereof and the Cinematograph Exhibitors Association of India filed objections in respect of the tariff before the Copyright Board in accordance with the provisions of section 34 of the Act, repudiating the rights of the appel lant.
The Copyright Board held : (1) In the absence of proof to the contrary, the composers of lyrics and music retained the copyright in their musical works incorporated in the sound track of cinematograph films provided such lyrical and musical works were printed on written and that they could assign the performing right in public to the appellant.
(2) The tariff as published by the appellant was reasonable.
(3) The appellant had the right to grant li cences for the public performance of music in the sound track of copyrighted Indian cinematograph films and (4) It could collect fees, royalties and charges in respect of those films w.e.f.
the date on which the tariff was pub lished in the Gazette of India.
The High Court allowed the appeal preferred by the respondents under section 72 of the Act and held: (i) Unless there is a contract to the contrary a composer who composes a lyric or music for the first time for valuable consideration for a cinematograph film does not acquire any copyright either in respect of film or its sound track which he is capable of assigning.
(ii) Under proviso (b) to section 17 of the Act, the owner of the film at whose instance the composition is made becomes the first owner of the copyright in the composition.
(iii) The compos er can claim a copyright in his work only if there is an express agreement between him and the owner of the cinemato graph film reserving his copyright.
(iv) Though section 18 of the Act confers power to make a contract of assignment.
the power can be exercised only when there is an existing or future right to be assigned and that in the circumstances of the present case, assignment, if any, of the copyright in any future work is of no effect.
In appeal by certificate to this Court, the appellant contended (1) The author (composer) of a literary or musical work has copyright which includes.
inter alia.
the exclusive right (a) to perform the work in public and 207 (b) to make any cinematograph film or a record in respect of the work.
(2) That copyright in a literary or musical work is infringed by any person if without a licence granted to him by the owner of the copyright, he makes a cinematograph film in respect of the work or perform the work in public by exhibiting the cinematograph film.
(3) If a person desires to exhibit in public a cinematograph film containing a musical work, he has to take the per mission not only of the owner of the copyright in the cine matograph film but also the permission of the owner of the copyright in the literary or musical work which is incor porated in the cinematograph film, as according to section 13(4) of the Act, the copyright in a cinematograph film or a record does not effect the separate copyright in any work in respect of which or a substantial part of which the film or as the case may be, the record is made (4).
The provi sions of section 17(b) of the Act have no application to a literary or musical work or the separate copyright therein and do not take away the copyright in a literary or musical work embodied in a cinematograph film.
(5) The only modes in which the author of a literary work or musical work ceases to be the owner of copyright in the work are (a) by assigning under section 18(b) by relinquishment under section 21 and (c) by the composer composing the work in the course of his employment under a contract of service with an employer in which case the employer becomes the owner of the copyright in the musical work.
(6) In the case of an assignment of copyright in future work and the employment of the author to produce a work under a contract of service, the question of priorities will be decided according to the principles "where equities are equal, the first in time shall prevail".
The respondent 's contentions were (i) Unless a music is notationally written, printed or graphically reproduced it is not a musical work within the meaning of Copyright Act and there is no copyright in songs or orchestral pieces sung or played directly without its notation being written.
(ii) Since a "cinematograph film" is defined in section 2(f) of the Act as including the sound track and the "cinema tograph" is required to be construed to include any work produced by any process analogous to cinematography the owner of the cinematograph film is the first owner of the copyright therein including the right of the composer of the literary or musical work incorporated in the sound track of the film.
(iii) In the case of the film in which a lyric (which literally means a short poem directly expressing the poet 's own thoughts and sentiments in instances failing within the purview of the expression "literary work" as defined in section 2(0) of the Act has been plagiarised, there will be copyright in the film vesting in the pro ducer.
(iv) The Act confers a separate copyright of a cinematograph film as a film, its author under section 2(d)(v) of the Act being the owner of the film at the time of its completion.
(v) In the case of a lyric or music incorporat ed under the sound track of a cinematograph film, since in section 2(f) of the Act cinematograph film includes its sound track and section 13(1)(b) of the Act confers copyright on the cinematograph film and section 14(c) (ii) of the Act confers on the. owner of copyright the right to cause the film in so far as it consists of visual images to be seen in public and in so far as it consists of songs to be heard in public, it is not necessary for the owner of the cinematograph film to secure the permission of the composer of the lyric or of the music incorporated in the sound track of a cinematograph film for exhibiting or causing the exhibition of the sound portion of the film in public or for causing the records of the sound track of the film to be heard in public.
(vii) It is not correct to say that under section 17 proviso (b) in order that the producer of the cinematograph film should have copyright in the literary or musical work incorporated in it, the making of the entire film should be commissioned.
Section 17(b) will equally apply if someone is commissioned to make any compo nent part of a cinematograph film such as a lyric or musical work i.e. when such component of the film is made at the instance of a film producer for valuable consideration, the copyright for such component shall as well vest in the producer.
(viii) As the Act confers a separate copyright on a cinematograph film as a film the producer can exercise both the rights conferred on him under section 141(c)(ii) of the Act and all that section 13(4) of the Act (when applicable) provides is that the rights created by section 14(1)(a) and (b) shall coexist with those created by section 14(1)(e) and (d) of the Act.
Dismissing the appeal the Court, HELD: (Per Krishna Iyer, J. concurring) 208 (1) Copyright in a cinema film exists in law but section 13(4) of the Act preserves the separate survival in its individuality of a copyright enjoyed by any work notwith standing its confluence in the film.
This persistence of the aesthetic personality of the intellectual property cannot cut down the copyright of the film qua film.
The exclusive right, otherwise, called copyright, in the ' case of a musical work extends to all the sub rights spelt out in section 14(1) (a).
A harmonious construction, of section 14, which is the integral yoga of copyright shows that the artiste enjoys his copyright in the musical _work the film producer is the master of his combination of artistic .pieces and the two can.
happily co exist and need not conflict.
[223 A C] (2) The boundaries of composite creations of art which are at once individual and collective may be viewed from different angles.
In a cosmic perspective, a thing of beauty has no boundary and is humanity 's property but in the materialist plane on which artistes thrive private and exclusive estate inert subsists.
The enigmatic smale of Mona Lisa is the timeless heritage of mankind, but, till liberated by the prescribed passage of time, the private copy right of the human maker says, "hands off.
[223 F G] (3) The film producer has the sole right to exercise what is his entitlement under section 14(1)(c) qua film.
But, he cannot trench on the composer 's copyright which he does only if the 'music ' is performed or produced or repro duced separately, in violation of section 14(1)(a).
A film may be caused to be exhibited as a film but the pieces of music cannot be picked out of the sound track and played in the cinema or the theatre.
To do that is the privilege of the composer and that right of his is not drowned in the film ' copyright except where there is special provision such as section 17, proviso (c).
Beyond exhibiting the film as a cinema show if the producer plays the songs separately to attract an audience or for other reasons he infringes the composer 's copyright, the copyright of the composer or the Performing Acts Society comes into play, if a music is played, whether in a restaurant or aeroplane or radio sta tion or cinema theatre.
[223 C E] (4) Section 14 has in its careful arrangement of the right belonging each copyright has a certain melody and harmony to music which is to loose the sense of the same.
Our copyright statute protects the composite cinematograph work produced by lay out of heavy money and many talents but does not extinguish the copyrightable component parts in toto.
The music which has merged through the sound track, into the motion picture is copyright by the producer but, on account of this monopoly, the music composer 's copyright does not perish.
The twin rights can co exist each fulfil ing itself in its delectable distinctiveness.
[224 A B] Observation: Apart from the music composed, the singer must be conferred a right.
Copyrighted music is not the soulful tune, the superb singing, the glorious voice or the wonder ful rendering.
It is the melody or harmony reduced to print writing or graphic form of musical works.
Author as defined in s.2(d) in relation to a musical work is only the composer and section 16 confines copyright to those works which are recognised by the Act, which means the composer alone has copyright in a musical work and the singer has none.
This disentitlement of the musician or group of musical artistes to copyright is un Indian because the major attraction which lends monetary value to a musical performance is not the music maker so much as the musician.
Perhaps both deserve to be recognised by the copyright law, because art in one sense depends on the ethos and the aesthetic best of a people and while universal protection of intellectual and aesthetic property of creators of "works" is an international obliga tion each country in its law must protect such rights wher ever originally is contributed.
[224 E H] Per Jaswant Singh J. (1) The existing and future right of music . . composer and lyrics in their respective works as defined in the Act is capable of assignment subject to the conditions mentioned in section 18 of the Act as also in section 209 19 of the Act which requires an assignment to be in writing, signed by the assigner or by his duly authorised agent.
[215 D E] (2) The interpretation of clause (f) of section 2 which is not exhaustive leaves no room for doubt when read in conjunction with section 14(1)(c)(iii), that the term cine matograph film includes a sound track associated with the film.
[220 D] (3) A harmonious and rational instead of mechanical construction of section 34, section 14(1)(a)(iii) and section 14(1)(c)(ii) will be: (A) Once the author of a lyric or a musical work parts with a portion of his copyright by authorising a film pro ducer to make a cinematograph film in respect of his work and thereby to have his work incorporated or recorded in sound track of a cinematograph film, the latter.acquires by virtue of section 14(1)(c) of the Act on completion of the cinematograph film a copyright which gives him the exclu sive right, inter alma, of performing the work in public that is, to cause the film in so far as it consists of visual images to be seen in public and in so far as it consists of the acoustic portion including a lyric or a musical work to be heard in public without securing any further permission of the author (composer) of the lyric or a musical work for the performance of the work in public.
A distinct copyright in the aforesaid circumstances comes to vest in the cinematograph film as a whole which relates both to copying the film and to its performance in public.
(B) If an author (composer) of a lyric or a musical work authorises a cinematograph film producer to make a cinematograph film of his composition by recording it on the sound track or a cinematograph film, he cannot complain of the infringement of his copyright if the author (owner) of the cinematograph film causes the lyric or the musical work recorded on the sound track of the film to be heard in public and nothing contained in section 13(4) of the Act can operate to affect the rights acquired by the author (owner) of the film by virtue of section 14(1)(c) of the Act.
(C) The composer of a lyric or musical work retains the right of performing it in public for profit otherwise than as a part of cinematograph film and he cannot be restrained from doing so.
In other words, the author (composer) of a lyric or musical work who has authorised a cinematograph film producer to make a cinematograph film of his work and thereby permitted him to appropriate his work by incorporating or recording it on the sound track of a cinematograph film cannot restrain the author (owner) of the film from causing the acoustic portion of the film to be performed or projected or screened in public for profit or from making any record embodying the recording in any part of the sound track associated with the film by utilising such sound track or from communicating or authorising the communication of the film by radio diffusion, as section 14(1)(c) of the Act expressly permits the owner of the copyright of a cinematograph film to do all these things.
In such cases the author (owner) of the cinematograph film cannot be said to wrongfully appropriate anything which belongs to the composer of the lyric or musical work.
Any other construction would not only render the ex press provisions of clause (f), (m), (y) of section 2, section 13(1)(b) ,red section 14(1)(c) of the Act otiose but would also defeat the intention of the legislature which in view of the growing importance of the cinematograph film as a powerful media of expression and the highly complex, technical and scientific process and heavy capital outlay involved in its production has sought to recognise as a separate entity and to treat a record embodying the record ing in any part of the sound track associated with the film by utilising such sound track as something distinct from a record as ordinarily understood.
[220 G H; 221 A G] (4)Clauses (d), (v), (f), (m), (v) and (y) of section 2, section 13(1) and 14(1)(c), provisos (b) and (c) to section 17 and section 22 and 26 of the Act abundantly make it clear that protectable copyright (comprising a bundle of exclusive rights mentioned in section 14(1)(c) of the Act comes to 210 vest in a cinematograph film on its completion which is said to take place when the visual portion and audible portion are synchronized.
[221 H; 222 A] (5) The rights of music . . composer or lyricist can be defeated by the producer of a cinematograph film in the manner laid down in proviso (b) and (c) of section 17 of the Act.
In both the.
cases falling under clauses (b) and (c) of section 17, a cinematograph film producer becomes the.
first owner of the copyright and no copyright subsists in the composer of the lyric or music so composed unless there is a contract to the contrary between the composer of the lyric or music on one hand and the producer of the cinemato graph film on the other.
[222 D F] Wallerstein vs Herbert (1867) Vol.
16, Law Times Reports 453, quoted with approval.
|
Appeal No. 106 of 1976.
(Appeal by Special Leave from the Judgement and Order dated 30.9.1975 of the Allahabad High Court in S.T.R. No. 698/70) S.C. Manchanda, Mrs. Urrnila Kapoor, Y. D. Jain and Miss Kamlesh Bansal, for the appellant.
G.N. Dikshit and O.P. Rana, for the respondent.
The Judgment of the Court was delivered by FAZAL ALI, J.
This is an appeal by special leave by the assessee who was a contractor dealing in fabrication of Vanguard rolling shutters and steel works.
The assessee manufactures iron shutters according to specifications given by the parties and fixes the same at the premises of the customers.
In the assessment year 1965 66 the assessee received an aggregate sum of Rs. 1,08,633 08 in the execu tion of such contracts.
This amount was claimed by the assessee as not being liable to sales tax during the assess ment year 1965 66 on the ground that the same represented the proceeds of work contracts.
The Sales Tax Officer rejected.the plea of the assessee.
and the Assistant Commis sioner (Judicial) on appeal also affirmed the order of the Sales Tax Officer.
But the plea of the assessee appears to have found favour with the Judge (Revisions) Sales Tax who decided that the amount was not exigible to sales tax, because the contracts in question were work contracts.
Thereafter at the instance of the Commissioner, the Revising Authority made a reference to the High Court and referred the following question of law for its opinion: .LM15 "Whether under the circumstances of the case and under the terms of the contract the supply of shutters and iron gates worth Rs. 1,08,633 08 was sale or amounted to work contract ?" .LM0
The High Court, after hearing the parties and considering the materials on the record, came to the conclusion that the contract entered into 167 by the appellant was not a work contract but a contract for the supply of goods simpliciter and the assessee, was, therefore, liable to pay tax.
The question referred to the High Court was answered accordingly.
The assessee 's case was that having regard to the circumstances of the present case, the terms and conditions of the contract and the nature of the work done by the appellant the contract in question was out and out a work contract and not a contract for supply of goods or materi als.
In order to decide this question it may be necessary first to give the salient features of the contract between the parties.
A specimen of the contract has been filed by the assessee as Annexure 'A ' in the Paper Book the relevant portions of which may be extracted thus: "Please erect at our premises . Nos.
of . .Nos. of following dimension against ' the contract price of Rs. . 1.
Full payment against delivery prior to despatch or documents by Bank.
It is clearly understood that there will be no such thing as to make payment after fixing.
Material will be carried to the side of work at cost of the party.
Our responsibility ceases when the same leaves our premises.
x x x 4.
We do not hold ourselves responsible for any structural damage or dispute with the landlord.
Masonary work done by the party at his cost according to.
our instructions.
x x x 6.
No responsibilities for non delivery or late despatch of goods due to any reason beyond our control.
" It would appear from the terms extracted above, that the assessee was required under the contract to fabricate the rolling shutters in the first instance, .to bring them to the site and thereafter to erect the saine at the premises.
In an application given to the Assistant Commissioner (Judi cial), which is Annexure 'C ' of the Paper Book, by the assessee he explains the various steps which the contractor had to take in order to fix the rolling shutters to the factory premises of the owner.
First the different parts and components of the rolling shutters are fabricated.
It is only when the various component parts are fitted into one that they constitute the rolling shutter as one unit, and taken separately they have no separate existence.
It was further explained that the component parts do not constitute a rolling shutter unless they are affixed to and erected in the building in position and in the required manner.
It was further alleged that the contract was not concluded merely by delivery of fabricated materials but was completed only after the same were taken to the site and finally erected and affixed to the site of the building.
In order to fix them 12 240SCI/77 168 to the premises certain masonary work had to be done by the owner and that too according to the instructions of the contractor.
It was also averred that in erection of the shutters some parts were permanently embedded into the walls and lintals and they become permanent fixtures which are not detachable.
The allegations made in Annexure 'C ' have not been controverted by the State either in this Court or before the High Court.
Moreover, the Indian Standard Specification Book for Metal Rolling Shutters and Rolling Grills the particulars of the fittings of rolling shutters, whose authenticity has not been doubted by counsel for the parties, clearly shows that rolling shutters consist of curtains, lock plates, guide channels, bracket plates, rollers, hood covers, gears, worms, fixing bolts, safety devices, anchoring rods, central hasp and staple.
Each guide channel has to be provided with a minimum of three fixing cleats or supports for attachment to the walls or column by means of bolts or screws.
The guide channels are further attached to the jambs, plumb either in the overlap ping fashion, projecting fashion or embedded in grooves, depending on the method of fixing.
All these operations take place at the site after despatch of the component parts of the rolling shutter.
Hood covers are fixed in a neat manner and supported at the top at suitable intervals.
This also has to be done at the site.
Item 11.1 of the specifications shows that the rolling shutter curtain and bottom lock plate are interlocked together and rolled in one piece, but the other parts like guide channels, bracket plates, rollers etc., are despatched separately.
Item 12.1 shows that all the rolling shutters are erected by the manufacturer or his authorized representative in a sound manner, so as to afford trouble free and easy operation, long life and neat appearance.
Even after erection is done, grease is applied to the springs and on the sides of the guide channels.
Thus the process involved in the fabrica tion of a rolling shutter and its actual fixing to the premises at the site is a continuous one and is completed only when erection is completed in every way.
The price charged by the contractor from the owner of the premises is one lumpsum without at all specifying as to what part is meant for the materials used or fabricated and what part for the services or labour put in by the contractor.
It is, therefore, clear that in the facts and circumstances of the present case, the transaction is a composite consolidated contract which is one and indivisible comprising labour and services executed for a lumpsum.
It is also clear that the materials are not merely supplied to the owner so as to pass as chattel simpliciter, but are actually fixed to an .immov able property and after the same are fixed and erected they become a permanent fixture so as to become an accretion to the immovable property.
In these circumstances, the con clusion is inescapable that the present contract cannot be said to be a pure and simple sale of goods or materials as chattels but is a work contract.
It is well settled that a work contract is a contract for construction of bridges, buildings etc., and in for a lumpsum.
The question as to under what circumstances a contract can be said to be a work contract is not free from difficulty and has to depend on the facts of each case.
It is difficult to lay down any rule of universal application, but there are.
some well recognized tests which are laid down by decided cases of this Court which afford 169 guidelines for determining as to whether a contract in question is a work contract or a contract for supply of goods.
One of the important tests is to find out whether the contract is primarily a contract for supply of materials at a price agreed to between the parties for the materials so supplied and the work or service rendered is incidental to the execution of the contract.
If so, the contract is one for sale of materials and the sale proceeds would be exigi ble to sales tax.
On the other hand where the contract is primarily a contract for work and labour and materials are supplied in execution of such contract, there is no contract for sale of materials but it is a work contract.
The circum stance that the materials have no separate identity as a commercial article and it is only by bestowing work and labour upon them, as for example by affixing them to the building in case of window leaves or wooden doors and windows that they acquire commercial identity, would be prima facie indicative of a work contract.
So also where certain materials are not merely supplied but fixed to an immovable property so as to become a permanent fixure and an accretion to the said property, the contract prima facie would be work contract.
This is exactly what has happened in the present case.
In State of Rajasthan vs Man Industrial Corporation Ltd.(1), after discussing the entire case law on the sub ject, this Court 'observed as follows: "The test in each case is whether the object of the party sought to be taxed is that the chattel as chattel passes to the other party and the services rendered in connection with the installation are under a separate contract or are incidental to the execution of the contract of sale.
" Although the aforesaid case appears to us to be on all fours with the facts of the present case, the High Court merely noticed the decision, but did not try to apply it to the facts of the present case.
In Man Industrial Corporation Ltd 's case (supra) the contract was to prepare window leaves according to specifications and fix them to the building.
It was held that fixing the window leaves to the building was not incidental or subsidiary to the sale but an essential term of the contract, because the contract became complete only after the windows were fixed as stipulated in the con tract.
Similarly in the instant case, the contract could not be completed merely by sending the materials at the site but would be completed only after erection of the shutters Had been made and the shutters fixed to the premises so as to become an accretion to the premises.
Mr. Dikshit appearing for the State submitted that in the present case the contract was merely for the supply of shutters in one unit after being fabricated by the contrac tor and the price was paid for the shutters, the question of fixing the shutters at the site was not an integral part of the contract but was only incidental to the supply of materials and, therefore, the contract was not a work con tract.
We are, however, unable to agree with this conten tion, because as (1) 24 S.T.C. 349, 355. 170 discussed above, the materials were sent with various component parts which had to be taken at the site, fitted into one another and then finally fixed into a frame so that the fixture became permanent and a part of the premises.
The operation to be done at the site as required by the instructions in the Standard Book could not be said to be merely incidental to the contract but was a fundamental part of the contract itself.
In our opinion, therefore, the decision in Man Industrial Corporation Ltd 's case (supra) fully covers the facts of the present case.
It was further argued by Mr. Dikshit learned counsel appearing for the State that it will appear from the terms of the contract that the price of the goods had to be paid in advance before delivery of the same to the customer which shows that the title to the shutters passed to the customer as soon as the shutters were packed and despatched to the site and the price paid and therefore the contract in the instant case could not be a work contract.
It is not possi ble to accept this contention, because the advance payment of the entire price was a term meant for the convenience of the parties as the contractor did not want to take any risk for delayed payment of goods, but the contract would be completed only after the 'shutters were fully assembled at the site and fixed according to the specifications which was essentially the responsibility of the contractor.
In Richardson ' and Cruddas Ltd. vs State of Madras(1) there was a similar recital in the contract for full price to be paid in advance and still the Madras High Court held that the contract was a work contract.
The decision of the Madras High Court was approved by this Court in Man Industrial Corporation Ltd 's case (Supra) and affirmed by this Court in Stale of Madras vs Richardson and Cruddas Ltd.(2) For these reasons the contention put forward by Mr. Dikshit on this score is overruled.
In a later case of this Court in State of Rajasthan vs Nanu Ram(3) tenders were invited by the Chief Engineer from the contractors for supplying and fixing of wooden door and windows, sashas together with frames and painting them in the police lines building and for supplying and fixing the wooden chowkhats and this was held to be a work contract.
The decision in Man Industrial Corporation Ltd 's case (supra) was followed by this Court in that case.
Again in Commissioner of Sales Tax, M.P. vs Purshottam Premji(4) this Court indicated the essential difference between a contract for work and services and a contract for sale of goods and observed as follows: "The primary difference between a con tract for work or service and a contract for sale of goods is that in the former there is in the person performing work or rendering service no property in the thing produced as a whole .
In the case of a contract for sale, the thing produced as a whole has indi vidual existence as the sole property of the party who produced it, at some time before delivery, and the property (1) 16 S.T.C. 827.
(2) 21 S.T.C. 245 (S.C.).
(3) 26 S.T.C. 268.
(4) 26 S.T.C. 38.
171 therein passes only under the contract relat ing thereto to the other party for price.
" The High Court placed great reliance on the decision in M/s T.V. Sundram Iyengar & Sons vs The State of Madras(1).
In that case what had happened was that the contractor built bus bodies and fitted the same to the chassis provided by the customers and charged the price for building the body and fitting the same to the chassis.
It was held by this Court that the contract was completed only when the complete bus with the body fitted to the chassis was delivered to the customer and, therefore, the supply of body being one single unit constituted a sale of goods.
That case is clearly distinguishable from the facts and circumstances of the present case.
In the first place the supply of materials and completion of the contract was indisputably in respect of movable property, no immovable property was at all in volved at any stage in the process of completion of the contract.
The bus body built by the contractor was moveable property manufactured by the contractor and had merely to be fitted to the chassis ' which was also movable property.
Secondly, the bodies constructed and fitted to the chassis were easily detachable.
In the instant case, the shutters were fabricated and fixed to an immovable property so as to become a permanent fixture and they were also not detacha ble.
The High Court failed to have noticed these important features which distinguish the aforesaid decision from the facts of the present case.
We are of the considered opinion that the present case is clearly covered by the two decisions of this Court re ferred to in Man Industrial Corporation Ltd 's case and Nenu Ram 's case (supra), and applying the same we hold that the contract in the present case was a work contract and the transaction was, therefore, not eligible to tax.
The High Court was in error in holding that the assessee was liable to pay tax ,on the sale proceeds of the contract.
We, therefore, allow this appeal, set aside the order of the High Court and restore the order of the Revising Author ity and hold that the assessee was not liable to pay sales tax.
The appellant will be entilled to his costs through out.
P.B.R. Appeal allowed.
| IN-Abs | The assessee.
who was a manufacturer of iron shut ters, fabricates the different parts ,and components and fits them into shutters.
The shutters are prepared ac cording to the specific requirements of the customer and fixed in the customer 's premises.
Though the masonary work connected with the fitting of the shutters was done by the customer, it was done according to the contractor 's instruc tions.
The contract was complete after the shutters were taken to the premises of the customer and affixed to the building; and when fitted into the walls the shutters become permanently embedded into the wall and are not detachable.
The price charged by the contractor from the customer was a lumpsum and did not show a break up, of the materials used or fabricated or the cost of services or labour.
The assessee claimed that the contract being a works con tract the proceeds from such contracts are not exigible to tax.
But this plea was rejected by the Sales Tax Officer.
The assessee 's appeal was rejected by the Assistant Commis sioner (judicial).
The Judge (Revisions) Sales Tax upheld the assesee 's contention.
On reference the High Court held that the contract was not a works contract but a contract for the supply of goods simpliciter.
Allowing the assessee 's appeal, HELD .
The contract in the present case was a works contract and the transaction was not exigible to tax.
The High Court was in error in holding that the assessee was liable to pay tax on the sale proceeds of the contract [171E] (1) The question whether a contract can be said to be a works contract has to depend on the facts of each case.
It is difficult to lay down any rule of universal application but some of the important tests evolved by this Court are: [168 H] (i) Where the contract was primarily a contract for the supply of materials at a price agreed to between the parties for the materials so supplied and the work or service ren dered is incidental to the execution of the contract.
the contract is one for sale of materials and the sale proceeds would be exigible to sales tax.
[169 A B] (ii) Where the contract is primarily for work and la bour, and materials are supplied in execution of such con tract, there is no contract for sale of materials but it is a works contract.
The circumstance that the materials have no separate identity as a commercial article and it is only by bestowing work and labour upon them, that is, by affixing them to the building would be prima facie indicative of a works contract.
Where certain materials are not merely supplied but fixed to an immovable property so as to become a permanent fixture and an accretion to the said property, the contract ' prima facie would be a works contract.
[169 C] In the instant case the transaction was a composite, consolidated contract which was one and indivisible compris ing labour and services executed for a lumpsum.
The con tract could be completed when materials with various compo nent parts had been taken to the site, fitted into one another and then finally fixed into a frame so that the fixture became permanent and a, part of 166 the premises.
This operation could not be, said to be merely incidential to the contract, but was fundamental part of the contract itself.
[168 F & 170 A] (2) It is not correct to say that the contract could not be a works contract because the price was paid in advance and the title passed to the customer as soon as the shutters were packed and despatched to the site.
Advance payment of the price was a term meant for the convenience of the par ties as the contractor did not want to take any risk for delayed payment; the contract would be completed only after the shutters were finally assembled at the site and fixed according to specifications, which was essentially the responsibility of the contractor.
[170 D] State of Rajasthan vs Man Industrial Corporation Ltd. 24 S.T C. 349, 355 and State of Rajasthan vs Nanu Ram 26 S.T.C. 268 followed.
State of Madras vs Richardson and Cruddas Ltd. 21 S.T.C. 245 (S.C.) and Commissioner of Sales Tax.
M.P. vs Purshottam Premji 25 S.T.C. 38 referred to.
M/s T.V. Sundram lyengar & Sons vs The State of Madras 35 S.T.C. 24 [19751 2 S.C.R. 372 distinguished.
|
Appeal Nos.
351 359/72.
Appeals from the Judgment and Order dated 7 5 1971 of the Orissa High Court in O.J.C. Nos. 1185 to 1190, 1223 and 1224 of 1970 and 41/71 and CiviI AppeaI Nos.
1855 1863, 2091/72 and 1802/74.
Appeals by Certificate/Appeals by Special Leave from the Judgments and Orders dated 7 5 1971, 3 2 1971 and 28 3 1974 of the 814 Orissa High Court in O.J.C. Nos.
1185 1190, 1223, 1224 and 1226/ 70, 850/70, 589/72 and Civil Appeals Nos.
1892 1893 of 1971, 1302, 2071 and 12351236 of 1972.
Appeals from the Judgment and Orders dated 15 5 1970, 16 41971, and 6 9 1971 of the Orissa High Court in O.J.C. Nos. 329 and 357/70, 786/.70, 242/67, 859 and 863/70.
Vinoo Bhagat for the Appellants in CAs.
351 359/72 and RR.
in CAs.
1859 1862/72.
Gobind Das and G.S. Chatterjee for the Appellants in rest of the Appeals, except 1802/74 and RR.
in CAs.
351 359/72.
R.K. Garg and S.C. Agarwal for Appellants in CA 1802/74 and B.P. Maheshwari and Suresh Sethi for Respondents in CAs.
12351236/72.
B. Parthasarthy for RR in CA.
1802/74.
The Judgment of the Court was delivered by J.
These appeals by certificate or special leave are directed against judgments of the Orissa High Court dated May 15, 1970, February 3, 1971, April 16, 1971, May 7, 1971, September 6, 1971 and March 28, 1974.
They arise out of several writ petitions.
The facts which gave rise to the petitions changed from time to time largely because of amendments in the law, and that was the reason for the filing of separate writ petitions resulting in the impugned judgments of the High Court, but we have heard them together at the instance of the learned counsel for the parties and will dispose them of by a common judgment.
The nature of the controversy in these cases is such that it will be enough to state the basic facts for the purpose of appreciating the arguments of counsel for the parties.
The Collector of Mayurbhanj issued a notice on February 3, 1970 by which he invited tenders for the grant of li cences for establishing 70 outstill shops for 1970 71.
Ajodhya Prasad Shah gave the highest bid for a group of seven shops, in one lot, for Rs. 34,000/ per month.
His bid was accepted and his name was entered in the prescribed register, and the entry was signed by the successful bidder and the Collector.
Ajodhya Prasad accordingly deposited Rs. 68,000/ on account of two months ' "fees", in ad vance, as required by rule 103 of the Board 's Excise Rules, 1965.
Raghunandan Saha, who was the unsuccessful bidder, felt aggrieved and filed an appeal, but it was dismissed by the Excise Commissioner on March 16, 1970.
The Board of Revenue also refused to interfere.
Ajodhya Prasad claimed that in the mean time he made arrangements for establishing his shops and incurred an expenditure of about Rs. 1,50,000/ .
He therefore approached the authorities concerned for the issue of the licenses for running the shops from April 1, 1970.
He approached , the Superintend ent of Excise for depositing Rs. 34,000/ for the month of April, but the Superintendent did not pass the deposit challan.
Ajodhya Prasad thereupon filed a writ petition (O.I.C. No. 329 of 1970) in the High Court with the allega tion that the Collector 815 was not acting according to the law as the State Government had issued instructions to him not to.
issue the licenses.
Ajodhya Prasad prayed in his petition for the issue of directions for ' the issue of licenses and quashing the State Government 's instructions to the contrary.
Raghunandan Saha also filed a petition (O.J.C. No. 357 of 1970) on April 13, 1970.
The Collector issued a notice for reauction on May 1, 1970 and Ajodhya Prasad amended his petition for quashing the notice also.
The State Government and the other respondents traversed the claim in Ajodhya Prasad 's writ petition and pleaded, inter alia, that the bids at the auction were not satisfac tory and, in the interest of the State revenue, the State Government had passed the orders for not accepting Ajodhya Prasad 's bids.
The High Court examined the questions whether Ajodhya Prasad was entitled to the issue of the licenses for the seven shops and whether the State Govern ment had the authority to direct the withholding and reauc tioning of the licenses, and held, inter alia, that the State Government had no power to interfere with the auction held by the Collector after it had "become final in appeal and revision", and could not direct a reauction.
The High Court examined the nature of the realisation at the auction and held that it was a tax which was not contemplated by section 38 of the Bihar and Orissa Excise Act, 1915, herein after referred to as the Act, and that rule 103(1) of the Board 's Excise Rules in regard to the fees for the licenses was not authorised by the Act and was in excess of the rule making power of the Board.
The High Court also held that the "auction price for a license is not excise duty within the meaning of Entry 51 of List II of the Seventh Schedule to the Constitution" and it was not open to.
the Collector "to follow the process of auctioning for deter mining the license fee" which was really a tax in the garb of a fee.
It held that the aforesaid rule 103 was incompe tent and ultra vires the Act.
On the question of grant of the "exclusive privilege" under section 22 of the Act, the High Court held that what was purported to be given under the sale notice was not the grant of .an exclusive privi lege.
In taking that view the High Court stated that notice had not been issued under section 22 (1) of the Act and the Collector had no authority to issue such a notice In that view of the matter, the High Court did not express any final opinion as to whether the licence was to be granted for an exclusive privilege to manufacture and sell 'liquor.
The High Court accordingly quashed the direction of the State Government dated April 15, 1970 for reauctioning the license and declared that rule 103(1) of the Board 's Excise Rules was ultra vires the Act.
Appeals Nos. 1892 and 1893 of 1971 are directed against that judgment of the High Court dated May 15, 1970, on certificates.
The State Government issued the Bihar and Orissa Excise (Orissa Amendment) Ordinance of 1970 and the State Govern ment issued a fresh order dated August 19, 1970 under the provisions of the amended section 29(2) of the Act for fresh settlement of the shops, and wrote to the Collector of Mayurbhanj to call for tenders in accordance with that order.
The Collector called for tenders within a week.
816 Ajodhya Prasad thereupon filed another writ petition (O.J.C. 'No. 850 of 1970) for quashing the Collector 's tender notices and for a direction to the authorities con cerned to grant a license to him on the basis of the earlier auction.
The Bihar and Orissa Excise (Orissa Amendment) Act, 1970 was passed on October 5, 1970 and the ordinance was re pealed.
That was followed by the Orissa Excise (Exclusive Privilege) Rules, 1970, which were made under section 89 of the Act.
The respondents in Ajodhya Prasad 's writ petition No. 850 of 1970 pleaded that the amendments to the Act were valid and that the State Government had the right to grant an exclusive privilege for the purposes mentioned in section 22 of the Act.
The money so realised was consideration for the exclusive privilege under section 22 and was neither an excise duty nor a tax nor a fee.
It was also pleaded that the tender was in accordance with the rules as the authority to accept the tender was the State Government.
The High Court examined Ajodhya Prasad 's writ petition (No. 850 of 1970 in its Judgment dated February 3, 1971.
It held that the order of the State Government dated August 19, 1970 for inviting tenders was invalid as the authorities for fixing the procedure under the amended section 29(2)(b) had not been specified, the Government had "appropriated for itself absolute and naked and arbitrary power ' to accept any tender or reject any tender for any reason whatsoever or without any rhyme or reason" and the order left it to the uncontrolled discretion of the authority concerned to determine the adequacy of the amount offered in the tender.
As regards the claim for the issue of a license under sec tion 6, the High Court held that as the petitioner was the highest bidder on February 20, 1970 and his name was entered in the bid register and the entry was signed, the petition er was entitled to the grant of the exclusive privilege under section 22 by virtue of section 6(a) of the Amending Ordinance irrespective of the validity of rule 103 (1) of the Board 's Excise Rules.
The High Court accordingly held that section 6(a) of the Amending Ordinance was valid and the grant of seven ' shops to the petitioner, for the manu facture and retail sale of country liquor was therefore validated "as the grant of an exclusive privilege under section 22 of the Act" and he was entitled to license under sub section (2) of that section.
The Order of the State Government dated August 19, 1970 and the Collector 's tender notice were quashed and the Collector was directed to issue the license for the seven shops to him.
Siba Prasad Saha who filed the writ petition (No. 786 of 1970) in August 1970, after the first judgment of the High Court dated May 15, 1970 for refund of the license fee and for non payment of any fee in the future, as he was a licen see for several liquor shops, amended it in the light of the subsequent developments.
The High Court took the view in its judgment dated April 16, 1971 that sections 2 to 5 of the Amending Ordinance, or the Amending Act (17 of 1970) were not made retrospective.
It took note of this Court 's 817 decision in Krishna Kumar Narula etc.
vs The State of Jammu and Kashmir and others(1) that a citizen had the fundamental right to carry on business in liquor and all that the State could do.
was to impose reasonable restric tion thereon.
It also held that in so far as section 29(2) of the Act provided that the sum payable under sub section (1) thereof shall be determined "otherwise" than by calling tenders or by auction, it was unconstitutional That portion ,of sub section (2)(a) was therefore struck off.
The High Court held further that what was realised by the State was not a fee or tax, as the primary purpose of the Act was to.
restrict the manufacture and sale of country liquor.
It accordingly held as follows, "We are, therefore, satisfied that the provi sion in Section 22 of the Act for grant to any person of the exclusive privilege of manufac ture and sale of country liquor for a sum, the method of determination of which is provided in Section 29, are provisions which are calcu lated to restrict and control trade in liquor although incidentally revenue is earned for the State thereby and that Entry in List II of the Seventh Schedule confers power on the State Legislature to enact such a regulatory measure and consequently the State Legislature has legislative competence to enact Sections 22 and 29.
" The High Court accordingly held that section 22 and section 29 without the expression "or otherwise" in clause (a) of sub section 2 were valid and constitutional.
The High Court then examined the effect of section 6 of the Amend ing Act of 1970, and held that as retrospec tive effect was not given to sections 2 to 5 of that Act, the validity of the money rea lised by the State had to be judged with reference to the unamended provisions, and held as follows, "It, therefore, follows that by reason of the fact that Sections 2 to 5 of the Amending Act were not made retrospective in operation, the effect of Section 6 is that thereby the Legis lature had directed the State to disregard the decision given by this Court in Ajodhya Pra sad 's case (I.L.R. 1971 Curt. 51 ) that the amount realised by the auction is illegal.
This virtually amounts to judicial exercise of power by the legislature a power which the Legislature does not possess.
We, therefore hold that Sections 2 to 5 of the Amending Act having not been made retrospective, Section 6 is ultra vires the powers of the Legislature.
" The High Court however held that although the ' license fee collected by the State was illegal, the petitioner had already enjoyed the benefit under the license and had volun tarily participated in the auction, and was not entitled to an order for its refund.
A similar view was taken in the judgment dated April 16,1971 in O.J.C. No. 242 of 1967 and the judgment dated May 7, 1971 in (1) ; 818 O.J.C. NOS.
1185 1190, 1223, 1224 and 1226 of 1970.
Those judgments have given rise to civil appeals Nos. 2071, 1855 1863 and 351 359 Of 1972 (cross appeals).
O.J. Cs.
Nos. 859 and 863 of 1970 were diposed of by separate judgments dated September 6, 1971 which followed the earlier judgment dated April 16, 1971 in Siba Prasad Saha 's case and that has given rise to appeals Nos. 1235 and 1236 of 1972.
The Bihar and Orissa Excise (Orissa Second Amendment) Act, 1971 (10 of 1971) was passed to set right the defects in the law.
Stated briefly that Act made the amendments to sections 2, 7, 29, 37 ' and 90 retrospective and validated the earlier acts.
A writ petition (O. J.C. No. 589 of 1972) was filed to challenge the vires of section 22 and 29 of the Act.
The main judgment in the matter was delivered in O.J.C. No. 1036 of 1971, on January 3, 1974.
In that judgment the High Court examined the challenge to the vires of sections 22 and 29 of the Act and the claim for refund of the money already paid with reference to the amendments to the Act.
It fol lowed the earlier decision in Siba Prasad Saha 's case of April 16, 1971 (I. L.R.1971 Cuttack 777) and dismissed the writ petitions and that/ms led to the filing of civil ap peals Nos. 1235 and 1236 of 1972.
The last judgment was delivered on March 28, 1974 in O.J.C. No. 589 of 1972, in Siba Prasad saha 's case.
The petitioner there was the grantee of the exclusive privilege for sale of country liquor: during the year 1972 73 for some shops in Mayurbhanj district.
The ' petitioner challenged the vires of sections 22 and 29(2) as amended, and prayed for the consequential reliefs.
The High Court held that the case was completely covered by its decision dated January 3, 1974 in O.J.C. No. 1036 of 1971 and dismissed the peti tion.
It will tires appear that these appeals are inter con nected and that is why we have thought it desirable to examine them in a common, judgment.
As has been stated, Civil Appeals Nos.
1892 and 1893 of 1971 arise out of ' O.J. Cs.
392 and 357 of 1970 which have been decided by the judgment of the High Court dated May 15, 1970.
It has been argued by Mr. Govind Das on behalf of the appellants that the High Court erred in hold ing that the sale notice issued by the Collector was not for the grant of an exclusive .privilege under subsection (1) of section 22 of the Act because the Collector had no authority to issue a notice under that sub section, as the power of the ' State Government in that respect had been delegated to the Board of Revenue.
Sub section (1) of section 22 of the Act provides that the State Government may grant to any person, On such condi tions and for such periods as it may think fit, the exclu sive privilege, inter alia, of manufacturing or selling retail any country liquor.
The proviso to the sub section requires that public notice shall be given of the intention 819 to grant any exclusive privilege of that nature and that a. decision would be taken after considering the objections made in that respect.
Once a decision is taken under ,sub section (1) to grant the exclusive privilege within any specified area, sub section (2) provides that no grantee of such a privilege shall exercise the same "unless or until he has received a license in that behalf from the Collector or the Excise Commissioner.
" It has been stated at the Bar by Mr. Govind Das, and has not been controverted that, as. had been averted in ' the memorandum of appeal, the requirement of sub section (1) of section 22 had already been complied with by the State Government, and that the Collector was not concerned and did not in fact issue any public notice for purposes of sub section (1) of section 22.
A reading of the Collector 's notice, which admittedly was in Form G.L. 10, shows that it related to the auction of the right to open a shop at the site named in the notice and the payment of the license fee therefor.
The High Court therefore went wrong in holding that the issue of the notice in Form G.L. 10 negatived the contention that what was proposed to be given was the exclusive privilege to manufacture and sell country liquor.
By virtue of section 7(1), the administra tion of the Excise Department and the collection of excise revenue within the district vested in the Collector, and we are unable to think, that his notice in Form G.L. 10 was sufficient to show that the exclusive privilege for retail sale of country liquor, under the outstill system, was not proposed to be given to the successful bidders at the auc tion.
The true nature of the proceeds of the auction held by the Collector in such a case has been examined by this Court in Nashirwar etc.
vs The Slate of Madhya Pradesh, C) Har Shankar and others vs The Dy.
Excise and Taxation Com missioner and others(2) and Thakur Prasad Sao and others vs The Member, Board of Revenue and others etc.
(? '). In Na shirwar 's case (supra) this Court examined the constitution al validity of the provisions in the Central Provinces Excise Act for granting leases in respect of liquor by public auction, and of the Abkari Act of the Kerala State placing restrictions on the manufacture and sale etc.
of liquor.
After considering all the decided cases includ ing Narula 's case (supra) in which it was held that a citizen had a fundamental right to.
do business and deal in liquor, this Court referred to its decision in State of Orissa and others vs Harinarayan Jaiswal and others(4) in which Narula 's case was explained, and held as follows, "For these reasons we hold that the State has the exclusive right or privilege of manufacturing and selling liquor.
The State grants such right or privilege in the shape of a licence or a lease.
The State has the power to hold a (1) ; (2) ; (3) ; (4) [1972].3 S.C.R. 784.
820 public auction for grant of such right or privilege and accept payment of a sum in consideration of grant of lease.
" While taking this view this Court held that the State Legislature was authorised to make a provision for public auction by reason of the power contained in Entry 8 List II of the Seventh Schedule to the Constitution and that there was "no fundamental right of citi zens to carry on trade or to do business in liquor.
" The matter again came up for consideration in Har Shankar 's case (supra) with reference to the provisions of sections 27 and 34 of the Punjab Excise Act, 1914, where the appellants gave bids at public auctions.
It was held that the amount payable by them, as licensees, was neither a fee in the technical sense nor a tax, but was in ' the nature of "price of a privilege" and that auctions were only a mode or medium for ascertaining the best price obtainable therefor.
Thakur Prasad 's (supra)was a case directly under the provisions of the Act.
It also related to the outstill system.
It was held that "the State has the exclusive right and privilege of manufacturing and selling liquor" and that it has the "power to hold a public auction for the grant of such a right or privilege and to accept payment of a sum therefor.
" It was accordingly held that the right granted to the appellants by public auction and the li censes issued to them was "clearly an exclusive privilege within the meaning of section 22(1) of the Act" and that it has expressly been provided in section 29 that it would be permissible for the State Government to accept payment of a sum in "conSideration" of the exclusive privilege under section 22.
There can be no doubt therefore that the High Court erred in taking a contrary view.
The High Court has tried to support its view by refer ring to the condition stated in Form G.L. 10 for the opening of additional shops during the currency of the license, and has stated that an exclusive privilege under section 22 "cannot comprehend exercise o[ such power once it is granted for a specified period.
" This was clearly an erroneous view because it is not disputed before us that no such condition was inserted in the license at all.
What the licensee therefore received under the license was an exclu sive privilege of manufacturing and selling liquor under the outstill system within the meaning of section 22 of the Act.
The High Court has held that after the acceptance of the bid all that remained was to issue a license and that the Collector committed an illegality in ordering a reauction under the directions of the State Government.
Such a view presupposes that a binding, obligation had come into existence in favour of the bidder by accepting a deposit from him even though this was done on the express condition that it was tentative and was not an acceptance of his bid.
We do not think that what the High Court held to be an "acceptance of the bid" at the "auction", even after the announcement of an express condition 821 attached to it that the knocking down of the bid would not really be an acceptance of it by the Government, could be an acceptance of the bid at all.
In the peculiar facts and circumstances of the auction, the bids were, apparently, nothing more than offers in response to invitation to make tenders, and such auctions were the mode of ascertaining the highest offers.
The basic conditions for the emergence of rights through offers or conditions made and accepted, and acted upon, by paying any specified or agreed price as consideration, were thus wanting in this case.
In fact the express and advertised terms of the auction made it clear that the money tendered was to be deemed to be deposited tentatively, pending the acceptance of the bid.
So what we have before us are neither offers nor acceptance by the Government.
There were only offers by the bidders to pur chase the rights, subject expressly to their acceptance or rejection by the State Government.
The essentials of any agreement and the mutuality of obligations were thus absent altogether.
Moreover it was not an ordinary auction where binding agreement could be deemed to be concluded at the fall of the hammer, creating mutually enforceable obligations.
Those were only so called auctions, adopted as means for ascer taining the highest offers for the exclusive privileges which the Government alone could grant for carrying on a trade or business.
considered noxious, under the law and which, because of its special character, could be regulated in any way, or even prohibited altogether, by the Govern ment.
This special character of the trade or business would appear from the power of the State Government to grant the exclusive privilege to.
carry on trade in the manufacture and sale of liquor.
It will be recalled that section 22(1) provides that the State Government "may grant to any person, on such conditions and for such periods as it may think fit, the exclusive privilege" in question: Sub section (2) of section 22 enacts that a grantee of such a privilege shah not exercise it "unless or until he has received a license in that behalf from the Collector or the Excise Commission er.
" The powers of the Government to reject a bid were thus reserved both under the provisions of law and by the express declarations made before the auction.
At any rate we do not find any basis for the creation of a right merely by making a bid.
The extent of the powers of the government in such matters has been indicated by this Court in State of Orissa and others vs Harinarayan Jaiswal and others (supra).
So long as these powers are not used in an unreasonable or mala fide manner, their exercise cannot be questioned.
In the cases before us, it could not be said that either the Gov ernment or any of its officers abused the power by acting either unreasonably or in a mala fide manner, and we find no justification for the argument that it was not permissi ble for the State Government to issue.the directions for reauction even when it found that the bids at the auction were unsatisfactory.
The High Court has taken the view that rule 103(1) of the Board 's Excise Rules regarding the manner of fixation and realisation 822 of the consideration for the grant of a license for the exclusive privilege of retail vend of country spirit was "incompetent and ultra vires the act.
" The High Court took that view under the mistaken impression that the State was not entitled to collect a tax "under the garb of a fee" and the "auction price for a license is not duty within the meaning of Entry 51 of List 11 of the Seventh Schedule to the Constitution.
" But, as has been shown, what was sought to be raised was consideration and not "fee".
The use of the expression "fees" in the rule is therefore inaccurate, but that cannot detract from the real nature of the recov ery.
Mr. S.C. Agarwal has challenged the validity of rule 103 on another ground, and we shall deal with it when we come to the judgment of the High Court dated April 16, 1971.
The next judgment of the High Court is that dated February 3, 1971, in O.J.C. No. 850 of 1970, which has given rise to civil appeal No. 209/of 1972 by the State of Orissa.
We have already stated the findings of the High Court in regard to it.
It has been argued by Mr. Govind Das that even if the State Government failed to specify the authority which was to determine the mode of determining the sum payable under sub section (1) of section 29, that could not be said to matter because it was the Collector, who was incharge of the administration of the Excise Department and Collection of the excise revenue under section 7 of the Act, who took the action to issue the auction notice for the grant of the license.
for the retail sale of country liquor.
Moreover, the State Government did not object to his authority to do so.
and, on the other hand, directed him to make a reauction merely on the ground of the insufficiency of the bids.
The Collector called for fresh.
tenders.
It was not in dispute before the High Court that the State Government issued a special order under section 29 by which it nominated itself to be the authority to determine the sufficiency of the sum payable under section 29(1) of the Act.
There is nothing in sub section (2)(b) to show that that was not permissible.
The other question in this respect is whether the fol lowing direction in the State Government 's order dated August 19, 1970 was valid, "It shall be at the discretion of the State Government to accept or reject any tender without assigning any reason therefor to order for calling of fresh tender or other wise as the case may be.
" It will be recalled that the High Court has taken the view that the order dated August 19, 1970 and the tender notice issued in pursuance thereof were bad in law and were liable to be quashed.
The High Court has taken the view that section 29(2)(a) did not authorise the exercise of "such absolute and naked power in determining the sum of money" as was sought to be done by the order dated August 19, 1970.
It appears to us however that the power to accept or reject a tender without assigning any reason cannot be said to be 823 arbitrary as section 29(2) (which has been amended with retrospective effect) itself provides.
that (i) it shall be exercised in the interest of the Excise revenue", (ii) by the specified authority, and (iii) under such control as may be specified.
As has been stated, the State Govern ment retained the power of accepting or rejecting the tender, or for calling of a fresh tender, to itself, and such an order cannot be said to be an "absolute" or "naked" power of the nature apprehended by the High Court.
Refer ence in this connection may be made to the decision in Jaiswal 's case (supra) mentioned above.
Moreover it is not disputed before us that the power to accept or not to accept the highest or any bid was expressly reserved under the impugned sale notification.
Sub section (2) of section 79 of the Act was also amended by the Bihar and Orissa Excise (Second Orissa Amendment) Act 1971 (Act 10 of 1971) with full retrospective effect.
Section 17 of the Act validated both the licenses granted and amounts paid or payable therefor, and its validity has not been challenged before us.
It will be remembered that Siba Prasad Saha had filed O.J.C. No. 786 of 1970 after the first judgment of the High Court dated May 15,1970, for refund of the license fee and for non payment of the fee in future.
The State of Orissa feels aggrieved against the decision of the High Court in that case dated April 16,1971 that a citizen has a fundamen tal right to deal in liquor.
In taking that view the High Court relied on this Court 's decision in Narula 's case (supra).
The decision in Narula 's case was considered and explained by this Court in Nashirwar 's care (supra) and it has been held as follows, "It is not correct to read in the deci sion in Narula 's case that there is a funda mental right to do business in liquor.
The decision is that dealing in liquor is busi ness and a citizen has a right to do business in that commodity and the State can impose reasonable restrictions on the right in public interest.
If the State can prohibit bussiness in liquor as is held in State of Bombay and Another vs
F.N. Balsara (1951 S.C.R.682) this establishes that the State has exclusive right of privilege of manufac ture, possession, sales of intoxicating liquor and therefore the Slate grants such a right of privilege to persons in the shape of license or lease." In reaching this conclusion this Court took note of the decision in Bharucha 's case(1) that there was no inherent right in a citizen to sell intoxicating liquors by retail, and that it is not a privilege of a citizen of the State, and observed that as Bharucha 's case was a Constitution Bench decision like Narula 's case, the latter could not be said to have overruled the former.
As has been stated, the matter again came up for consideration in Har Shankar 's case (supra) with specific reference to Narula 's case, and it was reiterated that "there is no fundamental right to do trade or business in intoxicants" and that "in all their mani festations, these rights are vested in the State and indeed without such vesting there can be no effective regulation of 824 various forms of activities in relation to intoxicants.
" The contrary view of the High Court in impugned judgment is incorrect and must be set aside.
The other grievance of the appellant State is that the High Court struck down the expression "or otherwise" from clause (a) of subsection (2) of 29 of the Act as unconstitu tional.
We have given our reasons for the contrary view, and the High Court therefore went wrong in striking down the expression "or otherwise".
The High Court has also held that as sections 2 to 5 of the Amending Act of 1970 were not made retrospective in operation, the effect of section 6 amounted to a direction by the Legislature to the State to disregard the decision in Ajodhya Prasad 's case that the amount realised by auction was illegal and that section 6 was therefore ultra vires the powers of the Legislature.
It will be sufficient to say in this connection that the Bihar and Orissa Excise (Second Orissa Amendment) Act, 1971 (Act 10 of 1971) has made good the deficiency, if any, by stating that the amending provi sions shall be deemed always to have been so added or inserted or substituted.
In this respect also, the impugned judgment of the High Court must be rectified.
Mr. S.C. Agarwal has argued that the amount realised by the State for grant of the exclusive privilege under sec tions 22 and 29 was nothing but a tax and no such tax was permissible under Entries 45 to 63 of List II of the Seventh Schedule to the Constitution and that it was not excise duty within the meaning of Entry 51 or a fee under Entry 66.
It has also been argued that Entry 8 embodying the Police powers of the State could not be invoked to sustain such an imposition.
Mr. Bhagat has also argued that the collection was in the nature of a tax and section 29 was therefore ultra vires the Constitution.
Mr. Bhagat has also urged that the State was not the owner of the exclusive privilege to manufacture or sell liquor and that the Act did not empower it to part with that right on payment.
We have given our reasons already for taking a contrary view, with refer ence to.
the decisions in Nashirwar 's case and Har Shankar 's case.
The State has the exclusive right or privilege to manufacture, store and sell liquor and to grant that right to its license holders on payment of consideration, with such conditions and restrictions for its regulation as may be necessary in the public interest.
The argument to the contrary is futile and is rejected.
It has been argued by Mr. Agarwal that although the Amending Act of 1970 (Act 17 of 1970) was enacted for the purpose of getting over the High Court 's declaration in O.J.C.No.
357 of 1970 that rule 103 of the Board 's Excise Rules, 1965, in so far as it directs that fees for license for the retail vend of excisable articles shall be fixed by auction, was ultra vires the Act, rule 103 continued to remain invalid even after the promulgation of that Act because.
such a rule could not be made under section 90(7) of ' the Act.
Counsel has argued that as the rule was in valid, it was not permissible to hold the impugned public auction because that was not permissible under any other provision of the Act.
This argument is also futile because section 5 of the Bihar and Orissa Excise (Second Orissa Amendment) 10 of 1971) has substituted a new sub section (2) for the old sub section as follows, providing for auction, and it has been stated that it shall be "deemed always to have been substituted". "(2) The sum payable under sub section (1) shall be determined as follows, (a) by auction or by calling tenders or other wise as the State Government may, in the interest of excise revenue by general or special order direct." Then follow other clauses with which we are not concerned.
Moreover section 17 of that Act has validated all grants made by way of licenses for manufacture and retail sale of country liquor in respect of any place on or after the 7th day of August, 1965, on which date the Board 's Excise Rules (including rule 103) admittedly came into force.
In this view of the matter, it is not necessary for us to examine the other arguments of Mr. Agarwal Which have been adopted by Mr. Bhagat regarding the invalidity of rule 103.
It is not necessary to deal separately with the judgment of the High Court dated April 16, 1971 in O.J.C. No. 242 of 1967, which has given rise to civil appeal No. 2071 of 1972, or with its decision dated May 7, 1971 in O.J.Cs.
No. 1185 1190, 1223, .1224 and 1226 of 1970 (which has given rise to civil appeals Nos.
1855 1863 of 1972 and cross appeals Nos.
351 359 of 1972) because they are based on the afore said decision dated April 16, 1971 in O.J.C. No. 786 of 1970.
So also, it is not necessary to deal separately with the decision dated September 6,1971 in O.J.C.No. 859 of 1970 and 863 of 1970 which have given rise to civil appeals Nos. 1235 and 1236 of 1972, for the same reason.
This takes us to the judgment of the High Court dated March 28, 1974 in O.J.C.No.589 of 1972 which has given rise to civil appeal No. 1802 of 1974.
That decision is based on the decision dated January 3,1974 in O.J.C.No.
1036 of 1971.
The petitioner in that case was a licensee for the retail sale of country liquor in Mayurbhanj district.
He chal lenged the vires of sections 22 and 29 of the Act and claimed that the monthly consideration for the license was not due from him and that he was entitled to a refund of the money already paid by him.
The High Court followed that decision and dismissed the writ petition.
In doing so it relied on its decision dated April 16, 1971 in Siba Prasad Saha vs State of Orissa and other (I.L.R. 1971 Cut tack 777) and the decision of this Court in Jaiswal 's case (supra) and dismissed the petition.
We have already dealt with the points which arise for consideration in this case while examining the earlier cases and we see nothing wrong with the impugned judgment of the High Court by which the writ petition has been dismissed.
In the result, we order as follows, Civil Appeals Nos.
1892 and 1893 of 1971 are allowed, the impugned judgment of the High Court dated May 15,1970 is set aside and writ petitions Nos.
O.J.C. 329 and 357 of 1970 are dismissed.
826 Civil Appeal No. 2091 is allowed, the impugned judgment of the High Court dated February 3, 1971 is set aside and the writ petition No. 850 of 1970 is dismissed.
Civil Appeal No. 1302 of 1972 is allowed, the 'impugned judgment of the High Court dated April 16, 1971 is set aside and the writ petition No. 786 of 1970 is dismissed.
Civil Appeal No. 2071 of 1972 is allowed, the impugned judgment of the High Court dated April 16, 1971 is set aside and the writ petition No. O.J.C. 242 of 1967 is dismissed.
Civil Appeals Nos.
1855 1863 of 1972 are allowed, the impugned judgments of the High Court dated May 7, 1971 are set aside and O.J. Cs.
1185 1190, 1223, 1224 and 1226 of 1970 are dismissed.
Cross appeals Nos.
351 359 of 1972 are dismissed.
Civil Appeals Nos. 1235 and 1236 of 1972 are allowed, the impugned judgments of the High Court dated September 6, 1971 are set aside and O.J. Cs.
Nos. 859 and 863 of 1970 are dismissed.
Civil Appeal No. 1802 of 1974 fails and is dismissed.
In the circumstances of these cases there will be no order as to he costs.
| IN-Abs | Section 22(1) of the Bihar & Orissa Excise Act, 1915, provides that the States may grant to any person on such conditions and for such periods as it may think fit, the exclusive privilege of manufacturing or selling in retail count try liquor.
The proviso provides that a public notice shall be given of the intention to grant such exclu sive privilege and that a decision would be taken after considering objections.
Sub section (2) provides that no grantee of such a privilege shall exercise it unless or until he has received a licence in that behalf from the Collector or the Excise Commissioner.
In the present case the Collector issued a notice in form GL 10 relating to the auction of the right to open a liquor shop at the site named in the notice and the payment of the licence fee therefor.
The respondent was a success ful bidder at the auction.
He deposited the money under r. 103 of the Excise Rules but the Government did not grant him the licences.
In a writ petition filed by the respond ent the State Government alleged that the bids at the auc tion were not satisfactory and that in the interest of revenue the State Government did not accept the bids.
The High Court held (i) that the State Government had no power to interfere with the auction held by the Collector after it had become final and could not direct reauction and (ii) that the realisation at the auction was not a fee but a tax not contemplated by the Act and that the auction price for a licence was not excise duty within the meaning of Entry 51 of List II and hence r. 103(1) of the Rules providing for fixation of licence fee by auction was in excess of the rule making power of the Board.
The High Court also held that what was purported to be given under the sale notice of the Collector was not the grant of exclusive privilege under section 22.
By the Bihar & Orissa Excise (Orissa Amendment Ordi nance) 1970 which later became the Act, section 29(2) was amend ed.
The State Government issued an order for fresh settle ment of the shops and the Collector accordingly called for tenders.
In the respondent 's writ petition the High Court held that the State Government 's order was invalid as the author ities for fixing the procedure.
under section 29(2) as amended had not been specified and the order left it to the uncon trolled discretion of the authority concerned to accept or reject any tender and to determine the adequacy of the amount offered in the tender.
The State Government 's order and the Collector 's tender notice were quashed and the Collector was directed to issue licence to the respondent.
The High Court accordingly held that the respondent was entitled to the grant of the exclusive privilege under section 22 because he was the highest bidder in the auction.
The High Court also held in a petition filed by another respondent, that in so far as section 29(2) provided that the sum payable under sub section
(1) thereof shall be determined "other wise" than by calling tenders or by auction it was uncon stitutional; that portion of section 29(2).
should, therefore, be struck down: that section 6 of the Amending Act, 1970 was ultra vires as there was exercise of judicial power by the legis lature and, therefore, the licence fee collected by the State was illegal; but that as the respondent had already enjoyed the benefit of the licence and voluntarily partici pated in the auction he wag not entitled to its refund.
3 1338S.C.I./76 812 Therefore the Second Amendment Act, 1971 was passed.
The vires of the amended sections 21 and 29 was challenged in writ petitions but the High Court dismissed them.
In appeals to this Court, HELD: (1) The provisions of the Act and the express declarations make clear that the State Government had the power to reject a bid.
In any event no right is created in the bidder by making a bid.
The administration of the Excise Department and the collection of revenue within the district vest in the Collector.
It is not correct to say that the notice issued by the Collector in form GL 10 was sufficient to show that the exclusive privilege for retail sale of country liquor was not proposed to be given to the successful bidders at the auction.
The High Court erred in holding that a condition regarding the opening of additional shops was inserted in the Form. ; 820E] (b) It has been held by this Court that the State has the exclusive right or privilege of manufacturing and sell ing liquor.
The State grants such right or privilege in the shape of a licence or a lease.
The State has the power to hold, a public auction for grant of such right or privilege and accept payment of a sum in consideration of grant of lease, that the amount payable by the bidders as licensees was neither a fee in the technical sense nor a tax, but was in the.
nature of price of a privilege and that auctions were only a mode or medium for ascertaining the best price obtainable thereof.
Therefore, the right granted to the bidders by public auction and the licences issued to them was clearly an exclusive privilege within the meaning of section 22(1 ) of the Bihar Act and it was expressly provided in section 29 that it would be permissible for the State not to accept payment of a sum in consideration of the grant of the exclusive privilege.
[819 H; 820A D] Nashirwar etc.
vs The State of Madhya Pradesh ; ; Hat Shankar & ors.
vs The Dy.
Excise and Taxa tion Commissioner & ors.
; ; Thakur Prasad Sac & ors.
vs The Member, Board of Revenue & ors. ; State of Orissa & ors.
vs Harinarayan Jaiswal & ors. ; applied.
(c) The view of High Court that after the acceptance of the bid the Collector should have issued the licence and that he committed an illegality in ordering reauction pre supposes that a binding obligation had come into existence in favour of the bidder by accepting a deposit from him even though this was done on the express condition that it was tentative and was not an acceptance of his bid.
In the peculiar facts and circumstances of the auction, the bids were nothing more than offers in response to an invitation to make tenders and such auctions were the mode.
of ascer taining the highest offers.
The basic conditions for the emergence of rights through offers or conditions made and accepted and acted upon by paying any specified or agreed price as consideration were wanting in this case.
The express and advertised terms of.
the auction made it clear that the money tendered was to be deemed to be deposited tentatively, pending the acceptance of the bid.
The bids were neither offers nor acceptance ' by the Government.
They were only offers by the bidders.to purchase the rights.
The essentials of an agreement and mutuality of obligations were absent altogether.
Since auction is only a mode of ascer taining the highest offer, the State Government can deter mine the sum payable by any other method and hence.
the High Court was wrong in striking down the expression "other wise" from section 29(2)(a).
[820 H; 821 A C] (d) These auctions are not ordinary auctions where a binding agreement could be deemed to be concluded at the fall of the.hammer, creating mutually enforceable obliga tions but.
are a means for ascertaining the highest offers for the exclusive privileges which the Government alone could grant for carrying on a trade or business considered noxious under the law, and which, because of its special character, could be regulated m any way or even prohibited altogether by the Government.
This special character of the trade or business would appear from the power of the State Government to grant the exclusive privilege to carry on trade m the manufacture and sale of liquor.
[821 F G] (e) There is no justification for the argument of the.
respondents that it was not permissible for the State Gov ernment to issue directions for reauction even when it found that the bids at the auction were unsatisfactory.
So long as the powers of the Government to reject a bid are not used in an unreasonable or mala fide manner, their exercise cannot be questioned [821 G] 2(a) The High Court 's view that r. 103(1) was ultra.
vires was taken under the mistaken impression that the State was collecting a tax under the garb of a fee and that the auction price for a licence could not be treated as duty within the meaning of Entry 51, List II of the Seventh Schedule.
But what was sought to be raised was considera tion and not fee.
The use of the expression " 'fees" in the rule is inaccurate but that:cannot detract from the real nature of the recovery.
[822 A B] (b) The argument of the respondent that r. 103 continued to remain invalid even after the promulgation of the Amend ment Act is not correct because section 5 of the Second Amendment Act has substituted a new sub section
(2)for the old subsection providing for auction and this sub section stated that it shall be deemed always to have been substituted".
Section 17 has validated all grants made by way of licences for manufacture and retail sale of country liquor and the amounts paid or payable therefor.
[824 G H; 825 C] (c) The power to accept or reject a tender without assigning any reason cannot be said to be arbitrary as section 29(2) (which has been amended with retrospective effect) itself provides that (i) it shall be exercised in the inter est of the Excise revenue, (ii) by the specified authority and (iii) under such control as may be specified.
In the instant case the 'State Government retained the power of accepting or rejecting the tender or for calling of a fresh tender, to itself, and such an order cannot be said to be an absolute or naked power of the nature apprehended by the High Court.
Moreover, the power to accept or reject the highest o,r any bid was expressly reserved under the im pugned sale notification.
[823 A C] (3) Even though no authority was specified for taking action under section 29(1) it was the Collector who is in charge of the Excise Administration that took action in the present case and his action was approved by the State Gov ernment.
Moreover, the State Government issued a modified order under section 29 nominating itself as the authority to determine the sufficiency of the.
sum payable.
[822 D] (4) It has been held by this Court that there is no fundamental right to do trade or business in intoxicants and that in all their manifestations these rights are vested in the State and without such vesting there can be no effective regulation of various forms of activities in relation to intoxicants.
There is no inherent right in a citizen to sell intoxicating liquors by retail.
[823 H] Krishan Kumar Narula etc.
vs The State of J & K & ors ; ; Nashirwar etc.
vs The State of M.P. ; ; Har Shankar & ors.
vs The Dy.
Excise & Taxation Commissioner & ors.
; ; Coovetlee Bharucha vs The Excise Commissioner ; fol lowed.
(5) Since the Bihar & Orissa Excise (Second Orissa Amendment) Act, 1971 has made good the deficiency, if any, by stating that the amending provisions in sections 2 to 5 of the Amending Act, 1970 shall be deemed always to have been so added or inserted or substituted, the High Court was wrong in holding that there was any exercise of judicial power by 'the Legislature.
[824 C D]
|
ivil Appeal Nos.
572 574 and 575 of 1972.
(Appeals by Special Leave from the Judgment and Order dated 13 7 1971 of the Kerala High Court in Tax Revision Cases Nos. 42, 45, 58 and 44 of 1970.) S.V. Gupte (In CA No. 572/72), K. M, K. Nair and A. C.I Pudissery for the appellant in all the appeals T. A. Ramachandran, for the respondents in all the appeals.
The Judgment of P.N. Bhagwati and R.S. Sarkaria, JJ. was delivered by Bhagwati, J., section Murtaza Fazal Ali, J. gave a separate opinion.
BHAGWATI, J.
The facts giving rise to these appeals are set out in the judgment about to be delivered by our learned brother section Murtaza Fazal Ali and we do not think it necessary to reiterate them.
So far as Civil Appeals 572 574 of 1972 are concerned, it would be sufficient to state briefly the following facts as these are the only facts necessary for appreciating the question of law which arises for determination in these appeals.
In the assessments of the assessee to sales tax for three assessment years.
the returns filed by him on the basis.
of his books of account appeared to the Sales Tax Officer to be incorrect and incomplete since certain sales appearing in the books of account of one Haji P.K. Usmankutty as having been effected by the assessee in his favour were not accounted for in the books of account maintained by the assessee.
The assessee applied to the Sales Tax Officer for affording him an oppor tunity to cross examine Haji Usmankutty in regard to the correctness of his accounts, but this opportunity was denied to him and the Sales Tax Officer proceeded to make a best judgment assessment under section 17, sub section (3) of the Kerala General Sales Tax, 1963.
The assessee ap pealed but without success and this was followed by a revi sion application to 236 the High Court.
The High Court took the view that the assessee was entitled to an opportunity to cross examine Haji Usmankutty before any finding could be arrived at by the Sales Tax Officer that the returns filed by the assessee were incorrect and incomplete so as warrant the making of 'the best judgment assessment and since no such opportunity had been given to the assessee, the High Court quashed the order of the Sales Tax authorities and remanded the case to the Sales Tax Officer for making fresh assessments according to law after giving an opportunity to the assessee to cross examine Haji Usmankutty.
The facts in Civil Appeal No. 575 of 1972 are almost identical, save that instead of Haji Usmankutty, certain wholesale dealers were sought to be cross examined in that case and the opportunity to cross examine them was denied by the Sales Tax authorities.
Since the High Court quashed the orders of assessments in both cases, the State preferred an appeal by special leave in each case challenging the correctness of the view taken by the High Court.
Now, the law is well settled that tax authorities entrusted with the power to make assessment of tax discharge quasi judicial functions and they are bound to observe principles of natural justice in reaching their conclusions.
It is true, as pointed out by this Court in Dhakeswari Cotton Mills Ltd. vs Commissioner of Income Tax, West Bengal(1) that a taxing officer "is not lettered by technical rules of evidence and pleadings, and that he is entitled to act on material which may not be accepted as evidence in a court of law", but that does not absolve him from the obligation to comply with the fundamental rules of justice which have come to be known in the jurisprudence of administrative law as principles of natural justice.
It is, however, necessary to remember that the rules of natural justice are not a con stant: they are not absolute and rigid rules having univer sal application.
It was pointed out by this Court in Suresh Koshy George vs The University of Kerala & Ors.(2) that "the rules of natural justice are not embodied rules" and in the same case this Court approved the following observations from the judgment of Tucker, L.J. in Russel vs Duke of Norfolk and Ors.(3): "There are in my view, no words which are of universal application to every kind of inquiry and every kind of domestic tribunal.
The requirements of natural justice must depend on the circumstances of the case, the nature of the inquiry, the rules under which the tribunal is acting, the subject matter that is being dealt with, and so forth.
Accordingly, 1 do not ' derive much assistance from the definitions of natural justice which have been from time to time used, but, whatev er standard is adopted, one essential is that the person concerned should have a reasonable opportunity of presenting his case.
" One of the rules which constitutes a part of the prin ciples of natural justice is the rule of audi alterem partera which requires that (1) ; (2) ; (3) [1949] 1 All.
England Reports 108.
237 no man should be: condemned unheard.
It is indeed a re quirement of the duty to act fairly which lies on all quasi judicial authorities and this duty has been extended also to the authorities holding administrative enquiries involving civil consequences or affecting rights of parties because, as pointed out by this Court in A.K. Kraipak and Ors.
vs Union of India,(1) "the aim of the rules of natural justice is to secure justice or to put it negatively to prevent miscarriage of justice" and justice, in a society which has accepted socialism _as its article of faith in the Constitu tion, is dispensed not only by judicial or quasi judicial authorities but also by authorities discharging administra tive functions.
This rule which requires an opportunity to be heard to be given to a person likely to be affected by a decision is also, like the genus of which it is a species, not an inflexible rule having a fixed connotation.
It has a variable content depending on the nature of the inquiry, the framework of the law under which it is held, the constitu tion of the authority holding the inquiry, the nature and character of the rights affected and the consequences flow ing from the decision.
It iS, therefore, not possible to say that in every case the rule of audi alterem partem requires [that] a particular specified procedure to be followed.
It may be that in a given case the rule of audi alterem partem may import a requirement that witnesses whose statements are sought to be relied upon by the authority holding the in quiry should be permitted to be cross examined by the party affected while in some other case it may not.
The procedure required to be adopted for giving an opportunity to a person to be heard must necessarily depend on the facts and circumstances of each case.
Now, in the present case, we are not concerned with a situation where the rule of audi alterem partem has to be read _into the statutory provision empowering the taxing authorities to assess the tax.
Section 17, sub section (3), under which the assessment to sales tax ha 's been made on the assessee provides as follows: "If no return is submitted by the dealer under subsection (1) within the pre scribed period, or if the return submitted by him appears to the assessing authority to be incorrect or incomplete, the assessing author ity shall, after making such enquiry as it may consider necessary and after taking into account all relevant materials gathered by it, assess the dealer to the best of its judgment: Provided that before taking action under this sub section the dealer shall be given a reasonable opportunity of being heard and, where a return has been submitted, to prove the correctness or completeness of such return.
" It is clear on a plain natural construction of the language of this provision that it empowers the Sales Tax Officer to make a best judgment assessment only where one of two condi tions is satisfied: (1) 238 either no return is submitted by the assessee or the return submitted by him appears to the Sales Tax Officer to be incorrect or incomplete.
It is only on the existence of one of these two conditions that the Sales Tax Officer gets the jurisdiction to make a best judgment assessment.
The ful filment of one of these two pre requisites is, therefore, a condition precedent to the assumption of jurisdiction by the Sales Tax Officer to make assessment to the best of his judgment.
Now, where no return has been submitted by the assessee, one of the two conditions necessary for the applicability of section 17, subsection (3) being satisfied, the Sales Tax Officer can, after making such inquiry as he may consider necessary and after taking into account all relevant materials gathered by him, proceed to make the best judgment assessment and in such a case, he would be bound under the proviso to give a reasonable opportunity of being heard to the assessee.
But in the other case, where a return has been submitted by the assessee, the Sales Tax Officer would first have to satisfy himself that the return is incorrect or incomplete before he can proceed to make the best judgment assessment.
The decision making process in such a case would really be in two stages, though the in quiry may be continuous and uninterrupted: the first stage would be the reaching of satisfaction by the Sales Tax Officer that the return is incorrect or incomplete and the second stage would be.
the making of the best judgment assessment.
The first part of the proviso which requires that before taking action under sub section (3) of section 17, the assessee should be given a reasonable opportunity of being heard would obviously apply not only at the second stage but also at the first stage of the inquiry, because the best judgment assessment, which is the action under section 17, sub section (3), follows upon the inquiry and the "reasonable opportunity of being heard" must extend to the whole of the inquiry, including both stages.
The requirement of the first part of the proviso that the asses see should be given a "reasonable opportunity of being heard" before making best judgment assessment merely em bodies the audi alterem partem rule and what is the content of this opportunity would depend, as pointed out above, to a great extent on the facts and circumstances of each case.
The question debated before us was whether this opportunity of being heard granted under the first part of the proviso included an opportunity to cross examine Haji Usmankutty and other wholesale dealers on the basis of whose books of accounts the Sales Tax Officer disbelieved the account of the assessee and came to the finding that the return submit ted by the assessee were incorrect and incomplete.
But it is not necessary for the purpose of the present appeals to decide this question since we find that in any event the assessee was entitled to this opportunity under the 'second part of the proviso.
The second part of the proviso lays down that where a return has been submitted, the assessee should be given a reasona ble opportunity to prove the correctness or completeness of such return.
This requirement obviously applies at the first stage of the enquiry before the Sales Tax Officer comes to the conclusion that the return submitted by the assessee is incorrect or incomplete so as to warrant the making of a best judgment assessment.
The question is what is the content 239 of this provision which imposes an obligation on the Sales Tax Officer to give and confers a corresponding right on the assessee to be afforded, a reasonable opportunity "to prove the correctness or completeness of such return".
Now, obviously "to prove" means to establish the correctness ,or completeness of the return by any mode permissible under law.
The usual mode recognised by law for proving a fact is by production of evidence and evidence includes oral evi dence of witnesses.
The opportunity to prove the correct ness or completeness of the return would, therefore, neces sarily carry with it the right to examine witnesses and that would include equally the right to Cross examine witnesses examined by the Sales Tax Officer.
Here, in the present case, the return filed by the assessee appeared to the Sales Tax Officer to be incorrect or incomplete because certain sales appearing in the books of Hazi Usmankutty and other wholesale dealers were not shown in the book 's of account of the assessee.
The Sales Tax Officer relied on the evi dence furnished by the entries in the books of account of Hazi Usmankutty and other wholesale dealers for the purpose of coming to the conclusion that the return filed by the assessee was incorrect or incomplete.
Placed in these circumstances, the assessee could prove the correctness and completeness of his return only by showing that the entries in the books of account of Hazi Usmankutty and other whole sale dealers were false, bogus or manipulated and that the return submitted by the assessee should not be disbelieved on the basis of such entries, and this obviously, the assessee could not do, unless he was given an opportunity of cross examining Hazi Usmankutty and other wholesale dealers with reference to their accounts.
Since the evidentiary material procured from or produced by Hazi Usmankutty and other wholesale dealers was sought to be relied upon for showing that the return submitted by the assessee was incor rect and incomplete, the assessee was entitled to have Hazi Usmankutty and other wholesale dealers summoned as witnesses for cross examination.
It can hardly be disputed that cross examination is one of the most efficacious methods of establishing truth and exposing falsehood.
Here, it was not disputed on behalf of the Revenue that the assessee in both cases applied to the Sales Tax Officer for summoning Hazi Usmankutty and other wholesale dealers for cross examina tion, but his application was turned down by the Sales Tax Officer.
This act of the Sales Tax Officer in refusing to summon Hazi Usmankutty and other wholesale dealers for cross examination by the assessee clearly constituted in fraction of the right conferred on the assessee by the second part of the proviso and that vitiated the orders of assessment made against the assessee.
We do not wish to refer to the decisions of various High Courts on this point Since our learned brother has dis cussed them in his judgment .
We are of the opinion that the view taken by the Orissa High Court in Muralimohan Prabhudayal vs State of Orissa(1) and the Kerala High Court in M. Appukutty vs State of Kerala(2) and the present cases represents the correct law on the subject.
We accordingly dismiss the appeals with no order as to costs.
(1) 26 S.T,C, 22.
(2) 14 S.T.C, 489.
240 FAZAL ALl, J.
These appeals by special leave involve an interesting question of law as to the interpretation of section 17(3) of the Kerala General Sales Tax, 1963 hereinafter referred to as 'the Act ' and the proviso thereof read with r. 15 framed under the Act.
The assessment years in question are 1965 66, 1966 67 and 1967 68.
in the case of the re spondent K.T. Shaduli in Civil Appeals Nos. 572 574 of 1972 and 1967 68 in the case of Nallakandy Yusuff in Civil Appeal No. 575 of 1972.
But both the cases involve an identical question of law.
In this view of the matter, we propose to deal with all these appeals by one common judg ment.
The assessee in Civil Appeals Nos.
572 574 of 1972 filed his sales tax returns before the Sales Tax Officer who on an examination of .the accounts found that the returns submit ted by the assessee were both incorrect and incomplete inasmuch as certain entries in the books of account of Haji P.K. Usmankutty revealed Certain transactions which were not accounted for in the assessee 's book 's of account.
The Sales Tax Officer, after hearing the assessee, made an assessment to the best of his judgment under section 17(3) of the Act read with r. 15 made under the Act.
The Sales Tax Officer thus rejected the accounts of the assessee as they did not re flect the goods said to have been purchased by Haji P.K. Usmankutty.
The assessee sought an opportunity to cross examine Haji Usmankutty with respect to the correctness of his accounts which were relied upon by the Sales Tax Offi cer, but this opportunity was refused to him by the Sales Tax Officer as also the other appellate authorities.
Simi larly in the case of the respondent Nallakandy Yusuff, in Civil Appeal No. 575 of 1972, the return filed by the asses see was rejected by the Sales Tax Officer on the ground that certain transactions shown in the accounts of some wholesale dealers were not reflected in his books of account and the opportunity asked for by the assessee for cross examining the said wholesale dealers was refused to him.
The order of the Sales Tax Officer was confirmed by the Appellate Author ities under the Act.
Both the assessees then filed a revi sion application before the High Court which allowed the application of the assessees, quashed the orders of the Sales Tax Authorities and remanded the cases to the Sales Tax Officer for giving an opportunity to the respondents for cross examining the wholesale dealers concerned and then making assessments in accordance with the law.
The State having obtained special leave from this Court hence these appeals before us.
The short question that fell for determination before the High Court was, whether under the provisions of the Act the opportunity of being heard which was to be given to the assessees, would include within its sweep the right of cross examination of a third party whose accounts were the basis of the best judgment assessments made by the Sales Tax Officer and the examination of which later on showed that the returns filed by the assessees were incorrect and incom plete.
The High Court, on a consideration of section 17(3) and the Rules made under the Act came to the conclusion that the assessees were entitled to a fair hearing and the opportuni ty of being heard could not be said to be complete unless in the circumstances of these cases the as 241 sessees were allowed to cross examine Haji P.K. Usmankutty and other wholesale dealers on whose accounts reliance was placed by the Sales Tax Authorities.
A provision of law authorising the Taxing Authorities to make a best judgment assessment in default of the assessee complying with the legal requirements is not a new one, but existed in section 23(4) of the Income tax Act, 1922 as amended by the Indian Income tax (Amendment) Act, 1939, the relevant part of which runs thus: If any person fails to make the return required by any notice given under sub section (2) of section 22 and has not made a return or a revised return under sub section (3 ) of the same section or fails t6 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 and, in the case of a firm, may refuse to register it or may cancel its registration if it is already registered: Provided x x x x" Describing the nature and character of a best judgment assessment, Lord RuSsell of Killowen in delivering the judgment of the Privy Council in Income tax Commissioner vs Badridas Ramrai Shop, Akola,(1) observed as follows: "The Officer is to make an assessment to the best of his judgment against a person who is in default as regards supplying informa tion.
He must not act dishonestly or _vindic tively or capriciously, because he must exer cise judgment in the matter.
He must make what he honestly believes to be a fair estimate of the proper figure of assessment, and for this purpose he must, their Lordships think, be able to take into consideration local knowledge of previous returns by and assessments of the assessee, and all other matters which he thinks will assist him.
in arriving at a fair and proper estimate; and though there must necessarily be guess work in the matter, it must be honest guess work." These observations were quoted with approval by this Court in Raghbar Mandal Harihar Mandal vs State of Bihar(2).
Mr. Gupte learned counsel for the appellant submitted that the main object of the best judgment assessment was to pena lise the (1) (1937) 64 IA.
102, 114 115.
(2) 8 S.T.C.770.
242 assessee for either not filing a return or for filing a return which was defective and if at this stage he is given a full fledged 'hearing including the right to summon and cross examine witnesses, then this would amount to condoning the default committed by the assessee.
It was also argued that as the Income tax authorities are not bound by the technical rules of evidence, the assessee cannot claim cross examination of witnesses as a matter of right.
In support of his submission he relied upon a decision of this Court in Dhakeswari Cotton Mills Ltd vs Commissioner of Income Tax, West Bengal(1), where agreeing with a similar argument put forward by the Solicitor General in that case this Court observed thus: "As regards the second contention, we are in entire agreement with the learned Solici tor General when he say 's that the Income tax Officer is not lettered by technical rules of evidence and pleadings, and that he is entitled to action material which may not be accepted as evidence in a Court of law, but there the agreement ends, because it is equal ly clear that in making the assessment under sub section (3) of section 23 of the Act, the Income tax Officer is not entitled to make a pure guess and make an assessment without reference to any evidence or any material at all.
There must be something more than bare suspicion to support the assessment under section 23 (3).
" There can be no doubt that the principle that as the tax proceedings are of quasi judicial nature, the Sales Tax authorities are not strictly bound by the rules of evidence which means that what the authorities have to consider is merely the probative value of the materials produced before them.
This is quite different from saying that even the rules of natural justice do not apply to such proceedings so as to deny the right of cross examination to the assessee where the circumstances clearly justify such a course and form one of the integral parts of the materials on the basis of which the order by the Taxing Authorities can be passed.
The admissibility of a document or a material in evidence is quite different from the value which the authority would attach to such material.
The Privy Council has held that the Taxing Authorities can even base their conclusion on their private opinion or assessment provided the same is fully disclosed to the assessee and he is given an opportu nity to rebut the same.
In these circumstances, therefore, we do not agree with Mr. Gupte that merely because the technical rules of evidence do not strictly apply, the right of crossexamination cannot be demanded by the assessee in a proper case governed by a particular statute.
This Court further fully approved of the four proposi tions laid down by the Lahore High Court in Seth Gurmukh Singh vs Commissioner of Income tax, Punjab(2).
This Court was of the opinion that the Taxing Authorities had violated certain fundamental rules of (1) ; (2) 243 natural justice in that they did not disclose to the asses see the information supplied to it by the departmental representatives.
This case was relied upon by this Court in a later decision in Raghubar Mandal Harihar Mandal 's case (supra) where it reiterated the decision of this Court in Dhakeswari Cotton Mills Ltd. 's case (supra), and while further endorsing the decision of the Lahore High Court in Seth Gurmukh Singh 's case(") pointed out the rules laid down by the Lahore High Court for proceeding under sub section
(3) of section 23 of the Income tax Act and observed as follows: "The rules laid down in that decision were these: (1 ) While proceeding under sub section (3) of section 23 of the Income tax Act, the Income tax Officer is not bound to rely on such evidence produced by the assessee as he considers to be false; (2) if he proposes to make an estimate in disregard of the evidence, oral or documentary, led by the assessee, he should in fairness disclose to the assessee the material on which he is going to found that estimate; (3) he is not however debarred from relying on private sources of informa tion, which sources he may not disclose to the assessee at all; and (4) in case he proposes to use against the assessee the result of any private inquiries made by him, he must commu nicate to the assessee the substance of the information so proposed to be utilised to such an extent as to put the assessee in possession of full particulars of the case he is expected to meet and should further give him ample opportunity to meet it, if possible.
" It will thus be noticed that this Court clearly laid down that while the Income tax Officer was not debarred from relying on any material against the assessee, justice and fair play demanded that the sources of information relied upon by the Income tax Officer must be disclosed to the assessee so that he is in a position to rebut the same and an opportunity should be given to the assessee to meet the effect the aforesaid information.
We, however, find that so far as the present appeals are concerned, they are governed by the provisions of the Kerala General Sales Tax Act, the provisions of which are not quite identical with the provisions of the Income tax Act and the Kerala Act appears to have fully incorporated all the essen tial principles of natural justice in section 17(3) of the Act.
In these circumstances, therefore, the answer to the ques tion posed in these appeals would have to turn upon the scope, interpretation and content of section 17(3) of the Act, the proviso thereto and r. 15 framed under the Act.
It is true that the words "opportunity of being heard" are of very wide amplitude but in the context the sales tax pro ceedings which are quaSi judicial proceedings all that the Court has to see is whether the assessee has been given a fair hearing.
Whether the hearing would extend to the right of demanding cross examination of witnesses or not would naturally depend upon the nature of the materials relied upon by the sales tax 244 authorities, the manner in which the assessee can rebut those materials and the facts and circumstances of each case.
It is .difficult to lay down any hard and fast rule of universal application.
We would, therefore, first try to interpret the ambit of section 17(3) and the proviso thereof in order to find out whether a right of cross examination of witnesses whose accounts formed the basis of best judgment assessment is conferred on the assessee either expressly or by necessary intendment.
Section 17(3) of the Act runs thus: "If no return is submitted by the dealer under subsection (1) Within the prescribed period, or if the return submitted by him appears to the assessing authority to be incorrect or incomplete, the assessing author ity shall, after making such enquiry as it may consider necessary and after taking into account all relevant materials gathered by it, assess the dealer to the best of its judgment: Provided that before taking action under this sub section the dealer shall be given a reasonable opportunity of being heard and, where a return has been submitted, to prove the correctness or completeness of such re turn.
" An analysis of this provision would show that this sub section contemplates two contingencies (1) where the asses see does not file his return at all; and (2) where the assessee files his return which, however, is found to be incorrect or incomplete by the assessing authority.
The sub section further enjoins on the assessing authority a duty to consider the necessary materials and make an enquiry before coming to its conclusion.
The proviso expressly requires the assessing authority to give to the assessee a reasonable opportunity of being heard even if the assessee had committed default in not filing the return.
Since the statute itself contemplates that the assessee should be given a reasonable opportunity of being heard, we are not in a position to agree with the contention of the learned counsel for the appellant that if such an opportuni ty is given, it will amount to condonation of default of the assessee.
The tax proceedings are no doubt quasi judicial proceedings and the Sales tax authorities are not bound strictly by the rules of evidence, nevertheless the authori ties must base their order on materials which are known to the assessee and after he is given a chance to rebut the same.
This principle of natural justice which has been reiterated by this Court in the decisions cited above has been clearly incorporated in section 17 (3) of the Act as men tioned above.
The statute does not stop here, but the second part of the proviso confers express benefit on the assessee for giving him an opportunity not only of being heard but also of proving the correctness or completeness of such return.
In view of this provision it can hardly be argued with any show of force that if the assessee desires the wholesale dealers whose accounts are used against him to be cross examined in order to prove that his return is not incorrect or incomplete he should not be conceded this opportunity.
Apart from anything else, the second part of the proviso itself confers this specific right on the asses see.
It is difficult to conceive as to how the 245 assessees would be able to disprove the correctness of the accounts of Haji P.K. Usmankutty or the other wholesale dealers, unless he is given a chance to cross examine them with respect to the credibility of the accounts maintained by them.
It is quite possible that the wholesale dealers may have mentioned certain transactions in their books of account either to embarrass the assessees or due to animus or business rivalry or such other reasons which can only be established when the persons who are responsible for keeping the accounts are brought before the authorities and allowed to be croSs examined by the assessees.
This does not mean that the assessing authority is bound to examine the whole sale dealers as witnesses in presence of the assessees: it is sufficient if such wholesale dealers are merely ten dered by the sales tax authorities for cross examination by the assessees for whatever worth it is.
In view of the express provision of the second part of the proviso, we are fully satisfied that the respondents had the undoubted right to crosS examine the wholesale dealers on the basis of whose accounts the returns of the assessees were held to be incor rect and incomplete.
We are fortified in our view by a decision of this Court in C. Vasantilal and Co. vs Commis sioner of Income tax, Bombay City(1), where this Court observed as follows: "The Income tax Officer is not bound by any technical rules of the law of evidence.
It is open to him to collect materials to facilitate assessment even by private enquiry.
But if he desires to use the material so collected, the assessee must be informed of the material and must be given an adequate opportunity of explaining it.
" It will be noticed that if the Sales tax authorities refused the prayer of the assessees to cross examine the wholesale dealers, then such refusal would not amount to an adequate opportunity of explaining the material collected by the assessing authority.
Mr. Gupte learned counsel for the appellant relied on a decision of the Gujarat High Court in Jayantilal Thakordas vs Stale of Gujarat(2).
In the first place the Gujarat High Court in that case was concerned with the Bombay Sales Tax Act which did not contain any .express provision like the one which is to be found in the second part of the proviso to s.17(3) of the Kerala General Sales Tax Act and, there fore, any decision given by the Gujarat High Court would have no application to the facts of the present appeals.
In Jayantilal Thakordas 's case (supra) the Court was merely called upon to interpret the import of the words "reasonable opportunity of being heard" and the Judges held that as ample opportunity was given to the assessee therefore concerned to show cause why the sales said to have been suppressed (1) , 209.
(2) 23 S.T.C. 11.
(3) 14 S.T.C. 489.
246 by him should not be included in his turnover, the rules of natural justice were duly complied with.
The Court further pointed out that the sales tax authorities were not strictly bound by the rules of evidence nor did the Act require the assessing authorities to do more than what they had done in that case.
The Gujarat High Court seems to have dissent ed from the view taken by a single Judge of the Kerala High Court in M. Appukutty vs State of Kerala(3).
Finally, it does not appear from the facts mentioned in the judgment of the Gujarat High Court that the assessee had at any time made a specific prayer for cross examining the representa tives of the firm of M/s A. Alibhai & Co. In these circum stances, therefore, Jayantilal Thakordas 's case (supra) does not appear to be of any assistance to the appellant.
We might, however, state that we are not prepared to go to the extent to which the Gujarat High Court has gone even in interpreting the content and ambit of an opportunity given to the assessee of being heard so as to completely exclude the right of cross examination.
We have already held that whether the reasonable opportunity would extend to such a right would depend upon the facts and circumstances of each case.
We feel that the correct law on the subject has been laid down by a Division Bench of the Orissa High Court in Muralimohan Prabhudayal vs State 07 Orissa(1) where the High Court, while adumbrating the 4th proposition, namely, as to how the assessee was to rebut the. , material used by the Department against him, observed as follows: "It is the amplitude and ambit of this fourth proposition which needs examination.
There cannot be any controversy that the assessee can adduce independent evidence of his own to disprove the particulars proposed to be used against him . .
A third party 's accounts are proposed to be used against the assessee and if such accounts are relied on, the assessee 's accounts are to be discarded . .
If the assessee gets an opportunity by cross examination, he can establish that the accounts of the third party are wrong and manipulated to suit the interest of the third party, or that they were intended to be adversely used against the assessee with whom the third party had inimical rela tionship.
It is difficult to accept the contention in such a case, that the ample and reasonable opportunity to be given to the assessee would not include within its sweep the right of cross examination." The High Court in the present appeals has relied on its earlier decision in Appukutty vs State of Kerala (supra) where a single Judge of the Kerala High Court pointed out that the fact that a third party maintaining some secret accounts had made certain entries in his accounts which may connect the assessee will not give jurisdiction to the assessing authority to use that information unless the assessee has been (1) 26 S.T.C. 22.
247 given an opportunity to Cross examine him effectively.
As no such opportunity was given, the Court held that the proceedings stood vitiated.
In our opinion, the decision of the Kerala High Court was substantially correct and in consonance with the language of section 17(3) and the proviso thereto.
Other cases have also been cited before us which, howev er, are based on the peculiar language of the statutes which the Courts were construing and which are different from the language used in the Act.
Finally, apart from the provisions of section 17(3.) and the proviso thereto, the rules further reiterate what the provi so contemplates.
Rule 15 which deals with provisional as sessment where a return is incorrect and incomplete runs thus: "If the return submitted by the dealer appears to the assessing authority to be incorrect or incomplete, the assessing author ity shall, after issuing a notice to the dealer calling upon him to produce his ac counts to prove the correctness or complete ness of his return at time and place to be specified in the notice and after scrutiny of all the accounts if any, produced by the dealer and after taking into account all relevant materials gathered by it determine the turnover of the dealer to the best of its judgment, and fix provisionally the annual tax or taxes payable at the rate or rates speci fied in Section or notified under Section 10.
Before determining the turnover under this rule, the dealer shall be given a reasonable opportunity of being heard and also to prove the correctness or completeness of the return submitted by him.
" The Rule clearly shows that where the return of the assessee is incorrect or incomplete he must be called upon to prove the correctness or completeness of the same.
It also en joins that a reasonable opportunity of being heard should be given to the assessee to prove the correctness or complete ness of the return submitted by him.
Thus the requirement of the second part of the proviso to section 17(3) is reiterated in r. 15.
We understand that such a provision in the Act is peculiar to the Kerala Act and is not to be found in other sales tax statutes which provide for best judgment assess ment.
Thus on a true interpretation of section 17(3), the proviso thereto and r. 15, the inescapable conclusion would be that the assessee has been given stationary right to prove the correctness of his return by showing that the materials on the basis of which his return is found to be incorrect or incomplete are wrong and if for this purpose the assessee makes an expire prayer for cross examining the wholesale dealers whose accounts formed the sheet anchor of the notice issued to the assesee, he is undoubted ly entitled to cross examine such wholesale dealers.
In view of the language in which the Rules are couched it seems to us that a determinative issue arises in this case the Department taking the stand that the returns filed by the assessees are incorrect and incomplete, whereas the assessees contend that the 17 240SCI/77 248 returns are correct and that the accounts of the wholesale dealers which formed the basis of the information of the Sales tax Authorities were wrong and incorrect.
Such an issue can only be determined after examination of ' the accounts of both the parties and after affording the asses sees the right to cross examine the wholesale dealers con cerned, particularly when the assessee makes a specific prayer to this effect.
For these reasons, therefore, we are convinced that the judgment passed by the High Court in all these appeals is correct in law and the High Court has rightly decided the issues involved.
The appeals accordingly fail and are dismissed with no order as to costs.
P.B.R. Appeals dismissed.
| IN-Abs | Section 17(3) of the Kerala General Sales Tax Act 1963 provides that if the return submitted by an assessee appears to be incorrect or incomplete.
the assessing authority may assess the dealer to the best of its judgment.
The proviso to the sub section enacts that before taking action under the sub section, the dealer shall be given a reasonable opportunity of being heard and, where a return has been submitted, to prove the correctness to completeness of such return.
Relying on the evidence furnished by entries in the books of account of some other dealers, the Sales Tax Officer disbelieved the assessee 's accounts and came to the conclusion that the return field by him was incorrect and incomplete and made a best judgment assessment under section 17(3).
The assessee 's request to cross examine the deal ers in regard to the correctness of their accounts was rejected by the Sales Tax Officer.
In revision the High Court quashed the order of the Sales Tax Officer.
Dismissing the State 's appeal, (Per Bhagwati and Sarkaria.
JJ) HELD .
The assessee was entitled to cross examine the dealers under the second part of the proviso to section 17(3).
The Sales Tax Officer 's refusal to summon the dealers for cross examination by the.
assessee constituted infraction of the right conferred on the assessee by the second part of the proviso and that vitiated the order of assessment made against him.
[239 F] (1) The rule which requires an opportunity to be heard to be given to a person likely to be affected by a decision is not an inflexible rule having a fixed connotation.
It has a variable content depending on the nature of the in quiry, the framework of the law under which it is held, the constitution of the authority holding the inquiry, the nature and character of the right affected and the coil sequences flowing from the decision.
The rule of audi alterem partem does not require in every case a specified procedure to be followed.
In a given case, the rule of audi alterem partem may import a requirement that witnesses, whose statements are sought to be relied upon by the author ity holding the inquiry, should be permitted to be cross examined by the party affected while in some other cases it may not.
The procedure required to be adopted for giving an opportunity to a person to be heard must necessarily depend on the facts and circumstances of each case.
[237 B D] (2) (a) It is only on the existence of one of two condi tions, namely, that no return is .submitted by the assessee or the return submitted appears to be incorrect or incom plete that the Sales Tax Officer gets the jurisdiction to make a best judgment assessment.
[237 H] 234 (b) The second part of the proviso lays down that where a return has been submitted, the assessee should be given a reasonable opportunity to prove the correctness or complete ness of such return.
"To prove" means to establish the correctness or completeness of the return by any mode per missible under law.
The opportunity to prove would, there fore, necessarily carry with it the right to examine wit nesses and that would include equally the right to cross examine witnesses examined by the Sales Tax Officer.
[238 G H] In the instant case, the assessee could prove the cor rectness and completness of his return only by showing that the entries in the books of account of the dealers on which the Sales Tax Officer relied, were false, bogus or manipu lated and that his return should not be disbelieved on the basis of such entries.
This could not be done unless an opportunity to cross examine the dealers was given.
[239 B] Murlimohan Prabhudayal vs State of Orissa, 26 S.T.C. 22 and M. Appukutty vs State of Kerala, 14 S.T.C. 489 approved.
Fazal Ali, J. (concurring).
Section 17(3) with the proviso thereto and r. 15, have given a statutory right to the assessee to prove the cor rectness of his return and the assessee was entitled to cross examine the wholesale dealers, relying on whose ac counts the Sales Tax Officer made a best judgment assess ment.
[247 E] (1) The well settled rules in regard to best judgment assessment are (i) The taxing authority must not act dis honestly or vindictively or capriciously.
He must make what he honestly believes to be a fair estimate, of the proper figures of assessment and for this purpose, he must be able to take into consideration all matters which he thinks will assist him in arriving at a fair and proper estimate.
Though it must necessarily be guess work it must be honest guess work.
[241 E] (ii) Although tax proceedings are quasi judicial and the Sales Tax Officer is not bound strictly by rules of evi dence, yet he must base his order on materials known to the assessee and after he has been given a chance to rebut the same.
[244 E] (iii) Admissibility of a document or material in evi dence is quite different from the value which the authority would attach to such material.
The tax authority can even base its conclusion on private opinion or assessment provid ed the same is fully disclosed to the assessee and he is given an opportunity to rebut the same.
[242 E] Income tax Commissioner vs Badridas Ramrai Shop, Akola (1937) 64 I.A. 102, 114, 115 and Dhakeswari Cotton Mills Ltd. vs Commissioner of Incometax, West Bengal, ; followed.
Raghubar Mandal Harihar Mandal vs State of Bihar 8 S.T.C. 770 and C. Vasantilal & Co. vs C.I.T. Bombay City 45/.T.R. 206 referred to.
Seth Gurmukh Singh vs Commissioner of Income tax Punjab, approved, 2(a) The words "opportunity of being heard" in section 17(3) are of very wide amplitude.
All that the court has.
to see is whether the assessee had been given a fair hearing.
Whether the hearing would extend to the right of demanding cross examination of witnesses or not, would depend upon the nature of the materials relied upon by the tax authorities, the manner in which the assessee can rebut those materials and the facts and circumstances of each case.
[234F G] 235 The second part of the proviso confers benefit on the asses see for giving him an opportunity not only of being heard but also of proving the correctness or completeness of his return.
Secondly, r. 15 clearly shows that where the return of the assessee is incorrect or incomplete he must be called upon to prove.
the correctness or completeness of the same.
It also enjoins on the Sales Tax Officer that a reasonable opportunity of being heard should be given to the assessee to prove the correctness and completeness of the return.
The requirement of the second part of the proviso to section 17(3) is reiterated in r. 15.
D] In the instant case, if the assessee desired the dealers whose accounts were used against him to be cross examined to prove that his return was not incorrect or incomplete, he could not be denied this opportunity.
The dealers might have made the entries to embarrass the assessee or they might have animus or business rivalry with the assessee.
The assessee could establish the correctness of his return only if he was allowed to cross examine the dealers.
[244 H] Jayantilal Thakordas vs State of Gujarat 23 S.T.C. 11 dis tinguished.
M. Appukutty vs State of Kerala, 14 S.T.C. 489 and Muralimohan Prabhudayal vs State of Orissa, 26 S.T.C. 22 approved.
|
Appeal No. 1744 of 1976.
(Appeal by Special Leave from the Judgment and Order dated 28.4.1975 of the Punjab & Haryana High Court in Civil Writ Petition No. 1819/75) M.K. Ramamurthi and J. Ramamurthi, for the appellants.
Madan Mohan, for the respondents 4 8, 10 25, 27 30 & 32 36.
B.D. Sharma & R.N. Sachthey, for respondents 1 2.
The Judgment of the Court was delivered by JASWANT SINGH, J.
This appeal by special leave which is directed against the judgment and order dated April 28, 1975, of the High Court of Punjab and Haryana at Chandigarh, dismissing Civil Writ Petition No. 1819 of 1975 filed by the appellants and respondents 3 to 37 herein, who are industrial workers employed in Factories situate in the industrial area in Chandigarh.
The facts leading to this appeal are: In 1956, the Legislature of the then State of Punjab enacted what is called the Punjab Industrial Housing Act, 1956 (Punjab Act 16 of 1956) (hereinafter referred to as 'the Act ') to pro vide for allotment, recovery of rent, eviction and other ancillary matters in respect of houses constructed under the subsidised Industrial Housing Scheme for industrial workers in the State of Punjab.
In exercise of the powers conferred on it under section 24 of the Act, the State Government made rules called the Punjab Industrial Housing Rules, 1956 (hereinafter referred to as the Rules ').
Rule 4 of the Rules as originally made ran as under: "4.
Eligibility for allotment (1) Two roomed tenements shall be allotted to indus trial workers whose income exceeds Rs. 100 per mensem.
(2) One roomed tenements shall be allotted to workers with an income not exceeding Rs,100 per mensem.
" 329 This rule was amended vide Notification No. 4119 2HG 6C 29333 dated October 5, 1960.
The rule, after its aforesaid amendment, read as under: "4.
Eligibility for allotment (1) Two roomed tenements shah be allotted to industrial workers whose income does not exceed Rs. 350.00 per mensem.
(2) One roomed/small two roomed tenements shall be allotted to workers with an income not exceeding Rs. 250.00 per mensem; provided that where sufficient number of industrial workers with income exceeding Rs. 250.00 per mensem is not forthcoming for allotment, the Labour Commissioner may, with the approval of the State Government, allot two roomed tene ments to industrial workers with an incOme not exceeding Rs. 250.00 per mensem.
Notes: In towns, where only roomed/small two roomed tenements have been built, applica tions should first be invited from such work ers only, whose monthly income does not exceed Rs. 250.00.
It is only after the demand from these workers has been met that unallotted tenements should be made available for allot ment to workers, whose income exceed Rs. 250.00 per mensem.
Where these tenements are given to higher paid workers the normal subsi dised rent should be charged from them till such time as the regular two roomed tenements do not become available for them.
When the two roomed tenements become available the higher paid workers must be removed from the smaller tenements, failing which they should be charged the full economic rent.
(ii) In cases where after allotment of one roomed/small two roomed tenements a worker crosses the wage limit of Rs. 250.00 per mensem, he may be allowed to continue in occupation of the house allotted to him on payment of subsidised rent, till such time as the regular two roomed house does not become available, in other respects the procedure as prescribed in note (i) should be followed.
(iii) Two roomed tenements should in the first instance, be offered from allotment to workers whose income is between Rs. 251.00 and Rs. 350.00 per mensem." Vide Notification No. 7480 4H(8) 72/21542 dated Novem ber 7, 1972, the Chief Commissioner, Union Territory, Chand igarh, made in exercise of the powers conferred by section 24 of the Act what are called the Punjab Industrial Housing, Chandigarh (First Amendment) Rules, 1972 adding the fol lowing, ,after sub rule (2) in Rule 4 of the Rules: 330 "(3) An industrial worker shall become ineligible to retain the industrial house allotted to him from the date his income exceeds Rs. 350/ per mensem and his allotment of it shall stand cancelled with effect from that date.
Provided that in case such an industrial worker has been allotted and is in occupation, of an industrial house immediately before the commencement of the Punjab Industrial Hous ing (Chandigarh First Amendment) Rules, 1972, his allotment shall be cancelled by the Labour Commissioner after giving him one month 'S notice in writing of such cancella tion.
Chief Commissioner also ordained that the following shall be added in form 'C ' of the Rules after condition (24) : "(25) The allottee shall become ineligible to retain the industrial house, allotted to him from the date his income exceeds rupees 350 per mensem and his allotment shall be deemed to have been cancelled from that date.
" The appellants and the aforesaid respondents, who were allottees of houses in Sector 30, Chandigarh constructed by the State Government for occupation of industrial workers under the Industrial Housing Scheme subsidised by the Central Government and declared under section 3 (2) of the Act to be houses covered by the provisions of the Act were given notices.
by the Labour Inspector, Union Territory, Chandigarh, in terms of the proviso to sub rule (3) of rule 4 of the Rules, as amended by the aforesaid Notification No. 74804H(8) 72/21542 dated November 7, 1972, calling upon them to show cause as to why the allotment of houses made to them should not be cancelled as the income of each one of them exceeded Rs. 350/ per mensem which disentitled them to retain their respective allotments.
The appellants and the aforesaid respondents thereupon filed a joint writ petition, being writ petition No. 1819 of 1975 under Arti cles 226 and 227 of the Constitution in .the
High Court of Punjab and Haryana for issue of an appropriate writ, order or direction quashing the said notices and notification No. 7480 4H(8) 72/21542 dated November 7, 1972 amending Rule 4 of the Rules and restraining respondents 1 and 2 from pro ceeding with the cancellation of their respective allotments and evicting them from the houses.
They contended that the aforesaid rule 4 as amended was ultra vires the Act in so far as it carved out an exception to the statutory defini tion of "industrial worker ' as contained in section 2(e) of the Act within the scope of which they admittedly fell.
The High Court repelled their contention and dismissed their writ petition by its judgment dated April 28, 1975.
Ag grieved by this judgment and order, the appellants and the said respondents made an application to the High Court for issue of a certificate of fitness under Article 133 of the Constitution which was refused by the High Court by its order dated May 9, 1975.
Thereupon they moved this Court for special leave under Article 136 of the Constitution which was granted.
331 Appearing in support of the appeal, Mr. Ramamurthy has reiterated before us that since the appellants and respond ents 3 to 37 are admittedly industrial workers as defined in clause (e) of section 2 of the Act, the impugned rule 4 which is designed to cancel their allotment, on the ground that their salary exceeded Rs. 350/ per mensem is clearly repugnant to that clause and as such utra vires and invalid as it takes out industrial workers with income exceeding Rs. 350/per mensem from the scope of the definition.
He has further contended that since the authority competent to make rules under section 24 of the Act cannot frame any rule having a retrospective effect and the impugned rule rule 4(3) as amended operates retrospectively, the same is in valid.
He has lastly urged that the impugned notification is also invalid as if makes hostile and arbitrary discrimi nation against industrial workers whose income exceeds Rs. 350/ per mensem, and thereby violates the guarantee en shrined in Article 14 of the Constitution.
We shall deal seriatim with all the three contentions raised by Mr. Ramamurthy.
Before embarking on that task, we consider it appropriate to scan the scheme of the Act.
Section 3 of the Act clearly states that the Act shall be applicable to houses constructed by the State Government for the occupation of industrial workers under the Industrial Housing Scheme subsidised by the Central Government.
The scheme, as evident from the affidavit of the Home Secre tary, Chandigarh Government, is meant for the benefit of the low aid industrial workers and economically weaker sections of the community.
Section 9(1) of the Act provides that the occupation by any person of a house shall at all times be subject to such conditions relating to its occupation as may be prescribed, or as may be intimated from time to time by the Labour Commissioner.
Section 7 of the Act sets out the circumstances in which a person shall be treated to be in unauthorised occupation of any house.
Clause (b) of the section explicity states that a person shall be deemed to be in unauthorised occupation "Where being an allottee he has by reason of cancellation of an allotment under sub sec tion (2) of section 9 ceased to be entitled to occupy the house".
Sub section (2) of section 9, which is necessary to be referred to at this stage and which because of the non obstante clause contained in its opening part overrides all other laws for the time being in force, authorises the Labour Commissioner after giving notice to the allottee and considering the explanation tendered by him to cancel the allotment under which a house is held or occupied by him.
Section 24 of the Act not only empowers the State Government generally to make rules to effectuate the purposes of the Act but also specifically confers on it the power to make rules to provide inter alia for the manner of allotment of accommodation and conditions relating to its occupation [see section 24(2)(ii)] as also for the matters which are to be or may be prescribed [see section 24(2)(x)].
A conspectus of the aforesaid provisions of the Act leaves no room for doubt that the allotment of accommodation to an industrial worker is not unconditional but is subject to conditions which can be changed unilaterally by the Government from time to time by altering the rules in exercise of the powers conferred on it 331(a) under section 24 of the Act.
Section 7 of the Act which embodies a deeming provision gives a mandate to treat a person as an unauthorised occupant not only if he ceases to be an industrial worker under the Act but also if being an allottee, he ceases to.be entitled to occupy the accommoda tion by reason of cancellation of the allotment under sub section (2) of section 9 of the Act.
A combined reading of sections 7 and 9 of the Act goes to show that if at any time a person becomes an unauthorised occupant of the house by reason of his ceasing to be an industrial worker or by otherwise ceasing to fulfil any of the prescribed conditions then in force including the one relating to the limit of his income, he becomes amenable to action under section 9(2) of the Act.
The result is that even though the allottee may continue to be an industrial worker, still the allotment under which he holds a house can be cancelled if his occupa tion becomes un authorised on any one of the grounds laid down in section 7 of the Act.
We are, therefore, satis fied that the impugned amendment which squarely falls within the purview of the aforesaid provisions of section 24 of the Act was validly made and the contention urged by Mr. Rama murthy that it is ultra vires is misconceived and untenable.
We may state here in passing that the aforesaid scheme being meant for the benefit of the low paid industrial workers and the number of the houses constructed thereunder being very limited, the Government could legitimately evolve the method which it did to disentitle industrial workers like the appellants whose monthly salaries appear to range between Rs. 974.71 and Rs. 1861.27 and the aforesaid respondents whose monthly income is also relatively large to retain the houses in question.
The contention of Mr. Ramamurthi that the impugned rule is retroactive in operation is also devoid of merit.
A careful study of the proviso to rule 4(3) of the Rules which appears to have been inserted to allay fears and remove misapprehensions would show that the rule is not intended to operate retrospectively on industrial workers who had been allotted and were in occupation of industrial houses immedi ately before the amendment of the Punjab Industrial Housing (Chandigarh First Amendment) Rules, 1972.
It une quivocally states that allotment of an industrial worker who is in occupation of an industrial house in pursuance thereof immediately before the amendment of the Punjab Industrial Housing (Chandigarh First Amendment) Rules, 1972 shall not be cancelled without one month 's notice in writing.
The proviso therefore clearly shows that the allotment of an in dustrial worker whose income exceeds Rs. 350/ per mensem is to stand cancelled not from the date when his income started exceeding Rs. 350/ per mensem but on the expiry of one month 's notice in writing of the cancellation.
The second contention raised by Mr. Ramamurthi is also, therefore, repelled.
The third contention advanced by the learned counsel on behalf of the appellants not having been raised before the High Court cannot be permitted to be raised at this stage.
The contention can also not be allowed to be raised in view of the Presidential Order dated June 27, 331(b) 1975 promulgated under clause (1) of article 359 of the Consti tution suspending inter alia Article 14 of the Constitution for the period during which the proclamation of emergency made under clause (I ) of Article 352 of the Constitution on December 3, 1971 and on June 25, 1975 are both in force.
For the foregoing reasons, we do not find any merit in this appeal which is dismissed but in the circumstances of the case without any order as to costs.
Counsel for the appellants submits that he may be given time for vacating the premises.
We grant time till 31st August 1977 on the undertaking given by the counsel that vacant possession will be given on or before that date.
M.R. Appeal dismissed.
| IN-Abs | The appellants and respondents Nos. 3 to 37 herein, were allottees of houses in Chandigarh constructed by the State Government for low paid industrial workers under the Industrial Housing Scheme subsidised by the Central Govern ment.
The Labour Inspector, Union Territory, Chandigarh gave them notices in terms of the proviso to, rule 4(3) of the Punjab Industrial Housing Rules, 1956, as amended vide Notification dated November 7, 1972, to.
show cause why their allotments should not be cancelled.
The income of each of them exceeded Rs. 350/ per mensem, which disenti tled them to retain their allotments.
The appellants and the said respondents filed a joint petition in the High Court for a writ to quash the amendment to rule 4, and to restrain the Government from cancelling their allotments and evicting them.
The writ petition was dismissed.
The appel lants contended firstly, that rule 4(3) was ultra vires the Punjab Industrial Housing Act, 1956 as it took out industri al workers with income exceeding Rs. 350/ p.m. from the scope of section 2(e) of the Act which defines industrial workers; and secondly, that the authority competent to make rules u/s 24 of the Act cannot frame rules having retrospec tive effect, and as the amended rule 4(3) operates retro spectively it is invalid Dismissing the appeal by special leave, the Court, HELD: (1) The allotment of accommodation to an industrial worker is not unconditional but is subject to conditions which can be changed unilaterally by the Government from time to time by altering the rules in exercise of the powers conferred on it under section 24 of the Act.
Section 24 specifically empowers the State Government to make rules to provide inter alia for the manner of allotment of accom modation and conditions relating to its occupation.
The impugned amendment which squarely falls within the purview of the aforesaid provisions of section 24, was validly made, and was not ultra vires.
[331 G H, 331 (a) C] (2) Section 7 of the Act embodies a deeming provision and gives a mandate to treat a person as an unauthorised occupant not only if he ceases to be an industrial worker under the Act, but also if being an allottee, he ceases to fulfil any of the prescribed conditions then in force, including the one relating to the limit of his income, and thereby becomes amenable to action under section 9(2) of the Act.
[331(a) A B] (3) The proviso to rule 4(3) clearly shows that the allotment of an industrial worker whose income exceeds Rs. 350/ per mensem is to stand cancelled not from the date when his income started exceeding Rs. 350/ per mensem but on the expiry of one month 's notice in writing of the can cellation.
The rule is not intended to operate retrospec tively on industrial workers who had been allotted and were in occupation of industrial houses immediately before, 328 the amendment of the Punjab Industrial Housing (Chandigarh First Amendment) Rules, 1972.
[331(a) E F] The Court observed The scheme being meant for the benefit of the low paid industrial workers and the number of the houses constructed thereunder being very limited, the Government could legiti mately evolve the method which it did, to disentitle indus trial workers whose monthly income was relatively large, to retain the houses.
[331 (a) C D]
|
Appeal No. 81 of 1977.
(Appeal by Special Leave from the judgment and order dated 6 12 1976 of the Delhi High Court in C.R. No. 248/76).
F.S. Nariman, N.S. Sistani and K.C. Dua for the appellant.
K.K. Jain, S.K. Jain and P. Dayal, for respondent No. 1.
314 The Judgment of the Court was delivered by KRISHNA lYER, J.
Delhi, the home of Power and the nidus of paradoxes, presents many pathological problems to the students of history, social science, politics and law, often inter acting with each other.
We are here concerned with the socio legal malady of accommodation scarcity and the syndrome of long queues of government employees waiting, not knowing for how long, for allotment of government quar ters at moderate rents and the co existence of several well to do officers enjoying, by virtue of their office, State allotted residential accommodation while owning their own but letting them out at lucrative rents, making sub stantial incomes in the bargain.
The law awoke to end this unhappy development and to help the helpless nonallottees get government accommodation.
Such is the back drop to section 14A which, read along with section 25B, of the Delhi Rent Control Act, 1958 (Act LIX of 1958) (for short, the Act), falls for our consideration in the present appeal by special leave.
A deeper understanding of the need for the new provi sions just mentioned and the construction that they bear in the context necessitates stating a little more in detail the social setting.
The seat of the capital of a vast country with varied activities naturally will be honeycombed with government offices, public organisations and growing armies of employees.
The higher echelons in public service, over the decades, have made generous use of the availability of government lands at low prices and of the know how of utilising, to their advantage, the immense developmental potential in the years ahead if buildings were constructed with foresight.
Thus many neatly organised colonies blossomed all around Delhi whose owners were in many in stances officers who had the telescopic faculty to see the prospective spread out of Delhi of the future.
Taking time by the forelock, they wisely invested money (often on soft loans from Government) in buildings which secured ambi tious rents when India 's headquarters did, as it was bound to, explosively expand.
Most of such officials let their premises for high rents to big businessmen, foreign estab lishments, company executives and others of their link.
Where did the officers themselves reside ? The strange advantage of Delhi is that houses, with lawns, servants ' quarters and other amenities, built by government long years back are allotted to government servants on rents which are a fraction of what similar accommodation in the private sector may fetch oftentimes.
The bigger officials according to the hierarchical system (almost perfected into some sort of official castes and sub castes based on status and position in the ministries and not on the heads of their families or office) occupied the classified quar ters, the official `brahmins ', of course, getting the best.
The rents they paid as tenants were negligible compared to the returns they made as landlords.
Indeed, a sociological research into the whole system may perhaps unravel the semi survival of quasifeudal life styles and the unlovely phenomenon of public servants paying little and collect ing large.
The socio economic sequel was worse than this.
An astronomical increase in the number of government servants led to a terrific pressure for accommodation because, most of them particUlarly at the lesser 315 (Krishna lyer, J.) levels had no worthwhile salaries and were priced out of the private sector where rentals had unconscionably rocket ed.
This rack renting abuse can be checked, in some meas ure, by an activist policy of relentlessly enforcing fair rents through penal tags.
That, of course, depends on the will and wisdom of Parliament and Government, and the court may not make any comment.
Anyway, currently, controls in this essential area of human accommodation, in the capital city of our socialist republic, are a statute book virtue.
Similarly, the suggestion, in the course of his submissions, made by counsel for the appellants, that the true solution is for the State to build more accommoda tion for its servants and not eject tenants like his client is commendable as a text book panacea but `a consum mation to be wished ' in practical expectations! Nevertheless, the State took cognizance of the sinister development of several officers owning private residences and occupying government premises and making handsome dividends out of the disparity in rents and, ergo, a large number of less fortunate officials having to wait in a queue for years hoping against hope that some day some government quarters would be allotted! These latter, with broken domestic budgets, huddle together in small private tenements (or even servants ' quarters) paying rents beyond their means.
The politics and economics of scarcity are well known.
Out of this distressing situation was born section 14A of the Act.
A fasciculus of clauses creating substantive and procedur al provisions to meet the evil and advance the scheme in that behalf came in, first by ordinance 24 of 1975 in Decem ber 1975, duly replaced by the Delhi Rent Control (Amend ment) Act, 18 of 1976.
The chronic disease needed dras tic treatment and the legislative draftsmen created a chain of stiff provisions.
Speaking generally, the government, after satisfying itself about the official having let out his residential building and occupying officially allotted quarters, directed the person to vacate government premises but he had quickly to get back his own house.
So a new right (section 14A) was created,accelerated remedial procedures were prescribed (section 25A and 25B).This appeal turns on the meaning of section 14A. The purpose of the project has been explained by Chandrachud J. in Sarwan Singh(1): "The object of Section 14A, as shown by its marginal note, is to confer a right on certain landlords to recover immediate possession of premises belonging to them and which are in the possession of their tenants.
In the sig nificant language of the marginal note, such a right is `to accrue ' to a class of persons.
The same concept is pursued and clarified in the body of Section 14A by providing that in the contingencies mentioned in the section, a right will accrue to the landlord 'to recover immediately possession of any premises let out by him '. " * * * * "Whatever be the merits of that philoso phy, the theory is that an allottee from Central Government or a local (1) Sarwan Singh vs Kasturi Lal, ; , 272 274.
316 authority should not be at the mercy of law 's delays while being faced with instant eviction by his landlord save on payment of what in practice is penal rent.
Faced with a Hob son 's choice, to quit the official residence or pay the market rent for it, the allottee had in turn to be afforded a quick and expedi tious remedy against his own tenant.
With that end in view it was provided that nothing, not even the Slum Clearance Act, shall stand in the way of the allottee from evicting his tenant by resorting to the summary procedure prescribed by Chapter IIIA.
The tenant is even deprived of the elementary right of a defendant to defend a proceeding brought against him, save on obtaining leave of the Rent Controller.
If the leave is refused, by section 25B(4) the statement made by the landlord in the application for eviction shall be deemed to be admitted by the tenant and the landlord is entitled to an order for eviction.
No appeal or second appeal lies against that order.
Section 25B(8) denies that right and provides instead for a revision to the High Court whose jurisdiction is limit ed to finding out whether the order complained of is according to law.
" It is a notorious fact that, vesting a right is long years ' distance away from getting the remedy, thanks to our legal process with its slow motion mood.
A jurisprudence of quick acting and comprehensive remedies, demanding re structuring and streamlining of the judicative apparatus and imparting operational speed and modernisation of the whole adjectival law and practice, is urgent and important an observation we make hoping that Parliament will programme for such a constructive change for the good of the communi ty, in consultation with the Court and the Bar.
That legal instrumentality alone truly sustains the rule of law which delivers justice with inexpensive colority, finality and fullness.
The big right remedy gap is the bane of our system.
We regard it our duty to, mention this dimension of justice and this desideratum of systemic reform so that repetitive litanies to end law 's delays may be intelligently heeded by the law makers instead of joining the chorus against the court.
Back to the statute.
Section 14 A, with a non obstante rider, follows upon and is partly supplemental to section 14 which primarily governs eviction by landlords of tenants.
We may extract a part of section 14 and the whole of section 14A: "14(1) Notwithstanding anything to the contrary in any other law or contract, no order or decree for the recovery of possession of any premises= shall be made by any court or Controller in favour of the landlord against a tenant: Provided that the Controller may, on an application made to him in the prescribed manner make an order for the recovery of possession of the premises on one or more of the following grounds only, namely, (a) to (d) * * * * 317 (Krishna Iyer, J.) (e) that the premises let for residential purposes are required bona fide by the land lord for occupation as a residence for himself or for any member of his family dependent on him, if he is the owner thereof, or for any person for whose benefit the premises are held and that the landlord or such person has no other reasonably suitable residential accom modation: Explanation.
For the purposes of this clause, "premises let for residential pur poses, includes.
any premises which having been let for use as a residence are, without the consent of the landlord, used incidental ly fo.r commercial or other purposes, . " X X X X "14A. Right to recover immediate posses sion of premises to accrue to certain persons. (1) Where a landlord who, being a person in occupation any residential premises allotted to him by the Central Government or any local authority is required, by, or in pursuance of any general or special order made by that Government or authority, to vacate such resi dential accommodation, or in default, to incur certain obligations, on the ground that he owns, in the union territory of Delhi, a residential accommodation either in his own name or in the name of his wife or dependent child, there shall accrue, on and from the date of such order, to such landlord, notwith standing anything contained elsewhere in this Act or in any other law for the time being in force or in any contract (whether express or implied), custom or usage to the contrary, a right to recover immediately possession of any premises let out by him: Provided that nothing in this section shall be construed as conferring a right on a landlord owning, in the union territory of Delhi two or more dwelling houses, whether in his own name or in the name of his wife or dependent child, to recover the possession of more than one dwelling house and it shall be lawful for such landlord to indicate the dwelling house, possession of which he intends to recover.
(2) Notwithstanding anything contained elsewhere in this Act or in any other law for the. time being in force or in any contract, custom or usage to the contrary, where the landlord exercises the right of recovery conferred on him by sub section (1 ), no compensation shall be payable by him to the tenant or any person claiming through or under him and no claim for such compensation shall be entertained by any court, tribunal or other authority: Provided that where the landlord had received, 318 (a) any rent in advance from the tenant, he shall, within a period of ninety days from the date of recovery of possession of the premises by him, refund to the tenant such amount as represents the rent payable for the unexpired portion of the contract, agreement or lease; (b) any other payment, he shall, within the period aforesaid, refund to the tenant a sum which shall bear the same proportion to the total amount so received, as the unexpired portion of the contract or agreement, or lease bears to the total period of contract or agreement or lease; ' Provided further that, if any default is made in making any refund as aforesaid, the landlord shall be liable to pay simple inter est at the rate of six per cent per annum on the amount which he has omitted, or failed to refund." A summary remedy is provided by section 25B which reads: "25.B. Special procedure for the disposal of applications for eviction on the ground of bona fide requirement. (1) Every application by a landlord for the recovery of possession of any premises on the ground specified in clause (a) of the proviso to.
sub section (1) of Section 14, or under Section 14A, shall be dealt with in accordance with the procedure specified in this section.
(2) The ContrOller shall issue summons, in relation to.
every application referred to in sub section (1 ), in the form specified in the Third Schedule.
(3) (a) The Controller shall, in acquisi tion to, and simultaneously with, the issue of summons for service on the tenant, also direct the summons to be served by registered post, acknowledgment due, addressed to the tenant or his agent empowered to accept the service at the place where the tenant or his agent actu ally and voluntarily resides or carries on business or personally works for gain and may, if the circumstances of the case so require, also direct the publication of the summons in a newspaper circulating in the locality in which the tenant is last known to have resided or carried on business or personally worked for gain.
(b) When an acknowledgment purporting to be signed by the tenant or his agent is re ceived by the Controller or the registered article containing the summons is received back with an endorsement purporting to have been made by a postal employee to the effect that the tenant or his agent had refused to take delivery of the registered article, the Controller may declare that there has been a valid service of summons.
319 (Krishna Iyer, J.) (4) The tenant on whom the summons is dully served (whether in the ordinary way or by registered post) in the form specified in the Third Schedule shall not contest the prayer for eviction from the premises unless he files an affidavit stating the grounds on which he seeks to contest the application for eviction and obtains leave from the Controller as hereinafter provided; and in default of his appearance in pursuance of the summons or his obtaining such leave, the statement made by the landlord in the application for eviction shall be deemed to be committed by the tenant and the applicant shall be entitled to an order for eviction on the ground aforesaid.
(5) The Controller shall give to.
the tenant leave to contest the application if the affidavit filed by the tenant discloses such facts as would disentitle the landlord from obtaining an order for the recovery of possession of the premises on the ground specified in clause (a) of the proviso to sub section (1) of Section 14, or under Sec tion 14A. (6) Where leave is granted to the tenant to contest the application, the Controller shall commence the hearing of the application as early as practicable.
(7) Notwithstanding anything contained in sub section (2) of Section 17, the Controller shall, while holding an inquiry in a proceed ing to which this Chapter applies, follow the practice and procedure of a Court of Small Causes, including the recording of evidence.
(8) No appeal or second appeal shall lie against an order for the recovery of posses sion of any premises made by the Controller in accordance with the procedure specified in this section; Provided that the High Court may, for the purpose of satisfying itself that an order made by the Controller under this section is according to law, call for the records of the case and pass such order in respect thereto as it thinks fit.
(9) Where no application has been made to the High Court on revision, the Controller may exercise the powers of review in accordance with the provisions of Order XL VIX of the first Schedule to the Code of Civil Procedure, 1908 (5 of 1908).
(10) Save as otherwise provided in this Chapter, the procedure for the disposal of an application for eviction on the ground speci fied in clause (e) of the proviso to subsec tion (1) of Section 14, or under Section 14A, shall be the same as the procedure for the disposal of applications by Controllers.
" 320 The landlord respondent No. 1 was a government servant who had let his own building to the .appellant tenant (a company) to carry on business and use part of it for its manager 's residence.
He himself was occupying residential premises allotted by the Central Government and, since he was directed by that Government to vacate, on the ground that he had let out 'residential accommodation ' of which he was owner, he sought refuge under section 14A.
The eviction proceeding was resisted, inter alia, on the score that the ground did not fail within the sweep of section 14A, the premises 'having been let out for a residential cum commercial pur pose to a joint stock company which was carrying on its business . besides using it for the residence of its Managing Director '.
This plea did not cut ice with the Controller who refused leave to contest under section 25B(4).
of the Act.
The refusal would ordinarily have led to an order for eviction but this consequence was intercepted by a writ petition under article 226 of the Constitution and a revision to the High Court, as provided by the proviso to subs.
(8) of section 25B of the Act.
Dismissal of these proceedings has brought the appellant, special leave having been granted, to this Court as the last hope.
Of course, the issue is of some moment, legally and otherwise.
For while solving the twin problems, viz. making more accommodation available to government servants in need and ending the vice of officers gaining by letting their own residential houses, section 14A creates another, viz., the ejectment of tenants by summary procedure on a new ground.
Maybe, as between the two.
hardships Parliament has made the choice and the Court implements the law based on the policy decision of the legislature.
Mr. Nariman sought to expose the weakness of this legislative, policy by stating that nothing in section 14A compelled the officer landlord to occupy the premises after evicting the tenant.
He could still let it for a higher rent, take on lease from the private sector a small house and make a gain flowing from the difference in rents.
While we, as Judges, cannot fail to apply the provision merely because dubious ingenuities can circumvent it, we will later interpret the section eliminating the possible evil pointed out.
The short but insistent submission made by the counsel for the appellant was that the Controller could not shut him out from being heard, as he did, if only a triable issue emerged from the affidavit in opposition filed under 'section 25B(4).
Such an issue (in fact, more than one) was obviously present here, urged counsel.
But we make it plain even at this stage that it is fallacious to approximate (as was sought to be done) section 25B(5) with Order 37, r. 3 of the Code of Civil Procedure.
The social setting demanding summary proceeding, the nature of the subject matter and, above all, the legis lative diction which has been deliberately designed, differ in the two provisions.
The legal ambit and judicial dis cretion are wider in the latter while, in the former with which we are concerned, the scope for opening the door to defence is narrowed down by the strict words used.
The Controller 's power to give leave to contest is cribbed by the condition that the affidavit filed by the tenant dis closes such facts as would disentitle the landlord from obtaining an order for the recovery of posession of the premises on the ground specified in cl.
(e) of the proviso to sub section
(1) of section 14 321 (Krishna lyer, J.) or under section 14A. Disclosure of facts which disentitle recovery of possession is a sine qua non for grant of leave.
Are there facts disentitling the invocation of section 14A ? The thrust of Shri Nariman 's contention is that section 14A does not apply at all, as a matter of construction of the expression 'residential premises '.
This is net something factual but essentially legal and perhaps the question deserves our decision.
For, if we explain, as declaratory of the law, what the true scope of section 14A is, vis a vis the premises involved, the Controller may then proceed on that footing and decide whether there is any fact disclosed which disentitles eviction.
Let us break down section 14A, to the basic components crea tive of the new right to recover possession of premises let to a tenant.
`Premises ', by definition, covers any building or part of a building let for use, residential, commercial or other (section 2(i)).
We confine ourselves to the considera tions relevant to our case.
To attract section 14A, the landlord must be in occupation of `residential premises ' allotted to him by the Central Government.
He must be required by order of that Government to vacate such 'residential accommoda tion '.
These are fulfilled here.
The ground for such order to vacate must be 'that he owns, in the Union Territory of Delhi, a residential accommodation '.
If so, there accures to such landlord the right 'to recover immediately posses sion of any premises let out by him ' (emphasis added).
The bone of contention between the parties is as to whether the premises let out are 'residential accommoda tion '.
It may be a pursuit of subtle nicety to chase the reason for using different expressions like 'residential premises ' and 'residential accommodation ' in the same sec tion.
If at all, 'accommodation ' is ampler than 'premises '.
What is residential accommodation ? If the building in dispute answers that description, the tenant must submit to eviction.
So this is the key question.
Admittedly, the building was let out for commercial purpose also.
Is the purpose of the lease decisive of the character of the accommodation ? For a long time it was used as an office of the tenant 's business, the manager also residing in a part thereof.
Does user clinch the issue ? At present, the main use to which the building is put is as residence of the manager.
The Delhi Development Authority granted the land to the government servant respondent for construction of a residen tial building although he later let it out for non residen tial use, apparently for getting large rents, silencing his compunction about the basis on which he secured the allot ment of the land at low cost.
But can the court conclude from the object of the land assignment whether the building later put up is residential or not ? Marginal relevance there may be in these diverse factors, telling value they do not possess, Law, being 6 436SCI/77 322 pragmatic, responds to the purpose for which it is made, cognises the current capabilities of technology and life style of the community and flexibly fulfils the normative role, taking the conspectus of circumstances in ,the given case and the nature of the problem to solve which the stat ute was made.
LegiSlative futility is to be ruled out so long as interpretative possibility permits.
Residentiality depends for its sense on the context and purpose of the statute and the project promoted.
Guided by this project oriented approach, we reject the rival extreme position 's urged before us by Shri Nariman and Shri Jain.
Residential premises are not only these which are let out for residential purposes as the appellant would have it.
Nor do they cover all kinds of structures where humans may manage to dwell.
If a beautiful bungalow were let out to a businessman to run a show room or to a meditation group or music society for meditational or musical uses, it re mains none the less a residential accommodation.
Otherwise, premises may one day be residential, another day commercial and, on yet a later day, religious.
Use or purpose of the letting is no conclusive test.
Likewise, the fact that many poor persons may sleep under bridges or live in large hume pipes or crawl into verandahs of shops and bazars cannot make them residential premises.
That is a case of reductio ad absurdum.
Engineering skills and architectural designing have advanced far enough to make multi purpose edifices and, by minor adaptations, make a building serve a residential, commercial or other use.
The art of building is no longer ' rigid and the character of a house is not an 'either or '.
It can be both, as needs demand.
It is so common to see a rich home turned into a business house, a dormitory into a factory.
Many small scale industries are run in former living quarters.
To petrify engineering concepts is to betray the law 's purpose.
Whatever is suitable or adaptable for residential uses, even by making some changes, can be designated 'residential premises '.
And once it is 'residen tial ' in the liberal sense, section 14A stands attracted.
Dic tionary meaning, commonsense understanding and architectur al engineering concur in the correctness of this construc tion.
What falls outside the ambit of 'residential purposes ' may be limited but not non existent.
A shop in Connaught Place, a factory in an area prescribed by any municipal regulation for residential use or any structure too patently non residential such as a hothouse for botanical purposes or a bath and toilette or teashop by the road margin are obvi ous instances.
We may visualise other cases but that is not our purpose here.
The house we are considering was built on land given for constructing a residence is being used even now for residence, is suitable otherwise for residence and is being credibly demanded for the respondent 's residence.
Residential suitability being the basic consideration, this building fills the bill.
Nothing said in the affidavit in opposition puts it out of the pale of residential accommoda tion.
A building which reasonably accommodates a residen 323 (Krishna Iyer, J.) tial user is a residential accommodation nothing less, nothing else.
The circumstances of the landlord are not altogether out of place in reaching a right judgment.
The 'purpose test ' will enable officers who own houses to defeat the government by pleading that they do not own 'residential premises ' because the lease is for commercial use, built though it was and stumble ,though it is, for residence.
Similarly, the 'possibility test ' may make nonsense of the provision.
The contrast in the phraseology between section 14(1)(e) and section 14A strengthens our inference.
The legislature has, in the former provision, used the expression 'premises let for residential purposes ', thus investing the purpose of the lease with special signifi cance.
The deliberate omission of such words in section 14A and, instead, the use of the flexible but potentially more com prehensive, though cryptic, expression 'residential accom modation ' cannot be dismissed as accidental.
Shri Nariman argued that the court must have the power to consider whether the order of the government stating that the government servant 's building is residential, is valid or not.
We do not deny that in the last resort it is within the Court 's province to do so.
But it must give due not deadly weight to the decision of the government that the premises owned by its officer is residential.
Perversity and mala fides will, of course, invalidate government orders here, as elsewhere.
They are the exceptions but as a prac tical guideline, the government 's order may be taken as correct.
For, after all, while courts must finally pro nounce, others familiar with the work a day world and en quire before passing orders are not too inexpert or incompe tent to be brushed aside.
The power to render binding decisions vests in the judicial process, not because it is infallible or occult but because it is habitually independ ent and professionally trained to consider contending view points aided by counsel for a adversaries.
The humility that makes for wisdom behoves the judge to show respect for not obedience to the view of an administrative agency.
There remains the conundrum raised by Shri Nariman.
Supposing the landlord, after exploiting the easy process of section 14A, re lets the premises for a higher rent; the social goal boomerangs because the tenant is ejected and the landlord does not occupy, as he would have been bound to do, if he had sought eviction for bona fide occupation under section 141(e).
Section 19 obligates the landlord in this behalf.
In literal terms, that section does not apply to eviction obtained under section 14A.
But the scheme of that section definitely contemplates a specific representation by the petitioner landlord to the Controller that because he has been ordered to vacate the premises where he is residing, therefore he requires immediate possession for his occupa tion.
The non obstante clause, the vesting of a right to immediate recovery, the creation of a summary process under section 25B and the package of connected provisions, all empha size that the amendments have to be viewed as a whole, that the Court cannot be fooled and the statute mocked at.
The law, as Mr. Bumble (in Oliver Twist) said.
`is a ass a idiot ', but today the socio economic project cannot be frustrated by legalistics.
Underlying the whole legislative plan and provision is the fundamental anxiety to recover, for the officer 's occupation, his own premises.
Once we grasp this cardinal point, the 324 officer 's application for eviction under section 14A can be entertained only on his averment that he, having been asked to vacate, must get into possession of his own.
For in stance, if he has a vacant house of his own and, on getting an order to vacate, he moves into his vacant house, he cannot thereafter demand recovery under section 14A.
The cause of action is not only the government order to vacate, but his consequential urgency to recover his own building.
That is the rationale legis.
To interpret otherwise is to vindicate Mr. Bumble ! We hold that Shri Nariman 's apprehen sion is unfounded and section 14A is largely a rider to .s.
14 and the condition indicated in section 19 must, mutatis mutandis, bind the landlord.
Parliament cannot be assumed not to intend the obviouS, or to intend the ludicrous.
Literality not right where absurdity is the result.
The same result is reached by reading into every appli cation for eviction by a landlord a necessarily implied representation to court that for the reason of his being directed to get out he must be given possession of his own residence for his own occupation with the aid of the judi cial process.
If the finale is reached and possession obtained, the Court will not allow a party to reduce its process to a mere make .
believe, or a clever parody, break ing faith with the judicial process itself.
Such paths can be interdicted by the use of the inherent power of the court.
The re letting to someone else or non occupation, even after a reasonable time or without reasonable cause, will be regarded as an abuse of the process of the court and, at the instance of the affected tenant or otherwise, the eviction order cancelled and possession restored.
We affirm this legal position lest overly cute but qualmless landlords should hopefully hoax the court and reduce its decree to a joke.
Every tribunal has the inherent power to prevent its machinery from being made a sham, thereby run ning down the rule of law itself as an object of public ridicule.
It will and must prove any strategem self defeat ing if a party indulges in making the law the laughing stock, for, the court will call him to order.
We are not adventuring into any innovation of legal principle in inhibiting unconscionability in the enforce ment of rights.
Lord Denning M.R. said: "What is the justification for the courts in this or any other case, departing from the ordinary meaning of words ? If you examine all the cases you will, I think, find that at bottom it.is because the clause (relieving a man from his own negligence) is unreasonable or is being applied unreasonably in the cir cumstances of the particular case.
The judges have then, time after time, sanctioned a departure from the ordinary meaning .
Are the courts then powerless ? Are they to permit the party to enforce his unreasonable clause, even when it is unconscionable, or applied so unreasonably as to be unconscion able ? When it gets to this point, I would say, as I said many years ago: `There is the vigilance of the common law which, while allowing freedom of contract, watches to see that it is not abused. '" X X X X 325 (Krishna Iyer, J.) He continued: "I know that the judges hitherto have never confessed openly to the test of reasona bleness.
But it has been the driving force behind many of the decisions.
"(1) We agree that, in the words of Lord Erakine, 'there is no branch of the jurisdiction of this court more delicate than that, which goes to restrain the exercise of a legal right '.
But the principle of unconscionability clothes the court with the power to prevent its proc ess being rendered a parody.
The justice of the law steps in end, the area of eviction of a tenant by a landlord, the tribunal cannot tolerate double dealing or thwarting the real in tendment of the statute.
The same conclusion can be reached through another line of reasoning expressed by Justice Jackson of the Supreme Court of the United States in D ' Cench Duhme:(2) "If the judicial power is helpless to protect a legislative program from schemes for easy avoidance, then indeed it has become a handy implement of high finance .
Once the purpose or effect of the scheme is clear, once the legislative policy is plain, we would indeed forsake a great tradition to any we were helpless to fashion the instruments for appropriate relief.
" The doctrine that the judicial machinery, while enforc ing the law, shall forbid its being misused is another dimension of two deeply rooted, but inter connected maxims.
Actus curiae neminem gravabit (An act of the court shall prejudice no man: Jenk.
118) and Actus legis est damnosus (The act of the law is hurtful to no one: 2 Inst. 287): Actus legis nemini facit in juriam (The act of the law does injury to no one: 5 Coke.
This principle is fundamental to any system of justice and applies to our jurisprudence.
An Afterword The possibility of the power of government to issue orders to vacate being used discriminatorily should be carefully avoided.
If exceptions are made in the case of big officers, naturally the middling and the lesser minions of government may have a grievance.
It may perhaps be proper if government, when allotting good premises for high offi cers who make from their own houses large returns by way of rentals, makes them pay into government coffers some equita ble part of the gain so made, giving consideration to cir cumstances like loans, investments and the like.
This, again, is a matter falling with (1) 39 Mod.
L.R. 379 (1976) (2) Referred to in , at 366 67; Quoted in Univ.
of Pennsylvania Law Review VoL. 117 (1968) p. 1, 63.
326 in the province of the sense of justice of the Administra tion.
But we mention it only to save the legislation from the aspersion of invidiousness in the exercise of the power.
In the view we have already taken, it follows that the appeal must be dismissed and we hereby do so; but the par ties, in the circumstances, will bear their own costs throughout.
P.H.P. Appeal dismissed.
| IN-Abs | The respondent No. 1 landlord let out his building to the appellant, a company to carry on business and use part of it for its manager 's residence.
The landlord was occupying residential premises allotted by the Central Government.
After the amendment of the.
Delhi Rent Control Act, 1958, by Ordinance 24 of 1975 which was later replaced by Delhi Rent Control (Amendment) Act, 1976, section 14A and 25B were added to the Statute.
Section 14 permits a landlord to evict the tenant if the premises let for residential pur pose are required bonafide by the landlord for occupation as a residence for himself or for any member of his family dependent upon him.
Section 14A provides that where a landlord is in occupation of any residential accommodation ,allotted to him by the Central Government or any local authority and if he is required by order made by that Gov ernment or authority to vacate such residential accommoda tion on the ground that he owns in the Union Territory of Delhi a residential accommodation either in his own name or in the name of his wife or dependent child, there shall accrue to the landlord a right to recover immediately pos session of any premises let out by him.
The said provision has been given effect notwithstanding anything to the con trary in the Delhi Rent Act or any other law or the custom or usage.
Section 25B provides for a summary remedy.
It provides that the Controller shall give to the tenant leave to contest the application if the affidavit filed by the tenant discloses such facts as would disentitle the landlord for obtaining an order for the recovery of possession on the ground specified in section 4(1)(c) or 14A. The re spondent was directed by the Government to vacate the Gov ernment accommodation on the ground that he had let out residential accommodation of which he was owner.
The respondent No. 1 accordingly filed eviction proceedings against the appellant claiming possession under Section 14A. The appellant contended before the Rent Controller that the ground did not fail within the sweep of section 14A since the premises were let out for residential rum com mercial purposes to, a joint Stock Company which was carry ing on business besides using for the residence of its Managing Director.
This plea did not cut ice with the Con troller who refused leave to contest.
The appellant filed a writ petition in the High Court under Art 226 of the Consti tution which was dismissed.
In appeal by special leave, the appellant contended that 1.
Nothing in s.14A compels the landlord to occupy the premises after evicting the tenant.
He could still let it for a higher rent, take on lease from the private sector a small house and make a gain, from the difference flowing in rent.
The Controller could not shut him out from being heard if a triable issue emerged from the affidavit in opposition.
In the present case such issues were present and, therefore, the Rent Controller was not justi fied in refusing leave to contest.
Section 14A does not apply in the present case since the premises were not residential premises as they were let out both for commercial and residential purposes.
313 (Krishna lyer, J.) Dismissing the appeal, HELD: (1) It is fallacious to approximate section 25B(5) with Order 37 rule 3 of the Code of Civil Procedure.
The social setting demanding summary proceeding, the nature.
of the subject matter and above all, the legislative diction which has been deliberately designed, differ in the two provisions.
Disclosure of facts which disentitle recovery of possession is a sine qua non for grant of leave.
[320 F A, 321A] (2) The definition of premises in section 2(i) covers any building or part of the building leased for use, resi dential, commercial or other.
To attract section 14A the landlord must be in occupation of residential premises allotted to him by the Central Government.
He must be required by order of that Government to vacate his residen tial accommodation.
The Delhi Development Authority granted the land to respondent No. 1 for construction of a residen tial building although it was let out for commercial pur pose.
Residential premises are not only plots which are let out for residential purposes nor do all kinds of structures where humans may manage to.
dwell are residential.
Use or purpose of the letting is no conclusive test.
Whatever is suitable or adaptable for residential use, even by making some changes, cart be designated residential premises.
Once it is residential in the liberal sense, section 14A strands attracted.
In the present case the house was built on land given for constructing a residence, is being used even now for residence is suitable otherwise for residence and is being credibly demanded for the respondent 's residence.
Residential suitability being the basic consideration, the building is residential.
The `purpose test ' will enable officers who own houses to defeat the statute that they do not own residential premises though it was suitably built for residence.
The scheme of section 14A definitely contem plates a specific representation from landlord to the Controller that because he has been ordered to vacate the premises where he is residing he requires immediate posses sion for his occupation.
It 's non obstante clause, the vesting of a right to immediate recovery, the creation of a summary process and the package of connected provisions all emphasize that the amendments have to be viewed as a whole, that the court cannot be fooled and the statute mocked at.
The cause of action is not only the Government orders to vacate but consequential urgency to recover his own build ing.
Parliament cannot be.
assumed not to intend the obvi ous, or to.
intend the ludicrous.
Literality is not right where obscurity is the result.
[321 C D, G H 322 C D, 323 A B, G H] Gillespie Brothers & Co. Ltd. vs Roy Bowles Transport Ltd. quoted in 39 MUd.
L.R. 379 (1976) and Anderson vs Abbott ; at 366 67 quoted in Univ.
of Pennsylvenia Law Review Vol. 117 (1968) p. 1, 63, quoted with approval.
(3) Judicial machinery while enforcing the law shall forbid its being misused.
[325 E] (4) The possibility of the power of Government to issue orders to vacate being used discriminately should be care fully avoided.
If exceptions are made in the case of big officers, naturally the.
middling and the lesser minions of Government may have a grievance.
It may ' perhaps be proper for Government when allotting good premises for high offi cers who made from their own houses large returns to pay into the Government coffers some: equitable part of the gain so made, giving consideration to circumstances like loans investment and the like.
[325 G H]
|
ivil Appeal Nos. 227 and 228/ 1976.
(From the Judgment and Order dated 8 1 1976 of the Patna High Court in C.W.J.C. No. 1053 and 1054 of 1975).
252 L.M. Singhvi, Sri Narain and K.J. John, for the appellants.
L.N. Sinha, Sol.
U.P. Singh and Shambhu Nath Jha, for the respondents.
The Judgment of the Court was delivered by BEG, C.J.
These appeals are before us after certifica tion of the cases, raising identical questions of law as fit for appeal to this Court, dealt with by one judgment and orders of a Division Bench of the, Patna High Court on two writ petitions.
The petitions were directed against orders of the State Government passed in 1974 revising the rate of royalty payable by the petitioners appellants under a lease of 1970, and, after that, cancelling the lease by a letter of ' 15th March, 1975.
The petitioners ' case was that the revision of the rate of royalty payable by the petitioners for the lease to, collect and exploit sal seeds from the forest area was illegal during the subsistence of the lease, and thereafter, cancellation of the lease itself was illegal for various reasons.
Primarily, the case of the petitioners is that of a breach of contract for which the State would be liable ordinarily to pay damages if it had broken it.
If the petitioners could establish some right, either contrac tual or equitable, to continue in possession, the State could be prevented, by appropriate proceedings, from ousting the petitioners from the forest land from which the peti tioners have been gathering sal seeds.
The petitioners had also set up mala fides on the part of the Conservator of Forests, in enhancing the royalty unreasonably and then cancelling the lease, allegedly acting under the influence of friends and associates of the Forest Minister of Bihar.
The relevant clause relating to revision of royalty in the written contract reads as follows : "The rate of royalty will be revised every three years ' cycle in consultation with the lessee and the decision will be binding on the lessee".
Apparently, there is no restriction, under the terms of the contract, upon the amount by which the royalty could be increased by a revision after a three years ' cycle under this clause.
The lessee is only entitled, under the con tract, to be consulted before a revision.
But, the decision of the Governmental authorities to enhance is binding upon him after that.
Hence, if this was the only term of the contract on this question, the petitioners could not complain of unreasonable enhancement in the revised rate of royalty.
Under clause 4 of the lease, the lessee had to establish a factory within the State of Bihar for processing of sal seeds and extraction of oil therefrom within period of five years from the date of the agreement, failing which the agreement itself was to terminate.
The questions which apparently arose appertained to action alleged by the State to fall within the terms of the agreement between the par ties regulated by the duly signed contract which was presum ably executed in compliance with the provisions of Article 299 of the Constitution.
Prima facie, therefore, the appel lants can only get their 253 remedies, if they can obtain any at all, through ordinary suits for damages or for injunctions to restrain breaches of contract provided they could show how the contracts were broken or were going to be broken.
The writ petitions, however, raise questions relating not only to action lying within the sphere regulated by the law of contract, but, according to the petitioners, by constitutional provisions relating to the exercise of the executive powers of the State Government contained in Arti cle 298 which reads as follows : "298.
The executive power of the Union and of each State shall extend to the carrying on of any trade or business and to the acquisition, holding and disposal of property and the making of contracts for any purpose: Provided that (a) the said executive power of the Union shall, in so far as such trade or business or such purpose is not one with respect to which Parliament may make laws, be subject in each State to legislation by the State; and (b) the said executive power of each State shall, in so far as such trade or business or such purpose is not one with respect to which the State Legislature may make laws be subject to legislation by Parliament".
It is urged vehemently by Dr. L.M. Singhvi, appearing on behalf of the petitioners appellants, that the State, acting in its executive capacity through its Government or its officers, even in the contractual field, cannot escape the obligations imposed upon it by Part III of the Constitution.
The only article, however, in Part III of the Constitution relied upon by Dr. Singhvi is Article 14 which says: "14.
The State shall not deny to any person equality before the law or the equal protection of the laws within the territory of India".
It can be and has been urged on behalf of the State that Governmental authorities when acting in the contractual field, could not be controlled by Article 14 of the Consti tution at all.
When the State had entered into contracts with citizens who carry on their trade and pay the royal ties.
In accordance with the agreements reached between the State and citizens, it does not exercise any special governmental or statutory powers.
In such cases, the State as well as the citizen with whom it contracts are both equally subjected to the law of contract.
It has been urged on behalf of the respondent State that there has been nO breach of contract in the cases before us.
The State is, according to the learned Solicitor General, appearing for the State of Bihar, not claiming to be above the law of contract governing all parties which subject themselves to the law of contract.
The dispute whether there is or there i.s not a breach of contract should, according to the con tention on behalf of the State, be determined by ordinary civil courts as in every case 254 between ordinary litigants who cannot invoke the powers of the High Courts under Article 226 of the Constitution simply because there is a dispute whether an agreement has been broken or not.
Equal subjection of all parties, including the State, to the same procedural requirements, when such disputes are to be adjudicated upon, means that the State should be placed on the same footing as an ordinary liti gant.
It should neither enjoy special benefits and privi leges, nor be subjected to special burdens and disadvan tages.
This should, it is urged, follow from a strict application of Article 14 if the State were to be, as a party to a contract and a litigant, placed on the same footing as other .parties who enter into such contracts.
It is true that the special provisions of Article 299 of the Constitution are there to protect public interest so that 'the contracts by or on behalf of the Government have to comply with the special requirements of form.
But, once the State enters into the contractual sphere after the require ments of form, contained in Article 299, have been complied with, does it have to take its place, in the eye of law, side by side with ordinary parties and litigants or has it any special obligations or privileges attached to it even when it acts within this field ? Dr. Singhvi 's argument that the State Government had some special obligations attached to it would have appeared more plausible if it could be shown that the State or its officers or agents had practised some discrimination against the petitioners appellants at the very threshold or at the time of entry into the field of contract so as to exclude them from consideration when compared with others on any unreasonable or unsustainable ground struck by Article 14 of the Constitution.
It is true that the Article 14 of the Constitution imports a limitation or imposes an obligation upon the State 's executive power under Article 298 of the Constitution.
All constitutional powers carry corresponding obligations with them.
This is the rule of law which regu lates the operation of organs of Government functioning under a Constitution.
And, this is exactly what was meant to be laid down by this Court in Erusian Equipment & Chemi cals Ltd. vs State of West Bengal & Anr.,(1) on which learned counsel for the appellants sought to rely strongly.
It was held there (at p. 677) : "Under Article 298 of the Constitution the Executive power of the Union and the State shall extend to the carrying on of any trade and to the acquisition, holding and dis posal of the property and the making of con tracts for any purpose.
The State can carry on executive function by making a law or without making a law.
The exercise of such powers and functions in trade by the State is subject to Part HI of the Constitution.
Article 14 speaks.
of equality before the law and equal protection of the laws.
Equality of opportunity should apply to matters of public contracts.
The State has the right to trade.
The State has therefore the duty to observe equality.
An ordinary individual (1) ; at 677.
255 can choose not to deal with any person.
The Government cannot choose to exclude persons by discrimination.
The order of black listing has the effect of depriving a person of equal ity of opportunity in the matter of public contract.
A person who is on the approved list is.
unable to enter into advantageous rela tions with the Government because of the order of black listing.
A person who has been dealing with the Government in the matter of sale and purchases of materials has a legiti mate interest or expectation.
When the State sets to the prejudice of a person it has to be supported by legality".
It is thus clear that the Erusian Equipment & Chemicals Ltd. 's case (supra) involved discrimination at the very threshold or at the time of entry into the field o,f consid eration of persons.
with whom the Government could contract at all.
At this stage, no doubt, the State acts purely in its executive capacity and is bound by the obligations which dealings of the State with the individual citizens import into every transaction entered into in exercise of its constitutional powers.
But, after the State or its agents have entered into the field of ordinary contract, the rela tions are no longer governed by the constitutional provi sions but by the legally valid contract which determines rights and obligations of the parties inter se.
No question arises of violation of Article 14 or of any other constitu tional provision when the State of its agents, purporting to act within this field, perform any act.
In this sphere,_ they can only claim rights conferred upon them by contract and are bound by the terms of the contract only unless some statute steps in and confers some special statutory power or obligation on the State in the contractual field which is apart from contract.
In the cases before us the contracts do not contain any statutory terms or obligations and no statutory power of obligation which could attract the application of Article 14 of the Constitution is involved here.
Even in cases where the question is of choice or consideration of compet ing claims before an entry into the field of contract facts have to be investigated and found before the question ,of a violation of Article 14 could arise.
If those facts are disputed and require assessment of evidence the correctness of which can ,only be tested satisfactorily by taking de tailed evidence, involving examination and cross examina tion of witnesses, the case could not be conveniently or satisfactorily decided in proceedings under Article '226 of the Constitution.
Such proceedings are summary proceedings reserved for extraordinary cases where the exceptional and what are described as, perhaps not quite accurately, "pre rogative" powers of the Court are invoked.
We are certain that the cases before us are not such in which powers under Article 226 of the Constitution could 'be invoked.
The Patna High Court had, very rightly divided the types of cases 'in which breaches of alleged obligation by the State units agents can be set up into three types.
These were stated as follows : "(i) Where a petitioner makes a grievance of breach of promise on the part of the State in cases where an assurance 256 or promise made by the State he has acted to his prejudice and predicament, but the agree ment is short of a contract within the meaning of article 299 of the Constitution; (ii) Where the contract entered into between the person aggrieved and the State is in exercise of a statutory power under certain Act or Rules framed thereunder and the petitioner alleges a breach on the pan of State; and (iii) Where the contract entered into between the State, and the person aggrieved is non statutory and purely contractual and the rights and liabilities of the parties are governed by the terms of the contract, and the petitioner complains about breach of such contract by the State.
" It rightly held that the cases such as Union of India vs M/s. AngloAfghan Agencies,(1) and Century Spinning & Manu facturing Co. Ltd. vs Ulhasnagar Municipal Council(2); and Robertson vs Minister of Pensions,(3) belong to the first category where it could be held that public bodies or the State are as much bound as private individual are to carry out obligations incurred by them because parties seeking to bind the authorities have altered their position to their disadvantage or have acted to their detriment on the strength of the representations made by these authorities.
The High Court thought that in such cases the obligation could sometimes be appropriately enforced on a Writ Petition even though the obligation was equitable only.
We do not propose to express an opinion here on the question whether such an obligation could be enforced in proceedings under Article 226 of the Constitution now.
is enough to observe that the cases before us do not belong to this category.
The Patna High Court also distinguished cases which belong to the second category, such as K.N. Guruswami vs The State of Mysore;(4) ' D.F. South Kheri vs Ram Sanehi Singh;(5) and M/s. Shree Krishna Gyanoday Sugar Ltd. vs The State of Bihar,(6) where the breach complained of was of a statutory obligation.
It correctly pointed out that the cases before us do not belong to this class either.
It then, very rightly, held that the cases now before us should be placed in the third category where questions of pure alleged breaches of contract are involved.
It held, upon the strength of Umakant Saran vs The State of Bihar;(7) and Lekhrai Sathram Das vs
N.M. Shah;(8) and B.K. Sinha vs State of Bihar(9) that no writ order can issue under Article 226 of the Constitution in such cases "to compel the authorities to remedy are a breach of contract pure and simple".
(1) ; (2) A.I.R. 1971 S.C. 1021.
(3) [1949] 1 King 's Bench 227.
(4) ; (5) A.I.R. 1973 S.C. 205.
(6) (7) A.I.R. 1973 S.C. 964.
(8) ; (9) A.I.R. 1974 Patna 230.
257 Learned counsel for the appellants has, however, relied upon a passage from Lekhraj Sathram Das 's case (supra) where this Court observed (at p. 231); " . until and unless in the breach is involved violation of certain legal and public duties or violation of statutory duties to the remedy of which the petitioner is entitled by issuance of a writ of mandamus, mere breach of contract cannot be remedied by the Court in exercise of its powers under Article 226 of the Constitution".
Learned counsel contends that in the cases before us breaches of public duty are involved.
The submission made before us is that, whenever a State or its agents or offi cers deal with the citizen, either when making a transaction or, after making it, acting in exercise of powers under the terms of contract between the parties, there is a dealing between the State and the citizen which involves performance of "certain legal and public duties.
" If we were to accept this very wide proposition every case of a breach of con tract by the State or its agents or its officers would call for interference under Article 226 of the Constitution.
We do.
not consider this to be a sound proposition at all.
Learned counsel for the appellants cited certain author ities in an attempt to support his submission that the State and its Officers are clothed with special Constitutional obligations, including those under Article 14 of the Consti tution, in all their dealings with the public even when a contract is there to regulate such dealings.
The authori ties cited were: D.F. South Kheri vs Ram Sanehi Singh (supra) where all that was decided, relying upon K.N. Gurus wamy vs The State of Mysore (supra), was that, where the source of a right was contractual but the action complained of was the purported exercise of a statutory power, relief could be claimed under Article 226; and, Calcutta Gas Co. (Proprietary) Ltd. vs State of West Bengal & Ors,(1) where the real question considered was whether the petition er had a locus standi to question the validity of an enact ment; Basheshat Nath vs The Commissioner of Income Tax, Delhi & Rajasthan and Anr.,(2) which has nothing to do with any breach of contract but only lays down that "Article 14 protects us from both legislative and administrative tyranny of discrimination"; State of M.P. & Anr.
vs Thakur Bharat Singh.(3) which lays that even executive action must not be exercised arbitrarily but must have the authority of law to support it; S.S. Sawhney v.D. Ramarathnam, Assistant Pass port Officer.
of India, New Delhi & Ors.
,(4) which repeats requirements of action which satisfy Article 14 and 21 of the Constitution where compliance with these provi sions is obligatory.
(2) [1959] Suppl.
1 S.C.R. 528 at 551.
(3) ; (4) 2 4365CI/77 258 We do not think that any of these cases could assist the appellants or is at all relevant.
None of these cases lays down that, when the State or the officers purport to operate within the contractual field and the only grievance of the citizen could be that the contract between the parties is broken by the action complained of, the appropriate remedy is by way of a petition under Article 226 of the Constitu tion and not an ordinary suit.
There is a formidable array of authority against any such a proposition.
In Lekhraj Sathramdas Lalwani vs M.M. Shah, Deputy Custodian cum Managing Officer, Bombay & Ors., (supra) this Court said (at p. 337); "In our opinion, any duty or obligation falling upon a public servant out of a con tract entered into by him as such public servant cannot be enforced by the machinery of a writ under article 226 of the Constitution".
In Banchhanidhi Rath vs The State of Orissa & Ors(1) this Court declared (at p. 845): "If a right is claimed in terms of a contract such a right cannot be enforced in a writ petition." In Har Shankar & Ors. etc. etc.
vs The Dy.
Excise & Taxation Commr.
& Ors.
,(2) a Constitution Bench of this Court ob served (at p. 265): "The appellant have displayed ingenuity in their search for invalidating circumstances but a writ petition is not an appropriate remedy for impeaching con tractual obligations".
Learned Solicitor General, appearing for the State, contended that there could be no aspect of Article 14 of the Constitution "involved in a case where no comparison of the facts and circumstances of a particular petitioner 's case with those of other persons said to be similarly situated is involved.
In such a case, he submitted, there was no possibility of inferring a discrimination.
In reply, learned counsel for the appellants sought to direct our attention towards some allegations showing that there was discrimination between appellants and other parties gov erned by similar contracts in other areas.
We doubt very much whether the doctrine of discrimination can be at all availed of against the State 's section purporting to be taken solely within the contractual field when n6 aspect of any statutory or ConStitutional obligation appears either from incontrovertible facts or applicable legal provisions.
Indeed, it has been held fin C.K. Achutan vs State of 'Ker ala & Ors.,(3) that no question of a violation of Article 14 arises even where one out of the several persons ' is: se lected by the State for a particular contractual transac tion.
Learned counsel for the appellants submitted that there was a conflict between what was laid down here and the law declared by this Court in Erusian Equipment & Chemicals .Ltd. 's case (supra).
We think that the two cases are distinguishable on facts.
The propositions of law laid down in the two cases must be read in the context of facts established in each case.
In any event, A.I.R. 1972 S.C. 843 at 845.
(2) ; at 265 (3) [1959] Suppl.
(1) S.C.R. 787.
259 the cases before us do.
not raise any question of discrimi nation alleged at the stage of entry into the contractual area which could attract the application of Article 14.
In the cases.before us, allegations on which a violation of Article 14 could be based are neither properly made nor established.
Before any adjudication on the question wheth er Article 14 of the Constitution could possibly be said to have been violated, as between persons governed by similar contracts, they must be properly put in issue and estab lished.
Even if the appellants could be said to have raised any aspect of Article 14 of the Constitution and this Arti cle could at all be held to operate within the contractual field whenever the State enters into such contracts, which we gravely doubt, such questions of fact do not appear to have been argued before the High Court.
And, in any event, they are of such a nature that they cannot be satisfactorily decided without a detailed adduction of evidence, which is only possible in ordinary civil suits, to establish that the State, acting in its executive capacity through its Offi cers, has discriminated between parties identically situat ed.
On the allegations and affidavit evidence before us we cannot reach such a conclusion.
Moreover, as we have al ready indicated earlier, the correct view is that it is the contract and not the executive power, regulated by the Constitution, which governs the relations of the parties on facts apparent in the cases before us.
The real object of the appellants seems to be to hold up any adjudication on the cases before us by taking shelter behind Article 14 so that the stay orders obtained by them, presumably on representations made to this Court that no aspect of enforcement of Article 14 of the Constitution 'was involved.
We think that to accede to the prayer on behalf of the appellants to.
adjourn the hearing of these cases until after the Emergency is lifted and.
yet to continue the stay orders is to permit a circumvention of the Constitutional mandate contained in Article 359 and to countenance a gross abuse of the processes of the Court.
A rather desparate argument which has been addressed to us on behalf of the appellants is that they were entitled to an opportunity to.
show cause against the cancellation of the leases.
It was urged, on the strength of A.K. Kraipak & Ors. etc.
vs Union of India & Ors.
,(1) that the distinction made between administrative and quasi judicial action is thin and a vanishing one.
This argument appears to.
us to be wholly irrelevant inasmuch as a question of the distinc tion between an administrative and quasi judicial decision can only arise in the exercise of powers under statutory provisions.
Rules of natural justice are attached to the performance of certain functions regulated by statutes or rules made thereunder involving decisions affecting rights of parties.
When a contract is sought to be terminated by the Officers of the State, purporting to act under the terms of an agreement between parties, such action is not taken in purported exercise of a statutory power at all.
In Additional District Magistrate, Jabalpur, vs Shiva kant Shukla,(2)it was pointed out (at p. 1288): (1) (2) ; at 1288.
260 "The principles of natural justice which are so implied must always hang, if one may so put it, on pegs of statutory provisions or necessarily follow from them.
They can also be said sometimes to be implied as necessary parts of the protection of equality and equal protection of laws conferred by Article 14 of the Constitution where one of the pillars of Dicey 's principles of the Rule of Law is found embodied.
Sometimes, they may be implied and read the legislation dealing with rights protected by Article 19 of the Constitution.
They could at times, be so implied because 'restrictions on rights conferred by Article 19 of the Constitution have to be reasonable".
The limitations imposed by rules of natural justice cannot operate upon powers which are governed by the terms of an agreement exclusively.
The only question which normally arises in such cases is whether the action com plained of is or is not in consonence with the terms of the agreement.
As already pointed out by us, even if by some stretch of imagination some case of unequal or discrimina tory treatment by the officers of the State of persons governed by similar contracts is sought to be made out ', a satisfactory adjudication upon the unusual facts of such a case would necessitate proper pleadings supported by accept able evidence.
In that case, the interim stay order or injunction could not be justified at all because so long as a Residential Order, under Article 359 of the Constitution, is operative, the enforcement of fundamental rights falling under Article 14 is suspended.
In such cases even if a petition or suit is entertained and kept pending no stay order could be passed because that would amount to indirect ly enforcing the fundamental rights conferred by Article 14 of the Constitution.
It is only where a prima facie case for an injunction or stay can be made out, quite apart from a right covered by Article 14 of the Constitution or by any other fundamental right whose enforcement may have been suspended, that an injunction or stay could be granted at all on suitable 'terms.
As we have already said it was on such an assumption that this Court had, apparently, granted the interim stay which must now be discharged.
Consequently, we dismiss these appeals with costs throughout, and discharge the stay orders.
S R. Appeals dismissed.
| IN-Abs | A contract called a "lease" to collect and exploit sal seeds from forest area was entered into in 1970, between the respondent State and the appellants in 1970.
Clause (3) in the written contract executed in accordance with the provi sions of article 299 of the Constitution provided for the revision of the. rate of royalty at the expiry of every three years in consultation with the lessee and was to be binding on the lessee.
Under clause (4) of the. lease, the lessee.
had to establish a factory within the, State of Bihar for processing of sal seeds and extraction of oil therefrom within a period of five.
years from the date.
of the, agreement, failing which the agreement itself was to terminate.
In 1974, the respondent State revised the rate of royalty payable, by the appellants and after that, can celled the lease by a letter dated 15th, March 1975.
The writ petitions challenging the said orders were dismissed by the Patna High Court.
On appeals by certificates, the appellants contended: (i) the State acting in its executive capacity through its Government or its officers even in the contractual field cannot escape the obligation imposed upon it by Part III of the Constitution; (ii).
Article 14 of the Constitution has been infringed and (iii) Principles.
of natural justice have.
been violated as no opportunity to show cause against the cancellation of lease was given.
Dismissing the appeals the Court, HELD: (1) Article.
14 of the Constitution imports a limitation or imposes an obligation upon the States execu tive power under article 298 of the Constitution.
The rule of law which regulates.
the operation are organs of Government functioning under the Constitution is that all constitution al powers carry ' corresponding obligations with them.
[254 E F] Erusian Equipment & Chemicals Ltd. vs State of West Bengal and Anr.
1975(2) SCR 674 at 677, referred to.
(2) The State acts purely in its executive capacity and is bound by the obligations which dealings of the State with the individual citizens import into every transaction en tered into in exercise of its constitutional powers, only at the time of entry into the field of consideration of per sons with whom the Government could contract at all.
But, after the State or its agents have entered into the field of ordinary contract the relations are no longer governed by the constitutional provisions but by the legally valid contract which determines rights and obligations of the parties inter se.
[255 C D] 250 (3 ) Article 14 or of any other constitutional provision is not violated when the State or its agents purporting to act within the contractual field perform.
any act.
In this sphere they can only claim rights conferred upon them by contract and are bound by the terms of the contract only unless some statute steps in and confers some special statu tory power or obligation on the State in the contractual field which is apart from contract.
In the instant case, the contracts do not contain any statutory terms or obliga tions and no statutory ' power or obligation which could attract the application of article 14 of the Constitution is involved.
[255 D E, 260 E F] (4) The doctrine of discrimination cannot be availed of against the State 's action purporting to be taken solely within the contractual field when no aspect of any statutory or constitutional obligation appears either from incontro vertible facts or of facts.
The appellants ', cases do not raise any question of discrimination alleged at the stage of entry into the contractual area which could attract the application of Article 14.
[258 F G, 259 A] C.K. Achuthan vs State of Kerala and Ors.
1959 Supp.
(1) SCR 787, applied.
Erusian Equipment & Chemicals vs State of West Bengal & Ant. , distinguished.
(5) Before any adjudication on the question whether Article 14 of the Constitution could possibly be held to have been violated as between persons governed by similar contracts, they must be properly put in issue and estab lished.
The question whether Article 14 could at all be held to operate within the.
contractual field whenever the State enters into such contracts is such that it cannot be decided without a detailed adduction of evidence which is only possible in ordinary civil suits, to establish that the State, acting in its executive capacity through its offi cers, has discriminated between parties identically situat ed.
In the instant case allegations on which a violation of article 14 could be based are neither properly made nor estab lished.
It is the contract and not the executive power regulated by the Constitution which governed the relations of the parties.
[259 A D] (6) Proceedings under article 226 are, summary proceedings reserved for extraordinary cases where the exceptional and what are described perhaps not quite accurately as "preroga tive" powers of the court are invoked.
If the facts are disputed and require assessment of evidence, the correctness of which can only be tested satisfactorily by taking de tailed evidence involving examination and cross examination of witnesses, the case could not be conveniently or satis factorily decided in proceedings under article 226 of the Constitution.
Even in cases where the question is of choice or consideration of competing claims before an entry into the field of contract facts have to be investigated and found before the question of violation of article 14 could arise.
The appellants ' cases are not such in which powers under Article 226 of the Constitution could be invoked.
[255 E G] Lekhraj Satnam Das Lalvani vs
M.M. Shah, Deputy Custodi an cum Managing Officer ; ; Banchhanidhi Rath vs The State of Orissa & Ors.
AIR 1972 SC 843 @ 845 and Har Shankar & Ors.
vs The Dy.
Excise. & Taxation Corotar.
& Ors. 3 ; @ 265, reiterated.
D.F. South Kheri vs Ram Sangi Singh AIR 1973 SC 205; K.N. Guruswamy vs State of Mysore, ; ; Calcutta Gas Co. (Proprietary) Ltd. vs State of West Bengal & Ors. ; Basheshat Nath vs Commissioner of Income Tax, 1959 Supp.
(1) SCR 528; State of M.P. vs Thakur Bharat Singh 1967(2) SCR 454 and S.S. Sawhney
D. Ramarathnam, Assistant Pass port Officer, Govt.
of India, New Delhi & Ors. , held not applicable.
(7) The Patna High Court had very rightly divided the types of cases in which breaches of alleged obligation by the State or its agents can be set up into three types: (i) Where a petitioner makes a grievance of breach of an obliga tion of the State in cases where on an assurance or repre sentation of, the State, he has acted to his prejudice and detriment but the agreement is 251 short of a contract within the meaning of article 299 of the Constitution; (ii) Where the contract entered into between the person aggrieved and the State is in exercise of a statutory power under certain Act or Rules framed thereunder and the petitioner alleges a breach on the part of the State; (iii) Where the contract entered into between the State and the person aggrieved is nonstatutory and purely contractual and the rights and liabilities of the parties are governed by the terms of the contract and the petitioner complains about breach of such contract by the State.
The High Court rightly held that the appellants cases should be placed in the third category where questions of pure alleged breaches of contract are involved and that no writ or order can issue under Article 226 of the Constitution in such cases to compel the authorities to remedy a breach of con tract pure and simple [255 H, 256 A B, F G] Umakant Saran vs The State of Bihar AIR.
and Lekhraj Satram Das vs N.M. Shah ; , followed.
B.K. Sinha vs State of Bihar AIR 1974 Patna 230, approved.
Union of India vs M/s. Anglo Afgan Agencies ; ; Century Spinning and Manufacturing Company Ltd. vs Ulhasnagar Municipal Council AIR 1971 SC 1021; Robertson vs Minister of Pensions (1949)(1) K.B. 227; K.N. Guruswamy vs State of Mysore AIR ; ; D.F. South Kheri vs Ram Sanghi Singh AIR 1973 SC 205; M/s. Shrikrishna Gyanaday Sugar Ltd. vs The State of Bihar , distin guished and held inapplicable.
(8) The object of the appellants is to hold up any adjudication on the cases, by taking shelter behind Article 14 so that the stay orders obtained by them may continue.
To accede to the prayer to adjourn the hearing of the cases until after the emergency is lifted and yet to continue the stay orders is to permit circumvention of the constitutional mandate contained in article 359 and to countenance gross abuse of the process of the court.
[259 D E] (9) The interim stay or order or injunction could not be justified at all because so long as the Presidential Order under article 359 of the.
Constitution is operative, the en forcement of Fundamental Rights falling under Art.14 of the Constitution is suspended.
In such cases even if a petition or a suit is entertained and can be pending no stay order could be passed because that would amount to indirectly enforcing the Fundamental Rights conterred by article 14 of the Constitution.
It is only where a prima facie case for an injunction of stay can be made out, uqite apart from a right governed by article 14 of the Constitution or of any other Fundamental Rights whose enforcement may have been suspend ed, that an injunction could be granted at all in suitable cases on suitable terms.
[260 C E] Additional District Magistrate, Jabalpur vs Shivkant Shukla ; @ 1288 1976 Supp.
SCR, 172 re ferred to.
(10) The appellants are not entitled to an opportunity to show cause against the cancellation of the leases.
The question of distinguishing between an administrative and quasi judicial decision can only arise in the exercise of powers exercised under statutory provisions.
Rules of natural justice are attached to the performance of certain functions regulated by statutes or rules made thereunder involving decisions affecting rights of parties.
When a contract is sought to be terminated by the officers of the State purporting to act under the terms of an agreement between parties, such action is not taken in purported exercise of an agreement between parties, such action is not taken in purported exercise cannot operate upon powers which are governed by the terms of an agreement exclusively.
The only question which normally arises in such cases is whether the action complained of is or is not in consonance with the terms of the agreement.
[259 F H, 260 C]
|
Appeal No. 1360 of 1968.
(Appeal by Special Leave from the Judgment and Order dated 22 11 1967 of the Andhra Pradesh High Court in Second Appeal No. 804/64).
T.S. Krishnamurthi lyer, R.K. Pillai and R. Vasudev Pillai, for the appellants.
T. V. section Narasimhachari, for the respondents.
The Judgment of P.N. Bhagwati and A.C. Gupta, JJ. was delivered by Bhagwati, J.S. Murtaza Fazal Ali, J. gave a separate opinion.
BHAGWATI, J. We have had the advantage of reading the judgment prepared by our learned brother section Murtaza Fazal Ali and we agree with the conclusion reached by him in that judgment but we would prefer to give our own reasons.
The facts giving rise to the appeal are set out clearly and succinctly in the judgment of our learned brother and we do not think it necessary to reiterate them.
The short question that arises for determination in this appeal is as to whether it is sub section (1) or sub section (2) of section 14 of the that applies where property is given to a Hindu female in lieu of maintenance under an instrument which in so many terms restricts the nature of the interest given to her in the property.
If sub section (1) applies, then the limitations on the nature of her interest are wiped out and she becomes the full owner of the property, while on the other hand, if sub section (2) governs such a case, her limited interest in the property is not enlarged and she continues to have the restricted estate prescribed by the instrument.
The question is of some complexity and it has evoked wide diversity of judicial opinion not only amongst the different High Courts but also within some of the High Courts themselves.
It is indeed unfortunate that though it became evident as far back as 1967 that subsections (1) and (2) of section 14 were presenting serious difficulties of construction in cases where property was received by a Hindu female in lieu of maintenance and the instrument granting such property pre scribed a restricted estate for her in the property and divergence of judicial opinion was creating a situation which might well be described as chaotic, robbing the law of that modicum of certainty which it must always possess in order to guide the affairs of men, the legislature, for all these years, did not care to step in to remove the constructional dilemma facing the courts and adopted an attitude of indifference and inaction, untroubled and un moved by the large number of cases on this point encumbering the files of different courts in the country, when by the simple expedient of an amendment, it could have silenced .judicial conflict and put an end to needless litigation.
This is a classic instance of a statutory provision which, by reason of its inapt draftsmanship, has created endless confusion for litigants and proved a para dise for lawyers.
It illustrates forcibly the need of an authority or body to be set up by the Government or the Legislature which would constantly keep in touch with the adjudicatory 267 authorities in the country as also with the legal profession and immediately respond by making recommendations for suit able amendments whenever it iS found that a particular statutory provision is, by reason of inapt language or unhappy draftsmanship, creating difficulty of construction or is otherwise inadequate or defective or is not well conceived and is consequently counter productive of the result.
it was intended to achieve.
If there is a close inter action between the adjudicatory wing of the State and a dynamic and ever alert authority or body which responds swiftly to the draw backs and deficiencies in the law in action, much of the time and money, which is at present expended in fruitless litigation, would be saved and law would achieve a certain amount of clarity, certainty and simplicity which alone can make it easily intelligible to the people.
Since the determination of the question in the appeal turns on the true interpretation to be placed on sub section (2) read in the context of sub section (1) of section 14 of the , it would be convenient at this stage to set out both the sub sections of that section which read as follows: "14(1) Any property possessed by a female Hindu, whether acquired before or after the commencement of this Act, shall be held by her as full owner thereof and not as a limited owner. Explanation.
In this sub section, "property" includes both movable and immovable property acquired by a female Hindu by inheri tance or device, or at a partition, or in lieu of maintenance or arrears of maintenance, or by gift from any person, whether a relative or not, before, at or after her marriage, or by her own skill or exertion, or by purchase or by prescription, or in any other manner what ever, and also any such property held by her as stridharas immediately before the commence ment of this Act.
(2) Nothing contained in sub section (1) shah apply to any property acquired by way of gift or under a will or any other instrument or under a decree or order of a civil court or under an award where the terms of the gift, will or other instrument or the decree, order or award prescribe a restricted estate in such property.
" Prior to the enactment of section 14, the Hindu law, as it was then in operation, restricted the nature of the interest of a Hindu female in property acquired by her and even as regards the nature of this restricted interest, there was great diversity of doctrine on the subject.
The Legisla ture, by enacting sub section (1) of section 14, intended, as pointed by this Court in S.S. Munna Lal vs
S.S. Raikumar(1) "to convert the interest which a Hindu female has in property, however, restricted the nature of that interest under the Sastric Hindu law may be, into absolute estate".
This Court pointed out that the is a codifying enactment and has made far reaching changes in the structure of the Hindu law of inheritance, and succession.
The Act confers upon Hindu females full rights of inheritance (1) [1962] Supp. 3 S.C.R. 418. 268 and sweeps away the traditional limitations on her powers of disposition which were regarded under the Hindu law as inherent in her estate".
Sub section (1) of section 14, is wide in its scope and ambit and uses language of great amplitude.
It says that any property possessed by a female Hindu,.
whether acquired before or after the commencement of the Act, shall be held by her as full owner thereof and not as a limited owner.
The words "any property" are, even without any amplification, large enough to cover any and every kind of property, but in order to expand the reach and ambit of the section and make it all comprehensive, the Legislature has enacted an explanation which says that property would include "both movable and immovable property acquired by a female Hindu by inheritance or device, or at a partition, or in lieu of maintenance or arrears of mainte nance, or by gift from any person, whether a relative or not, before, at or after her marriage, or by her own skill or exertion, or by purchase or by prescription, or in any other manner whatever, and also any such property held by her as stridhana immediately before the commencement" of the Act.
Whatever be the kind of property, movable or immovable, and whichever be the mode of acquisition, it would be cov ered by subsection (1) of section 14, the object of the Legislature being to wipe out the disabilities from which a Hindu female suffered in regard to ownership of property under the old Sastric law, to abridge the stringent provi sions against proprietary rights which were often regarded as evidence of her perpetual tutelege and to recongnize her status as an independent and absolute owner of property.
This Court has also in a series of decisions given a most expansive interpretation to the language of sub section (1) of section 14 with a view to advancing the social purpose of the legislation and as part of that process, construed the words 'possessed of ' also in a broad sense and in their widest connotation.
It was pointed out by this Court in Gummalepura Taggina Matada Kotturuswami vs Setra Veeravva(1) that the words 'possessed of mean "the state of owning or having in one 's hand or power".
It need not be actual or physical possession or personal occupation of the property by the Hindu female, but may be possession in law.
It may be actual or constructive or in any form recognized by law.
Elaborating the concept, this Court pointed out in Mangal Singh vs Rattno(2) that the section covers all cases of property owned by a female Hindu al though she may not be in actual, physical or constructive possession of the property, provided of course, that she has not parted with her rights and is capable of obtaining possession of the property.
It will, therefore, be seen that sub section (1) of section 14 is large in its amplitude and covers every kind of acquisition of property by a female Hindu including acquisition in lieu of maintenance and where such property was possessed by her at the date of commence ment of the Act or was 'subsequently acquired and possessed, she would become the full owner of the property.
Now, sub section (2) of section 14 provides that nothing contained in sub section (1 ) shall apply to any property acquired by way of gift or under a will or any other instru ment or under a decree or order (1) [1959] supp.
1 S.C.R. 968.
(2) ; 269 of a civil court or under an award where the terms of the gift, will or other instrument or the decree, order or award prescribe a restricted estate in such property.
This provi sion iS more in the nature of a proviso or exception to sub section (1) and it was regarded as such by this Court in Badri Pershad vs Smt.
Kanso Devi(1).
It excepts certain kinds of acquisition of property by a Hindu female from the operation of sub section (1) and being in the nature of an exception to a provision which is calculated to achieve a social purpose by bringing about change in the social and economic position of women in Hindu society, it must be construed strictly so as to impinge as little as possible on the broad sweep of the ameliorative provision contained in sub section (1 ).
It cannot be interpreted in a manner which would rob sub section (1 ) of its efficacy and deprive a Hindu female of the protection sought to be given to her by sub section (1 ).
The language of sub section (2) is apparently wide to include acquisition of property by a Hindu female under an instrument or a decree or order or award where the instrument, decree, order or award pre scribes a restricted estate for her in the property and this would apparently cover a case where property is given to a Hindu female at a partition or m lieu of maintenance and the instrument, decree, order or award giving such property prescribes limited interest for her in the proper ty.
But that would virtually emasculate sub section (1), for in that event, a large number of cases where property is given to a Hindu female at a partition or in lieu of mainte nance under an instrument, order or award would be excluded from the operation of the beneficent provision enacted in sub section (1 ), since in ,most of such cases, where property is allotted to the Hindu female prior to the enact ment of the Act, there would be a provision, in consonance with the old Sastric law then prevailing, prescribing limit ed interest in the property and where property is given to the Hindu female subsequent to the enactment of the Act, it would be the easiest thing for the dominant male to provide that the Hindu female shall have only a restricted interest in the property and thus make a mockery of sub section (1).
The Explanation to sub section (1) which includes within the scope of that sub section property acquired by a female Hindu at a partition or in lieu of maintenance would also be rendered meaningless, because there would hardly be a few cases where the instrument, decree, order or award giving property to a Hindu female at a partition or in lieu of maintenance would not contain a provision prescribing re stricted estate in the property.
The social purpose of the law would be frustrated and the reformist zeal underlying the statutory provision would be chilled.
That surely could never have been the intention of the Legislature in enacting sub section (2).
It is an elementary rule of construction that no provision of a statute should be construed in isola tion but it should be construed with reference to the con text and in the light of other provisions of the statute so as, as far as possible, to make a consistent enactment of the whole statute.
Sub section (2) must, therefore, be read in the context of sub section (1) so as to leave as large a scope for operation as possible to sub section (1) and so read, it must be confined to cases where property is ac quired by a female Hindu for the first time as a grant without any pre existing (1) ; 270 right, under a gift, will, instrument, decree, order or award, the terms of which prescribe a restricted estate in the property.
This constructional approach finds support in the decision in Badri Prasad 's case (supra) where this Court observed that sub section (2) "can come into operation only if acquisition in any of the methods enacted therein is made for the first time without there being any pre existing right in the female Hindu who is in possession of the property".
It ' may also be noted that when the Hindu Suc cession Bill 1954, which ultimately culminated into the Act, was referred to a Joint Committee of the Rajya Sabha, clause 15(2) of the Draft Bill, corresponding to the present sub section (2) of section 14, referred only to acquisition of property by a Hindu female under gift or will and it was subsequently that the other modes of acquisition were added so as to include acquisition of property under an instru ment, decree, order or award.
This circumstance would also seem to indicate that the legislative intendment was that sub section (2) should be applicable only to cases where acquisition of property is made by a Hindu female for the first time without any pre existing right a kind of acquisi tion akin to one under gift or will.
Where, however, proper ty is acquired by a Hindu female at a partition or in lieu of right of maintenance, it is in virtue of a pre existing right and such an acquisition would not be within the scope and ambit of sub section (2), even if the instrument, de cree, order or award allotting the property prescribes a restricted estate in the property.
This line of approach in the construction of sub section (2) of section 14 is amply borne out by the trend of judi cial decisions in this Court.
We may in this connection refer to the decision in Badri Parasad 's case (supra).
The facts in that case were that one Gajju Mal owning self acquired properties died in 1947 leaving five sons and a widow.
On August 5, 1950, one Tulsi Ram Seth was appointed by the parties as an arbitrator for resolving certain dif ferences which had arisen relating to partition of the properties left by Gujju Mal.
The arbitrator made his award on December 31, 1950 and under clause 6 of the award, the 'widow was awarded certain properties and it was expressly stated in the award that she would have a widow 's estate in the properties awarded to her.
While the widow was in possession of the properties, the Act came into force and the question arose whether on the coming into force of the Act, she became full owner of the properties under sub section (1) or her estate in the properties remained a restricted one under sub section (2) of section 14.
This Court held that although the award gave a restricted estate to the widow in the properties allotted to her, it was sub section (1) which applied and not sub section (2), because inter alia the properties given to her under the award were on the basis of a pre existing right which she had as an heir off .her husband under the Hindu Women 's Right to Property Act, 1937 and not as a new grant made for the first time.
So also in Nirmal Chand vs Vidya Wanti (dead) by her legal representatives(1), there was a regular partition deed made on December 3, 1945 between Amin chand, a coparcener and (1) C.A. No. 609 of 1965, decided on January 21, 1969.
271 Subhrai Bai, the widow of a deceased coparcener, under which a certain property was allotted to Subhrai Bai and it was specifically provided in the partition deed that Subhrai Bai would be entitled only to the user of the property and she would have no right to alienate it in any manner but would only have a life interest.
Subhrai Bai died in 1957 subse quent to the coming into force of the Act after making a will bequeathing the property in favour of her daughter Vidyawati.
The right of Subhrai Bai to bequeath the property by will was challenged on the ground that she had only a limited interest in the property and her case was covered by sub section (2) and not sub section (1).
This contention was negatived and it was held by this Court that though it was true that the instrument of partition prescribed only a limited interest for Subhrai Bai in the property, that was in recognition of the legal position which then prevailed and hence it did not bring her case within the exception contained in sub section (2) of section 14.
This Court observed: "If Subhrai Bai was entitled to a share in her husband 's properties then the suit proper ties must be held to have been allotted to her in accordance with law.
As the law then stood she had only a life interest in the properties taken by her.
Therefore the recital in the deed in question that she would have only a life interest in the properties allotted to her share is merely recording the true legal position.
Hence it is ' not possible to con clude that the properties in question were given to her subject to the condition of her enjoying it for her life time.
Therefore the trial court as well as the first Appellate Court were right in holding that the facts of the case do not fall within section 14(2) of the Hindu Succession Act, 1955.
" It will be seen from these observations that even though the property was acquired by Subhrai Bai under the instrument of partition, which gave only a limited interest to her in the property, this Court held.
that the case fell within sub section (1) and not sub section (2).
The reason obviously was that the property was 'given to Subbrai Bai in virtue of a pre existing right inhering in her and when the instrument of partition provided that she would only have a limited interest in the property, it merely provided for something which even otherwise would have been the legal position under the law as it then stood.
It is only when property is acquired by a Hindu female as a new grant for the first time and the instrument, decree; order or award giving the property prescribes the terms on which it is to be held by the Hindu female, namely, as a restricted owner, that sub section (2) comes into play and excludes the applicability of sub section (1).
The object of sub section (2), as pointed out by this Court in Badri Persad 's case (supra) while quoting with approval the observations made by the Madras High Court in Rangaswami Naicker vs Chinnammal(1), is "only to remove the disability of women imposed by law and not to interfere with contracts, grants or decree etc.
by virtue of which a woman 's right was restricted" and, there fore, where property is acquired by a Hindu female under the instrument in virtue of a pre existing (1) A.I.R. 1964 Mad.
387. 272 right, such as a right to obtain property on partition or a fight to maintenance and under the law as it stood prior to the enactment of the Act, she would have no more than limit ed interest in the property, a provision in the instrument giving her limited interest in the property would be merely by way of record or recognition of the true legal position and the restriction on her interest being a "disability imposed by law" would be wiped out and her limited interest would be enlarged under sub section (1).
But where property is acquired by a Hindu female under an instrument for the first time without any pre existing right solely by virtue of the instrument, she must hold it on the terms on which it is given to her and if what is given to her is a restricted estate, it would not be enlarged by reason of sub section (2).
The controversy before us, therefore, boils down to the narrow question whether in the 'present case the proper ties were acquired by the appellant under the compromise in virtue of a pre existing right or they were acquired for the first time as a grant owing its origin to the compromise alone and to nothing else.
Now, let us consider how the properties in question came to be acquired by the appellant under the compromise.
The appellant claimed maintenance out of the joint family properties in the hands of the respondent who was her deceased husband 's brother.
The claim was decreed in favour of the appellant and in execution of the decree for mainte nance, the compromise was arrived at between the parties allotting the properties in question to the appellant for her maintenance and giving her limited interest in such properties.
Since the properties were allotted to the appel lant in lieu of her claim for maintenance, it becomes neces sary to consider the nature of the right which a Hindu widow has to be maintained out of joint family estate.
It is settled law that a widow is entitled to maintenance out of her deceased husband 's estate, irrespective whether that estate may be in the hands of his male issue or it may be in the hands of his coparceners.
The joint family estate in which her deceased husband had a share is liable for her maintenance and she has a right to be maintained out of the joint family properties and though, as pointed out by this Court in Rant Bai vs Shri Yadunanden Ram,(1) her claim for maintenance is not a charge upon any joint family property until she has got her maintenance determined and made a specific charge either by agreement or a decree or order of a court, her right is "not liable to be defeated except by transfer to a bona fide purchaser for value without notice of her claim or even with notice of the claim unless the transfer was made with the intention of defeating her right".
The widow can for the purpose of her maintenance follow the joint family property "into the hands of any one who takes it as a volunteer or with notice of her having set up a claim for maintenance".
The courts have even gone to the length of taking the view that where a widow is in possession of any specific property for the purpose of her maintenance, a purchaser buying with notice of her claim is not entitled to possession of that property without first securing proper maintenance for her, vide Rachawa & Ors.
vs Shivayanappa (2) cited with approval in Ranibai 's case (supra).
It is, therefore, clear (1) ; (2) I.L.R. 273 that under the Sastric Hindu Law a widow has a right to be maintained out of joint family property and this right would ripen into a charge if the widow takes the necessary steps for having her maintenance ascertained and specifically Charged in the joint family property and even .if no specif ic charge i.s created, this right would be enforceable against joint family property in the hands of a volunteer or a purchaser taking it with notice of her claim.
The right of the widow to be maintained is of course not a ]us in rein, since it does not give her any interest in the joint family property but it is certainly jus ad rem, i.e., a right against the joint family property.
Therefore, when specific property is allotted to the widow in lieu of her claim for maintenance, the allotment would be in satisfac tion of her jus ad rem, namely, the right to be main tained out of the joint family property.
It would not be a grant for the first time without any pre existing right in the widow.
The widow would 'be getting the property in virtue of her pre existing right, the instrument giving the property being merely a document effectuating such pre existing right and not making a grant of the property to her for the first time without any antecedent right or title.
There is also another consideration which is very relevant to this issue and it is that, even if the instrument were silent as to the nature of the interest given to the widow in the property and did not, in so many terms, prescribe that she would have a limited interest, she would have no more than a limited interest in the property under the Hindu law as it stood prior to the enactment of the Act and hence a provision in the instrument prescribing that she would have only a limited interest in the property would be, to quote the words of this Court in Nirmal Chand 's case (supra), "merely recording the true legal position" and that would not attract the applicability of sub section (2) but would be governed by sub section (1) of section 14.
The conclusion is, therefore, inescapable that where proper ty is allotted to a widow under an instrument, decree, order or award prescribes a restricted estate for her in the property and sub section (2) of section 14 would have no application in such a case.
We find that there are several High Courts which have taken the same view which we are taking in the present case.
We may mention only a few of those decisions, namely, B.B. Patil vs Gangabai(1), Sumeshwar Misra vs Swami Nath Tiwari,(2) Reddayya vs Varapula Venkataraju,(3) Lakshmi Devi vs Shankar Jha (4) N. Venkanegouda vs Hanemangouda,(5) Smt.
Sharbati Devi vs Pt.
Hiralal,(6) Sesadhar Chandra Dev vs Smt.
Tara Sundari Dasi,(7) Saraswathi Ammal vs Anantha Shenoi (8) and Kunji Thomman vs Meenakshi(9).
It is (1) A.I.R. (1972) Bom.
16 (2) A.I.R. (1970) Pat.
(3) A.I.R. (1965) A.P. 66 (4) A.I.R. (1967) Mad.429 (5) A.I.R. (1972) Mys.
(6) A.I.R. (1964) Pub.
(7) A.I.R. (1962) Cal.
(8) A.I.R. (1966) Ker.
(9) I.L.R. 3 436SCI/77 274 not necessary to refer to these decisions since we have ourselves discussed the question of construction of sub sections (1) and (2) of section 14 on Principle and pointed out what in our view is the correct construction of these provisions.
We may only mention that the judgment of Pale kar, J., as he then was, in B.B. Patii vs Gangabai (supra) is a well reasoned judgment and it has our full approval.
The contrary view taken in Gurunadham vs Sundarajulu,(1) Santhanam vs Subramania,(2) section Kachapalava Gurukkal vs I7.
Subramania Gurukkal(3), Shiva Pujan Rai vs Jamuna Missir,(4) Gopisetti Kondaiah vs Gunda Subbarayudu(5), Ram Jag Misir vs The Director Consolidation, U.p.(6) and Ajab Singh vs Ram Singh (7) does not, in our opinion, represent the correct law on the subject and these cases must be held to be wrong ly decided.
In the circumstances, we reach the conclusion that since in the present case the properties in question were acquired by the appellant under the compromise in lieu or satisfac tion of her right of maintenance, it is sub section (1 ) and not sub section (2) of section 14 which would be applicable and hence the appellant must be deemed to have become full owner of the properties notwithstanding that the compromise prescribed a limited interest for her in his properties.
We accordingly allow the appeal, set aside the judgment and decree of the High Court and restore that of the District Judge, Nellore.
The result is that the suit will stand dismissed but with no order as to costs.
FAZAL ALI, J. This is a defendant 's appeal by special leave against the judgment of the High Court of Andhra Pradesh dated November 22, 1967 and arises in the following circumstances.
Venkatasubba Reddy, husband of appellant No. 1 Vaddebo yina Tulasamma hereinafter to be referred to as 'Tulasam ma ' died in the year 1931 in a state of jointness with his step brother V. Sesha Reddy and left behind Tulasamma as his widow.
On October 11, 1944 the appellant Tulasamma filed a petition for maintenance in forma pauperis against the respondent in the Court of the District Munsif, Nellore.
This application was set ex parte on January 13, 1945 bug subsequently the petition.was registered as a suit and an ex parte decree was passed against the respondent on June 29, 1946.
On October 1, 1946 the respondent filled an interlocutory application for recording a compromise alleged to have been arrived at between the parties out of Court on April 9, 1945.
The appellant Tulasamma opposed this application which was ultimately dismissed on October 16, 1946.
An appeal filed by the respondent to the District Judge,Nellore was also dismissed.
Thereafter Tulasamma put the decree in (1) I.L.R. (2) I.L.R. (3) A.I.R. (1972) Mad.
(4) I.L.R. (1947) Pat.
(5) I.L.R. (6) (7) A.I.R. (1969) J & K 92.
275 execution and at the execution stage the parties appear to have arrived at a settlement out of Court which was certi fied by the Executing Court on July 30, 2949 under O. XXI r. 2 of the Code of Civil Procedure.
Under the compromise the appellant Tulasamma was allotted the Schedule properties, but was to enjoy only a limited interest therein with no power of alienation at all.
According to the terms of the compromise the properties were to revert to the plaintiff after the death of Tulasamma.
Subsequently Tulasamma con tinued to remain in possession of the properties even after coming into force of the Hindu Succession Act, 1956 here inafter to be referred to as. 'the 1956 Act, or 'the Act of 1956 '.
By two registered deeds dated April 12, 1960 and May 26, 1961, the appellant leased out some of the proper ties to defendants 2 & 3 by the first deed and sold some of the properties to defendant 4 by the second 'deed.
The plaintiff/respondent filed a suit on July 31, 1961 before the District Munsiff, Nellore for a declaration that the alienation made by the widow Tulasamma were not binding on the plaintiff and could remain valid only till the life time of the widow.
The basis of the action filed by the plain tiff was that as the appellant Tulasamma had got a restrict ed estate only under the terms of the compromise her inter est could not be enlarged into an absolute interest by the provisions of the 1956 Act in view of section 14(2) of the said Act.
The suit was contested by the appellant Tulasamma who denied the allegations made in the plaint and averred that by virtue of the provisions of the 1956 Act she had become the full owner of the properties with absolute right of alienation and the respondent had no locus standi to file the present suit.
The learned Munsiff decreed the suit of the plaintiff holding that the appellant Tulasamma got merely a limited interest in the properties which could be enjoyed during her lifetime and that the alienations were not binding on the reversioner.
Tulasamma then filed an appeal before the District Judge Nellore, who reversed the finding of the Trial Court, allowed the appeal and dismissed the plaintiff 's suit holding that the appellant Tulasamma had acquired an absolute interest in the properties by virtue of the provisions of the 1956 Act.
The learned Judge further held that sub section
(2) of section 14 had no applica tion to the present case, because the compromise was an instrument in recognition of a pre existing right.
The plaintiff/respondent went up in second appeal to the High Court against the judgment of the District Judge.
The plea of the plaintiff/respondent appears to have found favour with the High Court which held that the case of the appel lant was clearly covered by section 14(2) of the Hindu Succes sion Act and as the compromise was an instrument as contem plated by section 14(2) of the 1956 Act Tulasamma could not get an absolute interest under section 14(1) of the Act.
The High Court further held ' that by virtue of the compromise the appellant Tulasamma got title to the properties for the first time and it was not a question of recognising a pre existing right which she had none in view of the fact that her husband had died even before the Hindu Women 's Right to Property Act, 1937.
We might further add that the facts.
narrated above have not been disputed by counsel for the parties.
The appeal has been argued only on the substantial questions of law which turn.
upon the interpretation of sub sections
(1) & (2) of section 14 276 of the .
It is common ground that in this case as also in the.
other connected appeals, the properties in suit were allotted under a compromise or an instrument in lieu of maintenance.
It is also admitted that the appellant Tulasamma was in possession of the properties at the time when the 1956 Act came into force.
Finally it is also not disputed that the compromise did purport to confer only a limited interest on the widow restricting completely her power of alienation.
We have now to apply the law on the facts mentioned above.
Similar points were involved in the other two appeals Nos.
135 of 1973 and 126 of 1972.
We have heard all the, three appeals together and in all these appeals counsel for the parties have confined their argu ments only to the questions of law without disputing the findings of fact arrived at by the Courts below.
Thus the two points that fall for determination in this appeal may be stated thus: .lm18 (1) whether the instrument of compromise under which the properties were given to the appellant Tulasamma before the 1956 Act in lieu of maintenance falls within section 14(1) or is covered by section 14(2) of the 1956, Act and (2) Whether a Hindu widow has a right to property in lieu of her maintenance, and if such a right is conferred on her subsequently by way of maintenance it would amount to mere recognition of a preex isting right or a conferment of new title so as to fall squarely within section 14(2) of the 1956 Act.
There appears to be serious divergence of judicial opinion on the subject and the High Courts have taken con trary views on this point.
Some High Courts, particularly, Bombay, Punjab, Calcutta and Patna have veered round to the view that a right of maintenance claimed by a Hindu widow is a pre existing right and any instrument or document or transaction by which the properties are allotted to the widow in lieu of her maintenance would only be recognition of a pre existing right and would not confer any new title on the window.
Following this line of reasoning the afore said High Courts have held that the properties allotted to the Hindu widow even though they conferred a limited inter est would fall clearly within the ambit of section 14(1) of the 1956 Act by virtue of which the limited interest would be enlarged into an absolute interest on the coming into force of the 1956 Act.
On the other hand the Orissa, Allahabad, Madras and Andhra Pradesh High Courts have taken a contrary view and have held that as the Hindu widow 's right to maintenance is not a right to property, property allotted to her in lieu of maintenance confers on her a right or title to the property for the first time and therefore such Conferment is protected by section 14(2) of the 1956 Act and is not covered by section 14(1).
Unfortunately, however, there is no decision of this Court which is directly in point, though there are some decisions which tend to support the view taken by the Bombay High Court.
277 Before, however, resolving this important dispute it may be necessary to consider the real legal nature of the incident of a Hindu widow 's right to maintenance.
In order to determine this factor we have to look to the concept of a Hindu marriage.
Under the Shastric Hindu Law, a marriage, unlike a marriage under the Mohammadan Law which is purely contractual in nature, is a sacrament a religious ceremony which results in a sacred and a holy union of man and wife by virtue of which the wife is completely transplanted in the household of her husband and takes a new birth as a partner of her husband becoming a part and parcel of the body of the husband.
To a Hindu wife her husband is her God and her life becomes one of selfless service and unstinted devotion and profound dedication to her husband.
She not only shares the life and love the joys and sorrows, the troubles and tribulations of her husband but becomes an integral part of her husband 's life and activities.
Cole brooke in his book 'Digest of Hindu Law ' Vol.
II de scribes the status of wife at p. 158 thus: "A wife is considered as half the body of her husband, equally sharing the fruit of pure and impure acts; whether she ascend "the pile after him, or survive for the benefit of her husband, she is a faithful wife.
" This being the position after marriage, it is manifest that the law enjoins a corresponding duty on the husband to maintain his wife and look after her comforts and to provide her food and raiments.
It is well settled that under the Hindu!Law the husband has got a personal obligation to maintain his wife and if he is possessed of properties then his wife is entitled as of right to be maintained out of such properties.
The claim of a Hindu widow to be main tained is not an empty formality which is to be exercised as a matter of concession or indulgence, grace or gratis or generosity but is a valuable spiritual and moral right which flows from the spiritual and temporal relationship of the husband an wife.
As the wife is in a sense a part of the body of her husband, she becomes co owner of the property of her husband though in a subordinate sense.
Although the right of maintenance does not per se create a legal charge on the property of her husband, yet the wife can enforce this right by moving the Court for passing a decree for maintenance by creating a charge.
This right is available only so long as the wife continues to be chaste.
Thus the position is that the right of maintenance may amount to a legal charge if such a charge is created either by an agree ment between the parties or by decree.
There are a number of authorities which have taken the view that even if the property is transferred and the trans feree takes the property with notice of the right of the widow to be maintained out of the property, the purchaser takes the obligation to maintain the widow out of the property purchased and the wife or widow can follow the property in the hands of the purchaser for the limited purpose of her maintenance.
We shall, however, deal with these authorities a little later.
278 Colebrooke in his 'Digest of Hindu Law Vol.
1I, quotes the.
Mahabharata at p. 121 thus: "Where females are honoured, there the deities are pleased; but where they are unhonoured, there all religious acts become fruitless.
" This clearly illustrates the high position which is bestowed on Hindu women by the Shastric Law.
Again Colebrooke in his book Vol.
II at p. 123, while describing the circumstances under which the maintenance is to be given to the wife, quotes Manu thus: "MANU : Should a man have business abroad, let him assure a fit maintenance to his wife, and then reside for a time in a foreign country; since a wife, even though virtuous, may be tempted to act amiss, if she be distressed by want of subsistence: While her husband, having settled her maintenance, resides abroad, let her continue firm in religious austerities; but if he leave no support, let her subsist by spinning an other blameless articles" This extract clearly shows that there is a legal obligation on the part of the husband to make arrangements for his wife 's due maintenance even if he goes abroad for business purposes.
Colebrooke again quotes Yajnawalkya at p. 243 of his book Vol.
thus: "When the father makes an equal partition among his sons, his wives must have equal shares with them, if they have received no wealth either from their lord or from his father.
If he makes an equal partition among his sons by his own choice, he must give equal shares to such of his wives also as have no male issue.
" This shows that when a partition is effected, the Hindu Law enjoins that the wife must get an equal share with the sons, thus reinforcing the important character of the right of maintenance which a Hindu wife or widow possesses under the Hindu Law.
Similarly Gopalchandra Sarkar Sastri dealing with the nature and incidents of the Hindu widow 's right to mainte nance observes in his treatise 'Hindu Law ' at p. 533 thus: "When the husband is alive, he is per sonally liable for the wife 's maintenance, which is also a legal charge upon his proper ty, this charge being a legal incident of her marital co ownership in all her husband 's property .
But after his death, his widow 's right of maintenance becomes limited to his estate, which, when it passes to any other heir, is charged with the same . .
There cannot be any doubt that under Hindu law the wife 's or widow 's maintenance is a legal charge on the husband 's estate; but the Courts appear to hold, 279 in consequence of the proper materials not being placed before them, that it is not so by itself, but is merely a claim against the husband 's heir, or an equitable charge on his estate; hence the husband 's debts are held to have priority, unless it is made a charge on the property by a decree.
" The view of the author appears to be that the Courts hold that the right of maintenance of a widow does not amount to a legal charge and this is so because proper materials were not placed before the Courts.
In other words, the author seems to indicate that the original Hindu Law contained clear provisions that the right of! maintenance amounts to a charge on the property of her husband and the obligation runs; with the property so that any person who inherits the property also takes upon the obligation to maintain the widow.
Sastri quotes from the original texts various ex tracts regarding the nature and extent of the right of maintenance of the Hindu women some of which may be extract ed thus: "The support of the group of persons who should be maintained, is the approved means of attaining heaven, but hell is the man 's portion if they suffer; therefore he should carefully maintain them.
The father, the mother, the Guru (an elderly relation worthy of respect), a wife, an offspring, poor dependants, a guest, and a religious mendicant are declared to be the group of persons who are to be maintained.
Manu, cited in Srikrishna 's commentary on the Dayabhaga, ii, 23.
It is declared by Manu that the aged mother and father, the chaste wife, and an infant child must be maintained even by doing a hundred misdeeds, Manu cited in the Mitak ' shara while dealing with gifts.
" The last extract dearly shows the imperative nature of the duty imposed on the owner of the property to maintain wife, aged mother, father etc.
even at the cost of perpetrating a hundred misdeeds.
Similarly Sastri in his book quotes Yajnaval kya at p. 523 thus: "Property other than what is required for the maintenance of the family may be given.
" The learned author highlights the importance of the right maintenance as being a charge on the property of the husband and observes as follows: "The ancestral immovable property is the hereditary source of maintenance of the mem bers of the family, and the same is charged with the liability of supporting its members, all of whom acquire a right to, such property from the moment they become members of the family, by virtue of which they are at least entitled to maintenance out of the same.
Such 280 property cannot be sold or given away except for the support of the family; a small portion of the same may be alienated, if not incompat ible with the support of the family.
There is no difference between the two schools as regards the view that the ances tral property is charged with the maintenance of the members of the family, and that no alienation can be made, which will prejudi cially affect the support of the group of persons who ought to be maintained.
Hence heirs are bound to maintain those whom the last holder was bound to maintain.
" The author further points out that under the Mitakshara law the daughter in law does, with her husband, acquire a right to the ancestral property, since her marriage, but she becomes her husband 's co owner in a subordinate sense, and the principal legal incident of this ownership is the right to maintenance, which cannot be defeated by gift or devise made by the holder of such property.
Similar observations have been made by the learned author at p. 528 of the book which may be extracted thus: "According to both the schools, the lawfully wedded wife acquires from the moment of her marriage a right to the property be longing to the husband at the, time and also to any property that may subsequently be acquired by him, so that she becomes a co owner of the husband, though her right is not co equal to that of the husband, but a subor dinate one, owing to her disability founded on her status of perpetual or life long tutelege or dependence.
. . . . . .
This right of the wife to maintenance from her husband is not lost even if the husband renounce Hinduism.
This right subsists even after the husband 's death although her husband 's right as distinguished from hers may pass by suvi vorship or by succession to sons or even to collaterals; these simply step into the posi tion of her husband, and she is required by Hindu law to live under their guardianship after her husband 's death.
" Finally it is pointed out by the learned author at p. 529 of the Book that the right which a woman acquires to her husband 's property subsists even after his death and ob served thus: "According to both the schools, the right which a woman acquires to her husband 's property subsists after his death, whether his interest passes by succession or by survivor ship to the male issue or any other person, and that this right does not depend upon the widow 's not possessing other means of support.
" 281 Summarising the nature of the liability of the husband to maintain his wife, the learned author observed as follows at p. 533 of his Book: "When the husband is alive, he is person ally liable for the wife 's maintenance, which is also a legal charge upon his property, this charge being a legal incident of her marital co ownership in all her husband 's property . .
But after 'his death, his widow 's right of maintenance becomes limited to his estate, which, when it passes to any other heir, is charged with the same . .
There cannot be any doubt that under Hindu law the wife 's or widow 's maintenance is a legal charge on the hus band 's estate; but the Courts appear to hold, in consequence of the proper materials not being placed before them, that it is not so by itself, but is merely a claim against the husband 's heir, or an equitable charge on his estate; hence the husband 's debts are held to have priority, unless it is made a charge on the property by a decree.
" To sump up, therefore, according to.
Sastri 's interpre tation of Shastric Hindu Law the right to maintenance possessed by a Hindu widow is a very important right which amounts.
to a charge on the property of her husband which continues to the successor of the property and the wife is regarded as a sort of co owner of the husband 's property though in a subordinate sense, i.e. the wife has no dominion over the property.
Similarly Mayne in his "Treatise on Hindu Law & Usage", 11th Edn., has traced the history and origin of the right of maintenance of a Hindu woman which according to him arises from the theory of an undivided family where the head of the family, is .bound to maintain the members including their wives and their children.
The learned author observes thus: (p. 813).
"The importance and extent of the right of maintenance necessarily arises from the theory of an undivided family.
The head of such a family is bound to maintain its mem bers, their wives and their children, to perform their ceremonies and to defray the expenses of their marriages;" Again at p. 816 para 684 the author stresses the fact that the maintenance of a wife is a matter of personal obligation on the part of the husband and observes thus: "The maintenance of a wife, aged parents and a minor son is a matter of personal obli gation arising from the very existence of the relationship and quite independent of the possession of any property, ancestral or acquired . . 'It is declared by Manu that the aged mother and father, the chaste wife and an infant child must be maintained even by doing a hundred misdeeds.
" 282 Again it has been observed at p. 818 para 687: "The maintenance of a wife by her hus band is, of course, a matter of personal obligation., which attaches from the moment of marriage." The author points out at p. 821 paragraph 689 that even after the coming into force of the Hindu Women 's Right to Property Act, 1937 which confers upon the widow a right of succession in respect of the non agricultural property, she is still entitled to maintenance from the family property.
The author observes thus: "It cannot, therefore, be said that the reason of the right has ceased to exist and the right is gone.
It was accordingly held that the widow of a deceased coparcener is still entitled to maintenance notwithstanding her right under the Act to a share in.
the non agricultural part of the family estate.
" Furthermore, the author cites the passage of Narada cited in Smriti Chandrika regarding which there is no dispute.
The saying runs thus: "Whichever wife (patni) becomes a widow and ' continues virtuous, she is entitled to be provided with food and raiment.
" At p. 822 para 690 the author points out that the right of a widow to be maintained is taken over even by the heirs of the husband who succeed to his property either by inheri tance or by survivorship.
In this connection the following observations are made: "She is entitled to be maintained where her husband 's separate property is taken by his male issue.
Where, at the time of his death, he was a coparcener she is entitled to maintenance as against those who take her husband 's share by survivorship." The Hindu law is so jealous in guarding the interests .
of Hindu women that the obligation for maintaining the Hindu women falls even on the King when he takes the estate by escheat or by forfeiture.
Similarly Mulla in his book "Hindu Law", 14th Edn., describes the incidents and characteristics of Hindu wife 's right to maintenance and observes thus at p. 597: "A wife is entitled to be maintained by her husband, whether he possesses property or not.
When a man with his eyes open marries a girl accustomed to a certain style of liv ing, he undertakes the obligation of maintain ing her in that style.
The maintenance of a wife by her husband is a matter of personal obligation arising from the very existence of the relationship, and quite independent of the possession by the husband of any property, ancestral or self acquired.
" 283 We might further mention that the Hindu wom en 's right to maintenance finally received statutory recognition and the entire law on the subject was consolidated and codified by the Hindu Married Women 's Right to Separate Maintenance and Residence Act, 1946 hereinaf ter to be referred to as 'the Act of 1946 ' which came into force on April 23, 1946.
Thus there appears to be complete unanimity of the various schools of Hindu law on the important incidents and indicia of the Hindu women 's right to maintenance which has now received statutory recognition and which only shows that the right to maintenance though not an indefeasible right to property is undoubtedly a pre existing right.
We shall now refer to some of the authorities which have dealt with this aspect of the matter.
In Narayan Rao Ramchandra Pant vs Ramabai(1), the Judicial Committee pointed out that the widow 's right to maintenance arises from the common law which developed from time to time.
justice West of the Bombay High Court appears to have entered into a very elaborate discussion of the entire law on the subject in Lakshman Ramchandra Joshi and Anr.
vs Satyabhamabai(2) and observed as follows: "These several authorities, no doubt, afford, in combination, a strong support to the proposition that a widow 's maintenance, especially as against the sons, the a charge on the estate, a right in re in the fullest sense adhering to the property, into whatever hands it may pass.
" These observations were reiterated in a later case in Narba dabai vs Mahadeo Narayan, Kashinath Narayan and Shamabai(3).
The observations of West J., in Lakshman Ramchandra Joshi and Anr 's case (supra) were fully approved by the Judicial Committee in Mst.
Dan Kuer vs Mst.
Sarla Devi(4), where it was observed: "But, apart from this circumstance, the judgment of West J., whose dissertations on Hindu Law must always command great esteem, contains an exposition of the law on this point, and the case is therefore rightly regarded as a leading authority on the ques tion.
In the course of his judgment that learned judge quotes with approval the remarks of Phear J., in Srimati Bhagabati vs Kanailal Mitter (1872) 8 Ben.
L.R. 225 that "as against one who has taken the property as heir, the widow has a right to have a proper sum for her maintenance ascertained and made a charge on the property in his hands.
She may also, doubtless, follow the property for this purpose into the hands of anyone who.
takes it as a volunteer, or with notice of her having set up a claim for maintenance against the heir" and that "when the property (1) L.R. 6 I.A. 114.
(2) I.L.R. (3) I.L.R. (4) L.R. 73 I.A. 208.
284 passed into the hands of a bona ' fide purchaser without notice, it cannot be affected by anything short of an already existing proprietary right; it cannot be subject to that which is not already a specif ic charge, or which does not contain all the elements necessary for its ripening into a specific charge.
" Summarising the entire position the Privy Council enunci ated the law thus: "The true rule of Hindu law in such matters would appear to be as follows: Two, obliga tions confront a joint Hindu family.
(1) The obligation to pay the debts (for instance, of the father) binding on the family; and (2) the moral obligation "to provide maintenance to the widows of the family.
" The latter obligation would, under certain circumstances, ripen into a legal obligation, as, for in stance, when a charge is created on specific property of the family either by agreement or a decree of the court; that, so long as neither of these two obligations has taken the form of a charge on the family property, the obligation to pay the binding debts will have precedence (as, for instance, in the course of the administration of the estate) over mere claims of a female member 's main tenance, but, if either of these two obliga tions assumes the shape of a charge, it would take precedence over the other." In Pratapmull Agarwalla vs Dhanabati Bibi,(1) the Judicial Committee pointed out that while a mother may not be the owner of her share until partition is made and has no pro existing right with regard to the share in the property, but she has a pro existing right for maintenance.
This Court also has made similar observations in a large number of cases regarding the nature and extent of the Hindu women 's right to maintenance.
In Rani Bai vs Shri Yadunandan Ram & Artr (2) this Court, while dealing with a situation where a widow claimed the right of maintenance but refused to hand over possession of the property until she secured her proper maintenance, observed as follows: .lm 15 "It cannot be disputed that the appel lant who is the widow of a pre deceased son of Jangi Jogi was entitled to receive main tenance so long as she did not to marry out of the estate of her father in law.
Although her claim for maintenance was not a charge upon the estate until it had been fixed and specifically charged thereupon her right was not liable to be defeated except by transfer to a bona fide purchaser for value without notice of a claim or even with notice of a claim unless the transfer was made with the intention of defeating her right.
The courts in India have taken the view that where a widow is in possession of a specific proper ty for the purpose of her maintenance a pur chaser buying with notice of her claim is not entitled to (1) L.R. 63 1.A. 33.
(2) ; 285 possession of that property without first securing proper maintenance for her: [vide Rachawa & others vs Shivayogappa I. .
In the present case it is difficult to understand how the appellant could be deprived of the possession of proper ties by a trespasser.
Moreover she was presum ably in possession of these properties in lieu of her right of maintenance and could not be deprived of them even by Jugli Bai without first securing proper maintenance for her out of the aforesaid properties.
" In Sheo Dyal Tewaree vs Judoonath Tewaree, (1) the Calcutta High Court stressed the fact that although the widow may not be the owner of a share but she had a pre existing right of maintenance.
Elucidating the nature and extent of a right of a Hindu wife to maintenance, the Calcutta High Court pointed out in Srinath Das vs Probodh Chunder Das(2) that the right of maintenance is really identified with the husband 's property right though of a subordinate nature.
In Hemangini Dasi vs Kedarnath Kundu Chowdhury(3) the Privy Council held that if the estate remained joint and undivided the maintenance of the mother remained a charge on the whole estate and that any share that the widow took in the property which was equal to the share of a son was really in lieu of maintenance for which the estate was liable.
The position has been very succinctly stated and meticu lously analysed by a decision of the Madras High Court in K.V. Thangavelu vs The Court of Wards, Madras,(4) where, dealing with the entire history of the matter and relying on various original texts of the Hindu jurists, the Madras High Court pointed out that a cogent ground for preferring the widow 's claim is to be found in her qualified or subordinate co ownership in the husband 's property declared by the Mitakshara.
The Court referred to verse 52 of Vyavaharad haya (chapter II) where the Mitakshara refers to Apastam ba 's Dharmasutra as follows: "From marriage arises also jointness (sahatwam) in the holding of property (dravya paragraphestiu)." In an earlier case Sarojinidevi vs Subrahmanyam,(5) the Madras High Court held that even after the coming into force of the Hindu Women 's Right to Property Act, 1937, which did not apply to agricultural lands, the right of the Hindu widow to maintenance stood in tact and the widow was enti tled to maintenance notwithstanding her right under the Act to a share in the non agricultural part of the family es tate.
To the same effect is an earlier decision (1) (2) 11 C.L.J. 580.
(3) I.L.R. (4) (5) I.L.R. 286 of the Madras High Court in Jayanti Subbiah vs Alamelu Mangamma( ') where the High Court pointed out that under the Hindu Law the maintenance of a wife by her husband is a matter of personal obligation arising from the very exist ence of her relationship and quite independent of the pos session by the husband of any property ancestral or self acquired.
We fully agree with this exposition of the law which is supported by a large number of authorities as discussed above.
In Yella 'wa vs Bhimangavda(2), the Bombay High Court was of the view that even the heir of the husband 's property could not be allowed to recover possession from the widow without first making proper arrangements for her mainte nance.
This case was approved by this Court in Rani Bags case (supra).
Thus on a careful consideration and detailed analysis of the authorities mentioned above and the Shastric Hindu Law on the subject, the following propositions emerge with respect to the incidents and characteristics of a Hindu woman 's right to maintenance: (1) that a Hindu woman 's right to maintenance is a personal obligation so far as the husband is ' concerned, and it is his duty to maintain her even if he has no property.
If the hus band has property then the right of the widow to maintenance becomes an equitable charge on his property and any person who succeeds to the property carries with it the legal obliga tion to maintain the widow; (2) though the widow 's right to maintenance is not a right to property but it is undoubtedly pre existing right in property, i.e. it is a jus ad rem not jus in rem and it can be en forced by the widow who can get a charge created for her maintenance on the property either by an agreement or by obtaining a decree from the civil court; (3) that the right of maintenance is a matter of moment and is of such importance that even if the joint property is sold and the purchas er has notice of the widow 's right to mainte nance, the purchaser is legally bound to provide for her maintenance; (4) that the right to maintenance is undoubt edly a preexisting right which existed in the Hindu Law long before the passing of the Act of 1937 or the Act of 1946, and is, therefore, a pre existing right; (5) that the right to maintenance flows from the social and temporal relationship between the husband and the wife by virtue of which the wife becomes a sort I.L.R. (2) I.L.R. 287 of co owner in the property of her husband, though her co ownership is of a subordinate nature; and (6)that where a Hindu widow is in possession of the property of her husband, she is enti tled to retain the possession in lieu of her maintenance unless the person who succeeds to the property or purchases the same is in a position to make due arrangements for her maintenance.
With this preface regarding a Hindu woman 's right to maintenance and the necessary concomitants and incidents of those rights, we now proceed to determine the question of law that arises for consideration in this appeal.
Before taking up that question, I might trace the historical growth of the legislation introducing slow and gradual changes in the Shastric Hindu from time to time.
The exact origin of Hindu Law is steeped and shrouded in antiquity and, therefore, it is not possible to determine the ethics or Justification for assigning a somewhat subordinate position to a Hindu woman in matters of inheritance, marriage and the nature of the limited interest which she took even after inheriting her husband 's property.
It is also strange that the Hindu Law made no provision for divorce at all.
This may be due to 'the fact that during the time of Manu and Yajnav alkya the structure of the Hindu society was quite different 'and there being no social problem of the magnitude that we have today, it was not considered necessary to break up the integrity and solidarity of a Hindu family by allowing ownership rights to the Hindu females.
Another object may have been to .retain the family property within the family in order to consolidate the gains which a particular family may have made.
However, these are matters of speculation.
But one thing is dear, namely, that the Hindu jurists were very particular in making stringent provisions safeguarding the maintenance of the Hindu females either by the husband or even by his heirs after his death.
Perhaps they thought that the property which a widow may receive in lieu of maintenance or the expenses which may be incurred for her maintenance would be a good substitute for the share which she might inherit in her husband 's property.
Nevertheless, the Legislature appears to have stepped in from time to time to soften the rigours of the personal law of Hindus by adding new heirs, conferring new rights on Hindu females and making express provisions for adoption, maintenance etc.
It appears that the question of conferring absolute interest on the Hindu female had engaged the attention of the Legisla ture ever since 1941 but the idea took a tangible shape only in 1954 when the Hindu Succession Bill was introduced and eventually passed in 1956.
This Bill was preceded by a Hindu Code Committee headed by Mr. B. N. Rau who had made a number of recommendations which formed the basis of the 1956 Act.
After the attainment of independence, the entire per spective changed, the nature of old human values assumed a new complexion and the need for emancipation of womanhood from feudal bondage became all the more imperative.
Under the strain and stress of 288 socio economic conditions and a continuous agitation by the female Hindus for enlargement of their rights a new look to the rights of women as provided by the Shastric Hindu Law had to be given.
In pursuance of these social pressures, it was necessary to set up a new social order where the women should be given a place of honour and equality with the male sex in every other respect.
This was the prime need of the hour and the temper of the times dictated the imperative necessity of making revolutionary changes in the Hindu Law in order to abolish the invidious distinction in matters of inheritance between a male and a female.
Similarly it was realised that there should be express provision for divorce on certain specified grounds inasmuch as the absence of such a provision had perpetrated a serious injustice to the Hindu females for a long time.
It seems to me that it was with this object in view that the Legislature of our free country thought it as its primary duty to bring forth legis lation to remove the dangerous anomalies appearing in the Hindu Law.
Even during the British times, there were certain legislation modifying certain provisions of the Hindu Law, e.g., the Hindu Law Inheritance Act which added a few more heirs including some females; the Hindu Women 's Right to Property Act, 1937, which provided that on partition a widow would be entitled to the same share as the sons in the property of her husband.
The Act of 1937, while giving a share to the wife on partition had not disturbed her right to claim maintenance which was preserved in tact and al though she was not permitted to sue for partition she was undoubtedly entiled to sue for maintenance without having recourse to the remedy of partition.
After independence the Parliament passed the Hindu Minority and Guardianship Act, 1956; the ; the Hindu Marriage Act, 1956 which regulated the law of marriage and divorce and ultimately the which provided for intestate succession.
The Hindu Succes sion Act, 1956 was, therefore, undoubtedly a piece of social legislation which fulfilled a long felt need of the nation and was widely acclaimed by the entire people as would appear from the debates which preceded the passing of the Act.
It is in the light of these circumstances that we have now to interpret the provisions of section 14(1) & (2) of the Act of 1956.
Section 14 of the 1956 Act runs thus: "14.
(1) Any property possessed by a female Hindu, whether acquired before or after the commencement of this Act, shall be held by her as full owner thereof and not as a limited owner.
Explanation.
In this Sub section, "property" includes both movable and immovable property acquired by a female Hindu by inheri tance or devise, or at a partition, or in lieu of maintenance or arrears of maintenance, or by gift from any person, whether a relative or not, before, at or after her marriage, or by her own skill or exertion, or by purchase 289 or by prescription, or in any other manner whatsoever, and also any such property held by her as stridhana immediately before the com mencement of this Act.
(2) Nothing contained in sub section (1) shall apply to any property acquired by way of gift or under a will or any other instrument or under a decree or order of a civil court or under an award where the terms of the gift, will or other instrument or the decree, order or award prescribe a restricted estate in such property." This Court has interpreted the scope and ambit of section 14(1) and the Explanation thereto on several occasions and has pointed out that the object of the legislation was to make revolutionary and far reaching changes in the entire struc ture of the Hindu society.
The word "possessed" used in section 14(1) has also been interpreted by this Court and it has been held that the word has been used in a very wide sense so as to include the st.ate of owning or having the property in one 's power and it is not necessary for the application of section 14 (1) that a Hindu woman should be in actual or physical possession of the property.
It is sufficient if she has a right to the property and the said property is in her power or domain.
In S.S. Munnalal vs
S.S. Rajkumar (1) it was held that mere declaration of the share of the widow passed only an of her share under a preliminary decree would fall within the ambit of section 14(1) and even though the widow did not get actual possession of the property until a final decree is passed she would in law be deemed to be in posses sion of the property.
In that case, the High Court had held that mere declaration of the share of the widow passed only an inchoate interest to her and she never came to possess the share within the meaning of section 14 of the Act and there fore the property remained joint family property.
This Court reversed the judgment of the High Court holding that once a preliminary decree was passed in favour of the widow granting her a share in the property she must be deemed to be in possession of the property in question.
Their Lordships emphasised that the words "possessed by" used in section 14(1) clearly indicated that such a situation was envis aged by the Legislature.
White interpreting the provisions of section 14 the Court also pointed out that the 1956 Act was a codifying enactment which had made far reaching changes in the structure of the Hindu society and the object was to sweep away traditional limitations placed on the rights of the Hindu women.
In this connection, the Court observed as follows: "The Act is a codifying enactment, and has made farreaching changes .in the structure of the Hindu law of inheritance, and succes sion.
The Act confers upon Hindu females full rights of inheritance, and sweeps away the traditional limitations on her powers of dispositions which were regarded under the Hindu law as inherent in her estate . .
Normally a right declared in an estate by a preliminary decree would be regarded as property, and there is nothing in the context in which section 14 occurs or in the phraseology (1) [1962] Supp. 3 S.C.R. 418.
4 436 SCI/77 290 used by the Legislature to warrant the view that such a right declared in relation to the estate of a joint family in favour of a Hindu widow is not property within the meaning of section 14.
In the light of the scheme of the Act and its evolved purpose it would be difficult, without doing violence to the language used in the enactment, to assume that a right declared in property in favour of a person under a decree for partition is not a right to proper ty.
If under a preliminary decree the right in favour of a Hindu male be regarded a.s property the right declared in favour of a Hindu female must also be regarded as proper ty.
Earlier the Court observed in that very case as under: "By section 14 (1) the Legislature sought to convert the interest of a Hindu female which under the Sastric Hindu law would have been regarded as a limited interest into an abso lute interest 'and by the explanation thereto gave to the expression "property" the widest connotation.
The expression includes property acquired by a Hindu female by inheritance or devise, or at a partition, or in lieu of maintenance or arrears of maintenance, or by gift from any person, whether a relative or not, before, at or after her marriage or by her own skill or exertion, or by purchase or by prescription, or in any other manner what soever.
By section 14(1) manifestly it is intended to convert the interest which a Hindu female has in property however restricted "the nature of that interest under the Sastric Hindu law may be into absolute estate.
" The matter was again considered by this Court in Eramma vs Verrupanna (1) where it was held that before a widow can get absolute interest under section 14(1) she must have some vestige of title, i.e. her possession must be under some title or right and not be that of a rank trespasser.
In this connection the Court observed as follows: "The property possessed by a female Hindu, as contemplated in the section, is clearly property to which she has acquired some kind of title whether before or 'after the com mencement of the Act.
It may be noticed that the Explanation to section 14(1 ) sets out the various modes of acquisition of the property by a female Hindu and indicates that the section applies only to property to which the female Hindu has acquired some kind of title however, restricted the nature of her interest may be . .
It does not in any way confer a title on the female Hindu where she did not in fact possess any vestige of title.
It follows, therefore, that the section cannot be interpreted so as to validate the illegal possession of a female Hindu and it does not confer any title on a mere trespasser.
In other words, the provisions of section 14( 1 ) of the Act cannot be attracted in the case of .
a Hindu female who is in possession of the property of the last (1) 291 male holder on the date of the commencement of the Act when she is only a trespasser without any right to property.
" In Mangal Singh vs Smt.
Ratno (1) a widow came into posses sion of her husband 's property in 1917 and continued to be in possession of the same till 1954 when she was dispos sessed by a collateral of her husband under the orders of the Revenue authorities.
She filed a suit for recovery of possession and during the pendency of the suit the Act of 1956 came into force.
This Court upholding the judgment of the High Court held that the dispossession of the widow being illegal, she must be deemed to be, in the eye of law, to continue in possession of the properties and acquired an absolute interest with the coming into force of the Act of 1956.
It was not a case where a Hindu female had parted with her right so as to.
place herself in a position where she could in no manner exercise her rights in that property any longer when the Act came into force.
This Court observed as follows: "It is significant that the Legislature begins section 14(1) with the words "any property possessed by a female Hindu" and not "any property in possession of a female Hindu.
" If the expression used had been "in possession of" instead of "possessed by", the proper interpretation would probably have been to hold that, in order to apply this provision, the property must be such as is either in actual possession of the female Hindu or in her constructive possession.
The constructive possession may be through a lessee, mortga gee, licensee, etc.
The use of the expression "possessed by" instead of the expression "in possession of", in our opinion, was intended to enlarge the meaning of this expression.
It is commonly known in English language that a property is said to be possessed by a person, if he is its owner, even though he may, for the time being, be out of actual possession or even constructive possession." "It appears to us that the expression used in section 14(1) of the Act was intended to cover cases of possession in law also where lands may have descended to a female Hindu and she has not actually entered into them.
It would of course cover.
the other cases of actual.
or constructive possession.
On the language of section 14( 1 ), therefore, we hold that this provision will become applicable to any property which is owned by a female Hindu, even though she is not in actual physical or constructive possession of that property." Again, while referring to an earlier case, namely, Eramma Verrupanna (supra), the Court clarified the position thus: "This case also, thus, clarifies that the expression "possessed by" is not intended to apply to a case of mere possession without title, and that the legislature intended this provision for eases where the Hindu female possesses the right of ownership of 'the property in question.
Even (1) ; 292 mere physical possession of the property without the right of ownership will not at tract the provisions of this section.
This case, also, thus, supports our view that the expression "possessed by" was used in the sense of connoting state of ownership and, while the Hindu female possesses the right of ownership, she would become full owner if the other conditions mentioned in the section are fulfilled.
The section will, however, not apply at all to cases where the Hindu female may have parted with her rights so as to place herself in a position where she could,.
in no manner, exercise her rights of ownership in that property any longer." In Sukhram & Anr.
vs Gauri Shanker &.
Another(1) the facts Were as follows: Hukam Singh and Sukh Ram were two brothers.
Chidda, the second appellant was the son of Sukh Ram and thus Chidda, Hukam Singh and Sukh Ram were members of a joint Hindu family governed by the Benares School of Mitakshara Law.
Hukam Singh died in 1952 leaving behind his widow Krishna Devi.
On December 15, 1956, Krishna Devi sold half share of the house belonging to the joint family.
This sale was challenged by the other members of the joint family on the ground that Krishna Devi had merely a life interest.
The question raised .was whether Krishna Devi acquired an abso lute .interest in the properties after coming into force of the .
It was argued before this Court that according to the Benaras School, a male coparcen er was not entitled to alienate even for value his undivided interest in the coparcenary without the consent of other coparceners and, therefore, Krishna Devi could not have higher rights than what her husband possessed.
This Court, however, held that in view of the express words of section 14 of the 1956 Act, once the widow was possessed of property before or after the commencement of the Act, she held it as full owner and not as a limited owner and, therefore, any restriction placed by Shastric Hindu Law was wiped out by the legislative intent as expressed in the Act of 1956.
The Court observed thus: "But the words of section 14 of the are express and explicit; thereby a female Hindu possessed of property whether acquired before or after the commence ment of the Act holds it as full owner and not as a limited owner.
The interest to which Krishna Devi became entitled on the death of her husband under section 3(2) of the Hindu Women 's Right to Property Act, 1937, in the property of the joint family is indisputably her "property" within the meaning of section 14 of Act 30 of 1956, and when she became "full owner" of that property she acquired right unlimited in point of user and duration and uninhibited in point of disposition." (1) ; 293 This case indirectly supports the view that if the intention of the Legislature was.
to confer absolute interest on the widow, no limitation can be spelt out ' either from the old Shastric Law or otherwise which may be allowed to defeat the intention.
This Court went to the extent of holding that the words in section 14(1) are so express and explicit that the widow acquired a right unlimited in point of user, though a male member governed by .the
Benaras school had no power of alienation without the consent of other coparceners.
Under the Act the female had higher powers than the male because the words of the statute did not contain any limitation at all.
On the parity of reasoning, therefore, where once a. property is given to the widow in lieu of maintenance and she enters in_to possession of that property, no amount of restriction contained in the document can prevent her from acquiring absolute interest in the property because the contractual restriction cannot be higher than the old Hindu Shastric Law or the express words the Act of 1956.
In Badri Prashad vs Smt.
Kansa Devi(1) the prepositer died in 1947 leaving behind five sons and a widow.
Soon after his death disputes arose between the parties and the matter was referred to an arbitrator in 1950.
The arbitrator in his award allotted shares to the parties wherein it was stated that the widow would only have widow 's estate in those properties.
While .the widow was in possession of the properties, the Act of 1956 came into force and the question arose whether or not she became full owner of the property or she only had a restricted interest as provided in the grant, namely, the award.
Court held that although the award had given a restricted estate, but this was only a narration of the state of law as it existed when the award was made.
As the widow, however, inherited the property under the Hindu Women 's Right to Property Act, her interest became absolute with the passing of the Act of 1956 and she squarely fell within the provisions of section 14(1) .of the Act.
It was further held that the mere fact that the partition was by means; of an award would not bring the matter within section 14(2) of the Act, because the interest given to, the widow was: on the basis of pre existing right and not a new grant for the first time.
This Court observed as follows: "The word "acquired" in sub section
(1 ) has also to be given the widest possible meaning.
This would be.
so be cause.
of the language of the Explanation which takes sub section
(1) applicable to acquisition of property by inheritance or devise or at a partition or in lieu of maintenance or arrears of maintenance or by gift or by a female 's own skill or exertion or by purchase or prescription or in any manner whatsoever.
Where at the commencement of the Act a female Hindu has a share in joint properties which are later on partitioned by metes and bounds and she gets ' possession of the properties allotted to her there can be No. manner of doubt that she is not only possessed of that property at the time of the coming into force of the Act but has.
also acquired the same before its commencement." (1) ; 294 This Court relied upon two earlier decisions: viz. S.S. Munnalal 's case and Sukhram 's case (supra).
This case appears to be nearest to the point which falls.
for determi nation in this appeal, though it does not cover the points argued before us directly.
Lastly our attention was.
drawn to.
an unreported deci sion of this Court in Nirmal Chand vs Vidya.
Wanti (dead) by her legal representatives(1) in which case Amin Chand and Lakhmi Chand were the owners of agricultural and non agri cultural properties.
The properties were partitioned in the year 1944 and Lakhmi Chand died leaving behind him the appellant and his second wife Subhrai Bai and his daughter by this wife.
There was a regular partition between Amin Chand and Subbrai Bai by a registered document dated Decem ber 3, 1945 under which a portion of the property was allot ted to Subhrai Bai and it was provided in the document that Subhrai Bai would be entitled only to the user of the land and she will have no right to alienate it in any manner but will have only life interest.
Later, Subhrai Bai bequeathed the property in 1957 to her daughter Vidya Wanti.
Subhrai Bai died and Vidya Wanti 's name was mutated in the papers after coming into ,force of the Act of 1956.
The point raised before the High Court was.
that as Subbrai Bai had been given only a limited interest in the property she had No. power to bequeath the property to her daughter as her case was not covered by section 14(1) but fell under section 14(2) of the Act.
This Court pointed out that at the time when the property was allotted to.
Subbrai Bai, the had.
not come into force and according to the state of Hindu Law as it ' then prevailed Subbrai Bai was undoubtedly entitled only to a limited interest.
There was a restric tion in the partition deed that Subhrai Bai would enjoy usufruct of the property only and shall not be entitled to, make any alienation.
It was not a restriction as such but a mere.
statement of law .as it then prevailed.
Such a re striction, therefore, ' would not bring the case of Subhrai Bai under section 14(2) of the Act and, therefore, she would acquire an absolute interest after the passing of the Act of 1956 and was, therefore, competent to execute the will in favour of her daughter.
This Court observed as follows: "If Subhrai Bai was entitled to.
a share in her husband 's properties then the suit properties must be held to.
have been allotted to her in accordance with law.
As the law then stood she had only a life interest in the properties taken by her.
Therefore the recital in the deed in question that she would have only a life interest in the properties allot ted to.
her share is merely recording the true legal position.
Hence it is not possibIe to, conclude that the properties in question were given to her subject to the condition.
of her enjoying it for her lifetime.
Therefore the trial court as well as the first Appellate Court were right in holding that the facts of the case do not fail within section 14(2) of the .
In the light of the above decisions of this Court the following principles appear to be clear: (1) C.A. No. 609 of 1965 decided on Jan. 21, 1969.
295 (1) that the provisions of section 14, of the 1956 Act must be liberally construed in order to advance the object of the Act which is to enlarge the limited interest possessed by a Hindu widow which was in consonance with the changing temper of the times; (2) it is manifestly clear that sub section
(2) of section 14 does not refer to any transfer which merely recognises a pre existing right without creating or conferring a new title on the widow.
This was clearly held by this Court in Badri Parshad 's case (supra).
(3) that the Act of 1956 has made revolution ary and far reaching changes in the Hindu society and every attempt should be made to carry out the.
spirit of the Act which has undoubtedly supplied a long felt need and tried to do away with the invidious distinc tion between a Hindu male and female in matters of intestate succession; (4) that sub section
(2) of section 14 is merely a proviso to.
(1) of section 14 and has to be interpreted as a proviso and not in a manner so ' as to destroy the effect of the main provision.
We have given our anxious consideration.
to the language of section 14(1) & (2) and we feel that o.n a proper interpreta tion of section 14(2) there does not appear to be any real incon sistency between section 14(1),.
the explanation thereto and sub section
To begin with, section 14(1) does not limit the enlargement of the estate of a Hindu widow to any particular interest in the property.
On the other hand the Explanation to section 14(1) brings out the real purpose.
of section 14(1) by giving an exhaustive category of cases where principle of section 14(1 ) has to operate, i.e. to 'cases where a Hindu female would get an absolute interest.
The argument of the learned counsel for the appellant is that as the right of maintenance was a pre existing right, any instrument or transaction by which the property was allotted to the appel lant would not be a new transaction so as to create a new title but would be only in recognition of a pre existing right, namely, the right of maintenance.
On the other hand Mr. Natesan appearing for the respondents submitted that the object of the proviso was to.
validate rather than disturb the past transactions which had 131aced certain restrictions or curbs on the power of a Hindu female and as.
the language of the proviso is very wide there is no warrant for not applying it to cases where pre existing rights are con cerned.
In the alternative, Mr. Natesan argued that the Hindu woman 's right to maintenance is not a legal right.
unless an actual charge is created in respect of the property and is, therefore not enforceable at law.
It is, therefore, not correct to describe a claim of a Hindu fe male 's right to.
maintenance simpliciter as a pre existing right because all the necessary indicia of a legal right are wanting.
After considering various aspects of the matter we are inclined to agree with the contentions raised by Mr. Krishna Murthy Iyer appearing for the appellant.
In the: first place, the appellant 's contention 296 appears to be more in consonance with the spirit and object of the statute itself.
Secondly, we have already pointed out that the claim of a Hindu female for maintenance is undoubtedly a pre existing right and this has been So held not only by various Courts in India but also by the Judicial Committee of the Privy Council and by this Court.
It seems to us, and it has been held as discussed above, that the claim or the right to maintenance possessed by a Hindu female is really a substitute for a share which she would have got in the property of her husband.
This being the position, where a Hindu female who.
gets a share in her husband 's property acquires an absolute interest by virtue of section 14(1) of the Act, could it be intended by the legisla ture that in the same circumstances a Hindu female who could not get a share but has a right of maintenance would not get an absolute interest ? In other words, the position would be that the appellant would suffer because her husband had died prior to the Act of 1937.
If the husband of the appellant had died after 1937, there could be no, dispute that the appellant would have got an absolute interest, because she was entitled to her share under the provisions of the Hindu Women 's Right to Property Act, 1937.
Furthermore, it may be necessary to study the language in which the Explanation to section 14(1) and sub section
(2) of section 14 are couched.
It would be seen that while the Explanation to section 14( 1 ) clearly and expressly mentions "property acquired by a female Hindu" at a partition or in lieu of maintenance or arrears of mainte nance there is no reference in sub section
(2) at all to this particular mode of acquisition by a Hindu female which clearly indicates that the intention of the Parliament was to exclude the application of sub section
(2) to, cases where the property has been acquired by a Hindu female.
either at a partition or in lieu of maintenance etc.
The Explanation is an inclusive definition and if the Parliament intended that everything that is mentioned in the Explanation should be covered by sub section
(2) it should have expressly so stated in sub section
Again the language of sub section
(2) clearly shows that it would apply only to such transactions which. are absolutely independent in nature and which are not in recog nition of or in lieu of pre existing rights.
It appears from the Parliamentary Debates that when the Hindu Succes sion Bill, 1954, was referred to a Joint Committee by the Rajya Sabha, in section 14(2) which was clause 16(2) of the Draft Bill of the Joint Committee, the words mentioned were only gift or will.
Thus the intention of the Parliament was to confine sub section
(2) only to two transactions, namely a gift or a will, which clearly would not include property received by a Hindu female in lieu of maintenance or at a partition.
Subsequently, however, an amendment was proposed by one of the, members for adding other categories, namely, an instru ment, decree, order or award which was accepted by the Government.
This would show that the various terms, viz., gift, will, instrument, decree, order or award mentioned in section 14(2) would have to.
be read ejusdem generis so as refer to transactions where right is created for the first time in favour of the Hindu female.
The intention of the Parliament in adding the other categories to sub section
(2) was merely to ensure that any transaction under which a Hindu female gets a new or independent title under any of the modes mentioned in section 14(2), namely, gift, will, decree, order, award or m instrument which prescribes a restricted estate would not be disturbed and would continue to occupy the field covered by section 14(2).
This 297 would be the position even 'if a Hindu male was to get the property by any of the modes mentioned in section 14(2): he would also get only a restricted interest and, therefore, the Parliament thought that there was no warrant for making any distinction between a male or a female in this regard and both were, therefore, sought to be equated.
Finally, we cannot overlook the scope and extent of a proviso.
There can be no doubt that sub section
(2) of section 14 is.
clearly a proviso to section 14 (1) and this has been so held by this Court in Badri Prasad 's case (supra).
It is well settled that a provision in the nature of a proviso merely carves out an exception to the main provision and cannot be interpreted in a manner so as to.
destroy the effect of the main provision or to render the same nugatory.
If we accept the argument of the respondent that sub section
(2 ) to section 14 would include even a property which has been acquired by a Hindu female at a partition or in lieu of maintenance then a substantial part of the Explanation would be completely set at naught which could never be the intention of the proviso Thus we are clearly of the opinion that sub section
(2) of section 14 of the proviso should be interpreted in such a way so as not to substantially erode section 14(1) or the Explanation thereto.
In the present case we feel that the proviso has carved out completely a separate.
field and before it can apply three conditions must exist: (i) that the property must have been acquired by way of gift, will, instrument, decree, order of the Court or by an award; (ii) that any of these documents executed in favour of a Hindu female must prescribe a restricted estate in such property; and (iii) that the instrument must create or confer a new right, title or interest on the Hindu female and not merely recognise or give effect to a pre existing right which the female Hindu already possessed.
Where any of these documents are executed but no restricted estate is prescribed, sub section
(2) will have no application.
Similarly where these instruments do not confer a new title for the first time on the female Hindu, section 14(1) would have no application.
It seems to me that section 14(2) is a salutary provision which has been incorporated by the Parliament for historical reasons in order to maintain the link between the Shastric Hindu Law and the Hindu Law which was sought to be changed by recent legislation, so that where a female Hindu became possessed of property not in virtue of any pre existing right but otherwise, and the grantor chose to impose certain conditions on the grantee, the legislature did not want to interfere with such a transaction by oblit erating or setting at naught the conditions imposed.
There was some argument at the bar regarding the use of the term " 'limited owner" in section 14(1) and "restricted es tate" in section 14(2).
Not much, however, turns upon this.
I think that the Parliament advisedly used the expression "restricted estate" in section 14(2), because while a limited interest would indicate only life estate, a restricted estate is much wider in its import.
For instance, suppose a donor while giving 298 the property to a Hindu female inserts a condition that she will have to pay Rs. 200/ to donor or to one of his rela tives till a particular time, this would not come within the term "limited interest", but it would be included by the term "restricted estate".
That is the only justification for the difference in the terminology of section 14( 1 ) and (2) of the Act.
Having discussed the various aspects of section 14(1) and (2) we shall now deal with the authorities cited before us by.
counsel for the parties which are by no means consist ent.
We will first deal with the authorities which took the view that we have taken in this case.
In this connection the sheet anchor of the argument of the learned counsel for the appellant is the decision of the Bombay High Court in B.B. Patil vs Gangabai (1) and that of the counsel for the re spondents is the decision of the Madras High Court in Guru nadham vs Sundrarajulu(2) and Santhanam vs Subramania(3).
The latter case was affirmed in appeal by the Division Bench of the Madras High Court in section Kachapalaya Gurukkal vs V. Subramania Gurukkal (4) and the aforesaid Division Bench judgment forms the subjects matter of Civil Appeal No. 135 of 1973 which will be disposed of by us by a separate judg ment.
We will now take up the case of the Bombay High Court relied upon by the learned counsel for the appellant which, in our opinion, lays down the correct law on the subject.
In B.B. Patil vs Gangabai (supra) the facts briefly were that the properties in question were the self acquired properties of Devgonda and after his death in 1902 Hira Bai daughter in law of Devgonda (widow of his son Appa, who also died soon thereafter) came into possession of the proper ties.
Disputes arose between Hira Bai and Nemgonda, the nephew of Devgonda, and the matter having been referred to the arbitrator he gave his award on October 16, 1903 and a decree in terms of the award was passed on October 24, 1903.
Under the decree in terms of the award, 65 acres of land and one house was allotted to Hira Bai out of which 30 acres were earmarked for the provision of maintenance and marriage of the three daughters and the rest of the property was ordered to be retained by Hira Bai for life with certain restrictions.
After her death these prop.reties were to revert to Nemgonda.
The dispute which was the subject matter of the appeal before the High Court was confined to 35 acres of land and the house which was in possession of Hira Bai.
Hira Bai continued to be in possession of these properties right upto February 25, 1967.
Meanwhile Nemgon da had died and his sons defendants 2 to 6 claimed the properties.
After the death of Hira Bai, the plaintiffs, who were two out of the three daughters of Hira Bai, filed a suit for possession claiming entire title to the properties in possession of Hira Bai on the ground that Hira Bai was in possession of the properties as limited owner at the time of the passing of the and (1) A.I.R. [1972] Bom.16.
(2) I.L.R. (3) I.L.R. (4) A.I.R. [1976] Mad. 279.
299 so her limited estate was enlarged into an absolute estate and the plaintiffs were, therefore, entitled to succeed to.
her properties in preference to the reversioners.
The suit was contested by defendants 2 to 6 mainly on the ground that as Hira Bai under the compromise was to retain only a life interest in the properties, her case would be covered by section 14(2) of the Act and after her death the properties would revert to the reversioners.
The Court held that as Hira Bai was put in possession of the properties in lieu of her maintenance, section 14 (2) had no application, because the award merely recognised the pre existing rights of Hira Bai and did not seek to confer any fresh rights or source of title on Hira Bai.
Thus even though the award did provide that Hira Bai would have a limited interest, section 14(2) would have no application and Hira Bai will get an absolute interest after the coming into force of the Hindu Success; on, Act, 1956.
The Court observed: "The explanation, thus, brings under ' its purview all properties traditionally acquired by a Hindu female on which merely by reason of the incidents of the Hindu law she has limited ownership.
In other words, sub section (1 ) read with this explanation provides that any property, howsoever acquired and in possession of a Hindu female after the commencement of the Act shall be held by her as a full owner in all cases where she former ly held merely limited ownership.
As a matter of fact, this sub section proceeds on the basis that there are.
several categories of properties of which a Hindu female, under the provisions of Hindu Law, is merely a limited owner.
By this enactment her rights! are enlarged and wherever under the Hindu Law she would merely obtain limited ownership, she would, after the commencement of the Act, obtain full ownership." "There is consensus of judicial opinion with regard to the ambit of sub section
(2) of section 14 of the Act.
It covers only those cases of grants where the interest in the grantee is created by the grant itself, or, in other words, where the gift, will, instrument, decree, order or award is the source or origin of the interest created in the grantee.
Where, however.
the instruments referred to above are not the source Of inter est created but are merely declaratory or definitive of the right to property anteced ently enjoyed by the Hindu female, sub section (2) has no application; and it matters not if in such instruments it is specifically provided in express terms that the Hindu female had a limited estate or ' that the property would revert on her death to the next reversioner such terms are merely the reiteration of the incidents of the Hindu Law applicable to the limited estate.
" Dwelling on the nature and incidents of the right of the widow ' to maintenance before the Hindu Women 's Right to Property Act, 1937, Palekar, J., speaking for the Court described the various 300 characteristics and incidents of the right of a Hindu female for maintenance (which have already been discussed by us).
Finally, the Judge observed as follows: "It appears to us that in the context of the Hindu widows the right to maintenance conferred under the Hindu Law is distinguisha ble in quality from her right to a share in the family property.
That may well be the reason why the explanation to sub section (1) of section 14 of the Act makes the female allottee of property "in lieu of maintenance" as much a limited owner as when the widow acquires "inheritance" or "at a partition".
And if in the latter two cases it is conceded that sub section (2) does not apply on the ground of antecedent right to the family properties, we do not see any rational justi fication to exclude a widow who has an equally sufficient claim over the family properties for her maintenance." Thus the following propositions emerge from a detailed discussion of this case: .lm10 (1) that the widow 's claim to maintenance is undoubtedly a tangible right though not an absolute right to property so as to become a fresh source of title.
The claim for maintenance can, however, be made a charge on the joint family properties, and even if the properties are sold with the notice of the Said charge, the sold properties will be bur dened with the claim for maintenance; (2) that by virtue of the Hindu Women 's Right to Property Act, 1937 the claim of the widow to main tenance has been crystallized into a full fledged right and any property allotted to her in lieu of maintenance becomes property to which she has a limited interest which by virtue of the provisions of Act of 1956 is enlarged into an absolute title; (3) Section 14(2) applies only to cases where grant is not in lieu of maintenance or in recognition of pre existing rights but confers a fresh right or tide for the first time and while conferring the said title certain restrictions are placed by the grant or transfer.
Where, .however, the grant is merely in recognition o.r in implementation of a pre existing right to claim maintenance, the case.
falls beyond the purview of section 14(2) and comes squarely within the explanation to section 14 (1).
The Court dissented from the contrary view taken by the Orissa and Madras High Courts on this question.
We find that the facts of this case are on all fours with the present appeal, and we are in complete agreement with the view taken and the reasons given by Palekar, J. Once it is recognised that right of maintenance is a pre existing tangi 301.
ble right, it makes no difference whether a Hindu widow died before or after the enactment of Hindu Women 's Rights to Property Act, 1937.
A similar view was taken by an earlier decision of the Andhra Pradesh High Court in Gadem Reddayya vs Varapula Venkataraju and Am, C) where the Court held that the family settlement was only in recognition of the pre existing right of the widow to maintenance and, therefore, was not covered by section 14(2) of the Act of 1956.
In our opinion, this case correctly states the law on the subject.
In Sumeshwar Mishra vs Swami Nath Tiwari, (2) the High Court of Patna appears to have taken the same view, and in our opinion very correctly.
The Patna High Court differed from the decision of the Madras High Court in Thatha Gurunadhan Chetti vs Smt.
Thatha Navaneethamma,(3) and in our opinion rightly.
We are of the opinion, for the reasons that we have already given above, that the.
view of the Madras High Court was not legally correct.
A later deci sion of the Patna High Court in Lakshmi Devi vs Shankar Jha(4) has also taken the same view.
We, however, fully approve of the view expressed by the Patna High Court and Andhra Pradesh High Court referred to above.
Similarly in H. Venkanagouda vs Hanamangouda(5) the Mysore High Court adopted the view of the Bombay High Court in B.B. Patil vs Gangabai (supra) and dissented from the contrary view taken by the Madras and the Orissa High Courts.
In our opinion, this decision seems to have correct ly interpreted the provisions of section 14(2) of the 1956 Act and has laid down the correct law.
The view of the Madras High Court and the Orissa High Court which was dissented fro.m by the Mysore High Court is, in our opinion, legally erroneous and must be overruled.
In Smt.
Sharbati Devi vs Pt.
Hira Lal & Anr.(6) the Punjab High Court clearly held that application of section 14(2) was limited to only those cases.
where a female Hindu ac quired a title for the first time, for otherwise the proper ty acquired in lieu of maintenance even though conferring a limited estate fell clearly within the ambit of explanation to section 14(1) of the Act and would, therefore, become the absolute property of the widow.
Thus the Punjab High Court also fully favours the view taken by the Bombay, Patna, Mysore, Andhra Pradesh and other High Courts discussed above and has our full approval.
The only distinction in the Punjab case is that here the widow got the properties after the coming into force of the Hindu Women 's Rights to Proper ty Act, 1937, but that, as we shall point out hereafter, makes no difference with respect to the legal right which a widow has to maintain herself out of the family property.
(1) A.I.R. 1965 .A.P. 66.
(2) A.I.R. 1970 Pat.
A.I.R. 1967 Mad. 429.
(4) A.I.R. 1074 Pat.
(5) A.I.R. 1972 Mys. 286.
(6) A.I.R. 302 The Calcutta High Court has also taken the same view in Sasadhai Chandra Dev vs Smt.
Sundari Desi (1) which we endorse.
In Saraswathi Ammal vs Anantha Shenoi, (2) the Kerala High Court, after a very detailed discussion and meticulous analysis of the law on the subject, pointed out that the right of a widow to maintenance was not a matter of conces sion but under the Sastri 's Hindu Law it was an obligation on the heirs who inherited the properties of the husband to maintain the widow and any property which the widow got in lieu of maintenance was not one given purely as a matter of concession, but the widow acquired a right in such property.
We fully agree with the view taken by the Kerala High Court in the aforesaid case.
In Kunji Thomman vs Meenakshi(3) although the Kerala High court reiterated its facts of that particular case previous view, on the High Court held that under the family settle ment the widow did not get any right to maintenance but was conferred a new right which was not based on her pre existing right and on this ground the High Court felt that the widow would not get an absolute interest in view of the explanation to section 14 (1).
In Chellammal vs Nallammal(4) the facts were almost similar to the facts of the present case.
A single Judge of the Madras High Court held that.
the case was clearly covered by the Explanation to section 14(1) of the Act and the properties given to the widow in lieu of maintenance became her absolute properties and would not be covered by section 14(2) of the Act.
This decision appears to have been overruled by a later decision of the same High Court in section Kachapalaya Gurukkal vs V. Subramania.
Gurukkal (supra) which is the subjectmatter of Civil Appeal No. 126 of 1972 and we shall discuss the Division Bench 's decision when we refer to the authorities taking a contrary view.
We find ourselves in complete agreement with the view taken by the Single Judge in Chellammal vs Nellammal (supra).
and we overrule the Division Bench decision in section Kachapalaya Gurukkal 's case (supra).
Thus all the decisions discussed above proceed on the right premises and have correctly.appreciated the nature and incidents of a Hindu woman 's right to maintenance.
They have also properly understood the import and applicability of section 14(2) of the 1956 Act and have laid down correct law on the subject.
We now deal with the authorities taking a contrary view.
which, in our opinion, does not appear to.
be the correct view.
In Narayan Patra vs Tara Patrani(5) the Orissa High Court, following a decision of the Andhra Pradesh High Court in G. Kondiah v.G. Subbarayya(6), held that since the widows were given only a (1) A.I.R. 1962 Cal.
(2) A.I.R. 1966 Ker.
(3) I.L.R. (4) (5) [1970] 35 Cuttak L.T. 667=A.I.R. 1970 Orissa 131.
(6) 303 restricted estate their case squarely fell within the ambit of section 14(2) of the Act and their interest would not be enlarged.
Reliance was also placed on a Madras decision in Thatha Gurunadharn Chetty vs Thatha Navaneethamma (supra).
It is obvious that the conclusions arrived at by the High Court are not warranted by the express principles of Hindu Sastric Law.
It is true that a widow 's c/aim for mainte nance does not ripen into a full fledged right to property, but nevertheless it is undoubtedly a right which in certain cases can amount to a right to property where it is charged.
It cannot be sand that where a property is given to a widow in lieu of maintenance, it is given to her for the first time and not in lieu of a pre existing right The claim to maintenance, as also the right to claim proper ty in order to maintain herself, is an inherent right con ferred by the Hindu Law and, therefore, any property given to her in lieu of maintenance is merely in recognition of the claim or right which the widow possessed from before.
It cannot be said that such a right has been conferred on her for the first time by virtue of the document concerned and before the existence of the document the widow had no vestige of a claim or fight at all.
Once it is established that the instrument merely recognised the pre existing right, the widow would acquire absolute interest.
Second ly, the Explanation to section 14(1) merely mentions the various modes by which a widow can acquire a property and the property given in lieu of maintenance is one of the modes mentioned in the Explanation.
Sub section (2) is merely a proviso to section 14(1) and it cannot be interpreted in such a manner as to destroy the very concept of the right conferred on a Hindu woman under section 14(1).
Sub section (2) is limit ed only to those cases where by virtue of certain grant or disposition a right is conferred on the widow for the first time and the said right is restricted by certain conditions.
In other words, even if by a grant or disposi tion a property is conferred on a Hindu male under certain conditions, the same are binding on the male.
The effect of sub section
(2) is merely to equate male and female in respect of grant conferring a restricted estate.
In these circum stances we do not agree with the views expressed by the Orissa High Court .
The other High Courts which have taken a contrary view are mainly the Andhra Pradesh, Allahabad and the Madras High Courts.
In an earlier decision of the Patna High Court in Shiva Pujan Rat and Others vs Jamuna Missir and Others(1) the High Court seems to rally round the view taken by the Madras High Court.
We shall take up the decisions of the Andhra Pradesh High Court.
As already indicated above, the earlier decision of the Andhra Pradesh High Court in Gadam Reddayya vs Vara pula Venkataraju took the same view which was taken later by the Bombay High Court and held that in a case like the present, a Hindu female would get an absolute interest and her case would not be covered by sub section
(2) of section 14 of the 1956 Act.
In Gopisetti Kondaiah vs Gunda Subbarayudu(2) another Division Bench of the same High Court appears to have taken a contrary view.
Jaganmohan Reddy, C.J., speak ing for the Court observed as follows: (1) I.L.R. 47 Pat.
(2) I.L.IR, 304 "In so far as the right of a Hindu woman to maintenance is concerned, it is necessary at this stage to point out one other basic con cept.
A Hindu woman has a right to be main tained by her husband or from her husband 's property or Hindu joint family property.
But that is merely a right to receive maintenance out of the properties without in any way conferring on her any right, title or interest therein.
It is not a definite right, but is capable of being made a charge on specific properties by agreement, decree of Court or award, compromise or otherwise . .
But this indefinite right, to be maintained from out of the properties of a Hindu Joint family, does not, however, create in her a proprietary right in the property . .
But if a restricted estate is given by any such instru ment, even if it be in lieu of maintenance, which is inconsistent with an estate she would get under the Hindu Law, then sub section (2) of section 14 would operate to give her only a restricted estate.
But if it is the latter, notwithstanding the fact that it was trans ferred in lieu of maintenance, if only a restricted estate was conferred by the instru ment, then she would only have the restricted estate.
" While we fully agree with the first part of the observations made by the learned Chief Justice, as he then was.
that one of the basic concepts of Hindu Law is that a Hindu woman has right to be maintained by her husband or from her husband 's property or the joint family property we respectfully disa gree with his conclusion that even though this is the legal position yet the right to receive maintenance does not confer on her any right, title or interest in the property.
It is true that the claim for maintenance is not an enforceable right but it is undoubtedly a pre existing right, even though no charge is made on the properties which are liable for her maintenance.
We also do not agree with the view of the learned Chief Justice that if the property is given to the widow in lieu of maintenance she will get only a restricted estate.
In our opinion, the High Court of Andhra Pradesh has proceeded on wrong prem ises.
Instead of acknowledging the right of a Hindu woman to maintenance as a right to a right or that matter a pre existing right and then considering the effect of the subsequent transactions, the High Court has first presumed that the claim for maintenance is not a tangible right at all and, therefore, the question of a pre existing right does not arise.
This, as we have already pointed out, is against the consistent view taken by a large number of Courts for a very long period.
Furthermore, this case does not appear to have noticed the previous Division Bench decision in Gadam Reddayya 's case (supra) taking the contrary view, and on this ground alone the authority of this case is considerably weakened.
At any rate, since we are satisfied that the claim of a Hindu woman for mainte nance is a pre existing right, any transaction which is in recognition or declaration of that right clearly falls beyond the purview of section 14(2) of the 1956 Act and, there fore, this authority does not lay down the correct law.
We, therefore, do not approve of the view taken in this case and overrule the same.
305 As regards the Madras High Court, the position appears to be almost the same.
There also, while a single Judge took the same view as the Bombay High Court and held that section 14(2) was not applicable, the Division Bench of the Court in an appeal against the order of another Single Judge took the contrary view.
In section Kachupalaya Gurukal vs Subramania Gurukkal (supra) the Court seems to draw an artificial distinction between a claim of a widow for maintenance and a pre existing right possessed by her.
According to the High Court, while a claim for maintenance simpliciter. was not a right at all, the right to get a share in the husband 's property under the Hindu Women 's Right to, Property Act, 1937 was a pre existing right.
The Madras High Court ap pears to have fallen into an error by misconceiving the scope and extent of a Hindu woman 's right to maintenance.
Secondly, it appears to have interpreted the proviso in such a manner as to destroy the effect of the main provision, namely, section 14(1) and the explanation thereto, for which there can be no warrant in law.
The decision of Natesan, J, in Gurunadham vs Sundrarajulu Chetty (supra) which had been affirmed by this judgment also, appears to have taken the same view and had fallen into the same error.
Furthermore, the view of the learned Judge that on the interpretation given and the view taken by the Bombay High Court which we have accepted, section 14 is intended to override lawful terms in contracts, bargains, bequests or gifts etc.
is not correct, because the scope and area of sub section
(2) of section 14 is quite separate and defined.
Such a sub section applies only to such transactions as confer new right, title.
or interest on the Hindu females.
In such cases the titles created under sub section
(2) are left in tact and section 14(1) does not interfere with the titles so created under those instruments.
Thus, in short, these two, decisions suffer from the following legal infirmities: (i) the Madras High Court has not correctly or properly appreciated the nature and extent of the widow 's right to.
maintenance: and (ii) the distinc tion drawn by the Court regarding the share given to the widow under the Hindu Women 's Right to.
Property Act allot ted to her before the passing of the Act in lieu of mainte nance is based on artificial grounds.
In fact the Act of 1937 did not legislate anything new, but merely gave statu tory recognition to the old Shastric Hindu Law by consoli dating the same and clarifying the right of the widow which she already possessed in matter of succession under the, Hindu Law.
This being the position, the Act of 1937 makes no difference.
so far as the legal status of a widow in regard to her right to maintenance was concerned.
The Act neither took away the: right of maintenance nor conferred the same; (iii) the Court appears to, have given an extended meaning to sub section
(2) of section 14 of the 1956 Act which has been undoubtedly enlarged so as to set at naught the express words in the Explanation to sub section
(1) of section 14 which ex pressly exclude the.
property given to a widow in lieu of maintenance or at a partition from the ambit of sub section
In other words, such a property, according to the Explana tion, is a property in which the widow would have undoubted ly a limited interest which by operation of law i.e. force of section 14(1 ) would be enlarged into an absolute interest if the widow is in possession of the property on the date when the Act was passed; (iv) similarly the Court failed to notice that 5 436 SCI/77 306 sub section
(2) of section 14 would apply only where a new right is created for the first time by virtue of a gift, will etc.
or the like executed in favour of the widow in respect of which she had no prior interest in the property at all.
For instance, a daughter is given a limited interest in presence of the widow.
Here the daughter not being an heir in presence of the widow (before the came into force) she had, no fight or share in the property, and if she was allotted some property under any instrument, a new and fresh right was created in her favour for the first time which she never possessed.
Such a case would be square ly covered by section 14(2) of the Act.
In Ram Jag Misir vs The Director of Consolidation, U.P.(1) the same view has.
been taken as the Madras High Court.
case does not discuss the various aspects which have been pointed out by us and proceeds purely on the basis that as the widow acquired a restricted estate under the compromise., section 14(2) would at once apply.
It has not at all considered the decisions of this Court that a mere description of limited interest in a grant or compromise is not a restriction but may just as well as merely a statement of the law as it stood when the grant was made.
The Court has also, not considered the various incidents and charac teristics of the widow 's right to maintenance under the Hindu Law.
Reliance was also placed by the learned counsel for the responderts on a Division Bench decision of the Patna High Court in Shiv Pujan Rai vs Yamuna Missir (supra) where the High Court held that the property given to a widow under a compromise in lieu of her maintenance was covered by sub section
(2) of section 14.
This decision was.
really based on the pecul iar findings of fact arrived at by the Courts of fact.
The High Court in the first place held that on the facts there was nothing to show that the widow acquired any inter est independent of the compromise under which she was given the property.
In these circumstances, it may be that the widow was given a. fresh or a new title under the compromise in which case the matter would be clearly covered by section 14(2) of the 1956 Act.
Even if this case be treated as an authority for the proposition that any property allotted to.
a widow under a compromise in lieu of maintenance would be covered by section 14(2) of the Act, then we dissent from this view, and for the reasons which we have already given we choose to prefer the view taken by the Patna High Court in a later case in Sumeshwar Mishra vs Swami Nath Tiwari (supra), which lays down the correct law on the subject.
Reliance was also placed on a Full Bench decision of the Jammu & Kashmir High Court in Ajab Singh & Ors.
vs Ram Singh and other.(2) In this case also the various aspects which we have indicated and the nature and extent of the Hindu women 's right to maintenance were not considered at all and the Court proceeded by giving an extended meaning to the provisions of sub section
(2) of section 14 which in that case was sub section
(2) of section 12 of the Jammu & Kashmir Hindu Succes sion Act, 1956.
It is true that the leading Judgment was given by one of us (Fazal Ali, J.,) but I must confess that the important question of law that has been argued before us in all its comprehensive aspects was not presented before me in that case and even the counsel O) (2) A.I.R. 1959 J & K 92.
307 for the respondents did not seriously contend that sub section
(2) of section 14 was not applicable.
For these reasons we are not in a position to approve of the Full Bench decision of the Jammu & Kashmir High Court in Ajab Singh 's case which.
is hereby overruled.
Thus on a careful scrutiny and analysis of the authori ties discussed above, the position seems to be that the view taken by the High Courts of Bombay, Andhra Pradesh, Patna, Mysore, Punjab, Calcutta .and
Kerala to the effect that the widow 's claim to maintenance, even though granted to her subject to certain restrictions, is covered by s.14 (1) and not by sub section
(2) is based on the following premises: (1) That the right of a Hindu widow to claim maintenance is undoubtedly a right against property though not a right to property.
Such a right can mature into a full fledged one if it is charged on the property either by an agreement or by a decree.
Even otherwise, where a family possesses property, the husband, or in case of his.
death, his heirs are burdened with the obligation to maintain the widow and, therefore, the widow 's claim for maintenance is not an empty formality but a pre existing right.
(2) Section 14(2) which is in the nature of a proviso to section 14(1) cannot be interpreted in a way so as to destroy the concept and defeat the purpose which; is sought to, be effectuated by section 14(1) in conferring an absolute interest on the Hindu women and in doing away with what was here tobefore known as the Hindu women 's estate.
The proviso will apply only to such cases which flow beyond the purview of the Explanation to section 14(1).
(3) That the proviso would not apply to any grant or transfer in favour of the widow hedged in by limitation or restrictions, where the grant is merely in recognition or declaration of a pre existing right, it will apply only to such a case where a new right which the female .did not possess at all is sought to be conferred on her under cer tain limitations or exceptions.
In fact in such a case even if a conditional grant is made to a male, he would be bound by the condition imposed.
The proviso wipes out the distinc tion between a male and a female in this respect.
The contrary view taken by the Madras, Orissa, Andhra Pradesh, Allahabad and Jammu & Kashmir High Courts proceeds on the following grounds: (1) That a widow 's claim to maintenance is merely an inchoate or incomplete right having no legal status, unless the widow gets a property in lieu of maintenance or unless a charge is created in a particular property the claim for maintenance cannot be legally enforced.
Thus, where under a grant, compromise, transfer or a decree, a property is allotted to the widow in lieu of maintenance, it is not the recognition of any pre existing right but it amounts to conferment of a new right for the first time which in fact did not exist before the said demise.
This view is really based on the provisions of the Hindu Women 's Right to Property Act, 1937, under which the widow has got the right to get a share of his son in lieu of partition and even 308 otherwise she is entitled to her share in the joint Hindu family property on partition.
These High Courts, therefore, seem to be of the opinion that in view of the provisions of the Hindu Women 's Right to Property Act, the widow in claim ing a share in the property has a pre existing right which is recognised by law, namely, the Act of 1937.
The same, however, cannot be said of a bare claim to maintenance which has not been recognised as a legal right and which can mature into a legally enforceable right only under a grant or demise.
This view suffers from a serious fallacy, which is, based on a misconception of the true position of a Hindu widow 's claim for maintenance.
It has been seen from.
the discussion regarding the widow 's claim for maintenance and her status in family that under the pure Sastric Hindu Law the widow is almost a co owner of the properties with her husband and even before the Act of 1937 she was entitled to the share of a son on the death of her husband after parti tion according to some schools of Hindu Law.
The Act of 1937 did not introduce any new right but merely gave a statutory recognition to the old Sastric Hindu Law on the subject.
In this respect the Act of 1937 is very different from the Act of 1956, the latter of which has made.
a revo lutionary change in the Hindu Law and has changed the entire complexion and concept of Hindu women 's estate.
In these circumstances, therefore, if the widow 's claim for mainte nance or right to get the share of a son existed before the Act of 1937, it is futile to dub this! right as flowing from the Act of 1937.
The second fallacy in this view is that the Court failed to consider that the.
claim for maintenance is an important right which is granted to the widow under the Sastric Hindu Law which enjoins the husband to maintain his wife even if he has no, property.
Where he has a property the widow has to be maintained from that property so much so that after the death of her husband any one who inherits that property takes the property subject to.
the burden of maintaining the widow.
Even where the property is transferred for payment of family debts and the transferee has the notice of the widow 's claim for maintenance, he has to discharge the burden of maintaining the widow from the property sold to him.
Thus the nature and extent of the right of the widow to claim maintenance is undoubtedly a pre existing right and it is wrong to say that such a right comes into existence only if the property is allotted to the widow in lieu of maintenance and not otherwise.
Another reasoning given by the courts taking the con trary view is that sub section
(2) being in the nature of a proviso to section 14(1) all grants with conditions take the case out of section 14(1).
This, as we have already pointed out, is based on a wrong interpretation of the scope: and 'ambit of sub section
(2) of section 14.
Lastly, the contrary view is in direct conflict with the observations made by this Court in the cases referred to above, where a grant in lieu of maintenance.
of the widow has been interpreted as being in recognition of a pre exist ing right ' so.
as to take away the case from the ambit of sub section
For these reasons and those given hereto.
before we choose to prefer the view taken by Palekar, J., in B B. Patil vs Gangabai (supra) which appears to be more in conso nance with the object and spirit of 309 the 1956 Act.
We, therefore, affirm and approve of the decisions of the Bombay High Court in B.B. Patil vs Ganga bai; of the Andhra Pradesh High Court m Gadam Reddayya vs Varapula Venkataraju & Anr.;of the Mysore High Court in H. Venkanagouda vs Hanamanagouda; of the Patna High Court in Sumeshwar Mishra vs Swami Nath Tiwari; of the Punjab High Court in Smt.
Sharbati Devi vs Pt.
Hira Lal & Anr and Cal cutta High Court in Sasadhar Chandra Dev vs Smt.
Tara Sund ari Dasi (supra) and disapprove the decisions of the Orissa High Court in Narayan Patra vs Tara Patrani; Andhra Pradesh High Court in Gopisetty Kondaiah vs Gunda Subbarayudu (supra); Madras High Court in section Kachapalaya Gurukkal vs V. Subramania Gurukkal (supra) and Gurunadham vs Sundararaulu; of the Allahabad High.
Court in Ram Jag Missir vs Director of Consolidation, U.P. and in Ajab Singh & Ors.
vs Ram Singh & Ors.
of the Jammu & Kashmir High Court.
Lastly strong reliance was placed by Mr. Natesan counsel for the respondents on a decision of this Court in Smt.
Naraini Devi vs Smt.
Ramo Devi & others(1) to which one of us (Fazal Ali, J.,) was a party.
This case is no doubt directly in point and this Court by holding that where under an award an interest is created in favour of a widow that she should be entitled to rent out the property for her lifetime, it was held by this Court that this amounted to a restricted estate under section 14(2) of the 1956 Act.
Unfortu nately the various aspects, namely, the nature and extent of the Hindu women 's right to maintenance, the limited scope of sub section
(2) which is a proviso.
sub section
(1 ) of section 14 and the effect of the Explanation etc., to which we have adverted in this judgment, were.
neither brought to our notice nor were argued before us in that case.
Secondly, the ground on which this Court distinguished the earlier decision of this Court in Badri Parshad vs Smt.
Kanso Devi (supra) was that in the aforesaid decision the Hindu widow had a share or interest in the house of her husband under the! Hindu Law as it was applicable then, and, therefore,such a share amounted to a pre existing right.
The attention of this Court, however, was not drawn: to the language of the Explanation to section 14(1) where a property given to a widow at a partition or in lieu of maintenance had been placed in the same category, and, therefore reason given by this Court does not appear to be sound.
For the reasons that we have.
already given, after taking an overall view of the situation, we are satisfied that the Division Bench decision of this Court in Naraini Devi 's case (supra) was not correctly decided and is therefore, overruled.
Indeed, if the contrary view is accepted, it will, in my opinion set at naught the legislative process of a part of Hindu Law ' of the intestate succession and curb the social urges and aspirations of the Hindu women, particularly in the International Year of Women, by reviving a highly detestable legacy which was sought to be buried by the Parliament after independence so.
that the new legislation may march with the times.
We would now like to summarise the legal conclusions which we have reached after an exhaustive considerations of the authorities mentioned above; on the question of law involved in this appeal as to the (1) 1976] 1 s.c.c. 574.
310 interpretation of section 14(1) and (2) of the Act of 1956.
These conclusions may be stated thus: (1) The Hindu female 's right to maintenance is not an empty formality or an illusory claim being conceded as a matter of grace and generosity, but is a tangible right against property which flows from the spiritual relationship between the husband and the wife and is recognised and enjoined by pure Shastric Hindu Law and has been strongly stressed even by the earlier Hindu jurists starting from Yajnavalkya to Manu.
Such a right may not be a right to property but it is a right against property and the husband has a personal obligation to maintain his wife and if he or the family has property, the female has the legal right to be maintained therefrom.
If a charge is created for the maintenance of a female, the said right becomes a legally enforceable one.
At any rate, even without a charge the claim for maintenance is doubtless a pre existing right so that any transfer declaring or recognising such a right does not confer any new title but merely endorses or confirms the pre existing rights.
(2) Section 14(1) and the Explanation thereto have been.
couched in the widest possible terms.
and must be liberally construed in favour of the females so as to advance the object of the 1956 Act and promote the socio economic ends, sought to be achieved by this long needed legislation.
(3) Sub section (2) of section 14 is in the nature of a proviso and has a field of its own without interfering with the operation of section 14(1) materially.
The proviso.
should not be construed in a manner so as to destroy the effect of the main provision or the protection granted by section 14(1) or in a way so as to become totally inconsistent with the main provision.
(4) Sub section (2) of section 14 applies to instruments, decrees, awards, gifts etc.
which create independent and new titles in favour of the females for the first time and has no application where the instrument concerned merely seeks to confirm, endorse, declare or recognise preexisting rights.
In such cases a restricted estate in favour of a female is legally permissible and section 14(1) will not operate in this sphere.
Where, however, an instrument merely de clares or recognises a pre existing right, such as a claim to maintenance or partition or share to which the female is entitled, the sub section has absolutely no application and the female 's limited interest would automatically be en larged into.
an absolute one by force of section 14(1) and the restrictions placed, if any, under the document would have to be ignored.
Thus where a property is allotted or trans ferred to a female in lieu of maintenance or a share at partition, the instrument is taken out of the ambit of sub section (2) and would be governed by section 14(1) despite any re strictions placed on the powers of the transferee.
(5) The use of express terms like "property acquired by a female Hindu at a partition", "or in lieu of maintenance" "or arrears of maintenance" etc.
in the Explanation to section 14(1) clearly makes sub section
(2) inapplicable to these catego ries which have been expressly excepted from the operation of sub section
311 (6) The words "possessed by" used by the Legislature in section 14(1) are of the widest possible amplitude and include the state of owning a property even though the owner is not in actual or physical possession of the same: Thus, where a widow gets a share in the property under a preliminary decree before or at the time when the 1956 Act had been passed but had not been given actual possession under a final decree, the property would be deemed to be possessed by her and by force of section 14(1) she would get absolute interest.
in the property.
It is equally well settled that the possession of the widow, however, must be under some vestige of a claim, right or title, because the section does not contemplate the possession of any rank trespasser with out any right or title.
(7) That the words "restricted estate" used in section 4(2) are wider than limited interest as indicated in section 14(1) and they include not only limited interest, but also.
any other kind of limitation that may be placed on the transferee.
Applying the principles enunciated above to the facts of the present case, we find (i) that the properties in suit were allotted to the appellant Tulasumma on July 30, 1949 under a compromise certified by the. Court; (ii) that the appellant had taken only a life interest in the properties and there was a clear restriction prohib iting her from alienating the properties; (iii) that despite these restrictions, she continued to be in possession of the properties till 1956 when the Act of 1956 came into.
force; and (iv) that the alienations which she had made in 1960 and 1961 were after she had acquired an absolute interest in the properties.
It is, therefore, clear that the compromise by which the properties were allotted to the appellant Tulasamma in lieu of her maintenance were merely in recognition of her right to maintenance which was a pre existing right and, there fore, the case of the appellant would be taken out of the ambit of section 14(2) and would fail squarely within section 14 (1) read with the Explanation thereto.
Thus the appellant would acquire an absolute interest when she was in possession of the properties at the time when the 1956.
Act came into force and any restrictions placed under the compromise would have to be completely ignored.
This being the position, the High Court was in error in holding that the appellant Tula samma would have only a limited interest in setting aside the alienations made by her.
We are satisfied that the High Court decreed the suit of the plaintiffs on an erroneous view of the law.
The result is that the appeal is allowed, the judgment and decree of the High Court are set aside, the judgment of the District Judge, Nellore.
is hereby restored and the plaintiffs ' suit is dismissed.
In the peculiar circumstances of this ease and having regard to the, serious divergence of judicial opinion of the various Courts of India, we would make no order as to costs in this Court.
P.B.R. Appeal allowed.
| IN-Abs | Section 14(1 ) of the pro vides that "any property possessed by a female Hindu, wheth er acquired before or after the commencement of the Act, shall be held by her as full owner thereof and not as a limited owner." According to the explanation to this sub section the term "property" includes both movable and immovable property acquired by a female Hindu in lieu of maintenance or arrears of maintenance or in any other manner whatsoever.
Sub section (2) provides that nothing in sub section
(1) shall apply to any property acquired by way of gift or under a will or any other instrument which prescribes a restricted estate in such property.
At the time of his death, the appellant 's husband, who was the brother of the respondent, lived in a state.
of jointness with the respondent.
On her husband 's death the appellant filed a petition for maintenance.
The re spondent entered into a compromise with her, one of the terms of which was that the appellant should enjoy during her life time certain properties given to her and on her death those properties should revert to the respondent. 'The appellant .sold some of the properties.
The respondent sought a declaration that under 1he terms of the compromise the appellant 's interest, which was a limited one, could not be enlarged into an absolute interest enabling her to sell the. properties.
The District Munsiff decreed the suit.
On appeal, the District Judge held that by virtue of the provisions of the 1956 Act, the appellant had acquired an absolute interest in the properties and that section 14(2) had no application to the case because the compromise was an instrument in recognition of a pre existing right.
The High Court, on the other hand, held that the compromise was an instrument contemplated by s.14(2) and the appellant could not get an absolute inter est, under s.14(1); and that since her husband died even before the Hindu Women 's Right to Property Act, 1937 came into force, she could not be said to have any pre existing right because she had got the right for the first time under the compromise.
Allowing the appeal, (Per Bhagwati and Gupta, JJ) HELD: Since the properties were acquired by the appel lant under the compromise in lieu or satisfaction of her right to maintainance it is section 14(1) and not s.14(2) which would be applicable.
The appellant must be deemed to have become full owner of the properties notwithstanding that the compromise prescribed a limited interest in the properties.
[274 C D] 1.
Under the Sastric Hindu Law a widow has a right to be maintained out of joint family property and this right would ripen into a charge if the widow took the necessary steps for having her maintenance ascertained and specifically charged on the joint family property and even if no specific charge were created, this right would be.
enforceable against joint family property in the hands of a volunteer or a purchaser taking it with notice of her claim.
The right of the widow to be maintained is not a ]us in rem, since it does not give any interest in the joint family property but it is ]us ad rem.
When specific property is allotted to the widow in lieu of her claim for maintenance, the allotment would be in satisfaction of her jus ad rem, namely, the right to be maintained out of the joint family property.
It would not be a grant for the. 262 first time without any pro existing right in the widow, The widow would be getting the property in virtue of her pre existing right, the instrument giving the property being merely a document effectuating such pre existing right.
[273 A C] 2(a) Section 14(1) is large in its amplitude and covers every kind of acquisition of property by:, a female Hindu including acquisition in lieu of maintenance.
Where such property was possessed by her at the date of commencement of the Act or was subsequently acquired and possessed, she would become the full owner of the property.
[268 G] (b) The words "any property" are large enough to cover any and every kind of property but in order to expand the reach and ambit of the, section and make it all comprehen sive, the Legislature has enacted the explanation.
[268 B] (c) Whatever be the kind of property movable or immova ble and whichever be.
the mode of acquisition, it would be covered by sub section
(1 ), the object of the Legislature being to wipe out the disabilities from which a Hindu female suffered in regard to ownership of property under the old Sastric Law, to abridge the stringent provisions against proprietary rights and to recognise her status as an inde pendent and absolute owner of property.
[268 D] (d) In Gummalapura Taggina Matada Kotturuswami vs Setra Veeravva [1959] Supp. 1 SCR 968, this Court construed the words "possessed of" in a broad sense and in their widest connotation to mean as "the state of owning or having in one 's hand or power" which need not be actual or physical possession or personal occupation of the property by the Hindu female, but may be possession in law.
It may be actual or constructive or in any other form recognised by law.
[268 E F] .
(e) Sub section (2), which is in the nature of a proviso to sub s.(1), excepts certain kinds of acquisition of property by a Hindu female from the operation of sub section
[269 B] (f) Sub section (2), must be read in the context of sub s.(1) to.
leave as large a scope for operation as possible to sub s.(1).
So read, it must be confined to cases where property is acquired by a female Hindu for the first time.
as a grant without any pre existing right under a gift, will, instrument, decree, order or award, the terms of which prescribe a restricted estate in the property.
[269 H] (g) The legislative intendment in enacting sub s.(2) was that this subsection should be applicable only to cases where the acquisition of property is made by a Hindu female for the first time without any pre existing right.
Where.
however, property is acquired by a Hindu female at a partition or in lieu of her right to4 maintenance iris in virtue of a pre existing right and such acquisition would not be within the! scope and ambit of sub s.(2) even if the instrument allotting the property prescribes a restricted estate in the property.
Where property is acquired by a Hindu re,male under art instrument in virtue of a preex isting right such as a right to obtain property on partition or a right to maintenance.
and under the law as it stood prior to the enactment of the Act, she should have no more than limited interest in the property a provision in the instrument giving her limited interest in the property would be merely by way of record or recognition of the true legal position and the restriction on her interest being a disa bility imposed by law would be wiped out and her limited interest would be enlarged under sub section
[270 D; 272 A B] In the instant case the appellant claimed maintenance out of the joint family properties in the hands of her deceased husband 's brother, and the claim was decreed and in execution of the decree the respondent entered into a com promise and allotted properties to her in lieu of her claim for maintenance.
The appellant must in the circumstances be deemed to have become full owner of the properties notwith standing that the compromise prescribed a limited interest for her in the properties.
It is sub s.(1) and not sub s.(2) of section 14 which must be held to be applicable on these facts.
S.S. Munna Lal vs
S.S. Raikumar, [1962] Supp. 3 SCR 418 Gummalapura Teggina Matada Kotturaswami vs Setra Verrayva [1959] Supp.
I SCR 968 Mangal Singh vs Ratno, ; Badri Pershad vs Smt.
Kanso Devi 263 ; Nirmal Chand vs Vidya Wanti (dead) by her Legal representatives.
C.A. No. 609 of 1965, decided on January 21, 1969, Rani Bai vs
Shri Yadunandan Ram; , referred to.
B.B. Patil, vs Gangabai, AIR. , Sumeshwar Misra vs Swami Nath Tiwari AIR 1970 Pat.
348, Reddayya vs Varapula Venkataraju AIR 1965 A.P. 66, Lakshmi Devi vs Shankar Jha, AIR. , N. Venkanagouda vs Hanamangouda, AIR 1972 Mys. 286, Smt.
Sharbati Devi vs Pt.
Hiralal AIR , Sesadhar Chandra Dev.
vs Smt.
Tara Sundari Dasi, AIR 1962 Cal.
438, Saraswathi Ammal vs
Anantha Shenoi, AIR 1966 Ker.
66 and Kunji Thomman vs Meenakshi, ILR approved.
Gurunadham vs Sundarajulu, ILR Sentha nam vs Subramania, ILR , section Kachapalaya Gurukkal vs V.Subramani Gurukkal, AIR 1972 Mad. 279 Shiva Pujan Rai vs Jamune Missir, ILR [1947] Pat. 1118 Gopisetti Kondaiah vs Gunda Subbrayudu, ILR , Ram Jag Missir vs The Director of Consolidation, U.P. AIR 1975 All.
151 and ,4lab Singh vs Ram Singh AIR 1959 J&K 92 not ap proved.
(per Fazal Ali, J concurring) The High Court was in error in holding that the appel lant would have only a limited interest and in setting aside the alienations made by her.
The compromise by which the properties were allotted to her in lieu of her maintenance were merely in recognition of her pre existing right ,of maintenance and, therefore, her case would be taken out of the ambit of section 14(2) and would fall within section 14(1) read with the Explanation thereto.
[311 G] The incidents and characteristics of a Hindu woman 's right to maintenance are: (i) that a Hindu woman 's right to maintenance is a personal obligation so far as the husband is concerned, and it is his duty to maintain her even if he has no property.
If the husband has property then the right of the widow to maintenance becomes an equitable charge on his property and any person who succeeds to the property carries with it the legal obligation to maintain the widow.
[286 D] (ii) though the widow 's right to maintenance is not a right to property but it is a pre existing right in proper ty, that is, it is a ]us ad rein and not ]us in rem and it cannot be enforced by the widow who can get a charge created for the maintenance on the property either by an agreement or by obtaining a decree from the civil court.
[286 E] (iii) that the right of maintenance is a matter of moment and is of such importance that even if the joint property is sold and the purchaser has notice of the widow 's right to maintenance, the purchaser is legally bound to provide for her maintenance.
[286 F] (iv) that the right to maintenance is a pre existing right which existed in the Hindu law long before the passing of the Act of 1937 or the Act of 1946, and is, therefore, a pre existing right.
[286 G] (v) that the right to maintenance flows from the social and temporal relationship between the husband and the wife by virtue of which the wife becomes a sort of co owner in the property of her husband, though her co ownership is of a subordinate nature.
[286 H] (vi) that where a Hindu widow is in possession of the property of her husband, she is entitled to retain the possession in lieu of her maintenance unless the person who succeeds to the property or purchases the same is in a position to make due arrangementS for her maintenance [287 A] Digest of Hindu Law, Vol.
II, pp. 121, 123 and 243 by Colebrooke.
Hindu Law by Golyal Chandra Sarkar Sastri, p. 533.
Treatise on Hindu Law & Usage by Mayne, 11th edn.
684, 813, 816, 822, Hindu Law by Mulla, p. 597.
264 Narayan Rao Ramchandra Pant vs Ramabai, L.R. 6 I.A., 114, Lakshman Ramchandra Joshi & anr.
vs Satyabhamabai, I.L.R. , Narbadabai vs Mahadeo Narayan, Kashinath Narayan and Shamabai, I.L.R. , Mst.
Dan Kaur vs Mst.
Sarla Devi, L.R. 73 LA. 208, Prataprnull Agarwalla vs Dhanabati Bibi, L.R. 63 I.A. 33, Rani Bai vs Shri Yadunandan Ram & anr.
; , Sheo Dayal Tewaree vs Judoo nath Tewaree , Srinath Das vs Prabodh Chun der Das, , Hernangini Dasi vs Kedarnath Kundu Chowdhry I.L.R. K.V. Thangavelu vs The Court of Words, Madras , Sarojinidevi vs Sub rahrnanyam I.L.R. , .Jayanti Subbiah vs Alamelu Mangamma I.L.R. and Yellawa vs Bhirnangavda I.L.R. referred to.
An examination of the decisions of this Court estab lishes the following principles of law: (i) that the provisions of section 14 'of the 1956 Act must be liberally construed in order to advance the object of the Act which is to enlarge the limited interest possessed by a Hindu widow which was in consonance with the changing temper of the times; [295A] (ii) it is manifestly clear that sub section
(2) of section 14 does not refer to any transfer which merely recognises a pre existing right without creating or conferring a new title on the widow.
This was clearly held by this Court in Badri Pershad 's case.
[295B] (iii) that the Act of 1956 has made revolutionary and far reaching changes in the Hindu society and every attempt should be made to carry out the spirit of the Act which has undoubtedly supplied a long felt need and tried to do away with the invidious distinction between a Hindu male and female in matters of intestate succession.
[295C] (iv) that sub section
(2) of section 14 is merely a proviso to sub section
(1) of section 14 and has to be interpreted as a proviso and not in a manner so as to destroy the effect of the main provision.
[295D] Thus on a conspectus of the Shastric Hindu Law, the provisions of the 1956 ' Act and the decisions of this Court the following conclusions emerge: 1.
A Hindu female 's right to maintenance is not an empty formality or an illusory claim but is a tangible right against property which flows from spiritual relationship between the husband and the, wife and is recognised and enjoined by pure Shastric Hindu law and has been strongly stressed even by the earlier Hindu jurists starting from Yajnavalkya to Manu.
Such a right may not be a right to property but is a right against property and the husband has a personal obligation to maintain his wife and if he or the family has property the female has the legal fight to be maintained therefrom.
If a charge is created for the main tenance of a female, the said right becomes a legally en forceable one.
At any rate, even without a charge the claim for maintenance is a pre existing right so that any transfer declaring or recognising such a right does not confer any new title but merely endorses or confirms the pre existing rights.
[310 BC] 2.
Section 14(1) and the Explanation thereto have been couched in the widest possible terms and must be liberally construed in favour of the females so as to advance the object of the 1956 Act and promote the socio economic ends sought to be achieved by this long needed legislation.
[310D] 3.
Section 14(2) is in the nature of a proviso and has a field of its own without interfering with the operation of section 14(1) materially.
The proviso should not be construed in a manner so as to destroy the effect of the main provision or the protection granted by section 14(1) or in a way so as to become totally inconsistent with the main provision.
[310 E] 4.
Section 14(2) applies to instruments, decrees, awards, gifts etc., which create independent and new titles in favour of the females for the first time and has no application where the instrument concerned merely seeks to confirm.
endorse, declare or recognise pre existing rights.
In such cases a restricted estate in favour of a female is legally permissible and section 14(1) will not operate 265 in this sphere.
Where, however, an instrument merely de clares or recognises a pre existing right, such as to a claim to maintenance .or partition or share to which the female is entitled, the sub section has absolutely no appli cation and the female 's limited interest would automatically be enlarged into an absolute one by force of section 14(1) and the restrictions placed, if any, under the document would have to be ignored.
Thus where a property is allotted or transferred to a female in lieu of maintenance or a share at partition, the instrument is taken out of the ambit of sub section (2) and would be governed by section 14(1) despite any re strictions placed on the powers of the transferee.
[310F G] 5.
The use of express terms like "property acquired by a female Hindu at a partition", "or in lien of maintenance", "or arrears of maintenance" etc., in the Explanation to section 14(1) clearly makes sub section
(2) inapplicable to these catego ries which have been expressly excepted from the operation of sub section
[310H] 6.
The words "possessed by ', in section 14(1) are of the widest amplitude and .
include the state of owning a proper ty even though the owner is not in actual or physical pos session of the same.
Thus, where a widow gets a share in the: property under a preliminary decree before or at the time.
when the 1956 Act had been passed but had not been given actual possession under a final decree, the property would be deemed to be possessed by her and by force of section 14(1) she would get absolute interest in the property.
It is equally well settled that the possession of the widow, however, must be under some vestige of a claim, right or title, because the section does not contemplate the posses sion of any rank trespasser without any right or title.
[311 A B] 7.
That the words "restricted estate" used in section 14(2) are wider than limited interest as indicated in section 14(1) and they include not only limited interest but also any other kind of limitation that may be placed on the transferee.
[311 C] In the instant case, the properties in dispute were allotted to the appellant under a compromise certified by the Court.
Secondly, the appellant had taken only a life interest in the properties and there was a clear restriction prohibiting her from alienating the properties.
Thirdly, despite these restrictions, she continued t0 be in posses sion of the properties till the alienations which she had made in 1960 and 1961 were after she had acquired an abso lute interest in the properties.
Naraini Devi vs Smt.
Ramo Devi & ors [1976] 1 S.C.C.574 over ruled.
S.S. Munnalal vs
S.S. Rajkumar [1962] Supp. 3 S.C.R. 418; Eramina vs Verrupanna ; Mangal Singh vs Smt.
Rattno ; ; Sukhram & anr.
vs Gauri Shankar & anr.
; ; Badri Parshad vs Smt.
Kanso Devi ; and Nirmal Chand vs Vidya Wanti (dead) by her Legal Representative C.A. 609 of 1966 decided on January 21, 1969 referred to.
B.B. Patil vs Gangabai A.1.R. ; Gaddam Reddayya vs Varapula Venkataraju & Anr.
A.I.R. 1965 A.P. 66; Sumeshwar Mishra vs Swami Nath Tiwari A.I.R. 1970 pat.
348; H. Venkanagouda vs Hansumangouda A.I.R. 1972 Mys. 286; Smt.
Sharbati Devi vs Pt.
Hiralal & Anr.
A.I.R. 1964 Punjab 114; Sasadhar Chandra Der vs Smt.
Tara Sundart Desi A.I.R. 1962 Cal.
438, approved.
Narayan Patra vs Tara Patrant [1970] 36 Cuttack Law Times A.I.R. 1970 Orissa 131; Shiva Pulan Rai & Ors.
vs Jamuna Missir & Ors.
I.L.R. 47 Pat.
1118; Gopisetti Kondaiah vs Gunda Subbarayudu I.L.R. ; Ram Jag Misir vs The Director of Consolidation, U.P. ; Ajab Singh & Ors.
vs Ram Singh & Ors.
A.I.R. 1959 L & K. 92; Surnadham vs Sundararajulu I.L.R. ; Kacha palaya Gurukkal vs
V. Subramania Gurukkal A.I.R. 1972, Mad. 279 not approved.
|
VIL Appeal Nos.
1923 1924 of 1972.
(From the Judgment and Decree dated 25 10 1957 of the Madhya Pradesh High Court in First Appeal No. 138/52) A.K. Sen, B.P. Maheshwari and Suresh Sethi, for the appellant in C.A. No. 1923/72 and respondent in CA No. 1924/72.
D.N. Mukherjee, for the respondent in CA No. 1923/72 and for appellant in CA 1924/72.
CHANDRACHUD, J. These are cross appeals arising out of a judgment rendered by the Madhya Pradesh High Court in First Appeal No. 138 of 1952 modifying the decree passed by the First Additional District Judge, Jabalpur in Civil Suit No. 6 B of 1949.
It would be convenient to refer to the parties as plaintiffs and defendants, plaintiffs being the Bata Shoe Co. Ltd. and the defendants being the Corporation for the City of Jabalpur.
Plaintiffs are a limited company having their registered office at Calcutta.
At the relevant time they had their factories at Batanagar in West Bengal, Batapur in West Punjab, Palsia Digha in Bihar and Faridabad near Delhi.
The sale 's organisation of the plaintiffs is situated at Cal cutta, and that organisation sells manufactured articles through the Company 's retail shops situated in different parts of India and Pakistan.
Three such retail shops were situated at Jabalpur.
In respect of the articles which were imported by the retail shops at Jabalpur within the limits of the then Jabalpur Municipal Committee between April 1, 1943 and March 31, 1945 the plaintiffs had paid to the Municipal Committee a sum of Rs. 16,528 odd as control duty.
This duty was assessed by the Muncipal Committee on an amount which was 40% less than the retail price of the goods which were brought within the municipal limits.
In the year 194.6 47 the Municipal Committee decided to reopen and revise.
the assessment by 185 charging the octroi duty on an amount which was only 6 1/4% less than the retail price of the goods.
The Municipal Committee further decided to levy double the duty by way of penalty for the aforesaid period on the ground that the plaintiffs bad intentionally evaded the payment of the duty payable on the goods.
Plaintiffs preferred an appeal against the decision of the Municipal Committee to the Sub Divisional Officer, Jabalpur who by an order dated July 14, 1948 modified the decision of the Municipal Committee by permitting them to charge the octroi duty on an amount which was less by 12 1 2 % than the retail price of the goods.
The Sub Divisional Officer however upheld the assessment of double duty.
The revision application preferred by the plaintiffs to the Board of Revenue was rejected on October 4, 1948 on the ground that it was not maintainable.
In conformity with the appellate order, but under protest, plaintiffs paid to the Municipal Committee a sum of Rs. 21,071 1 3 on August 6, 1948.
Defendants demanded a further sum of Rs, 10,604 2 6 alleging that they had over looked asking for it through mistake.
Plaintiffs paid that amount too on September 22, 1948 under protest.
On June 20, 1949 they filed a suit against the Municipal Committee for recovery of the total amount of Rs. 31,675 3 9 with interest at 6% per annum on the ground that the defendants were not entitled to recover the amount by way of octroi duty and penalty.
During the pendency of the suit the Municipal Committee was succeeded by the Corporation for the City of Jabalpur who were substituted as defendants to the suit.
The Trial Court decreed the suit to the extent of Rs. 32,629 7 0 calculating the interest at 4%, holding that the defendants could not charge octroi duty on an amount arrived at by anything less than 40% from the retail sale price, that the recovery of octroi duty by deducting a sum of 12 1/2% only from the retail price was illegal and that the defendants were not justified in recovering double duty by way of penalty since the plaintiffs had not intentional ly evaded the payment of proper duty.
Defendants had raised contentions both as regards the jurisdiction of the Civil Court to entertain the suit and as regards limitation but the Trial Court rejected those contentions and held that it had jurisdiction to entertain the Suit and that it was not barred by limitation.
In appeal the High Court held that the defendants were entitled to revise and reopen the assessment and that the re assessment.
of octroi duty which was ultimately fixed in appeal by the Sub Divisional Officer could not be ques tioned by the plaintiffs in the Civil Court.
On the ques tion of limitation the High Court held that applying the special period of limitation provided in section 48 of the Cen tral Provinces and Berar Municipalities Act, 1922 the suit was within limitation as regards the payment made by the plaintiffs on September 22, 1948 but that it was barred by limitation as regards the payment made on August 6, 1948.
The suit in regard to the amount paid to the Municipal Committee in September 1948 was held to be within limitation on account 186 of the intervening summer vacation during which the Courts were closed.
According to the High Court the exaction of the double duty being beyond the ' powers of the defendants, the special period of limitation was not attracted and the plaintiffs were therefore entitled to recover the sum paid by way of double duty.
In the result the High Court passed a decree in the sum of Rs. 24,103 13 3 which, according to it, represented the double duty wrongly recovered by the defendants from the plaintiffs.
The High Court has granted to both the parties a certificate to file an appeal to this Court under article 133(1 ) of the Constitution and both par ties being partly aggrieved by the decree of the High Court have filed cross appeals.
The first question for consideration is whether the civil court has jurisdiction to entertain the suit brought by the plaintiffs.
It is undisputed that the Municipal Committee had the power under section 65(1)(e) of the Act of 1922 to impose octroi tax on the goods brought within the Munici pal limits for sale, consumption or use therein.
Under rule 6(b) framed by the Provincial Government in exercise of the powers conferred by sections 71, 76 and 85 of that Act, octroi duty was payable on the "current price of articles" which is equivalent to the cost price of the articles to the importer plus the cost of carriage and not the price prevailing in the local market.
Prior to 1940, plaintiffs used to submit to the defendants an invoice relating to the imported goods wherein the cost price used to be shown by deducting from the retail price the aggregate amount of expenses amounting to 40%.
Defendants later disputed the deduction claimed by the plaintiffs and informed the latter by a letter of May 7, 1940 that octroi duty was leviable on the cost price of the goods as shown in the invoice plus the freight charges.
Plaintiffs accepted that view and started showing in the invoices the cost price of the articles and the freight charges.
Defendants used to assess octroi duty on those invoices until the dispute giving rise to the present suit arose during the year 1946 47, when the basis for charging the duty was fixed at 61/4% less than the retail price of the goods and the assessments already made were reopened with a view to revising them.
Section 83(1) of the Act of 1922 provides for appeal against the assessment or levy of any tax under the Act to the Deputy Commissioner or to such other officer as may be empowered by the Provincial Government in that behalf.
Section 84(3) of the Act which bears directly on the question of jurisdiction reads thus: "84(3) No objection shall be taken to any valuation, assessment or levy nor shah the liability of any person to.
be assessed or taxed be questioned, in any other manner or by any other authority than is provided in this Act.
" It is plain from this sub section that any valuation, as sessment or levy and the liablity of any person to be as sessed or taxed can be questioned only in the manner pre scribed by the Act and by the authority mentioned in the Act and in no other manner or by any other authority.
Since the sub section expressly prohibits a challenge to a valuation, assessment or levy "in any other manner . than is provided in this 187 Act" and since the Act has devised its own special machin ery for inquiring into and adjudicating upon such chal lenges, the common remedy of a suit stands necessarily excluded and cannot be availed of by a person aggrieved by an order of assessment to octroi duty.
Similarly, the sub section excludes expressly the power of "any other authority than is provided in this Act" to entertain an objection to any valuation, assessment or levy of octroi.
This part of the provision is in the nature of ouster of the jurisdiction of Civil Courts, at least by necessary impli cation, to entertain an objection to any valuation,,assess ment or levy.
This is the evident intendment, meaning and implication of the provision.
In Wolverhmpton New Waterworks Company vs Hawkesford(1) willes J. referred to various classes of cases in which the jurisdiction of ordinary courts is excluded; the third class of such cases being "where a liability not existing at common law is created by a statute which at the same time gives a special and particular remedy for enforcing it.
" The view of Willes J., that with respect to that class of cases the party must adopt the form of remedy given by the statute and no other, was accepted by the Privy Council in Secretary of State vs Mask & Company(2) and by the House of Lords in Neville vs London " 'Express" Newspaper, Limited(3).
In Mask & Company 's( '2) case the Privy Council was dealing with the provisions of the Sea Customs Act, 1876 section 186 whereof gave a right of appeal to the person aggrieved by any decision or order passed by the Customs Officers under that Act.
Section 191 further gave the aggrieved person a right to make an application to the Local Government for revision of the appellate decision or order.
The last paragraph of section 188 provided: "Every order passed in appeal under this section shall, subject to the power of revision conferred by section .191, be.
final".
The.re was no express exclusion of the civil courts ' Juris diction to entertain a suit challenging an order passed by a Customs Officer but the Judicial Committee, while recognis ing that the exclusion of the jurisdiction of civil courts was not to be readily inferred and that such exclusion must either be explicitly expressed or clearly implied, observed that looking at the last paragraph of section 188 of the Sea Customs Act it was difficult to conceive what further chal lenge of the order was intended to be excluded other than a challenge in the Civil Courts.
If a provision merely giving finality to an order could be construed as ousting the civil Court 's jurisdiction, section 84(3) of the Act, which is far more expressive, can legitimately be construed to have the same effect.
It excludes in terms a challenge to the various things therein mentioned, in any other manner or by any other authority than is provided in the Act.
But counsel for the plaintiffs contends that section 84(3) cannot oust the civil Court 's jurisdiction to entertain the present suit because the defendant have no power at all either under the Act or under the (1) ; (2) 67 I.A. 222.
(3) 88 Rules framed thereunder to reopen or revise an assessment to octroi duty.
An assessment once made is final subject to the remedies which the Act provides to the aggrieved party and since, according to the counsel, the reopening of assessment is wholly without jurisdiction the suit to chal lenge it is competent.
The argument, in other words, is that section 84(3) may bar a suit to challenge an act which is within the purview of the Act or the Rules but it cannot bar a suit to challenge an act which is outside the Act or the Rules and is therefore wholly lacking in jurisdiction.
In support of the contention that the civil Court has jurisdiction to entertain the suit plaintiffs 'rely princi pally on the decisions of this Court in Bharat Kala Bhandar Ltd. vs Municipal Committee, Dhamangaon(1), B.M. Lakhani vs Malkapur Municipality() and Dhulabhai and others vs The State of Madhya Pradesh(3).
The appellants in Bharat Kala Bhandar 's(1) case filed a suit for recovery of excise tax paid by them under section 66(1)(b) of the Central Provinces Municipalities Act, 1922 on the ground that after the coming into force of section 142A of the Government of India Act, 1935 till January 25, 1950 a tax in excess of Rs. 50/ per annum could not be imposed by the Municipal Commit tee and that after the coming into force of the, Constitu tion, imposition of tax in excess of Rs. 250/ per annum was tinconstitutional.
The Trial Court decreed the suit but on appeal the High Court held that the suit was bad for non compliance with section 48 of the C.P. Act according to which a suit for anything done or purported to be done under the Act had to be instituted within six months from the date of the accrual of the cause of action.
In answer the Municipal Committee contended that apart from the provisions of section 48, the suit was barred by section 84(3) under which no objection could be taken to any assessment in any other manner than is provided in the Act.
That section is the very same provi sion under which the present suit, according to the defend ants, is said to be barred from the cognisance of the civil Courts.
It was held by this Court by majority that since the Municipal Committee had no authority to levy a tax beyond what was permitted by section 142A of the Government of India Act or article 276 of the Constitution, the assessment proceedings were totally void insolaf as they purported to levy a tax in excess of the constitutionally permissible limits and therefore the suit was maintainable.
The question involved in B.M. Lakhani vs Malkapur Munic ipality (supra) was similar, the contention being that the recoveries which were made in contravention of section 142 A of the Government of India Act, 1935 and article 276(2) of the Constitution were wholly without jurisdiction and therefore a suit for refund of tax recovered by the Municipality in violation of the constitutional provisions was maintainable.
That contention was accepted by this Court which treated the matter as concluded by the decision in Bharat Kala Bhandar 's (supra) case.
(1) ; (2) (3) ; 189 In Dhulabhai and others vs The State of Madhya Pradesh (supra) the position was similar to that in the two cases noticed above.
Section 17 of the Madhya Bharat Sales Tax Act provided that no assessment made and no order passed under the Act or the Rules made thereunder shall be called in question in any Court.
It was conceded by the State Government that the sales tax levied on the appellants was unconstitutional in view of article 301 of the Constitution but it was contended that the civil Court had no jurisdiction to entertain the appellants ' suit for refund of the tax in view of section 17 of the Act.
After an examination of various decisions including those to which we have referred in this judgment Hidayatullah, J., who spoke for the Constitu tion Bench formulated seven propositions bearing on the construction of statutes which, expressly or by necessary implication, bar the jurisdiction of civil Courts.
It is unnecessary to examine each One of those propositions for the short reason that as in the case of Bharat Kala Bhan dar and B.M. Lakhani, (supra) so in the case of Dhulabhai (supra) the recovery of sales tax was unconstitutional and the suit, for that reason, was held maintainable.
Attention must, however, be drawn to propositions (1), (4) and (6).
The 1st proposition states that where the statute gives a finality to the orders of the special tribunals the Civil Courts ' jurisdiction must be held to be excluded if there is adequate remedy to do what the Civil Courts would normally do in a suit.
Such provision, however, does not exclude those cases where the provisions of the particular Act have not been complied with or the statutory tribunal has not acted in conformity with the fundamental principles of judicial procedure.
The 4th proposition is that when a provision is already declared unconstitutional or the con stitutionality of any provision is to be challenged, a suit is open.
The 6th proposition which bears more appropriately on the instant case says that questions of the correctness of the assessment, apart from its constitutionality, are for the decision of the authorities and a civil suit does not lie if the orders of the authorities are declared to be final or there is an express prohibition in the particular Act.
In either case the scheme of the particular Act must be examined because it is a relevant enquiry.
The plaintiffs ' contention that the suit is not barred from the cognizance of the civil Court is effectively an swered by these propositions but even so, a discussion of the jurisdictional issue will not be complete without reference to a decision rendered by a seven Judge Bench of this Court in Kamla Mills Ltd. vs State of Bombay(1).
The appellants therein were assessed to sales tax on sales which were treated by the Sales Tax authorities as 'inside sales ' but which according to the decision in Bengal Immunity Co. Ltd. vs State of Bihar(2) were 'outside sales ' and therefore non taxable under the Bombay Sales Tax Act, 1946.
After the decision in Bengal Immunity(2) case which came on September 6, 1955 the appellants discovered that they were illegally subjected to sales tax and since the period prescribed by the Act for adopting the remedies thereunder had expired, the appellants flied a suit for recovery of the sales tax illegally collected from them in respect (1) [19661] S.C.R. (2) 190 of the outside sales.
The State of Bombay contended that the suit was.
barred by section 20 of the Act which provided, to the extent material, that no assessment made and no order passed under the Act or the Rules.
shall be called into question in any civil Court.
It was held by this.
Court that section 20 protected all assessments made under the Act or the Rules made thereunder and that the protection was wide enough to cover assessments made by the appropriate author ities under the Act whether the assessments were made cor rectly or not.
Observing that if the appropriate authority while exercising its jurisdiction and powers under the relevant provisions of the Act comes erroneously to the conclusion that a transaction which is an outside sale is not an ,outside sale and proceeds to levy sales tax on it its decision cannot be said to be without jurisdiction, the Court held that the suit was barred from the cognizance of the civil Court.
In coming to this conclusion,the Court relied upon the decision in Firm and Illuri Subhaya Chetty & sons vs The state of Andhra Pradesh(1) which had taken the view, while interpreting a similar provision in section 18A of the Madras General Sales Tax.
Act, that the expression "any assessment made under this Act" was wide enough to cover all assessments made by the appropriate authorities under the Act, whether the said assessments were made correctly or not.
The decision in Bharat Kala Bhandar (supra) was brought to the notice of the Court in Kamla Mills (supra) case but that decision was distinguished on the ground that the provision which fell for construction therein was worded differently and as observed in Mask & Co. (supra) ' "deci sions on other statutory provisions are not of materrial assistance, except in so far as general principles of con struction are laid down".
With great respect, the decision in Bharat Kala Bhandar (supra) is distinguishable for the weightier reason that the tax recovered in that case was unconstitutional and no provision of a statute could ' be construed as laying down that no Court shall have jurisdic tion to order a refund of a tax collected in violation of a constitutional provision.
If there were a provision which so provided or which could be so construed, that provision would itself be unconstitutional.
In Kamla Mills (supra) case it was observed that if a statute creates a special right or liability, pro vides for the determination of that right or liability by tribunals specially constituted in that behalf and lays down that all questions in regard to that right or liability shall exclusively determined by the tribunals so constitut ed, it becomes pertinent to enquire whether remedies nor mally associated with actions a civil Court are prescribed by the said statute or not.
If the Court is satisfied that the Act provides no remedy for making a claim for the recov ery of an illegally collected tax the Court might hesitate to construe a provision giving finality to the orders passed by the tribunals specially created by the Act as creating an absolute bar to the suit and if such a construction was not reasonably possible, the Court would be called upon to examine the constitutionality of the provision excluding the civil Court 's jurisdiction in the light of articles 19 and 31 of the Constitution.
According to the 1st proposition in Dhulabhai 's (supra) case, if the statute gives finality to the orders passed by the special (1) ; 191 tribunals created by it, the civil Courts jurisdiction would be excluded if the statute provides adequate remedies to do what the civil Courts are normally empowered to do in a suit.
The 6th proposition in that case states that ques tions of the correctness of the assessment apart from its constitutionality are for the decision of the authorities and a civil suit does not lie if the orders of the authori ties are declared to be final or there is an express prohi bition in the particular Act.
Further, that in either case the scheme of the particular Act must be examined because it is a relevant enquiry.
These considerations make it neces sary to examine the relevant provisions of the Act of 1922 and the Rules framed thereunder with a view to seeing whether they provide adequate remedies to the aggrieved party to challenge a wrong or illegal exaction of octroi duty and whether correspondingly, the authorities specially created by the Act have the power to do what civil Courts are generally empowered to do.
This inquiry is relevant even though section 84(3) of the Act does not merely say that orders passed by the special tribunals shall be final but provides that no objection shall be taken to any assessment, levy etc., in any other manner or by any other authority than is provided in the Act.
Section 66(1)(b) of the C.P. and Berar Municipali ties Act, 1922 empowers the Municipal Committee to impose an octroi on animals or goods brought within the limits of the municipality for sale, consumption or use within those limits.
Section 83(1) provides that an appeal against the assessment or levy of, or refusal to refund, any tax under the Act shall lie to the Deputy Commissioner or to such other officer as may be empowered by the Provincial Govern ment in that behalf Sub section 1 A of section 83 gives to the person aggrieved by the decision the appellate authority the right to apply to the State Government for revision of the decision on the ground (a) that the decision is contrary to law or is repugnant to any principle of assessment of a tax, or (b) that the appellate authority has exercised a jurisdiction not vested in it by law or has failed to exercise the jurisdiction vested in it by law.
Section 83(2) empowers the appellate or revision authority to draw up a statement of the case and make a reference to the High Court for its decision if any.
question as to the liability to assessment or as to the principle of assessment arises in the matter on which the authority entertains a reasonable doubt.
Then comes section 84 which by sub section
(1 ) provides for a limitation of 30 days for appeal and by sub section
(3) lays down the injunction which is the bone of contentions in the instant case that no objection shall be taken to any valua tion, assessment or levy nor shall the liability of any person to be taxed or assessed be questioned in any other manner or by any other authority than to is provided in the Act.
Section 71 of the Act empowers the Provincial Government make rules regulating the assessment of taxes and for preventing evasion of assessment.
Section 76 which appears under the heading "Collection of taxes" empowers the government to make rules regulating the collection of taxes including the prevention of evasion of payment and payment of lump sums in composition.
Section 85 confers similar empowerment to make rules regulating the refund of taxes.
192 In exercise of the powers conferred by section 71, 76 and 85 and in supersession of the earlier rules, the Provincial Government made rules "for the assessment, collection and refund of the octroi tax" which were gazetted on April 9, 1929 and were amended from time to time.
Rule provides that articles subject to octroi duty are liable to duty as soon as they enter the octroi limits.
Rule 6(b) which prescribes the mode of calculating octroi duty provides that the cur rent prices of articles liable to ad valorem duty shall be the cost price to the importer plus the cost of carriage and not the price prevailing in the local market.
Rule 8 pre scribes the details of the procedure for assessing the octroi duty.
The note to that rule says that the duty shall be assessed on invoice and not on V.P. covers, Bank re ceipts, letters and hundies.
Rules 9(a) (b) (c), 10(b), 12, 13(a) and 13(b) provide for various matters relating to assessment and levy of octroi duty.
Rule l4(b) 'provides that any person importing or bringing any dutiable articles within the octroi limits of the municipality "without paying the duty" or without giving declaration to the Octroi Mohar rir shall be liable to pay double the duty and shall in addition be liable to be prosecuted to evasion of duty.
Rules 29 onwards deal with "Refund of Octroi".
Rule 31 out of that collocation of rules prescribes how and when applications for.
refunds may be made.
These provisions show in the first place that the de fendants indubitably possess the right and the power to assess and recover octroi duty and double duty on goods which are brought within the municipal limits for sale, consumption or use therein.
The circumstance that the defendants might have acted in excess of or irregularly in the exercise of that power cannot support the conclusion that the assessment or recovery of the tax is without jurisdiction.
Applying the test in Kamla Mills (supra), if the appropriate authority while exercising its Jurisdic tion and powers under the relevant provisions of the Act, holds erroneously that an assessment already made can be corrected or that an assessee is liable to pay double duty when rule 14(b), in fact, does not justify such an imposi tion, it cannot be said that the decision of the authority is without jurisdiction.
Questions of the correctness of the assessment apart from its constitutionality are, as held in DhulaBhai (supra), for the decision of the author ities set up by the Act and a civil suit cannot lie if the orders of those authorities are given finality.
There is no constitutional prohibition to the assessment which is im peached in the instant case as there was in Bharat Kala Bhandar (supra), B.M. Lakhani (supra), and Dhulabhai (supra).
The tax imposed in those cases being unconstitu tional, its levy, as said by Mudholkar J. who spoke for the majority in Bharat Kala Bhandar (supra), was "without a vestige or semblance of authority or even a shadow of right.
" That is in regard to the power of the authority concerned to reassess and to levy double duty.
Secondly, both the Act and the Rules contain provisions which we have noticed above, enabling the aggrieved party effectively to challenge an illegal assessment or levy of double duty.
By reason of the existence and availability of those special remedies, the ordinary remedy by way of a suit would be excluded on a true interpretation of section 84(3) of the Act.
193 The argument that double duty was levied on the plaintiffs though justified by the terms of rule 14(b) goes to the correctness of the levy, not to the jurisdiction of the assessing authority.
That rule ;authorizes the imposition of double duty if dutiable articles are imported (a) without paying the duty or (b) without giving declaration to the Octroi Moharrir.
It may be that neither of these two eventualities occurred and therefore there was no justifica tion for imposing double duty.
But the error could be corrected only in the manner provided in the Act and by the authority prescribed therein.
The remedy by way of a suit is barred.
Plaintiffs sought support to their contention as regards the maintainability of the suit for refund of double duty and revised duty, from certain observations contained in Firm Seth Radha Kishan vs Administrator, Municipal Commit tee, Ludhiana(1) to the effect that "a suit in a civil Court will always lie to question the order of a tribunal created by a statute, even if its order is, expressly or by neces sary implication, made final, if the said tribunal abuses its power or does not act under the Act but in violation of its provisions.
" In the first place, the assessment in the instant case was made by the authority duly empowered to do so and secondly the authority was acting under the Act while revising the assessment and imposing double duty.
It had the power to assess and levy double duty.
If it exceeded that power it acted wrongly, .not without jurisdiction.
In Firm Seth Radha Kishan (supra), the Municipal Committee being entitled to impose a certain rate of tax on common salt and higher rate in respect of salt of other kinds, imposed tax at the higher rate on "sambhar salt" which was a variety of common salt.
Section 86 of the Punjab Municipal Act, 1911, provided that the liability of any person to be taxed cannot be questioned in any manner or by any authority other than that provided in the Act.
That provision is identical with section 84(3) of the C.P. Municipalities Act, 1922, with which we are concerned in the instant case.
Section 86(2) of the Punjab Act provided that no refund of any tax shall be claimed by any person otherwise than in accordance with the provisions of the Act and the Rules thereunder.
It was held by this Court that the liability to pay terminal tax was created by the Act and since a remedy was given to the party aggrieved in the enforcement of that liability, the suit for refund was not maintainable by reason of section 86.
The observations on which plaintiffs rely 'cannot, in the context, be taken to mean that the Act protects correct assessments only and that every incorrect or wrong order of assessment can be challenged by a suit though the statute gives it finality and provides full and effective remedies to challenge it.
Except in matters of constitutionality and the like, a self contained Code must have priority over the common means of vindicating rights.
We would like to add that if the observations on which plaintiffs rely are to be understood literally, they are contrary to the decision in Kamla Mills (supra) ,case where, speaking for a seven Judge Bench, Gajendragadkar C.J. ob served that if the appropriate authority while exercising its jurisdiction and powers under the relevant provisions of the Act comes to an erroneous conclusion, it cannot be said that the decision is without jurisdiction (p. 78).
(1) [19641 2 S.C.R. 273, 284.
194 Plaintiff 's reliance on the 1st proposition in Dhuabhw s (supra) case is equally misconceived.
The first two propo sitions formulated in that case contain a dichotomy.
The l st proposition refers to cases where the statute merely gives finality to orders .of special tribunals.
In such cases, according to that proposition, the civil Court 's jurisdiction would not be excluded if "the provisions of the particular Act arc not complied with".
The instant case does not fall under the 1st.
proposition because section 84(3) of the Act does not merely give finality to the orders passed by the, special tribunals.
It provides, expressly, that such orders shall not be questioned in any other manner or by any other authority than is provided in the Act.
The 2nd proposition deals in its first paragraph with cases where there is an express bar to the civil Courts ' jurisdic tion.
The second paragraph of that proposition deals with cases where there is no express exclusion.
The instant case falls under either one or the other paragraph of this proposition, which rendered it necessary to examine whether the Act creates special rights and liabilities, provides for their determination by laying down that such rights and liabilities shall be determined by the special tribunals constituted under it and whether remedies normally associat ed with actions in civil Courts are prescribed by the Act.
Upon that examination we concluded that the suit is barred from the cognizance of the Civil Court.
Not only that the Act of 1922 provides an effective remedy to an aggrieved party to challenge the assessment of octroi duty and to claim refund of duty illegally paid or recovered, but the plaintiffs in fact availed themselves of these remedies.
In 1946 47 when the Municipal Committee reopened and revised the past assessments by charging octroi duty on an amount which was only 61/4% less than the retail price of the goods and when it levied double duty by way of penalty plaintiffs preferred an appeal against the decision of the Municipal Committee to the Sub Divisional Officer, Jabalpur, who by an order dated ' July 14, 1946 modified the decision of the Committee by asking them to charge octroi duty on an amount which was less by 121/2%instead of 61/4% than the retail price of the goods.
Plaintiffs succeeded to an extent though the Sub Divisional Officer upheld the assessment of double duty.
Having exhausted their remedies under the Act and having been benefited by the appellate decision, though partly, plaintiffs turned to the civil Court to claim the refund.
That is impermissible in view of the provision contained in section 84(3) of the Act.
In the result, Civil Appeal No. 1923 of 1972 filed by the plaintiffs fails and is dismissed.
Civil Appeal No. 1924 of 1972 filed by the defendants succeeds and is allowed with the result that the plaintiffs ' suit will stand dis missed.
Considering that the defendants revised the assess ment after a lapse of time parties will bear their costs throughout.
P.B.R. C.A. 1923/72 dismissed.
C.A. 1924/72 allowed.
| IN-Abs | The Central Provinces and Berar Municipalities .Act, 1922, empowers a municipality to assess and recover octroi duty on goods brought within the municipal limits for sale.
consumption and use therein.
Under the Act an appeal against assessment or levy or refusal to refund any tax lies to a designated official.
A person aggrieved by the decision of the appellate authority has a right to apply to the State Government for revision.
The Act also provides for refer ence to the High Court on questions like liability to as sessment or principles of assessment and so on.
Section 84 (3) lays down that "no objection shall be taken to any valuation.
assessment or levy nor shall the liability of any person to be taxed or assessed be questioned in any other manner or by any other authority than is provided in the Act." Rule 14(b) of the Rules framed under the Act provides that any person importing or bringing any dutiable articles within the octroi limits of a municipality without paying the duty or without giving a declaration to the octroi Moharrir, shall be liable to pay double the duty and shall in addition be liable to be prosecuted for evasion of duty.
The plaintiffs imported within the municipal limits for sale in their retail shops articles manufactured by them in their factories situated at different places in the country.
They paid the octroi levied by the municipality at a certain rate.
But Sometime later the municipality reopened and revised the assessment and charged octroi at a different rate.
It also levied double the duty by way of penalty on the ground that the plaintiffs had intentionally evaded payment of duty on the goods.
The appellate author ity modified the decision of the municipality but upheld the assessment of double duty.
The plaintiffs ' revision appli cation was rejected by the Board of Revenue.
The plaintiffs paid the duty and penalty under protest and filed a suit for recovery of the amount on the ground that the municipality was not entitled to recover the amount of octroi duty and penalty.
Overruling the defendant munic ipality 's objection as regards the civil court 's jurisdic tion to entertain the suit the trial court decreed the suit.
On appeal, the High Court held that the defendants were entitled to revise and reopen the assessment and that the reassessment of duty fixed in appeal by the appellate au thority could not be questioned by the plaintiffs in a civil court.
In appeal it was contended in this Court by the plain tiffs that section 84(3) may bar a suit to challenge an act which was within the purview of the Act, but it could not bar a suit to challenge an act which was outside the Act or the Rules and since in this case the defendant had no power to revise or reopen the assessment.
its action was wholly lacking in jurisdiction and so the suit was competent.
Dismissing the appeal, HELD: Since section 84(3) expressly prohibits a challenge to valuation, assessment or levy "in any other manner . . than is provided in this Act" and since the Act has devised its own special machinery for inquiring into and adjudicating upon such challenges, the common remedy .of a suit stands necessarily cxcluded and cannot be availed of by a person aggrieved by an order 183 assessment to octroi duty.
Similarly the sub section excludes expressly the power of "any other authority than is provided in this Act" to entertain an objection to any valuation, assessment or levy of octroi.
This art of the provision is in the nature of ouster of jurisdiction of civil courts, at least by necessary implication, to enter tain an objection to any valuation, assessment or levy. [187 A] 1.
Two of the propositions bearing on the construction of statutes which expressly or by necessary implication bar the jurisdiction of civil courts stated in Dhulabhai & Ors.
vs The State of Madhya Pradesh ; and which are relevant for the purposes of this case are: (i) where the statute gives finality to the orders of special tribunals the civil court 's jurisdiction must be held to be excluded if there is an adequate remedy to do what the civil courts would normally do in a suit.
Such provision, howev er, does not exclude cases where the provisions of the particular Act have not been complied with or the statutory tribunal has not acted in conformity with the fundamental principles of judicial procedure, (ii) questions of the correctness of the assessment, apart from its constitution ality, are for the decision of the authorities and a civil suit does not lie.
if the orders of the authorities are declared to be final or there is an express prohibition in the particular Act, In either case the scheme of the par ticular Act must be examined because it is a relevant en quiry.
[189 D F] (a) In the instant case, the various provisions of the Act show in the first place that the municipality possesses the right and the power to assess and recover octroi duty and double duty on goods brought within the municipal limits for sale, consumption or use therein.
The circumstance that the municility might have acted in excess of or irregularly in the exercise of that power could not support the conclusion that the assessment or recovery of the tax was without jurisdiction.
If the appropriate authority, while exercis ing its jurisdiction and powers under the relevant provi sions of the.
Act, holds erroneously that an assessment already made can be corrected or that an ,assessee is liable to, pay double duty, it cannot be said that the decision of the authority is without jurisdiction.
[192 E F] (b) Both the Act and the Rules contain provisions ena bling the aggrieved party to challenge an illegal assessment or levy of double duty.
By reason of the existence and availability of those special remedies, the ordinary remedy by way of a suit would be excluded on a true interpretation of section 84(3) of the Act.
[193 H] (c) Levy of double duty, though not justified by the terms of r. 14(b) goes to the correctness of the levy and not to the jurisdiction of the assessing authority.
Assuming that neither of the two eventualities mentioned in r. 14(b) occurred and, therefore, there was no justification for imposing double duty, the error could be corrected only in the manner provided in the Act and by the authority pre scribed therein.
The remedy by way of a suit is barred.
[193 A B] (d) The suit for refund of double duty or revised duty is not maintainable because in the first place the assess ment was made by the authority duly empowered to do so and secondly the authority was acting under the Act while revis ing the assessment and imposing double duty.
It had the power to assess and levy double duty.
If it exceeded that power it acted wrongly, but not without jurisdiction.
[193 C D] (e) It is not correct to say that the Act protects correct assessments only and that every incorrect or wrong order of assessment can be challenged by a suit though the statute gives it finality and provides full and effective remedies to challenge it.
Except in matters of constitu tionality and the like a selfcontained Code must have priority over the common means of vindicating rights.
If the appropriate authority, while exercising its jurisdic tion anti power under the relevant provisions of the Act.
comes to an erroneous conclusion it cannot be said that the decision is without jurisdiction.
[193 F. G] Dhulabhai and Others vs The State of Madhya Pradesh ; Kamla Mills Ltd. vs State of Bombay ; applied.
13 240SCI/77 184 Bharat Kala Bhandar Ltd. vs Municipal Committee, Dha mangaon; , , B.M. Lahani vs Malkapur Munici pality, and Firm Seth Radka Kishan vs Administrator, Municipal Committee, Ludhiana [19541 2 SCR 273, 284 distinguished.
Wolverhamton New Waterworks Company vs Hawkerford ; Secretary of State vs Mask & Company, 67 I.R. 222, Naville vs London "Express" Newspaper, Limited, , Bengal Immunity Co. Ltd. vs State of Bihar.
and Firm and Illuri Subbaya Chetty & Sons.
vs The State of Andhra Pradesh, ; referred to.
(f) The instant case does not fall within the proposi tions in Dhulabhai 's case because section 84(3) not merely gives finality to the orders passed by the special tribunal but expressly provides that such orders shall not be questioned in any other manner or by any other authority than is pro vided in the Act.
[194 B] (g) In the instant case, the plaintiffs availed them selves of the remedies provided under the Act and.
succeeded to art extent.
Having exhausted their remedies under the Act and having been benefited by the appellate decision, they turned to the civil court to claim refund.
This is impermissible under section 84(3).
[194 F G]
|
Appeals Nos. 9 and 10 of 1954.
On appeal from the Judgment and Order dated the 9th day of June 1952 of the Calcutta High Court in Appeal No. 26 of 1952 arising out of the Order dated the 6th day of December 1951 of the said High Court exercising its Ordinary Original Civil Jurisdiction in Matter No. 110 of 1950.
C.K. Daphtary, Solicitor General of India, (R. Ganapathy Iyer and R. H. Dhebar, with him) for the appellant in C. A. No. 9 of 1954 and respondent No. 3 in No. 10 of 1954.
section Chowdhury, (section N. Mukherji, B. N. Ghosh and A. K. Bose, with him) for the appellant in C. A. No. 10 of 1954.
section M. Bose, Advocate General of West Bengal, (B. Sen and P. K. Bose, with him) for respondents Nos.
I and 2 in both appeals.
1078 1955.
December 19.
DAS ACTING C. J.
The only question canvassed before us in the above appeals, which have been beard together, is whether certain sales of goods made by Shri Ganesh Jute Mills, Ltd. (hereinafter referred to as the Mills) to the Government of India, Ministry of Industry and Supplies are to be deducted from the taxable turnover of the Mills so as to be exempt from sales tax demanded by the Commercial Tax Officer of the State of West Bengal.
The relevant facts are stated below.
On the first of September 1948 the Government of India, Ministry of Industry and Supplies, in Calcutta, placed with the Mills a confirmatory order in writing bearing No. Cal/J 1/2001/103 for the supply to the Government of India of a large quantity of hessian cloth of different descriptions at different prices ,therein mentioned.
It was stipulated that the contract would be governed by the conditions of contract specified in Form WSB 133 as amended up to date.
It was specifically mentioned that the goods ordered were required to meet an international obligation of the Government of India and as such the execution of the contract in accordance with the programme of deliveries as given in the schedule attached thereto was essential.
The agreed prices were stated to be exclusive of the Bengal Sales Tax and it was stipulated that the Government of India would arrange direct payment of sales tax to the Government of West Bengal if it was ultimately found that Sales Tax was payable in respect of that contract.
Pursuant to the aforesaid contract, the Mills supplied goods to the Government of India of the aggregate value of Rs. 2,10,040 calculated at the prices agreed upon.
The Commercial Tax Officer, Beadon Street, District If Charge, claimed that the aforesaid sales should be included in the taxable turnover of the Mills and assessed to sales tax.
The Mills, on the ,other hand, claimed exemption under section 5 of the Bengal Finance (Sales Tax) Act, 1941.
(Bengal Act VI of 1941).
The relevant portion of section 5 ran as follows; 1079 "5.
(1) The tax payable by a dealer under this Act shalL be levied at the rate of one quarter of an anna in the rupee on his taxable turnover; (2) In this Act the expression "taxable turnover" means that part of a dealer 's gross turnover during any period which remains, after deducting therefrom (a) his turnover during that period on (i). . . (ii). . (iii) sales to the Indian Stores Department, the Supply Department of the Government of India, and any railway or water transport administration; (iv). . . (v). . (vi). . (b). . " The Mills further contended that if any sales tax was at all payable the same was payable by the Government of India and not by them.
The Commercial Tax Officer overruled both these objections and on the 8th November 1950 he assessed the Mills to sales tax in respect of the supplies made by the Mills to the Government of India under the aforesaid contract and demanded a sum of Rs. 9,401 10 6.
On the 6th December 1950 the Mills filed a petition under article 226 of the Constitution of India before the High Court at Calcutta.
In the petition the Mills impleaded as respondents the Commercial Tax Officer, the State of West Bengal and the Union of India.
The Mills prayed for a writ of mandamus on the respondents to cancel and/or recall and/or forbear from acting or giving effect to the demand dated the 8th November 1950 and from realising the sum of Rs. 9,401 10 6 and for a writ of certiorari for production of the records and proceedings before the Commercial Tax Officer and for quashing the same and for other incidental reliefs.
On the same day a rule was issued on the respondents to show cause why the orders prayed for should not be made.
The Commercial Tax Officer filed an affidavit in opposition disputing the contentions put forward by 1080 the Mills in support of their claim for exemption and maintaining that sales tax was due and had been legitimately assessed and demanded.
On behalf of the Union of India was filed an affidavit affirmed by one M. P. Pai, the then Joint Secretary in the Ministry of Works, Production & Supply.
It was therein stated that a department of the Government of India named the Department of Supply came into existence in the month of September 1939 immediately on the commencement of World War II and before the enactment of the Bengal Finance (Sales Tax) Act, 1941 (Bengal Act VI of 1941).
It was averred that before the 7th January 1946 the said Department of Supply was charged with the procurement of Stores from all places in India including Bengal and that it also directed the work of Indian Stores Department in the United Kingdom and of the India Supply Mission in the United States of America.
It was added that by Resolution No. 227/45 Pub(c) dated the 31st December 1945 the Governor General in Council announced the creation with effect from the 7th January 1946 of the Department of Industries & Supply in place of the existing Department of Supply and of Industries and Civil Supplies.
It was claimed that the powers and functions of the Department of Industries and Supplies were the same as those of the Department of Supply and that there was no variation in the nature of the said functions whatsoever.
The rule came up for hearing before Bose, J., who took the view that the newly created Department of Industries & Supplies was charged with the same work of procurement of stores for Government as had been entrusted to the Department of Supply and certain additional works and that later on the name was again changed to Ministry of Industry and Supply.
The learned Judge pointed out that although there was a change in the designation of the Indian Stores Department and the Supply Department of the Government of India, section 5 (2) (a) (iii) was not amended in any way until 1949 when by an amending Act (West Bengal Act X of 1949) the exemption 1081 granted under section 5(2)(a)(iii) was withdrawn.
The learned Judge appears to have regarded this con , tinuance of section 5(2) (a) (iii) in the Bengal Finance (Sales Tax) Act, 1941 as indicative of the fact that in view of the State of West Bengal the Ministry of Industry & Supply was the same as the Indian Stores Department and the Supply Department of the Government of India referred to in the section.
The learned Judge accordingly held that the Mills were entitled to the benefit of the exemption and were not liable to pay sales tax in respect of the supplies in question.
He accordingly, on the 3rd January 1952, made the rule absolute.
The Commercial Tax Officer and the State of West 'Bengal went up on appeal from the said judgment and order of Bose, J.
The appeal came up for hearing before & Bench consisting of K.C. Das Gupta, J. and P. N. Mookerjee, J.
In separate but concurring judgments both the learned Judges rejected the preliminary objection taken by the Mills and the Union of India as to the maintainability of the appeal.
On the merits both of them held that the Department of Industries & Supplies was not the same as the Indian Stores Department or the Supply Department of the Government of India.
The old departments ceased to exist and a new department combining some of the functions of these departments and some new functions was created and that, therefore, sales to the newly created department could not be deducted from the taxable turnover under section 5(2) (a) (iii).
In the result, the Appeal Court allowed the appeal with costs, set aside the order of Bose, J. and dismissed the application of the Mills under Article 226.
The Mills as well as the Union of India have now come up on appeal before us with a certificate of fitness granted by the High Court.
In view of the decision of this Court in National Sewing Thread Co. Ltd. vs James Chadwick & Bros. Ltd.(1), the question of maintainability of the appeal before the High Court has not been raised before us.
The appeals have been fought out on the merits only.
(1) ; 1082 The appeals came up before this Court for bearing on the 22nd and 23rd September 1955.
After going through the records it was felt that the materials on record were not sufficient to enable the Court to determine the real point of controversy between the parties.
The appeals were accordingly adjourned and directions were given for the filing of supplementary affidavits setting out the facts relied on by the parties respectively.
Fresh affidavits have since been filed.
It appears from the affidavit of one A. R. Iyer, Deputy Director, Directorate General of Supplies and Disposals, under the Ministry of Works, Housing & Supply, that in 1918 a department called the Contracts Directorate had been constituted as a purchasing Organisation for the needs of the Army.
With effect from the 1st January 1922 the Indian Stores Department was constituted as a result of the recom mendations of the Stores Purchase Committee.
The functions of this department were to act as a purchasing and inspection agency in respect of certain commodities including textile goods for all Central departments and minor Local Governments and such other authorities as might desire to avail themselves of the services of this department.
Annexure III to the affidavit of Iyer indicates that it was not obligatory on the other departments to make purchases through the Indian Stores Department.
Originally this department was constituted for a period of two years but by Resolution No. section 217 of the Government of India, dated the 6th May 1924, it was placed on a permanent basis and continued to discharge the same functions.
Rules 5 and 6 attached to this Resolution show that purchases could also be made locally by other departments in case of emergency or for convenience.
In 1939 when the outbreak of World War 11 was imminent the necessity for creating a new department was keenly felt and the Governor General in Council by a Resolution of the Home Department dated the 26th August 1939 (Annexure V to Iyer 's affidavit) announced the creation from that date of a department of Supply "to deal directly with ques 1083 tions concerning supplies of all kinds required for the prosecution of war".
Annexure VIII to Iyer 's affidavit shows that the control of the Indian Stores Department and all other matters relating to the purchase of stores in India which were being then dealt with in the Department of Commerce were to be dealt with in the department of Supply as a temporary measure for the duration of the war.
That the Indian Stores Department and the Contracts Directorate did not lose their identity is shown by the Office Memorandum dated the 3rd August 1940 (Annexure X, Clause 4) and Office Memorandum dated the 2nd December 1941 (Annexure XI, Clause I (a) and Clause 4).
It is thus clear that up to the end of the year 1940 purchases used to be made for and on account of the Government of India by the Contracts Directorate, the Indian Stores Department and the Department of Supply and that purchases were also made locally by other departments.
It was then that on the 1st July 1941 the Bengal Legislature passed the Bengal Finance (Sales Tax) Act, 1941 which by section 5(2) (a) (iii) exempted sales to the Indian Stores Department, the Supply Department of the Government of India and any railway or water transport administration from sales tax.
Sales to other departments of the Government of India were not so exempted.
By a Press Note dated the 2nd September 1941 issued by the Government of India in the Supply Department (Annexure XIII to Iyer 's affidavit) a purchase branch of the Supply Department for the duration of the war was created with effect from the 1st August 1941 and it shows that the Contracts Directorate and the Indian Stores Department bad then "ceased to exist as separate entities" for the duration of the war and a new branch was being organised in their place.
Then came the Office Memorandum dated the 23rd December 1941 issued by the Government of India in the Department of Supply (Annexure XIV) which superseded the previous office memorandum dated the 13th December 1940 (Annexure XII).
The 137 1084 authorities under the Central Government concerned with the production, manufacture and purchase of supplies were shown in Statement I annexed thereto.
It is clearly mentioned therein that departments other than the ones referred to therein were and, in the absence of orders to the contrary, would remain independent of the department though working in close touch with it (Clause 3).
Powers of local purchase were also not disturbed in any way (Clause 4).
Statement I indicates that purchases of various supplies, e.g., medical and veterinary supplies, coal and coke for Railway and other civil and military authorities in India, etc., and Printing and Stationery stores, were independent of the Supply Department.
It is thus clear that the Indian Stores Department and the Supply Department of the Government of India were not the only departments which bad authority to make purchases for and on behalf of the Government of India in its various departments.
On the 21st April 1943 came Notification No. 209No.
107/43 Pub(c) whereby the Governor General in Council announced the creation, from the 22nd April 1943, of a Department of Industries and Civil Supplies to deal with (i) Statistics and Research, (ii) Development and (iii) Controls.
Shortly thereafter Office Memorandum No. E4(179) dated the 14th May 1943 issued by the Department of Supply intimated that the Governor General in Council bad decided that the Department of Industries and Civil Supplies would, with effect from the 15th May 1943, take over responsibility for the procurement of cotton textiles and cotton textile stores (Annexure XVI to Iyer 's affidavit).
So this Department of Industries and Civil Supplies became another purchasing organisation of the Government of India apart from the Department of Supply.
The Government of India Resolution dated the 31st December 1945 announced the creation, with effect from the 7th January 1946, of the Department of Industries and Supplies in place of the existing Department of Supply and the Department of Industries and Civil Supplies.
By this Resolution the Indian 1085 Stores Department and the Contracts Directorate which during the war had been brought under the Supply Department, were incorporated in the newly created department.
It will be noticed that this newly created department had assigned to it the work of the procurement of stores for the Government of India which was formerly assigned to the Department of Supply and the Department of Industries and Civil Supplies.
In addition to these duties this department was authorised also to deal with other things, namely, development of industries, administration of Government factories not allocated to specialised departments, Disposals of Surplus and Civil Supplies.
The nature and volume of the purchases made by this newly created department became obviously different from and larger than those of the two departments it replaced.
It is also noteworthy that the Department of Supply which was created for the prosecution of war was abolished as soon as the war was over (Annexure XVII to the affidavit of Iyer).
The Resolution of the Government of India dated the 2nd September 1947 published in the Gazette of India dated the 6th September 1947 (Annexure XVIII) announced, amongst other things, that with effect from the 29th August 1947 the Department of Industries and Supplies would be re designated as the Ministry of Industries and Supply.
From the summary of the annexures to the affidavit of Iyer filed in these proceedings it is quite clear that while the Ministry of Industries and Supply was a new designation of the Department of Industries and Supplies, the Department of Industries and Supplies cannot be regarded merely as a new designation of the Department of Supply and the Department of Industries and Civil Supplies.
Indeed, the Resolution announced the "creation" of the Department of Industries and Supplies in place of the two existing departments mentioned above.
This newly created department had wider powers and was a new department altogether.
The exemption granted by the Bengal Finance (Sales Tax) Act, 1941 was given to two departments by name.
It was not given to the 1086 sales to the Government of India in all its departments.
It is true that the Indian Stores Department and the Supply Department of the Government of India were not corporate bodies but they evidently were sufficiently well defined organisations to be referred to as "entities" in some of the Press Notes and Resolutions mentioned above and even in the affidavits filed in these proceedings.
Further, the Bengal Finance (Sales Tax) Act, 1941 by section 5 (2) (a) (iii) certainly dealt with these two departments as if they were distinct entities.
The Act, in a manner, conferred on these two departments the status, as it were, of well defined and distinct entities at least for the purposes of that Act, namely for making sales to them exempt from the tax.
If it were the object of the Bengal Legislature to give exemption to all sales to all departments of the Government of India it would have been quite easy for it to frame sub clause (iii) in a general way as sub clause (iv) had been flamed.
Further, if sales to these two departments were to be regarded as covering sales to all departments of the Government of India then the sales to the railways which at that time mostly, if not wholly, belonged to the Government of India need not have been separately mentioned in the way it has been in sub clause (iii).
As already stated, there were, at the date when the Act was passed, various other departments of the Government of India which were concerned with purchase of stores but quite clearly the exemption conferred by the section was not intended to extend to the sales to those departments.
Therefore, the reference to these two particular departments in the section cannot possibly be read as a reference to the Government of India generally.
It has been urged that the real object of section 5(2)(a)(iii) was to give exemption not to the particular departments but to the sales of such goods as, at the date of the Act, used to be made to those departments and, therefore, sales of those goods made to any department of the Government of India which came to be charged with the duty of purchasing those 1087 goods should also come within the purview of the section and be entitled to the benefit of the exemption conferred by it.
We are unable to accept this line of reasoning.
This interpretation will unduly narrow the scope and ambit of the exemption by limiting it to sales of only those goods as, at the date of the Act, used to be sold to those two departments and sales of other goods even to those two departments, however necessary for the prosecution of the war, would not get the benefit of the exemption.
Such could not possibly be the intention of the legislature as expressed by the language used by it in framing the section.
According to the section the exemption is given to all sales made to those two departments, no matter whether the sales were only of the kind of goods which used to be sold to them at the date of the Act or of other kinds of goods.
The suggested interpretation involves the addition of qualifying words to the section which ordinarily it is Dot permissible for the court to do.
Further, the press notes and the resolutions of the Government of India summarised above clearly indicate that there were other purchasing departments which were independent of the Indian Stores Department or the Supply Department of the Government of India and that the authority of other departments of making local purchases was not interfered with by the creation of these two departments.
Therefore it may well have been that, at the date of the passing of the Act, same or similar kinds of goods used to be sold to these two departments as well as to other departments but surely it cannot be contended, in view of the language of the section, that the exemption was intended to extend to the sales of the same or similar kinds of goods to those other departments also.
It is not necessary for us to pronounce any opinion as to the validity or soundness of the extreme position taken up by the learned Advocate General of West Bengal namely that as the exemption is given by a statute to sales made to two departments eo nomine it will not extend to sales made to the same department redesignated by a new name.
It is enough for our present 1088 purpose to say that the Department of Industries and Supplies which was subsequently re designated as the Ministry of Industries and Supply was not the same as the Indian Stores Department or the Supply Department of the Government of India under a different name.
The scope and volume of the work entrusted to the Department of Industries and Supplies was much wider and larger than that with which the two departments which it replaced bad been charged.
Unlike those of the two departments, its purchases were not confined to goods necessary for the prosecution of the war.
To extend the benefit of the statutory exemption to the sales made to the newly created department of Industries and Supplies, of goods not required for war purposes but, say, for meeting international obligations as in the present case, will necessarily widen the scope of the exemption and impose greater loss of revenue on the State of West Bengal than what the Act by its language intends to do.
In view of the ever expanding activities of the modern welfare State indifferent fields including that of trade and commerce, the Government departments are often entrusted with the performance of well defined activities and are authorised to deal with the outside world and to enter into contracts of sale and purchase and other transactions in the same way as an ordinary person or company may do.
Such Government departments, therefore, may well be regarded as distinct units or quasi legal entities, at least for the particular purposes for which they are created.
At any rate, the Bengal Finance (Sales Tax) Act, 1941 by providing for the deduction of the sales to the two named departments from the taxable turnover certainly treated those two departments as distinct entities.
This exemption is the creation of the statute and must be construed strictly and cannot be ex tended to sales to other departments.
The fact that the section was not amended until 1949 does not at all indicate that the Bengal Legislature intended to extend the benefit of the section to any but the departments specifically mentioned in the section.
In our opinion the conclusion arrived at by the Appeal 1089 Court, namely that the sales tax is payable on the sale in question is correct and these appeals must be dismissed with costs.
SINHA J. I regret to have to differ from my learned brethren in the determination of the only question involved in these appeals, namely, whether the sales by the appellant in Civil Appeal No. 10 of 1954 (Messrs Shree Ganesh Jute Mills Ltd.) to the appellant in Civil Appeal No. 9 of 1954, the Union of India (the Government of India at the time of the transactions in question) were liable to payment of sales tax under the Bengal Finance (Sales Tax) Act, 1941 (Bengal Act VI of 1941), to be referred to hereinafter as "The Act".
The facts leading up to these appeals may shortly be stated as follows: The Government of India in the Ministry of Industry and Supply (which for the sake of brevity may be called "The Government" entered into a contract on the 1st September 1948 with Messrs Shree Ganesh Jute Mills Ltd., which may be designated "The Mills", for the supply of hessian at certain rates and of certain description appearing in Exhibit A to the affidavit filed on behalf of the Mills.
With reference to the question of sales tax the contract contains the following stipulation: "The prices shown above are exclusive of the Bengal Sales Tax.
The Government of India will arrange direct payment of sales tax to the Government of West Bengal if it is ultimately found that sales tax is payable in respect of this contract".
It is also provided that "This contract will be governed by the conditions of contract specified in Form WSB.
133 as amended up to date".
This contract was entered into and signed by "A Huq, Deputy Director of Supplies, for and on behalf of the Governor General of India".
In pursuance of the aforesaid contract the Mills supplied hessian goods to the Government of India of a certain valuation on which the Commercial Tax Officer of Bengal, the main contesting respondent, made a demand of Rs. 9,401 10 6 as sales tax from the Mills.
The Mills demurred to the 1090 payment and contended that the sales in question were exempt from payment of the sales tax demanded in view of the provisions of section 5 (2) (a) (iii) of the Act.
Eventually the Mills moved the High Court of Calcutta for an appropriate writ under article 226 of the Constitution against the contesting respondents.
The matter was heard by a Single Judge of that Court who by his judgment dated the 6th December 1951 held that the Mills were not liable to pay the sales tax demanded and cancelled the notice of demand and directed the respondents 1 and 2 to forbear from enforcing the demand.
Respondents I and 2 went up in appeal under the Letters Patent.
The appeal was heard by a Division Bench which came to the contrary conclusion.
The major portion of the judgment of the Letters Patent Bench was devoted to the discussion of the question whether the judgment of the learned Single Judge in the writ matter was amendable to the appellate jurisdiction under the Letters Patent.
That question has not been pressed during the arguments and is therefore no more in controversy.
The only question that was canvassed before us was the applicability of section 5 (2) (a) (iii) of the Act which contains the exemption, the benefit of which is being sought by the appellants in each case.
The exemption is in these terms: "Sales to the Indian Stores Department ', the Supply Department of the Government of India, and any railway or water transport administration".
It has been contended on behalf of the appellants that the sale of hessian by the Mills to the Government of India in the Ministry of Industry and Supply is within the terms of the exemption quoted above.
On the other hand, it is contended on behalf of the Sales Tax Department of the Government of West Bengal that the sales in question were not covered by the aforesaid exemption clause.
It is therefore necessary to go into some detail of the formation and development of the Department in question.
The supplementary affidavit filed on behalf of the Government and sworn to by Shri A. R. Iyer, Deputy Director of Directorate General of Supplies & 1091 Disposals, discloses the following facts.
The Indian Stores Department was constituted with effect from the 1st January 1922 as a result of the recommendations of the Stores Purchase Committee which had been constituted by the Government of India to examine the whole question of the constitution of an expert agency to carry out on a large scale purchase of supplies required for the public services, as recommended by the Indian Industrial Commission, with the object of encouraging the purchase of articles made in India for Government requirements.
The scope and functions of the Department, inter alia, were to act as a purchasing and inspection agency, and in an advisory capacity in all matters connected with the purchase of stores for the public services, on behalf of all Central Departments of the Government and of the minor local Governments and also on behalf of such major local Governments, Company worked Railways, Corporations, Port Trusts, Municipalities and quasi public bodies and Indian States as might desire to avail themselves of the Department 's assistance.
The activities of the Department consisted in the purchase and inspection in India of a large variety of goods and articles including "textile goods", so that the purchase of hessian which is the particular commodity involved in this case, would be included in the activities of the Department.
The Department had been constituted in the first instance for a period of two years.
But by a Resolution.
of the Government of India dated the 6th May 1924 it was placed on a permanent basis.
It continued to discharge the same functions as before.
It made purchases not only for the needs of the civilian departments of the Government of India but also of all the requirements of the Army.
Hessian which had been purchased from the Mills in this case was one of the products which the Government of India used to purchase only through the Indian Stores Department whenever needed for Government purposes.
A Department called the "Contracts Directorate" had been constituted in 1918 as a, purchasing organization for the needs of the Army.
But after the constitution of the Indian 138 1092 Stores Department in 1922 the Army authorities also began to utilize the services of the Indian Stores Department for procurement of several categories of stores required by them.
By a Resolution of the Home Department dated the 26th August 1939, apparently to meet the demands of the imminent second world war, the Contracts Directorate and the Indian Stores Department were in 1940 amalgamated with the Department of Supply so that in 1941, when the Act was passed, the position was that the Department of Supply as reorganized on the 3rd August 1940 included amongst its activities and functions the purchase of stores for the needs of the Government.
This branch of its activity was administered by the Directorate General, Supply Branch, located at New Delhi.
Jute products and textiles including hessian had to be purchased only by placing indents by the department concerned with the Directorate General of Supply, New Delhi.
Thus this Department absorbed for the duration of the war the purchasing sections of the Indian Stores Department and the Contracts Directorate which were placed under completely self contained organizations empowered to procure all supplies, whether for war purposes or otherwise.
All authorities requiring supplies to be procured in India had to place their indents or demands on the Directorate General concerned.
With effect from the 1st August 1941 the Contracts Directorate and the Indian Stores Department ceased to exist as separate entities in the Supply Department and became one purchasing organization in the said Department.
This Organisation arranged for supply of all classes of stores for purposes of Government, such as textiles, leather goods, etc.
Thus hessian which came under the bead of "textiles" which was being purchased in the first instance only by the Indian Stores Department continued to be purchased by the Supply Department when the Indian Stores Department came under the control of the Supply Department.
By a notification dated the 21st April 1943 issued by the Government of India in the Home Department, another Department called the Industries and 1093 Civil Supplies Department was created.
This Department was primarily concerned with statistics and.
research and development of industries, as also ' controls on civil supplies (other than foodstuffs).
When this Department was first created, it had no purchasing activity.
But with effect from the, 15th May 1943 the Government directed that the new department should take over responsibility for the procurement of cotton textiles and cotton textile stores which till then were being dealt with by the Indian Stores Department which later came under the Supply Department as aforesaid.
Purchase of jute and woollen textiles continued to be the responsibility of the Supply Department.
By a Resolution of the Government of India dated the 31st December 1945 the Department of Industries and Supplies in place of the existing Departments of Supply and of Industries and Civil Supplies was created with effect from the 7th January 1946.
From that date the Department of Industries and Supplies became responsible for the procurement of stores from all places in India in the same manner as the Department of Supply had been doing previously to its amalgamation with the new Department.
The powers and functions of the Department of Industries and Supplies in the matter of procurement of stores continued as before.
The Department continued to procure and purchase only the same kinds of articles as the Department of Supply had been doing before the coming into existence of the Department of Industries and Supplies so that the creation of the Department of Industries and Supplies did not make any difference in its activities relating to purchase of stores.
There was no addition to or subtraction from its functions in the matter of purchase of stores.
From what has been stated above, it is clear that the purchasing functions of the Government of India with special reference to the procurement of textiles including hessian with which we are immediately concerned were discharged by the Indian Stores Department from 1st January 1922.
Those functions were taken over by the Department of Supply in 1940, 1094 The Department of Supply itself merged in the Department of Industries and Supplies with effect from the 7th January 1946.
By a notification of the 2nd September 1947 the Department of Industries and Supplies was redesignated as the Ministry of Industry and Supply with effect from the 29th August 1947 as a result of the emergence of India as an Independent State.
Thus the Ministry of Industry and Supply is a lineal descendant of the Indian Stores Department, of course, with an added volume of work and functions, but the original activity of purchase of stores remaining the same in bulk and in character.
It has already been noticed that the Indian Stores Department was concerned with the function, amongst others, of purchasing stores of a large variety of articles and goods on behalf of all Central Departments of the Government of India and Local Gov ernments, Railway Companies, Corporations, Port Trusts, Municipalities and other quasi public bodies, as also Indian States if they availed of the services of the department.
Thus the infant Indian Stores Department has grown in stature and volume in the course of the last about 25 years.
The same sapling has grown into a shady tree but its function as the sole purchasing agency of the Government of India and other Governments for a large variety of goods and commodities has 'Continued.
The nomenclature has undergone successive changes, but the function of purchasing agency on behalf of the Central and other Governments and public bodies as aforesaid has remained the same.
Furthermore, the purchase of hessian, which is the subject matter of the demand in question has continued in the same organization, though under a different name.
It is well settled that the provisions of a statute have to be construed with reference to the state of affairs as they existed at the time the statute was passed.
In the year 1941 there was in existence the Supply Department of the Government of India which had incorporated the Indian Stores Department.
According to the affidavit referred to above, the main activities of purchase of goods and commodities 1095 required by the Government of India 'and other governments, local bodies, etc., except for purchases of small values, that is to say, not exceeding Rs. 100 in each case and of certain specified commodities, like foodstuffs, forage, lethal stores, etc.
referred to in para.
7 of the affidavit (at p. 18 of the supplementary paper book) were carried on by the Supply Department.
That is the reason why the exemption to the Government of India was worded as it stands in section 5(2) (a) (iii).
As stated above, the Supply De partment existed as a separate department up to the 6th January 1946.
With effect from the 7th January the Department of Industries & Supplies came into existence which later was re designated as the Ministry of Industry & Supply.
The judgment under appeal is based chiefly on the consideration that the exemption clause in question does not in terms refer to the newly created department which now goes by the name of the Ministry of Industry & Supply.
But this department in so far as it deals with industry, is not concerned with the main purchasing activities of the Government of India.
The exemption was granted in respect of the purchasing activity of the Government of India and that function continues to be assigned to the Supply Department which has now become a wing of the newly created department of the Government.
The question therefore arises whether in those circumstances the Government of India could claim the benefit of the exemption.
The High Court in answering that question in the negative has gone upon mere nomenclature.
It has emphasized the change in the name and overlooked the substance of the matter.
After all, what is a Department of a Government? It is not a mere name, whatever else it may be.
It is not a person, either natural or artificial.
A Department of Government is a particular function.
The Government has so many functions and each of its functions or a group of functions is placed in charge of a particular Department which may be made up of a number of clerks organized in a group, whose work is supervised by a hierarchy of officials with 1096 the head of the department at the apex.
A department may therefore consist of a single function out of the many functions of the Government, or it may comprise several functions placed in charge of a single departmental head.
The Indian Stores Department which came to be incorporated in the Supply Department of the Government of India and later merged in the larger Department of the Ministry of Industry & Supply, could have continued its separate existence as it did until 1939 or could have become part of a larger department as it did after the 3rd August 1940, or the 7th January 1946, or the 29th August 1947; and conversely, its activities could be split up into a number of sub departments under different heads classified according to the nature of the commodities to be purchased.
But, in my opinion, the change in the nomenclature in either direction should not matter so long as the function, namely, of purchasing articles and commodities required by the Government of India and other Governments continued to be the same.
It is a matter of substance and not of form.
The Department concerned cannot be equated with a natural person.
Nor can it be raised to the level of a legal person.
I am not aware of any principle of jurisprudence which would justify placing a department of Government on the pedestal of a legal person.
There is no tertium quid between the two positions.
Though the High Court has not said so in so many words, it has treated the department either as a legal person or as something in between a legal person and a natural person.
That, in my opinion, is not sound logic.
Nor is there any legal basis for treating a department of Government either as a legal person or as a natural person.
In my view, the terms of section 5(2) (a) (iii) show that it was an exemption granted to a particular function of the Government of India described by a certain name.
And one might feel inclined to exclaim with the great poet Shakespeare "What is in a name!" It is but a description of the main purchasing activity of the Government of India, as the history of the department above set out shows, 1097 Sometimes the language of a statute has to be construed in a modified form in order to give effect to the real intentions of the legislature where, as in the present case,, the language is only of a descriptive nature and not a definitive one.
An instance of this is furnished by the case of Miller vs Salomons(1).
In that case the question arose whether a person of Jewish persuasion who was returned to Parliament as a Member of the House of Commons was entitled to sit without taking the prescribed oath.
The form of the oath as given by 6 Geo. 3, c. 53, mentioned the name of "King George" only.
It was argued on behalf of that member that the oath was confined to the name of a sovereign who bore that name.
But it was held by the Court that it was a mere description and that the intention of the statute was to include all sovereigns who came after King George 111.
The relevant portion of the observations of the Court are in these terms: "The second question arising on the construction of the Act is, whether, as the form of the oath given by the 6 Geo. 3, c. 53, mentions the name of King George only, the obligation to administer it ceased with the reign of that Sovereign, because it was applicable to no other than to him.
I think this argument cannot prevail.
It is clear that the legislature meant the oath to be taken always thereafter, for the enactment is general that it shall be taken without limit of time and the oath is not confined to the existing monarch, but mentions 'the successors '; and as it could not be taken in those words during the reign of a Sovereign not of the name of George, it follows that the name George is merely used by way of designating the existing Sovereign; and the oath must be altered from time to time in the name of the Sovereign, in the manner it was when actually administered in this case, in order to carry the obvious meaning of the enactment into effect.
This is an instance in which the language of the legislature must be modified, in order to avoid absurdity and inconsistency with its manifest intentions".
(1) [1852] 7 Exchequer 475; ; , 1068.
1098 The High Court referred to the observation of Lord Halsbury in the case Of Commissioners of Inland Revenue vs Forrest(1) to the effect that exemptions from taxation should be strictly construed because otherwise the burden of taxation will fall on other members of the community.
Those observations, in my opinion, have no relevance to the facts and circumstances of the present controversy, because we know that the exemption was granted to the Government of India in the department dealing with purchase of certain commodities and articles without reference to quantity.
As already pointed out, the Indian Stores Department was concerned with purchase of stores for public services on behalf of all Central Departments of Government and local Governments, etc., and the Government of Bengal as then constituted was one of the Provinces of India which have been receiving subsidies and subventions to make up the deficit in their budgets.
As a matter of fact, as stated on behalf of the Bengal Government the concession was granted in order to enable business communities within the Province of Bengal to compete on favourable terms with others outside Bengal in the matter of supplying the needs of the Government.
Hence there is no question of liberal construction of the exemption resulting in throwing a greater burden on other citizens.
On the other hand, the larger the sales in the Province of Bengal as it used to be, the greater the benefit to the business community doing business within that Province.
It was therefore stated at the Bar that though the present case involved taxes amounting to less than Rs. 10,000, the question arising for determination in this case affected much larger amounts because such sales within the Province amounted to several crores.
I should have thought that the business community in the Province of Bengal having had the advantage of the transactions of sale, the Government of Bengal in all fairness should have allowed the purchasing agency of the Government of India the benefit of the exemption until that benefit was in (1) ; 1099 terms withdrawn some time in the beginning of 1949.
The matter can be looked at from another point of view also.
We are concerned here with the sale of hessian.
As pointed out in the affidavit filed on behalf of the Government of India, the purchase of hessian has all along been the concern of the Supply Department, now incorporated in the Ministry of Industry & Supply.
Sales tax is a tax on sale of goods and tax on hessians falls within the contemplation of the law granting the exemption if the sales were effected through the purchasing agency of the Government of India.
The beneficiary certainly was not an amorphous body like a department but the Government of India, because it is the Government of India which could be a unit for purposes of the Act.
In this connection our attention was invited to the last clause of the exemption covered by the words "and any Railway or water transport administration".
The argument was that if the Government of India as such was to be the beneficiary, then there was no necessity for the words just quoted.
But this argument overlooks the fact that a railway or a water transport administration need not necessarily be a department of Government because there were, and still are, railway systems or water transport systems which are owned and administered by corporate bodies other than the Government of India.
Sales even to those public or semi public bodies were within the terms of the exemption.
Those words therefore are not words of limitation but words which widen the scope of the exemption in so far as the same may be available to railways and water transport administrations not owned and carried on by the Government of India.
Another reason which may be adduced in answer to the contention that there was nothing to prevent the Legislature from stating that the exemption was granted in respect of all purchases by the Government of India is that the Indian Stores Department and its later substitutes had to make purchases Dot only for the Government of India but also for local governments and other public bodies.
Hence the exemption 1100 in the terms in which it occurs in section 5 (2) (a)(iii) was not an exemption in favour of the Government of India only but also to other Governments and public bodies which could avail themselves of the facility of purchase through that department.
Another argument was urged to meet the appellant 's case that really the exemption was meant for the Government of India in its function of purchase of stores and commodities, discharged through the Indian Stores Department and later through the Supply Department.
It was argued that if the legislature meant to grant the exemption to the Government of India, then the easiest thing to do would have been to say that sales to the Government of India were exempt from the tax.
But it has not been the contention of the appellant that all sales to the Government of India are within the terms of the exemption.
Only the sales transacted through the purchasing department of the Government of India were so exempt.
In para.
7 of the affidavit referred to above it has been stated on behalf of the Government that the different departments were entitled to make local purchases of small values, that is to say, not exceeding Rs. 100 and of certain specified commodities like foodstuffs which were not within the purchasing activity of the departments aforesaid of the Government of India.
Hence, in my opinion, there is no validity in this argument either.
It was also suggested during the argument that if the exemption were to be related to only such commodities and articles as were within the purview of the Stores Department and later of the Supply Department, then such an interpretation would involve addition of qualifying words to the section which is not ordinarily within the function of the courts.
But, in my opinion, this argument also suffers from the infirmity that,it equates the departments mentioned in the exemption clause quoted above with a legal person, an argument which has already been dealt with.
In my opinion, there is no escape from the conclusion that those are mere words of description and are not words with defined connotation, because 1101 neither the Act nor the rules framed thereunder define those departments.
If the nomenclature only mattered, then there is no escape from the conclusion that whatever articles and commodities were purchased by the Indian Stores Department or its later substitutes, of whatever magnitude and value, would be within the mischief of the exemption clause in question.
But that, in my opinion, was not the intention of the framers of the Act.
They knew what the activities of the Government through those departments were and the exemption was granted only in respect of those functions of the Government, as already indicated.
For the aforesaid reasons I would allow these appeals, set aside the orders of the Letters Patent Bench and restore the orders passed by the Single Judge of the Calcutta High Court, with costs throughout.
BY THE COURT.
In accordance with the Judgment of the majority the appeals are dismissed with costs.
| IN-Abs | Per section R. DAS, ACTING C.j., VIVIAN BOSE, BHAGWATI AND JAGANNADHADAS JJ., SINHA J. dissenting.
The exemption created by the provisions of section 5(2)(a)(iii) of the Bengal Finance (Sales Tax) Act of 1941 must be construed strictly and cannot be extended to sales to Government departments other than those mentioned therein.
The Department of Industries and Supplies, which was subse quently redesignated as the Ministry of Industries and Supplies, was not the same as the Indian Stores Department or the Supply Department of the Government of India and, consequently, sales made to the Ministry of Industries and Supplies are not exempt from payment of sales tax under that section.
In a welfare State with ever expanding activities in different fields including trade and commerce, Government departments are often entrusted with the performance of well defined activities and are authorised to deal with the outside world and enter into transactions in the same way as an ordinary person or a Company may do and may well be regarded as distinct units or quasi legal entities for the purpose for which they are created.
Consequently, the sales of hessian made to the Ministry of Industries and Supplies of the Government of India by the appellant Mills were not exempt from payment of sales tax under the Act and the State of West Bengal was entitled to levy the same.
1077 Per SINHA J.
The language of a statute has sometimes to be construed in a modified form in order to give effect to the real intentions of the legislature where, as in the present case, the language is only of a descriptive nature and not a definitive one.
Miller vs Salomons ([1852] 7 Exchequer 475), referred to.
Commissioners of Inland Revenue vs Forrest ([1890] 15 A. C. 334), held inapplicable.
The terms of section 5(2)(a)(iii) indicate that the exemption created attaches to a particular function of the Government of India described by a certain name.
The change of nomenclature was, therefore, of no consequence so long as a particular department continued to discharge that function, namely, that of purchasing articles including hessian for the Government of India.
History of the department shows that the Ministry of Industry and Supply is a lineal descendant of the Indian Stores Department and was at the time of the contract discharging its function on behalf of the Government of India and, consequently, the sales made to it must be held to be exempt from payment of sales tax.
A department of the Government is neither a natural nor a legal person but is one of the many functions of a Government placed in charge of a hierarchy of officials with the head of the department at the apex.
|
Appeal NO. 1317 of 1975.
(From the Judgment and Order dated 8 10 1974 of the Bombay High Court in Appeal No. 73 of 1974) P.H. Parekh and Miss Maniu Jetley, for the Appellant section K. Dholakia and R.C. Bhatia, for the respondent.
F.S. Nariman and B.R. Aggarwal, for the intervener.
The Judgment of the Court was delivered by CHANDRACHUD, J.
A question of practical importance concerning the dying profession of Solicitors arises in this appeal by special leave.
The question is whether the bill of costs of a Solicitor or an Attorney who has rendered profes sional services to his client in the City Civil Court can be taxed by the Taxing Master, Original Side, Bombay High Court, and if so, whether it can be taxed on the Original Side scale.
The dual system which was prestigiously in vogue in Bombay since the inception of the Bombay High Court has been abolished with effect from January 1, 1977 and there fore the question is not of growing importance.
All the same, though the question will by and by cease to have the importance which it has to day, we are informed at the bar that quite a few cases are kept pending in Bombay to await the decision of this appeal.
Certain properties belonging to appellants were attached by the City Civil Court, Bombay, in execution of a decree passed by a Court in Bellary.
The appellants appeared in the execution proceedings through a firm of Solicitors, M/s Raghavayya Nagindas & Co., respondents herein, who by the vakalatnama executed in their favour by the appellants, agreed to act, appear and plead for them in the City Civil Court.
The respondents took out three Chamber Summonses on behalf of the appellants for raising the attachment, which was eventually raised in about 1960.
Thereafter, they submitted three bills to the appellants for their costs and remuneration.
Since the bills remained unpaid, the respond ents obtained on February 8, 1972 an order from the Prothon otary of the High Court directing the TaXing Master to tax the bills 354 The appellants appealed against the order of the Prothono tary by way of Chamber Summons which was dismissed by the Chamber Judge on October 26, 1972 with liberty to the Taxing Master to decide whether respondents were entitled to be remunerated on the Original Side scale of fees, as between an Attorney and.
client.
The Taxing Master rejected the appellants ' contention, taxed the respondent bills according to the scale of fees applicable on the Original Side of the High Court and directed the issuance of an allocatur.
Before the respondents could obtain a payment order on the basis of the allocatur, the appellants took out a Cham ber Summons.on May 7, 1973 challenging the order of the Taxing Master.
That Chamber Summons was dismissed by the Chamber Judge whose decision has been confirmed in appeal by a Division Bench.
Three contentions were raised by the appellants in the High Court: (1) A Solicitor 's bill for costs and remunera tion in respect of the work done by him in the City Civil Court cannot be taxed by the.
Taxing Master, Original Side, High Court; (2) The bill, in any event, cannot be taxed according to the scale of fees applicable on the Original Side as between an Attorney and client; and (3) The recovery of the amount taxed by the Taxing Master is barred by limi tation under article 113 of the .
The High Court rejected all these contentions by its judgment dated October 8, 1974.
Mr. Parekh, appearing for the appellants before us, did not press the third point regarding limitation and rightly so.
Article 113 of the , though residuary, applies to suits and cannot govern the special form of remedy available to the Attorneys for recovering their fees.
Proceedings in pursuance of that remedy are governed by rule 573(ii)(a) of the Original Side RUles and the proviso there to.
The proceedings for recovery of fees under those provi sions are not barred by time.
Counsel has, however, pressed the first two contentions with some zeal.
We will first take up for consideration the primary question whether the Taxing Master has jurisdiction at all to tax an Attorney 's bill of costs for professional services rendered by him to his client in connection with a litigation in a court other than the Bombay High Court, in this case the City Civil Court.
Rule 569 of "The Rules of the High Court of Bombay (Original Side), 1957" affords, in our opinion, a complete .answer to the appellants ' conten tion that the Taxing Master who is an officer of the Origi nal Side of the High Court has no jurisdiction tot tax the Attorneys ' bills in regard to work done by them in matters other than those on the Original Side.
Rule 539 occurs in Chapter XXIX of the Original Side Rules under the rubric "The Taxing Office".
The rule reads thus: "569.
The Taxing Master shall tax the bills of costs on every side of the Court (except the Appellate Side) and in the Insolvency Court.
All other bills of costs of Attorneys shall also be taxed by him when he is directed to do ' so by a Judge 's order.
" 355 The rule consists of two parts of which the first part confers jurisdiction on the Taxing Master to tax the bills of costs on every side of the High Court including bills relating to matters in the Insolvency Court but excluding those on the Appellate Side of the High Court.
If the rule were to stop with the first part, it would have been possi ble to say that the Taxing Master has no Jurisdiction to tax the bills in regard to matters outside the High Court.
But the second parts of the rule puts the matter beyond doubt by providing that all other bills of costs of Attorneys shall also be taxed by the Taxing Master it is argued on behalf of the appellants that "other bills of costs ' must be construed to mean "other bills of costs relating to matters on the Original Side of the High Court" and bills relating to non contentious matters.
We see no jurisdiction for cutting down the scope of the second part of the rule by putting a limited meaning on words of width used therein.
"All other bills of costs of Attorneys" to which the second part Of the rule refers must 'mean all bills of costs of Attorneys other than those which are referred to in the first part of the rule.
That we conceive to be the plain meaning of the particular provision.
Rule 573 which was amended by Slip No. 190 also shows that the Taxing Master has jurisdiction to tax the bills of Attorneys in regard to professional services rendered by them in matters outside the High Court.
Amended rule 573(i)(a) provides that subject to the proviso and subject to the discretion of the Chamber Judge to enlarge the time, in "every suit or proceeding in the High Court" an Attorney shall lodge his bill of costs for taxation within five years after the disposal of the suit or the proceeding, an.d if an appeal is filed in the .
High Court, w!thin five years from the disposal of the appeal.
Amended rule 573(ii)(a) pro vides that subject to the proviso and to the Chamber Judge 's discretion, "In the case of matters which are not the sub ject of any proceedings in the High Court, an attorney shall lodge his bill of cost 's for taxation within five years from the completion of the matter.
" This latter rule prescribes the time within which an Attorney must lodge his bill of costs in regard to matters which are not the subject of any proceedings in the High Court.
The necessity for making this provision arose evidently because rule 569 empowers the Taxing Master to tax the Attorneys ' bills of costs in all matters except those on the Appellate Side of the High Court.
The appellants ' contention, if accepted, will render rule 573(ii)(a) otiose because according to that contention, no matter which is not the subject of any proceeding on the Original Side of the High Court or in the Insolvency Court could be taken before the Taxing Master for taxation of the Attorney 's bills.
It was then useless.
to provide that bills in regard to matters which are not the subject of any proceeding in the High Court must be filed within a particu lar period.
Apart from what appears to us to be the only reasonable construction of rule 569, the Bombay High Court, over a long course of years, has consistently taken the view that the Taxing Master has jurisdiction to tax Attorneys ' bills of costs in relation to professional services rendered by them in all matters, contentious or non contentious, and whichev er be the Court in relation to which the services 356 are rendered, except the Appellate Side of the 'High Court ill regard to which an exception has been expressly carved out by the rule '.
In Nowroji Pudumji Sirdar vs Kange & Savani(1) the appellants were represented by the respondent firm .of
Solicitors in litigation in the District Court and the Subordinate Courts of Poona.
The appellants having declined to pay the respondents ' bills on the ground that, they were excessive, respondents obtained an order from the Prothonotary for having the bills taxed by the Taxing Mas ter.
In an appeal from the decision of the Chamber Judge who upheld the Prothonotary 's order, it was contended by the appellants that the Taxing Master had no jurisdiction to .tax the bills of the respondents, firstly because the bills pertained to work which was not connected with the Original Side of the High Court and secondly because the services were rendered to the appellants by a partner of the respondent firm in his capacity as a pleader.
These conten tions were rejected by a Division Bench consisting of Sir Norman Macleod, C.J., and H.C. Coyajee, 1. who could "see no reason" why a Solicitor practising in Bombay and performing professional Services for a client regarding business in the mofussil should not be entitled to get his bills taxed by the Taxing Master on the Original Side of the High Court.
In coming this conclusion, the High Court relied on rule 494 of the Original Side Rules, 1922 which was identical with rule 569 of the Rules of 1957.
The High Court observed in Nowroji 's case that it may, be that Attorney would fall within the provisions of the Bombay Pleaders Act, 17 Of 1920, with regard to any work done in mofussil Courts after the coming into force of that Act, but that it was unnecessary to consider that question because the work for which the respondents, had lodged their bills was done before that Act had come into force, Relying upon this observation, it was submitted by Mr. Parekh that the decision in Nowroji 's case is not good law after the coming into force of the Bombay Pleaders Act.
It is not possible to accept this submission because even after that Act came into force, the Bombay High Court took the same view as was taken in Nowroji 's case and for good reason which we will expiate while dealing with the appellants contention bearing on i the scale of fees according to which the bills can be taxed.
The relevant rule, couched in identical language age, with which the High Court was con cerned from time to time leaves no doubt that the Taxing Master has the jurisdiction to tax all bills of costs of Attorneys, except those in regard to the work done by them on the Appellate Side of the High Court.
In Chitnis & Kanga vs Wamanrao section Mantri(2) the appel lants, a firm of Solicitors, had obtained from the Prothono tary of the High Court an order under rule 534 of the Rules of 1936, directing the Taxing Master to tax their bill of costs relating to (1) a suit filed on the Original Side of the High Court, (2) a petition for probate in the District Court at Satara, (3) an appeal in the High Court on its (1) (2) 48 Born.
L.R.76.
357 Appellate Side and (4) certain miscellaneous work done in the mofussil.
The respondent, to whom the appellants had rendered these professional services, contended before the Taxing Master that the order of the Prothonotary was ultra vires insofar as it related to items (2), (3) and (4).
The Taxing Master rejected that contention whereupon the re spondent took out a Chamber Summons submitting that it was not competent to the Attorneys to take advantage of the procedure that applies to taxation of Solicitors ' costs on the Original Side of the High Court in respect of costs incurred in the mofussil and on the Appellate Side of the High Court.
The respondent further contended by the Chamber Summons that the matter was governed by the Bombay Pleaders Act, 17 of 1920, and therefore the Taxing Master had no jurisdiction to tax the appellants ' bill in regard to items 2, 3 and 4.
The Chamber Judge set aside the ex parte order of the Prothonotary without a speaking order, against which the appellants filed .an appeal which was heard by Sir John Beaumont, C.J., and Kama, J. The Division Bench held that the order of the Prothonotary in regard to item 3 which related to the work done by the appellants on the Appellate Side of the High Court was clearly wrong in view of the provision contained in rule 534 of the Rules of 1936.
As regards the remaining three items, namely the suit on the Original Side, the probate proceedings in the Satara Dis trict Court and the miscellaneous work done in the mofussil, the Court following the decision in Nowroji 's case held that the appellants were entitled to have their bill taxed in regard to these items by the Taxing Master of the Original Side, although it related to work done in the mofussil.
Adverting to the observation made in Nowroji 's case in regard to the effect of the Bombay Pleaders Act of 1920, the learned Judges held that the provisions of that Act had no effect on the question in issue.
The learned Chief Justice referred in his judgment to section 17 of the Act of 1920 which provided that a legal practitioner (which expression includ ed an Attorney) may enter into a special agreement as to the terms of his remuneration and to section 18 which dealt merely with the amount of pleader 's fees which could be recovered against the opposite party.
These provisions, according to the High Court, had nothing to do with the question whether an Attorney 's bill of costs in regard to the work done by him in the mofussil could be taxed by the Taxing Master.
in Nowroji (supra), the learned Judge held that by reason of rule 569, age & Refrigeration Limited,(1) Mody J., sitting singly, took the same view of the Taxing Master 's power to tax the Attorneys ' bills.
In that case the appellants had rendered professional services to the respondents in respect of a petition for winding up which was filed in the High Court of Rajasthan.
Respondents raised the same contenions which are raised by Mr. Parekh before us, namely, that the Prothonotary had no jurisdiction to pass the Order direct ing the Taxing Master to tax the bill and secondly, that the bill of costs could not be taxed on the Original Side scale.
Relying upon the decision in Nowroji (supra), the learned Judge,held that by reason of rule 569, the very rule with which we are concerned in the instant case, an (1) 358 Attorney of the High Court was entitled to have his bill of costs taxed by the Taxing Master in respect of professional work done by him even in a Court other than the Bombay High Court.
The learned Judge also negatived the second conten tion of the respondents before him, but we will turn to that part of the judgment later.
These decisions of the High Court contain a correct exposition of the relevant rule which was numbered as Rule No. 494 in the Rules of 1922, No. 534 in the Rules of 1936 and is now Rule No. 569 in the Rules of 1957.
The Rules of 1909 also contained a similar .rule bearing No. 491.
It is important to mention from the point of view of 'legislative ' history, that prior to the framing of the 1909 rules, the corresponding rule was Rule 544 of the 1907 Rules which.
in material respects, was worded differently.
It said: "Rules 544.
The Taxing Officer shall tax the bills of costs on every side of the Court (Except the Appellate Side) and in the Insolvency Court.
He .shall also tax all such attorney 's bills of costs as he may be directed to tax by a Judge 's order on consent of the parties, or on the application by any party chargeable with the bill.
" Under this rule, the Taxing Officer could tax the bills referred to in the second part of the rule by consent of parties only of if an application was made for taxation of the bill by a person chargeable with the bill.
Further, the second part of Rule 544 did not contain the expression "All other bills of costs" (emphasis supplied) which is to be found in the corresponding rule since the framing of the 1922 Rules.
The significant changes introduced in 1922 are directed at conferring on the Taxing Master the power to tax all bills of Attorneys, including those for work done in any other Court save the appellate side of the High Court.
It is argued on behalf of the appellants that assuming that the Taxing Master has jurisdiction to tax the bills in regard to the work done by the respondents in the City Civil Court, the bills cannot be taxed on the Original Side scale in view of the provisions contained ' in the Legal Practi tioners (Fees) Act, 21 of 1926.
We see no substance in this submission.
The statement of Objects and Reasons of the 1926 Act shows that the Act was passed in order to give effect to the recommendation of the Indian Bar Committee that in any case in which a legal practitioner has acted or agreed to act, he should be liable to be sued for negligence and be entitled to sue for his fees, Prior to the Passing of the Act of 1926, various High Courts in India had held almost consistently that Vakils could be.
sued for negli gence in the discharge of their professional duties and were entitled to sue for their fees but .Barristers could neither be sued for negligence nor could they sue for their fees.
The Indian Bar Committee recommended by paragraph 42 of its report that in practice the distinction relating to suing for negligence and being sued 359 for fees was not of great importance since suits by or against legal practitioners 'in respect .of fees and the conduct of cases were extremely rare; but it was necessary to provide that in any case in which a legal practitioner had 'acted ' or 'agreed to act ', he should be liable to be sued for negligence and be entitled to sue for his fees.
The long title of the Act of 1926 describes it as an Act "to define in certain cases the rights of legal practitioners to sue for their fees and their liabilities to be sued in respect of negligence in the discharge of their professional duties.
" The preamble of the Act is in the same terms.
Section 2(a) of the Act defines a 'legal practitioner ' to mean a legal practitioner as ' defined in section 3 of the according to which a 'legal practi tioner ' means "an Advocate, Vakil or Attorney of any High Court, a Pleader, Mukhtar or Revenue Agent".
Section 3 of the Act of 1926 provides that any legal practitioner who acts or agrees to act for any person may by private agree ment settle with such person the terms of his engagement and the fee to be paid for his professional services.
Section 5 of the Act provides that no legal practitioner who has acted or agreed to act shall, by reason only of being a legal practitioner, be exempt from liability to be sued in respect of any loss or injury due to any negligence in the conduct of his professional duties.
Section 4 of the Act of 1926 which is the sheet anchor of Mr. Parekh 's argument reads thus: "4.
Right of legal practitioner to sue for fees.
Any such legal practitioner shall be entitled to institute and maintain legal proceedings for the recovery of any fee due to him under the agreement, or, if no such fee has been settled, a fee computed in accordance with the law for the time being in force in regard to the computation of the costs to be awarded to a party in respect of the fee of his legal practitioner." ' In the first place, as explained above, the Act of 1926 was passed for an entirely different purpose with which we are not concerned in the present case.
Secondly, and that is more important, section 4 on which the appellants rely deals, as shown by its marginal note, with a limited ques tion viz., the right of a legal practitioner to sue for his fees.
It may be that since an Attorney is included within the meaning of the expression 'legal practitioner ', he will be governed by the provisions Contained in section 4 of the Act of 1926 if he brings a suit for the recovery of his fees.
But we are not concerned in this case to determine_ the scope and extent of an Attorney 's right to sue for his fees.
It must further be borne in mind that section 4, which iS in two parts, provides in the first place that a legal practitioner 'shall be entitled ' to institute and maintain a legal proceeding for the recovery of any fee due to him under an agreement.
This part of the section confers an additional entitlement on legal practitioners and cannot justifiably be construed as detracting from any other right which they may possess in regard to the taxation and re covery of their fees.
Section 4 provides by its second part that if there is no agreement between the legal 'practition er and his client in regard to the fees payable to him, he shall be entitled to institute and 360 maintain legal proceedings for the recovery of a fee comput ed in the manner provided therein.
This also is in the nature of an entitlement, the right recognised thereby being .the right to bring a suit to recover the fees in the absence of an agreement.
Any legal practitioner who wants to enforce the right which is specially created and con ferred by the Act of 1926 will have to comply with the conditions on which that right is conferred.
When a statute creates a special right, it can only be enforced in the manner and subject to the conditions prescribed by the statute.
Therefore, the fees for the recovery of which legal proceedings are brought under section 4 cannot be any.
larger than the fees computed in accordance with the law for the time being in force in regard to the ' computation of the costs to be awarded to a party in respect of the fee of his legal practitioner.
But, as we have stated earlier, the provisions of the Act of 1926 are ,entirely beside the point.
They have no bearing on the question whether an Attorney can have his bill taxed by the Taxing Master in respect of the work done by him in courts other than the High Court of Bombay and if so, on what scale.
The Bombay High Court in the judgment under appeal thought that there was an apparent conflict between section 4 of the Act of 1926 and the Original Side Rules relating to the taxation of an Attorney 's bill of costs.
We would like to make it clear that bearing in mind the true object and purpose for which the Act of 1926 was passed and the drive of section 4 thereof, there is no conflict, apparent or real, between any of the provisions of the Act of 1926 and the rules of taxation contained in the Original Side Rules of 1957.
In that view, it is unnecessary to resort to the principle of harmonious construction which the High Court alternatively relied upon for holding that the Taxing Master has the jurisdiction to tax the respondents ' bill in the instant case and on the Original Side scale.
Mr. Parekh then relied upon the rules framed by the Bombay High Court under section 224(1)(d) of the Government of India ACt, 1935 which corresponds roughly to article 227(3) of the Constitution and contended that the respondents ' bills must be taxed in accordance with those rules and not accord ing to the scale prescribed by the Original Side Rules.
This contention too is unacceptable.
The rules on which counsel relies were framed by the High Court "for fixing and regulating by taxation or otherwise the fees payable as Costs by any party in respect of the fees of his adversary 's Attorney appearing, acting and pleading upon all proceedings in the Bombay City Civil Court." These rules, according to their very terms, have nothing to do with the taxation of any Attorney 's bill of costs as between himself and his own client.
The rules govern the fees payable by way of costs by any party in the City Civil Court, in respect of the fees of his adversary 's Attorney.
That is to say, if an order of costs is passed in favour of a party to a suit or proceeding in the City Civil Court, he is entitled to recov er from his adversary by way of professional charges in curred by him, the fees computed in accordance with the rules framed under section 224(1)(d) of the Government of India Act and not what he has in fact paid to his 361 Attorney.
Rule 9 on which 'counsel relies particularly, makes this position clear by providing: "9.
Where costs are awarded to a party in any proceeding ' the amount of the Attor ney 's fee to be taxed in the bill of costs is recoverable by such party if represented by an Attorney from the adversary and shall be computed in accordance with the rules above unless such fee has been settled under the provisions of section 3 of the Legal Practi tioner 's (Fees) Act, 1926, for a lesser amount in which case not more than such lesser amount shall be recoverable.
" The combined effect of this rule and section 4 of the Legal practitioners (Fees) Act, 1926 is that if an Attorney who has appeared or acted for his client in the City Civil Court sues his client for fees, he cannot recover in the suit anything more than is permissible under the rules framed by the High Court under section 224(1)(d) of the Government of India Act, 1933.
Neither those rules nor anything.
contained in the Act of 1926 is calculated to affect the Attorney 's right to have his bill taxed by the Taxing Master on the Original Side scale, for work done by the Attorney in the City Civil Court.
The Bombay City Civil Court Act, 69 of 1948, provides by section 18(1) that all suits and proceedings cognizable by the City Civil Court and ,pending in the High Court, in which issues have not been settled or evidence has not been re corded shall be transferred to the City Civil Court.
By section 18(2), costs incurred in the High Court till the date of the transfer of the suit are to be assessed by the City Civil Court in such manner as the State Government may after consultation with the High Court determine by rules.
Mr. Parekh.
drew our attention to rule 8 framed by the Government of Bombay under section 18(2) but we do not see its relevance on the issue under consideration in the instant case.
That rule shows that even as regards the fees of Attorneys, the Registrar of the City Civil Court is given the power to tax and allow all such costs and out of pocket expenses as shall have been properly incurred by an Attorney up to the date of the transfer of the suit.
The rule further provides that after the date of the transfer such fees shall be taxed and allowed as in the opinion of the Registrar are commensurate with the work done by the Advocate having regard to the scale of fees sanctioned for the Advocate in the City Civil Court by the High Court.
Rule 2, being a rule framed under section 18(2) of the Act of 1948, governs transferred, suits only and it expressly authorises the Registrar to tax the Attorney 's bill for the work done in such suits both before and after the transfer of the suit from the High Court to the City Civil Court.
There is no corresponding rule which can apply,to suits and proceedings instituted in the City Civil Court after the Bombay City Civil Court Act, 1948 came into force and in the absence of such rule, the rules framed under section 18(2) cannot 'support the appellants ' contention.
Mr. Parekh also drew our atten tion to the "Rules of the Bombay City Civil Court, 1948" framed by the Bombay High Court under section 224 of the Govern ment of India Act, 1935 but we see nothing 362 in those rules either which can assist his contention re garding the power of the Taxing Master to tax an Attorney 's bill as between himself and his client.
While we are on this aspect of the matter it would be useful to refer to the Supreme Court Rules, 1966 and the Bombay High Court Appellate Side Rules, 1960.
The Supreme Court ' Rules contain elaborate provisions in Order XLI and XLII thereof regarding costs of proceedings and taxation of costs.
Rule 13 of Order XLII provides that except as other wise provided in the rules or by any law for the time being in force, the fees set out in the Second and Fourth Sched ules to the Rules may be allowed to Advocates and officers of the Court respectively.
Rules 23 to 29 of Order XLII deal specifically with Advocate and Client taxation.
The Second Schedule contains detailed provisions under which fees are payable to Advocates.
for various types of profes sional services rendered by them.
Similarly, Chapter 14 of the Appellate Side Rules of the Bombay High Court contains various rules for computing the fees which an Advocate is entitled to charge his own client.
Similar provision is to be found in England in the Supreme Court Costs Rules, 1959 (see The Annual Practice 1965, p. 1998/300).
Mr. Natman who appears on behalf ' of the Incorporated Law Society, Bombay, drew our attention to rule 29 of the last mentioned rules under which a Solicitor 's bill can be taxed as between himself and his client.
These provisions are on a par with the rules of taxation of the Original Side of the Bombay High, Court.
The important point to be noted is that the Rules of the City Civil Court do not, except in regard to suits transferred from the High Court, contain any provi sion under which an Attorney can have, his bill taxed as between himself and his client.
Perhaps there is good reason for this because though under section 224(1)(d) of the Government of India Act, 1935 and article 227(3) of the Constitution, the High Court has got the power to settle tables of fees to be allowed to Attorneys practising in Subordinate Courts, that power has not been exercised by the High Court for the reason, probably, that the Rules of Taxation on the Original Side of the High Court adequately and effectively take care of that matter.
The High Court did exercise its powers under section 224(1)(d) in relation to the City Civil Court but did not in the rules framed in the exercise of that power provide for taxation of an Attorney 's bill of costs as between him and his client.
It is not too much to suppose that the High Court did not want to do once over again what it had elaborately done while framing the rules on the Original Side, which were in vogue for a large number of years and were working satisfac torily.
Mr. Parekh sought to derive some sustenance to his argument from a decision of the Calcutta High Court in Messrs Sander sons & Morgans vs Mohanlal Lalluchand Shah(1) but we find that the question which arose for decision therein was entirely different.
The appellants therein, a firm of Solicitors, submitted to the respondents a bill of costs for the work done by them for the respondents on the (1) A.I.R. 363 Original Side of the Calcutta High Court.
The respondents challenged the bill by a Chamber Summons, which the appel lants resisted on the ground that there was a private agree ment between the parties to pay a particular amount by way of fees and therefore the bill was not liable to be taxed under the Original Side Rules.
On a cosideration of the Original Side Rules of the Calcutta High Court, Particularly rules 4 and 74 of Chapter 36, the High Court came to the conclusion that the solicitors were bound to have their bills taxed according to the Original Side scale, agreement or no agreement.
We are concerned in the instant case with a different question under a different set of rules and as pointed out by the High Court, the Calcutta Rules are in material respect different from the Bombay Rules.
We must interpret the Bombay Rules on their own terms and decisions on other statutes cannot afford material assistance unless, of.
course ', .my principle of general application is laid down.
We have already mentioned that i.n Messrs Pereira Fa zalbhoy & Co. Mody J., held that an Attorney was entitled to have his bill taxed on the Original Side scale even in respect of the work done by him outside the High Court.
For the various reasons mentioned above we endorse that view.
Before concluding, we ought to refer to a rather anxious plea made by Mr. Parekh.
which involves ethical considera tions.
Counsel urged that it is unfair that for small work done in the City Civil Court Solicitors should be permitted to charge high fees prescribed under the Original Side Rules.
We find ourselves unable to share this concern.
If anything, Solicitors are subject to the watchful supervision of the High Court wherever they may render professional services.
The object of binding the Attorneys to the scale of fees prescribed in the Original Side Rules is not to confer on them any special benefit which is denied to other legal practitioners.
The object on the contrary is to ensure that Attorneys shall always be subject.
to the juris diction of the High.
Court no matter whether they have acted on the Original Side or in any Court subordinate to the High Court.
The only exception is made by rule 569 in regard to the work done on the Appellate Side of the High Court which, as indicated earlier, prescribes its own scale of fees 'as between an Advocate and his client.
In fact, we are unable to see why a power similar to the power of taxation of a. bill of costs between an Advocate and his.
client which is to be found in the Supreme Court Rules should not be conferred on appropriate officers of Courts subordinate to the High Court.
Such a power may enable the Presiding Judges to control the professional ethics of the Advocates appearing before them more effectively than is possible at present.
In this very case, a. bill of Rs. 6000 odd lodged by the appellants was reduced on taxation to a sum of about Rs. 850/ only.
If there were no machin ery for taxing the bill, the appellants might perhaps have got off with the demand.
We would only like to add that before allowing the costs claimed by an Attorney from his client, the Taxing Master ' must have regard to the fact that the Attorney has appeared in a Subordinate Court and to the scale of fees generally prevalent in that Court.
A judi cious exercise of 364 disecretion postulates elimination of unfair play, particu larly where one party to a transaction is in a position to dominate the will of the other.
The client must receive.the protection of the Court and its officers, whenever neces sary.
For these reasons we confirm the judgment of the High Court and dismiss the appeal.
There will however be no order as to costs.
| IN-Abs | Certain properties belonging to the appellants were attached by the City Civil Court in Bombay in execution of a decree.
The appellant engaged the respondent firm of Solicitors who by Vakalat executed in their favour by the appellants agreed to act, appear and plead for them in the City Civil Court.
The respondents took out three Chamber Summonses on behalf of the appellants for raising the at tachment.
Thereafter, they submitted three bills.
Since the bills remained unpaid, they obtained an order from the Prothonotary of the High Court directing the TaXing Master to tax the bills.
The appellants filed an appeal against the order of the Prothonotary which was dismissed by the Chamber Judge with liberty to the Taxing Master to decide whether the respondents were entitled to be remunerated on the original side scale of fees as between an attorney and client.
The Taxing Master rejected the appellants ' contention and taxed the respondents ' bills according to the scale of fees applicable on the original side by the High Court.
A Chamber Summons filed by the appellants before a Single Judge was dismissed.
An appeal before the Division Bench by the appellants also failed.
In an appeal by Special Leave the appellants contended: 1.
The Solicitors ' bill for cost and remuneration in respect of the work done by them in the City Civil Court cannot be taxed by the Taxing Master of the Original Side, High Court.
The bill in any event cannot be taxed according to the scale of fees applicable on the original side as between an attorney and client, particularly in view of the provisions contained in the Legal Practitioners Fees Act, 1926, Bombay City Civil Courts Act, 1948 and the Bombay City Civil Court Rules, 1948 as well and the rules framed by the Bombay High Court under section 2 24 ( 1 ) (d) under the Government of India Act, 19 3 5.
Dismissing the appeal, HELD: 1.
Rule 569 of the Rules of the High Court of Bombay (Original side) 1957, authorises the Taxing Master to tax the bills of cost on every side of the High Court except the Appellate side of the High Court and in the Insolvency Court.
All other bills of cost of attorneys shall also be taxed by him when he is directed to do so by a judge 's order.
There is no justification for the appellants ' con tention that "other bills of cost" must be construed to mean other bills of cost relating to matters on the original side of the High Court.
Rule 573 as amended prescribed a limitation of 5 years for lodging the bill of cost for taxation after the disposal of the suit or the proceedings in the High Court.
In respect of matters which are not the subject of any proceedings in the High Court the attorney has to lodge his bill of cost for taxation within 5 years from the completion of the matter.
The necessity for making this provision arose because rule 568 empowers the Taxing Master to tax the attorneys bill of cost in all matters except those on the Appellate side of the High Court.
The Bombay High Court, over a long Course of years has consist ently taken the view that the Taxing Master has Jurisdiction to tax attorneys bills of cost in relation 8 436SC1/77 352 to the professional services rendered by them whichever be the court in relation to which the services are rendered except the Appellate side of the High Court, in regard to which an exception has been expressly carved out by the rule.
[354 G H, 355 A G] Nowroji Fudumli Sirdar vs Kanga & Savani, 28 Born.
L.R. 384, Chitnis & Kanga vs Wamanrao section Mantri, and M/s. Pereta Fazalbhoy & Co. vs The Rajputana Cold Stor age & Refrigeration Ltd., approved.
The preamble and the statement of objects and reasons of the Legal Practitioners Fees Act 1926 shows that the Act was passed in order to give effect to the recommendations of the Indian Bar Committee that in any case in which a Legal Practitioner has acted or agreed to act he should be liable to be sued for negligence and be entitled to sue for his fees.
The Indian Bar Committee recommended by para 42 of its report that the distinction relating to suing for negligence and being sued for fees was not of great impor tance since suits by or against Legal Practitioners in re spect of fees and the conduct of cases were extremely rare.
But it was necessary to provide that in any case in which a Legal Practitioner had acted or agreed to act he should be liable to be sued for negligence and be entitled to sue for his fees.
The definition of Legal Practitioner in the 1926 Act is the same as in the (which includes an attorney).
Section 3 of the Act of 1926 provides that any Legal Practitioner who acts or agrees to act for any person may by private agreement settle with such person the terms of his engagement and fees to be paid for his professional services.
Section 4 of the Act pro vides that any such Legal Practitioner shall be entitled to institute and maintain legal proceedings for the recovery of any fee due to him under the agreement or if no such fee has been settled a fee computed in accordance with the law for the time being in force in regard to the computation of the cost to be awarded to a party in respect of the fee of his Legal Practitioner.
It may be that if an attorney institutes a suit he may be governed by section 4 but it really confers an additional right on the Legal Practitioner to institute a suit and cannot be construed as detracting from any other right which he may possess in regard to the taxation and recovery of his fees.
[358 G H, 359 A B, F H] 3.
The High Court was in error in observing that alterna tively there was an apparent conflict between section 4 of the 1926 Act and the original side rules relating to the taxation of an attorney 's bills of cost.
Bearing in mind the true object and purpose for which the 1926 Act was passed and the drive of section 4, there is no conflict, apparent or real between the 1926 Act and the High Court Rules of 1957.
[360 D E] 4.
The rules framed by the High Court under section 224(1)(d) of the 1935 Act, are rules for fixing and regulat ing the fees payable as costs by any ' party in respect of the fees of his adversary 's attorney.
These rules according to their very terms have nothing to do with the taxation of any attorney 's bill of cost as between himself and .his own client.
[360 F G] 5.
The combined effect of section 4 of the 1926 Act and the Rules framed by the High Court under section 224(1)(d) is that if an attorney who has appeared or acted for his client in the City Civil Court sues his client for fees he cannot recover in the suit anything more than what is per missible under the Rules framed by the High Court under section 224(1)(d).
However, that do not affect the right of an attorney to have his bill taxed by the Taxing Master on the original side scale.
[361 C D] 6.
Section 18(2) of the Bombay City Civil Courts Act.
1948 provides that in respect of suits transferred from the High Court to the City Civil Court costs incurred in the High Court till the date of the transfer of the suit are to be assessed by the city Civil Court in such manner as the State Government may after consultation with the High Court determine by rules.
Rule 2 framed under section/8(2) pro vides that even as regards the fees of attorneys the Regis trar of the City Civil Court is given the Vower to tax and allow all such costs and out of pocket expenses as shall have been properly incurred by an attorney upto the date of transfer of the suit.
The rule further provides that after the date 353 of the transfer such fees shall be taxed and allowed as in the opinion of the Registrar are commensurate with the work done by the advocate having regard to the scale of fees sanctioned for the advocates in the City Civil Courts Rules.
The said rule, applies only to transferred suits.
It has no application to the suits and proceedings instituted in the City Civil Court after 148.
[361 D H] M/s. Sandersons & Morgans vs Mohanlal Lalluchand Shah, A,I.R. distinguished.
The Taxing Master, however, before allowing the cost claimed by the attorney from his client must have regard to the fact that the attorney has appeared in a subordi nate court and to the scale of fees generally prevalent in that Court.
[363 G H] The Court observed that power similar to the power of taxation of a bill costs between the advocate and client which is found in Supreme Court Rules, 1966, should be conferred on appropriate officers of the Court subordinate to the High Court.
Such a power may enable the presiding Judge to control the professional ethics of the advocates appearing before them more effectively than is possible at present.
[362 A G]
|
Appeal No. 1353 of 1975.
(Appeal by Special Leave from the Judgment and Order dated 1 11 1974 of the Bombay High Court in Appeal No. 493 of 1966 from original Decree.) F.S. Nariman, B.R. Zaiawala, B.S. Bisaria, J.B. Dadac hanji, O.C. Mathut, K.J. John and Shri Narain, for the appellants.
P.H. Parekh and Miss Manju Jetely, for the respondent.
The Judgment of the Court was delivered by KAILASAM, J.
This appeal by special leave is preferred by the Board of Trustees of the Port of Bombay against the judgment of the Bench of the Bombay High Court in first appeal confirming the decree passed by the City Civil Court and dismissing the appeal with costs.
The respondents, Indian Goods Supplying Co., a partnership firm in Bombay, filed suit No. 3304 of 1959 in the Bombay City Civil Court at Bombay praying for a decree against the Trustees of the Port of Bombay in the sum of Rs. 24,950 with interest.
Three consignments of Chinese newsprint were imported by the respondents for home consumption in India.
The first 2 consignments arrived on February 16, 1957.
Suffice it to say that the clearance of the two consignments as well as the third consignment 345 was considerably delayed and the Port Trust claimed demur rage for the period from March 25, 1957.
The respondents disputed the right of the Port Trust to charge any demurrage for the period during which the goods were detained by the Customs authorities for analytical test.
as well as for the Import Trade Control formalities.
It is common ground that so far as the period for analytical test certified by the Customs authorities is concerned the Port Trust cannot charge demurrage.
But so far as the period during which the goods were detained for the Import Trade Control formalities by the Customs authorities the Port Trust claimed demurrage.
Due to protracted correspondence between the parties the goods were not cleared and ultimately the suit was filed by the respondents for recovery of a sum of Rs. 24,950 and interest thereon from the Port Trust being the aggregate loss sustained by them.
The appellants denied that liabili ty and pleaded that the Port Trust.
was in law entitled to ' collect the demurrage levied on the respondents and that as they failed to pay the demurrage the Port Trust was entitled to sell the goods by public auction.
The City Civil Court, Bombay, decreed the suit for a sum of Rs. 24,950 with interest at the rate of 6 per cent per annum from the date of the suit till judgment and there after at 4 per cent per annum and costs of the suit.
The appellants preferred an appeal to a Division Bench of the Bombay High Court which dismissed the appeal and confirmed the decree passed by the City Civil Court.
When the appeal was pending before the High Court the appellants deposited the decretal amount in court which was withdrawn by the respondents.
Mr. Nariman, counsel for the Port Trust, stated that the Port Trust does not want to ask for the repayment of the money and that he will confine himself to the question of the correctness of the decision of the Bombay High Court holding that the Port Trust is not entitled to collect demurrage in the circumstances of this case.
It is therefore sufficient for the purposes of the appeal to confine ourselves to determining the question of law which has been raised before the High Court and decided by it.
The question that was raised before the High Court was whether the claim of demurrage by the Port Trust for the period during which the goods were detained with the Port Trust in respect of Import Trade Control formalities is maintainable.
The High Court held that the importer of the goods cannot be held responsible for any delay not at tributed to his own default and that the importer whose goods are detained by the Customs Department is entitled to claim the clearance of goods without demurrage during the period for which the Customs Department has detained them.
The appellants, the Board of Trustees of the Port of Bombay, is a statutory body constituted by the Bombay Port Trust Act, Act 6 of 1879, and is a body corporate.
Chapter VI of the Act relates to Revenue and Expenditure and pro vides for levy of rates.
Section 346 43 empowers the Board to frame a scale of tolls, dues, rents, rates and charges to be levied for each or any of the matters enumerated in clauses (a) to (d).
Sub section (a) enables framing of scale of rates relating to the landing, shipping, wharfage, cranage, storage or demurrage of goods.
We are concerned with the framing of the scale of rates for demurrage of goods.
Section 43B(1) requires that every scale framed by the Board shah be submitted to the Central Government for sanction and, when so sanctioned and pub lished in the Bombay Government Gazette, shall have the force of law; and subject to the like sanction and publica tion, may from time to time be amended or added to by the Board.
It is admitted that the Board framed a scale of rights for demurrage of goods and the scale so framed by the Board was submitted to the Central Government and was sanc tioned by the Central Government and published by the Bombay Government in the Gazette as required.
The result is that under section 43B(1 ) the scales so framed by the Board and approved by the Central Government shall have the force of law.
The learned counsel for the appellants as the Port Trust in this appeal have given up its claims to refund of the money taken by the respondents.
In view of this the counsel for the respondents confined his arguments to supporting the view taken by the High Court regarding the question of law.
He submitted that the Central Government had taken action under section 43B (IA) and had called upon the Board to modify the operation of such scales and therefore the Board was bound to modify the scales accordingly.
This conten tion is based on a D.O. letter dated 7th September, 1952 addressed by the Government of India to the Port Trust which is typed at page 350 of the Supplement Paper Book No. 2.
In the D.O. letter the Government expressed its view that it seems unreasonable to charge an importer any demurrage once it is accepted that clearance was delayed on account of the reasons beyond his control.
The letter concluded by expressing an earnest hope that the Bombay Port Trust will reconsider their decision and fall in line with the practice of the Calcutta and Madras Ports.
It concluded by stating "We shall be grateful if you will kindly place the matter before the Trustees for their favourable consideration and intimate to us the result.
" The Board considered this letter and after taking into consideration the several circumstances, suggested that demurrage may be levied on a graded scale.
The Government of India was informed of the Resolution of the Board and no further action was taken by the Government.
The D.O. letter addressed by the Government of India cannot be considered as a direction by the Central Government calling upon the Board to modify any portion of the scale framed by the Port Trust.
The language of the D.O. would indicate that the Government wanted the Port Trust to consider the Government 's proposal and nothing further.
The Port Trust considered the proposal and made its report.
We are unable to accept the plea of the learned counsel for the respondents that the D.O. letter should be construed as a direction calling upon the Board to modify the portion of the scale framed by the Board.
Section 43B(1A) has there fore no application to this case.
347 Chapter VII of the Port Trust Act enumerates the powers and functions of the Board.
It is the duty of the Board to recover the rates to have a lien on the goods and seize and detain the goods until such rates are fully paid.
The Board is empowered to sell the goods if rates are not paid or lien for freight is not discharged.
It can also dispose of goods not removed from the premises of the Board within the time limited.
Section 65 also provides the mode of application of proceeds of the sale.
Under section 66 the Board is entitled to distrain for non payment rates.
The Port clearance shall not be granted till the rates are paid.
It is thus a statutory duty of the Board to collect the rates prescribed.
The contention put forward on behalf of the respondents is that they are in no way responsible for the delay in clearing the goods as the goods had been detained under the Import Trade Control Regulations.
It is no doubt true that before clearance is given by the Import Trade Control authorities and the Customs Department the goods cannot be cleared by the respondents.
Neither can the Port Trust deliver the goods without the consent of the Import Trade Control authorities.
Taking into account the hardship caused to the importer because of the delay certain conces sions in demurrage rates are permitted.
The Port Trust has prescribed the reduced demurrage levy which is 1/6th of the normal rate from the date of expiry of the free days upto the 60th day, 1/3rd of the normal rate after the expiry of the 60th day, upto the 90th day, half the normal rate after the expiry of the 90th day upto the 120th day, 2/3rd of the normal rate after the expiry of the 120th day upto the 150th day and at the full rate after the expiry of the 150th day.
As the scale of rates are framed by virtue of the statutory powers conferred on the Board under section 43 and as the rates have been approved by the Central Government under section 43B the rates have the force of law and cannot be questioned.
Taking into account the hardship to the import ers certain concession has been given but the legality of the rates which are being levied according to law cannot be questioned.
This view was taken by this Court in a recent decision reported in Trustees the Port of Madras vs M/s. Aminchand Pyarelal & Ors.
(1) Where it had t6 consider the validity of the scale of rates fixed by the Madras Port Trust.
In a suit by the Port Trust against the importer and the Union of India and the Customs authorities to recov er the balance of demurrage amounting to about rupees three lakhs the question arose whether the scale of charges in the Port Trust Regulations under the heading "Demurrage" was void and ultra vires for the reason that it was unrea sonable and not within the authority of the Port Trust.
The relevant provisions of the Bombay Port Trust Act with which we are concerned are in pari materia with the provisions of the Madras Act which fell for consideration by the Supreme Court.
The Supreme Court held that the scale of rates and statement of conditions flamed by the Madras Port Trust under sections 42, 43 and 43A are not by laws (1) ; 348 and the sections confer authority on the Board to frame a scale of rates at which and a statement or conditions under which any of the services specified therein shall be per formed.
It observed "The Board 's power to frame a scale of rates and statement of conditions is not a regulatory power to order that something must be done or something may not be done.
The rates and conditions govern the basis on which the Board performs the services mentioned in sections 42, 43 and 43 A.
Those who desire to avail of the services of the Board are liable to pay for those services at prescribed rates and to perform the conditions framed in that behalf by the Board.
" The Court rejected the view of the High Court that demurrage being a charge for wilful failure to remove the goods within the free period can ' be levied only if the failure to remove the goods is due to the fault or negli gence of the importer or his agent.
It also did not agree with the view taken by the High Court that the authority given to the Board to frame the scale of rates can be exer cised only for the purpose of levying charges where the importer was not prevented by any lawful authority from clearing the goods from the transit area and he had default ed or was negligent in clearing the goods.
Justice Chandra chud, who spoke for the Court, observed in his judgment at page 736 supra that the statute had not placed any limita tion on the power of the Board to fix rates and as the Board had the power to frame a scale of rates at which and the statement of conditions under which any of the services specified in the section shall be performed and as the Board has fixed the scale of rates it was difficult to see in what manner or respect the Board has exceeded its power under section 42.
The Court proceeded to observe in rejecting the view of the High Court that the Board cannot fix rates of demurrage when the failure to remove was not due to some fault or negligence of the importer, that there is no such fetter on the Board 's powers to fix the rates.
This deci sion of the Supreme Court is on all fours with the facts of the present case and concludes the question.
Mr. Nariman, counsel for the appellants cited three deci sions of the English Courts in support of his contention that even on the basis of a contract the right of the Port Trust to recover demurrage cannot be denied unless the person claiming the demurrage is responsible for the delay.
In Aktieselskabet Reidar vs Arcos, Limited (1), Lord Justice Atkin in answering the question whether if the chatterer has failed to complete the loading of the ship within the lay days, and the ship during the demurrage days becomes, without the default of the shipowner, unable to carry as much cargo as she would have carried if loaded within the lay days, but receives from the charterer a full cargo for her diminished capacity, the loss falls upon the charterer in addition to the demurrage, expressed his opin ion that the decision should be for the shipowner.
It was held that "The result of the authorities appears to be that in a contract fixing a number of lay days and providing for days at demurrage thereafter, the charterer enters into a binding obligation to load a complete cargo within the lay days subject to any default by the shipowner or to the operation (1) 349 of any exceptions, matters which do not arise in this case .
If however, for reasons other than the shipown er 's default, the chatterer becomes unable to do that which he contracted to do namely, put a full and complete cargo on board during the fixed laydays, the breach is never repaired, the damages are not completely mitigated, and the shipowner may recover the loss that he has incurred in addition to his liquidated demurrage or his unliquidated damages for detention.
" Thus it appears clear that claim of demurrage cannot be resisted unless where the detention was due to the shipowner 's default.
In the present case the Port Trust 's claim for demurrage cannot be denied unless it is proved that the delay was due to the Port Trust itself.
In Budgett & Co. vs Binnington & Co., (1) a clause in the charterparty fixed the number of lay days for unloading and allowed other days for demurrage.
During the lay days a strike took place both among the labourers employed on behalf of the ship and those employed by the consignees, with the result that the unloading ceased, and could not be resumed till some days after the expiration of the lay days.
The Court of Appeal held that as the number of lay days was fixed the consignees were liable to pay demurrage, notwith standing the inability of the shipowners, owing to the strike, to do their part in the unloading.
The test that was laid down by Lord Esher Master of the Rolls, was.
Has the shipowner failed in his duty through any default of his own or of persons for whom he is responsible ? As the non delivery was occasioned by something which the shipowner could not foresee or by the act of persons over whom he had any control it was held that he was not liable.
In Compania Crystal De Vapores of Panama vs Herman & Mohatta (India) Ltd., (2) Justice Devlin quoted with approv al the law laid down by Lord Esher in Budgert Co. vs Bin nington & Co. (supra) which is in the following terms : "If the shipowner by any act of his has prevented the discharge, then, `though the freighter 's contract is broken, he is ex cused ', he was referring to a case in which the shinowner 's act preventing the discharge was in breach of his obligation to give the charterer all facilities for the discharge.
But here the act of the shipowner which de layed the discharge was not a breach of any obligation of his.
" The position therefore is that even though the delay in clearing the goods was not due to the negligence of the importer for which he could be held responsible yet he cannot avoid the payment of demurrage as the rates imposed are under the authority of law the validity of which cannot be questioned.
The claim cannot be resisted as there is no evidence that the delay was due to any act of the Port Trust or persons for whom the Port Trust is responsible.
(1) [1891] 1 Q.B.p. 35.
(2) [2953] 2 ALl.
E.R. 508.
350 One other contention which was raised before the High Court but was not dealt with by it may be referred to.
It was submitted on behalf of the respondents that the defini tion of the words "free days" would not include the period of holidays or part of a holiday or Sunday in computing the number of free days during which the Customs Duty may not be assessed or received and therefore the period of detention of the goods during the operation of Import Trade Control formalities must be considered as free days.
In the scale of rates charged at the docks framed by the Bombay Port Trust under sections 43.
43A and 43B of the Bombay Port Trust Act, 1879, in Section III reference is made to free days.
Under the heading "Free Days" it is provided that all goods will be allowed storage in Docks free of rent for 5 days.
It is further provided that in computing the number of free days Sundays and holidays referred to in by law 118 as well as any other days on which Customs Duty may not be assessed or received, will be omitted in the case of all goods liable to duty under section 20 of the Sea Customs Act.
The submission was that not only Sunday and holidays should be omitted but also other days on which Customs Duty may not be assessed or received will have to be omitted and this should be understood as days during which the Import Trade Control formalities could not be completed.
This contention cannot be accepted as these Rules are in tended only to omit Sundays, other holidays and days on which the assessment of Customs Duty cannot be taken up and would not include the entire period during which the Import Trade Control formalities have not been completed.
The High Court was therefore in error in holding that the importer of the goods cannot be held responsible for any delay not attributable to his own default and that demurrage under section 43A could never be imposed as long as the goods were detained for the purpose of the operation of the Import Trade Control Regulations.
In the result the appeal is allowed but due to the concession made by the learned counsel for the Port Trust there will be no order directing the refund of the money that had already been deposited by the Port Trust and withdrawn by the respond ents.
The appellant also does not press his counter claim.
There will be no order as to costs in this appeal.
S.R. Appeal allowed.
| IN-Abs | The appellant, a statutory body framed the scales of rates of demurrage of goods under section 43 (a) of the Bombay 'Port Trust Act 1879 which was sanctioned by the Central Government.
Later on the Central Government in its D.O. letter dated 7th September 1952 addressed to the appel lant expressed its view that it seems unreasonable to charge an importer any demurrage once it is accepted that clearance was delayed on account of the reasons beyond his control.
It also expressed its hope that the appellant would recon sider its decision and fall in line with the practice of the Calcutta and Madras Ports.
The Port considered this letter and after taking into consideration the several circum stances suggested that demurrage may be levied on a graded scale and the Central Government did not take any further action.
In fact, the appellant has prescribed reduced demurrage levy from the expiry of the free days.
In respect of the three consignments of Chinese news print imported by the respondent for home consumption in India, the appellant claimed demurrage for the period from March 25, 1957 and as the amount was not paid the goods were sold in public auction.
The respondent thereafter filed a suit for recovery of a sum of Rs. 24,950/ and interest thereon from the appellant being the aggregate loss sus tained by it.
The appellant denied that liability and pleaded that it was, in law, entitled to collect the demur rage levied on the respondent and as it failed to pay the demurrage, the appellant was entitled to sell the goods by auction.
The City Civil Court, Bombay decreed the suit with interest at 6 per cent per annum from the date of the suit till judgment and thereafter at 4 per cent per annum and costs of the suit.
The appeal preferred by the appellant to the High Court failed and the decree stood confirmed.
The decretal amount deposited in the High Court during the pendency of the appeal was withdrawn by the respondent.
Allowing the appeal by Special leave the Court, HELD: (1) The High Court was in error in holding that the importer of the goods cannot be held responsible for any delay not attributable to his own default and that demur rage under section 43(a) could never be imposed as long as the goods were detained for the purpose of the operation of the Import Trade Control regulations.
[350 E] (2) The D.O. letter addressed by the Government of India should not be construed as a direction calling upon the Board to modify any portion of the scale framed by the Port Trust.
The language of the D.O. would indicate that the Government wanted the Port Trust to consider the Govern ment 's proposal and nothing further.
The Port Trust consid ered the proposal and made its report.
Section 43B(1A) has no application to this case.
[346 F H] (3) It is no doubt true that before clearance is given by the Import.
Trade Control Authorities and the Customs Authorities, the goods cannot be cleared by the importer.
Neither can the Port Trust deliver the goods without the consent of the Import Trade Control Authorities.
Taking into account the hardship caused to the importer because of the delay certain concessions in demurrage rates are per mitted.
As the scales of rates are permitted by virtue of the statutory 344 powers conferred on the Board under section 43 and as the rates have been approved by the Central Government under section 43B, the rates have the force of law and cannot be questioned.
Taking into account the hardship to the importers certain concession has been given but the legality of the rate which are being levied according to law cannot also be questioned.
[347 C D; E F] Trustees of the Port of Madras vs M/s Aminchand Pyarelal & Ors.
[1976].
SCR 721.
followed.
(4) Even though the delay in clearing the goods was not due to the negligence of the importer for which he should be held responsible yet he cannot avoid the payment of demurrage as the rates imposed are under the authority of law, the validity of which cannot be questioned, In the instant case the claim of the appellant cannot be resisted as there is no evidence that the delay was due to any act of the Port Trust or persons for whom the Port Trust is respon sible.
[349 G H] Aktieselskabet Reidar vs Arcos, Limited [1927] 1 K.B. 352;Budgett & Co. vs Bippington & Co. [1891] 1 Q.B.p. 35 and Compania Crystal De Vapores of Panama vs Herman & Mohatta (India) Ltd. , quoted with approval.
(5) Section 43, 43A and 43B of the Bombay Port Trust Act 1891 which make reference to "free days" are intended only to omit Sundays, other holidays or on which the assessment of customs duty cannot be taken up and would not include the entire period during which the Import Trade Control formali ties have not been completed.
[350 C D] (6) Under the powers vested in the Board, it is its statutory duty to collect the rates, to have a lien on the goods and seize and detain the goods until such rates are fully paid.
The Board is empowered to sell the goods if rates are not paid or lien for freight is not discharged or when the goods are not removed from its premises within the limited time.
[347 A B]
|
Appeal No. 686 of 1976.
(Appeal by Special leave from the Judgment and Order dated 13 2 1976 of,the Punjab and Haryana High Court in R.S.A. No. 249 of 1976).
P.P. Juneja, for the appellants.
S.K. Mehta, K.R. Nagaraja and P.N. Puri, for respondent No. 1 The Judgment of the Court was delivered by CHANDRACHUD, J.
(1) One Mula executed a registered gift deed in favour of appellant No. 13, Bhagwati Devi, on December 3, 1964.
On April 29, 1965, appellants 1 to '12 claiming to be potential reversioners filed Suit No. 143 of 1965 against the donor and the donee for a declaration that under the Punjab Custom (Power to Contest) Act, 1920, the gift deed was not binding on them.
The suit was decreed by the trial court on May 31, 1966 and that decree was con firmed in appeal on October 16, 1967.
(2) In between, on July 10, 1966 Mula adopted the re spondent.
On March 11, 1970, appellant No. 13 executed in favour of appellants 1 to 12 a lease in respect of the property which was the subject matter of the. gift.
Mula died on August 28, 1971.
(3) On December 13, 1971 respondent filed the present suit against the appellants for possession of certain properties including the property which Mula had gifted to appellant No. 13.
The suit was decreed by the trial court on January 29, 1971 and the decree was confirmed in appeal by the District Court and the High Court.
(4) On June 3, 1976 appellants filed a special leave petition in this Court challenging the High Court judgment.
They raised, inter alia, a new contention (ground No. B) that in decreeing the suit, the courts below had overlooked the relevant provisions of the Punjab Customs (Power to Contest).
Amendment Act of 1973, by virtue of which the legality of the gift made by Mula in favour of Bhagwati Devi could not be contested.
On June 11, 1976 this Court granted special leave to the appellants limited to the aforesaid Ground (B) of the special leave petition.
(5) We have heard an interesting argument from Mr. Juneja, who appears on behalf of the appellants, as regards the true construction and effect of the Punjab Customs (Power to Contest) Act, 1920, as amended in 1973, but we are of the opinion that the argument lacks basis and cannot, therefore, be accepted.
The contention, sought to be raised for the first time by the learned counsel, is founded on the assumption that by reason of the Amendment Act of 1973, the gift deed executed by Mula cannot be challenged by the respondent.
The assumption on which the argument is founded is fallacious, because the respondent does not seek by his plaint, as indeed he need not have sought, to chal lenge the gift deed executed by Mula in favour of Bhagwati Devi.
That gift was challenged by appellants 1 367 to 12 in Suit No. 143 of 1965, and they succeeded in obtain ing a declaration in that suit that the gift was not binding on the reversioners.
That decree became final, with the result that as on August 28, 1971, when Mula died, the property which he had sought to gift away to Bhagwati Devi, was free from the encumbrance of the purported gift.
By the present suit, the respondent merely asks for possession of the property in respect of which Mula had executed the deed of gift.
The basis on which he has asked for that relief is that upon the death of Mula in 1971, the gift ceased to be operative by reason of the decree passed in Suit No. 143 of 1965.
It seems to us plain that he has not and he need not have contested the validity of the gift deed since that question was decided finally in the aforesaid suit.
(6) Section 7 of the Punjab Custom .(Power to Con test) Act, 1920 provided initially that no person shall contest any alienation of non ancestral immovable property on the ground that such alienation is contrary to custom.
This section was amended by section 3 of the Punjab Custom (Power to Contest) Amendment Act, 12 of 1973, as a result of which no challenge could be made to the alienation of any immovable property, whether ancestral or non ancestral, on the ground that it is contrary to custom.
It is, therefore, true that if it became necessary after the Amending Act of 1973 to contest the gift executed by Mula in favour of Bhagwati Devi, section 7 of the Act of 1920 would operate as a bar to such a contest.
However, as we have stated earlier, it was not necessary for the respondent, in view of the decree passed in suit No. 143 of 1965, to contest the valid ity of the gift.
(7) The decision of this Court in Giani Ram vs Ramji Lal(1) may, with advantage be referred to on this point.
Under the customary law of the Punjab, the wife and daugh ters of a holder of ancestral property could not sue to obtain a declaration that the allegation of ancestral property will not bind the reversioners after the death of the alienor.
But the reversioner who was entitled to chal lenge that alienation could obtain a declaratory decree that the alienation will not bind the reversioners after the alienor 's death.
It was held by this Court that such a declaratory decree had the effect of restoring the property alienated to the estate of the alienor and therefore all persons, including the wife and the daughters of the de ceased, were entitled to the benefit of that restoration.
Since the property alienated had reverted to the estate of the alienor at the point of his death, the widow and daugh ters, who also became heirs along with the sons under the were held entitled to obtain possession of the ancestral property.
Mr. Juneja attempted to get over the effect of this decision by invoking the provisions of section 8 of the Punjab Limitation (Custom) Act, 1 of 1920, which provides that when a person obtains a decree declaring that an alienation of ancestral immovable property is not binding on him, according to.
custom, the decree shall enure for the benefit of all persons entitled to impeach the alienation.
Counsel argues that since the respondent was not entitled to impeach the gift in favour of Bhagwati Devi, having been adopted after the date of the gift, the decree obtained by appellants 1 to 12 cannot ensure for his benefit.
The short answer (1) ; 9 436 SCI/77 368 to this contention is that the decree would ensure for the benefit of all persons who are enitled to a share in the property of the deceased as it existed at the moment of his death.
Since Mula 's property stood freed from the encum brance of the gift at the moment of his death, respondent as the adopted son would be entitled to the possession of the gifted property.
(8) Another facet of the same question can be seen in Chand Singh vs Ind Kaur.(1) A learned Single JUdge of the Punjab and Haryana High Court held therein that though a suit to contest, under the customary law, an alienation of immovable property may not lie after the coming into force of the Amending Act of 1973, a declaratory decree already obtained by a reversioner would continue to be operative as the Amending Act does not render such a decree a nullity.
(9) There is thus no substance in the contention raised by the appellants and their appeal must fail.
Appellants 1 to 12 shall pay the respondent 's 'costs of the appeal.
S.R. Appeal dismissed.
| IN-Abs | section 7 of the Punjab Customs (Power to Contest) Act, 1920 provided that no person shall contest any alienation of non ancestral immovable property on the ground that such alienation is contrary to custom.
section 3 of the Amendment Act 12 of 1973 amended section 7 with the .result that no challenge could be made to the alienation of any immovable property, whether ancestral or non ancestral, on the ground that it is contrary to custom.
A gift deed was executed by one Mula, in favour of appellant No. 13 Bhagwati Deyi, on December 3, 1964.
Appel lants 1 to 12 claiming to be potential reversioners obtained a decree on May 31, 1966 in a suit flied against the donor and the donee for a declaration that under the Punjab Cus toms (Power to Contest) Act Z of 1920 the gift deed was not binding on them and that decree was confirmed in appeal on October 16, 1967.
On July 10, 1966, Mula adopted the re spondent.
On March 11, 1970 appellant No. 13 executed in favour of appellants 1 to 12,, a lease in respect of the property which was the subject matter of the gift.
Mula died on August 23, 1971.
On December 13, 1971, respondent filed a suit for possession of certain properties including the property which Mula had gifted to appellant No. 13.
The suit was decreed on January 20, 1971 and that decree was confirmed in appeal by the District Court and the High Court.
In appeal by special leave.
, the appellants contended (i) In decreeing the suit the Courts below had over looked the relevant provisions of the Punjab Customs (Power to Contest) Amendment Act, 1973 by virtue of which the legali ty of the gift made by Mula to appellant No. 13 could not be contested and (ii) since the respondent was not entitled to impeach the gift in favour of Bhagwati Devi, having been adopted after the date of the gift, the decree obtained by appellants 1 to 12 cannot enure for his benefit, under section 8 of the Punjab Limitation (Custom) Act, of 1920.
Dismissing the appeal, the Court HELD: (1 ) That a declaratory decree obtained under the Punjab Customs (Power to Contest) Act by a reversioner to the effect that an alienation would not bind them after the.
alienor 's death, had the effect of restoring the property alienated to the estate of the alienor and therefore, all persons who are heirs to the deceased were entitled to obtain possession of the alienated property.
[367 E F] (ii) The decree obtained by appellants 1 to 12 on May 31, 1966 would enure for the benefit of all persons who are entitled to a share in the property of the.
deceased as it existed at the moment of his death.
Since Mula 's property stood freed from the encumbrance of the, gift at the moment of his death, respondent as the adopted son would be en tiled to the possession of the gifted property.
[367 H, 368 A] Giani Ram vs Ramji Lal ; , relied on to; Chand Singh vs bid Kaur approved.
(iii) It is true that, if it became necessary after the amending Act of 1973 to contest the gift executed by Mula in favour of Bhagwati Devi, section 7 of the Act of 1920 would operate as a bar to such a contest.
But in the instant case, the basis on which the respondent has asked for the relief is that upon the death of Mula in 1971, the gift ceased to be operative by reason of the decree passed in suit No. 143/1965.
He has not and indeed he need not have contested the validity of the gift deed since the question was decided finally in the aforesaid suit.
[367 B D] 366
|
Civil Appeal No. 2150 of 1968.
(Appeal by Special Leave from the Judgment and Order dated 5.9.1968 of the Punjab & Haryana High Court in L.P.A. No. 458/68).
V.C. Mahajan, Hardev Singh and R.S. Sodhi, for the appel lant.
O.P. Sharma, for the respondents 1 and 2.
K.R. Nagaraja and P.N. Puri, for respondent No. 3.
The Judgment of the Court was delivered by BEG, C.J.
This appeal under Article 136 of the Consti tution is directed against a very detailed Judgment of the Punjab & Haryana High Court on a Writ Petition No. 1875 of 1965 filed under Articles 226 and 227 of the Constitution, assailing an order of the Additional Director, Consolidation of Holdings, passed on 8 June, 1965.
A perusal of that order, together with the earlier order of 4 May, 1965, and the application for restoration dated 15 May, 1965, filed by Gurdev Singh, respondent No. 3, shows: Gurdev Singh, who had 370 some complaint against the Consolidation Scheme, was not present so that his petition was ordered to be filed by the Additional Director, Consolidation on 4 May, 1965.
Gurdev Singh, soon thereafter i.e. on 15 May, 1965, filed an appli cation for restoration supported by an affidavit, attribut ing his absence on 4 May, 1965, to his illness.
The. order dated 8 June, 1965, of the Additional Director, shows that the applicant Gurdev Singh 's assertion that he could not attend due to illness, over which he had no control, was accepted by the Additional Director, who proceeded to exer cise his powers under section 42 of the East Punjab Holdings (Consolidation and Prevention of Fragmentation) Act, 1948 (hereinafter referred to as the Act) and to set right the grievance of the applicant, Gurdev Singh, after going into all the relevant records.
The learned Judge of the High Court, who heard the petition also went through the records very carefully, came to the conclusion that an assertion of rights by the petitioner/ appellant, a member of the Sanjam Group, merely because of some report contained in the "Fard Badar," could not take away the effect of entries in the revenue records.
The learned Judge held that no injustice was caused to the petitioner/appellant also, there was no ground for interference under Article 226 of the Constitu tion.
The learned counsel for the appellant has relied upon the case of Harbhajan Singh vs Karam Singh& Ors.
reported in ; , where this Court held that the Addl.
Director exercising the powers of the State Government has no jurisdiction under section 42 of the Act to review his previous order.
Section 42 of the Act runs as follows: "The State Government may at any time for the purpose of satisfying itself as to the legality or propriety of any order passed, scheme prepared or confirmed or repartition made by any officer under this Act, call for and examine the record of any case pending before or disposed of by such officer and may pass such order in reference thereto.
as it thinks fit: Provided that no order or scheme or repar tition shall be varied or reserved without giving the parties interested notice to appear and opportunity to.
be heard except in case where the State Government is satisfied that the proceedings have been vitiated by unlawful consideration.
" The proviso to Section 42 lays down that notice to interested parties to appear and opportunity to be heard are conditions precedent to passing of an order under Section 42.
The fact that the Additional Director was satisfied that the respondent, Gurdev Singh, did not have an opportu nity of being ,heard due to his illness, seems to us to amount to a finding that the proviso.
could not be complied with so that the previous order could not be held to be an order duly passed under Section 42 of the Act.
It could be ignored as "non est.
" The view taken in Harbhajan Singh 's case (supra) would not apply to the 371 instant case although Section 42 of the Act does not contain a power of review.
Orders which are 'non est ' can be ignored at any stage.
On the facts and circumstances of this case, we think that this is not a fit case for interference under Article 136 of the Constitution.
The appellant, if he has acquired any rights by reason of long possession, can assert them whenever any proceedings are taken before a competent au thority to dispossess him.
What we have held here or whatever has been held by the High Court will not affect such other rights, if any, as the Appellant may have ac quired by reason of possession.
We do not know and refrain from deciding who is actually in possession and for how long and in what capacity.
This appeal is dismissed.
Parties will bear their own costs.
_ P.H.P. Appeal dismissed.
| IN-Abs | Gurdev Singh had certain complaints about the Consolida tion Scheme.
He was not present when his application was being considered.
Therefore, the application was dis missed by the Additional Director, Consolidation.
Thereaf ter, Gurdev Singh respondent No. 3 filed an application for restoration supported by an affidavit attributing his ab sence to his illness.
The Additional Director accepted the ground of respondent No. 3 about illness and granted necessary relief to him.
The appellant filed a writ.peti tion in the High Court under Articles 226 and 227 of the Constitution.
The High Court held that the assertion of rights by the appellant merely because of some report con tained in the "Fard Badar" could not take away the effect of the entries in the revenue records The High Court also held that no injustice was caused to the appellant and, there fore, there was no ground for interference under Article 226.
In an appeal by Special Leave, the appellant contended that the Additional Director had no power to review his previous order.
The power to review conferred by section 42 of the Act has to be exercised only after hearing the interested parties.
Since respondent No. 3 was not given an opportunity of being heard on account of his illness, it shows that the order passed was non est and can be ignored at any stage.
The court dismissed the appeal on the ground that this was not a fit case for interference under Article 136.
the Court, however, observed that if the appellant has any right on account of long possession or otherwise he can assert them by adopting proper proceedings and that his rights would not be affected by whatever is stated m the Judgment of this Court as well as the High Court.
|
Civil Appeal No. 974 of 1975.
(Appeal by Special Leave from the Judgment and Order dated 25 6 1975 of the Gujarat High Court in Spl.
Civil Appln.
No. 1223/74).
D.V. Patel and S.S. Khanduja, for the Appellant.
885 U.R. Lalit, P.H. Parekh and Miss Manju jatley, for Respondent No. 1.
M.N. Shroff, for Respondent No. 2.
The Judgment of the Court was delivered by GUPTA, J.
The appellant was elected a councillor of Anjar municipality in Kutch District sometime in 1972, and later, President of the municipality.
On June 30, 1973, after he had been elected President, the appellant applied to the chief officer of the municipality for allotting to him a 'plot of land admeasuring 18 feet x 16 feet situate in the town of Anjar.
In his application the appellant stated that he wanted the plot for running a flour mill temporarily until he got a suitable plot from the Govern ment.
By his order dated July 5, 1973 the chief officer granted the request permitting the appellant to hold the land on payment of rent on condition, inter alia, that the land should be vacated whenever 'the municipality so or dered.
The first respondent who is a resident of Anjar applied to the Collector of Kutch under section 38 of the Gujarat Municipalities Act, 1963 (referred to as the Act hereinafter) for declaring that appellant 's office has "become vacant" as he has disabled himself from continuing as a councillor by taking lease of the land from the munici pality.
The Collector having heard the parties held that the appellant had got the land by misusing his position as President of the municipality incurring thereby the disqual ification referred to in section 38(1)(b)(i) of the Act which disabled him from continuing to be a councillor and declared that his office had become vacant.
The appellant before us preferred an appeal under section 38(4) of the Act to the State Government against the Collector 's order.
The State Government allowed the appeal and dismissed the application of the first respondent.
It was held that the land was allotted to the appellant in accordance with the by laws of the municipality and that there was no evidence of the appellant exerting any influence on the chief offi cer.
The first respondent challenged the order of the State Government by filing a writ petition in the Gujarat High Court.
The learned Judge of the High Court who heard the petition allowed the same, quashed the order of the State Government, and restored the order made by the Collector.
This appeal by special leave is directed against the judg ment of the High Court allowing the writ petition.
The appeal turns on section 38(1)(b)(i) of the Act which reads as follows: "38.
Disablilties from continuing as a councillor.
(1) If any councillor during the term for which he has been elected or nomi nated (a) x x x (b) acts as a councillor in any matter (i) in which he has directly or indirectly, by himself or his partner, any such share or interest as is de:scribed in clause (i), (ii), (iii), (v) or (vii) of sub section 886 (3) of section 11, whatever may be the value of such share or interest, or . . . . . he shall subject to the provisions of sub section (2) be disabled from continuing to be a councillor and 'his office shall become vacant.
" The provisions of sub section (2) are not relevant for the present purpose.
Section 11 of the Act enumerates, inter alia, the "gener al disqualifications for becoming a council lor" and specifies the cases to be treated as exceptions.
Section 11(2)(c) disqualifies a person from being a councillor "who, save as hereinafter provided, has directly, or indi rectly, by himself or his partner any share or interest in any work done by order of a munic ipality or in any contract or employment with or under or on behalf of a municipality '.
Sub section 3(A)(i) of section 11 which con tains an exception to this rule provides: "(3) A person shall not be deemed to have incurred disqualification (A) under clause (c) of sub section (2) by reason of his (i) having any share or interest in any lease, sale or purchase ;of any immovable property or in any agreement for the same." Thus a person is disqualified from becoming a councillor if he. has a direct or indirect interest in any contract with the municipality, but having any share or interest in any lease of immovable property or in any agreement for the same is not a disqualification.
Section 38(1)(b) (1),quoted above however provides that if any councillor during the term for which he has been elected "acts as a councillor" in acquiring a direct or indirect share or interest in any lease, he shall be disabled from continuing to be a council lor.
We have noted earlier that section 11(3)(A)(i) is an exception to.
the general disquali fication under section 11(2) (c), section 38(1) (b) (i) appears to be an exception to that exception.
This means that though having an inter est in any lease from municipality is not a disqualification for becoming or continuing as a councillor, if the council lor "acts as a councillor" in getting such lease from the municipality, he shall be 'disabled from continuing to be a councillor.
The president of the municipality being a council, lot, this provision also applies to him.
The ques tion therefore is whether the appellant in this case acted as a councillor in the matter of allotment of the land to him.
Section 275 of the Act authorises the municipality to make bylaws not inconsistent with the Act.
The Anjar municipality has framed by laws regulating the conditions on which permission may be given for the temporary occupa tion of public streets or land.
An English translation of by law 4 of these by laws which are in Gujarati reads: "Permission will be given for the, use of public road or land within the municipal limits but not of private land for temporary period for the matters mentioned in Schedule 1 hereto on advance payment of fee as stated in the Schedule.
887 Any person who intends to occupy such land shall have to make a written application to the chief officer.
But to give such permis sion or not shall be within the absolute discretion of the chief officer.
" Schedule 1 mentioned here prescribes the fees payable by the applicant on such permission being granted.
The chief officer in this case permitted the appellant to occupy the land in question in exercise of the power given to him by this by law.
The High Court found that the appellant acted as a councillor and President of the municipality in having the plot allotted to him mainly upon the provisions of sections 49 and 45 of the Act.
Section 49 defines the power and duties of the chief officer.
Sub section (1)(a) of 'sec tion 49 which is relevant in this context is as follows: "49.
Power and duties of chief officer. (1) The chief officer shall (a) subject to the general control of the president watch over the financial and executive administration of the municipality and perform all the duties and exercise all the powers specifically imposed or conferred upon him by, or delegated to him under, this Act.
" Section 45 enumerates the functions of the President; one of the functions is to exercise supervision and control over the acts and proceedings of all officers and servants of the municipality in matters of executive administration.
The High Court after referring to these provisions observed that the chief officer being under the general control of the president in all matters of executive ,administration, must have felt himself bound to grant the appellant s applica tion.
The High Court referred to an earlier application for the plot made by one Karan Kanji which the chief officer had rejected.
There is also a finding that by law 4 did not permit the use of the plot for the purpose for which the appellant had applied and that the chief officer went out of his way to help his president.
The High Court concluded that if the appellant had not been a councillor of the municipality and its president, his application would have met with the same fate as Karan Kanji 'section The legality of the chief officer 's order is not however an issue in this case, and the question whether or not the intended use of the plot by the appellant was beyond the scope of by law 4 need not detain us.
According to the High Court it was only because the appellant held the office of president 'of the municipality that the chief officer allowed his application.
This may or may not be true, but it is not a matter relevant to the real question that arises for consideration in this case.
Section 38(1)(b)(i) disables a councillor from continuing as such if he "acts as a councillor" in the matter of allotment of any land to himself, there is no bar in the Act to a coun cillor getting a lease of the land from the municipality as would appear from section 11(3)(A)(i).
It is only in a case where he acts as a councillor in getting the lease that he is disqualified.
There is nothing in the record of this case to show that the appellant had acted as a councillor to have the plot allotted to him 888 self. 'Even if the chief officer was influenced by the fact that the applicant before him was president of the munici pality, that would not attract section 38(1)(b)(i).
It is true that section 45 confers a general power of supervision and control on the president over the acts of all officers of the municipality and section 49, which enumerates the power and duties of chief officer, also makes him subject to the general control of the president in the discharge of these powers.
But the general power of supervision con ferred on the president does not, in our opinion,imply that in every case where he applies for a lease, which he is entitled to do as section 11(3)(A) (i) indicates, he should be deemed to have "acted" within the meaning of section 38(1)(b), otherwise, the president of a municipality under this Act, by virtue of his office would be disentitled altogether from applying for permission to use any land of the municipality.
If this were the correct position then there was no point in limiting the disqualification contemplated in section 38(1) (b) (i) to cases where the councillor acts as a councillor.
The words "acts as a councillor" cannot be treated as redundant.
In our view the councillor acts as a councillor within the 'meaning of section 38(1)(b) when he performs any of the functions which under the Act he is required to perform.
An allegation of misuse of his position against a councillor would not at tract the disability under section 38(1) (b)(i) unless it was shown furher that he has acted as a councillor in the matter.
In view of the clear provision of section 38(1)(b)(i) we do not find it possible to support the im pugned judgment.
The appeal is therefore allowed and the judgment of the High Court reversing the decision of the State Government is set aside.
In the circumstances of the case we make no order as to costs.
P.B.R. Appeal allowed.
| IN-Abs | Under section 38(1)(b)(i) of the Gujarat Municipalities Act, 1963, if a councillor.
during the term for which he has been elected or nominated, acts as a councillor in any matter in which he has directly or indirectly any share or interest, he shall, subject to the provisions of sub section 2, be disabled from continuing to be a councillor and his office shall become vacant.
While functioning as President of a municipality the appellant obtained a plot of land within the municipality for running a mill.
The Chief Officer who was the authority to grant such permission permitted the appellant to hold the plot on certain conditions.
The High Court in writ petition by the respondent held that the appellant was disqualified from continuing President of the municipality.
Allowing the appeal to this Court, HELD: (1) Section 38(1)(b)(i) disables a councillor from continuing as such if he, "acts as a councillor" in the matter of allotment of any land to himself; there is no bar in the Act to a councillor getting a lease of the land from the municipality as would appear from section 11(3)(A)(i).
It is only in a case where he acts as a councillor in getting the lease that he is disqualified.
There is nothing on the record to show that the appellant had acted as a councillor to have the plot allotted to himself.
[887 H] (2) Whether or not the Chief Officer was influenced by the fact that the applicant before him was President of the municipality, was not relevant to the question whether section 38(1)(b)(i) was attracted.
[888 A] (3) The general power of supervision conferred on the Presi dent does not imply that in every case where he applied for a lease, which he is entitled to do as section 11(3)(A)(i) indi cates, he should be deemed to have 'acted ' within the mean ing of section 38(1)(b)(i); otherwise the President of a munici pality under the Act, by virtue of his office would be disentitled altogether from applying for permission to use any land of the municipality.
If this were the correct position then there was no point in limiting the disqualifi cation contemplated in section 38(1)(b)(i) to cases where the councillor acts as a councillor.
The words 'acts as a councillor ' cannot be treated as redundant.
The councillor acts as a councillor within the meaning of section 38(1)(b)(i) when he performs any of the functions, which, under the Act, he is required to perform.
An allegation of misuse of his position against a councillor would not attract the disabil ity unders.
38(1)(b)(i) unless it was shown further that he has acted as a councillor in the matter.
[888 B D]
|
n No. 90 of 1976.
(Under Article 32 of the Constitution of India).
M.K. Ramamurthi and J. Ramamurthi, for the appellant.
T.S. Krishnamoorthy lyer and N. Sudhakaran, for respond ent No 2.
The Judgment of the Court was delivered by Beg, C.J.
The petitioner alleges in fringement of his rights under Articles 16(1) and 31(1) of the Constitution.
He joined the service of the erstwhile Transport Department of the State of Kerala as a Cleaner in the Mechanical Wing in 1949.
He was promoted to the post of Helper and then Assistant Mechanic, and, finally, to that of a Mechanic.
On 15th March, 1965, the Kerala State Transport Corporation was set up under section 3 of the (hereinafter referred to as "the Act") so.
that he became a servant of the Corporation.
He alleges that, as the Kerala State is administering the Corporation and appoints its Chairman and Members under section 5 of the Act, he is entitled to the protection given 390 by the State to its servants.
According to him, the Corpo ration is really an arm or an agent of the State.
We need not, however, consider the correctness of this proposition as the petitioner has not, in our opinion, succeeded in showing how any of his rights under Article 16(1) of the Constitution, and, even less, how any right of his under Article 31 of the Constitution could have been infringed, assuming that he is a servant of the State.
It appears that on 10th July, 1968 there was a settle ment in a dispute between the Corporation and its employees.
Under this settlement, a trade test was to be conducted after inviting applications from lower grades of what are known as the "mechanical line", that is to say, Assistant Electricians, Assistant Tyre Inspectors, Stitchers, Solu tioners etc.
for filling up posts in the higher grades.
It was mentioned there that "grade promotions" will take place up to the post of Assistant Chargeman, presumably without a "trade test" but, even under this settlement, appointment to the post of chargeman could only take place on the basis of results in "Trade Test" subject to seniority.
Indeed, it was stated there that Assistant Chargeman of more than three years service will be entitled to take part in the trade test.
The "Trade Test" was apparently a test of compe tence in technical knowledge for the work to be done in the mechanical line.
According to the petitioner, the settlement was opera tive until an industrial dispute arose.
That dispute was referred to arbitration under section 10A of the Industrial Disputes Act (14 of 1947) on 6th April 1971.
The subject matter of the dispute was widely stated so as to embrace "all questions relating to" wage structure, the ratio be tween the higher and lower grades, the nature of duties and responsibilities attached to each category, and methods to be adopted for increasing productivity so as to contribute to the maximum efficiency and economic advantages from the working of the Corporation.
Among the matters decided in the Award given was that categorywise seniority, together with Trade Test, should determine the promotions to higher grades.
The Award dated 31st December 1972 was duly noti fied.
It is true that conditions of service were not sepcifically mentioned among subjects referred to arbitra tion.
But, promotions based on passing appropriate tests would certainly affect productivity.
Moreover nobody took steps to assail the Award on any ground whatsoever The petitioner alleges that the Corporation and the Workmen subsequently agreed to promotions in the mechanical wing on the basis of seniority alone as had been done in the past under the settlement.
To prove such an agreement, the following passage was relied u on from "the minutes of discussion" held in the presence of the Minister (Trans port and Electricity) on 20th November, 1973, with the representatives of the Unions of the Mechanical Wing: "It has, therefore, been decided that all existing vacancies upto Assistant Chargemen in the Mechanical Wing will be filled up as was being done in the past.
The Minister, however, pointed out that comprehensive schemes of test, with due importance on the practical Side, will be 391 introduced for all categories of employees soon.
The Minister promised that the stages at which tests are to be introduced for the various categories of staff will be discussed with the Unions conveniently." This document, signed by the General Manager of the Corporation, contains only minutes of a discussion between the Minister for Trans port and Electricity and the representatives of the Unions.
It is difficult to see how it could modify the terms of the Award duly made which had become binding and enforceable under section 17A of the Industrial Disputes Act.
The Minutes relied upon as proof of an agreement did not even constitute an agreement or settlement which has to be signed by parties to the dispute under section 19(1) of the Industrial Disputes Act.
The petitioner relies upon his promotion to the post of "Leading Hand" by the Corporation on 30th November, 1973, under the abovementioned alleged agreement.
But, on 4th December 1975 the High Court had set aside the promotion of the petitioner and all others similarly circumstance upon a writ petition filed by an Association of Technical Certif icate Holders of the Corporation and one Krishna Kutty, a mechanic of the Corporation.
It appears that, among the opposite parties was the Kerala State Transport Mechanical Workers Union represented by its General Secretary.
Sec tion 18 (3) of the Industrial Disputes Act makes it clear that an Award of a Labour Court or Tribunal is binding on all parties to the industrial dispute.
It is true that the petitioner was not individually a party to the proceedings in the High Court which resulted in the quashing of the order of promotion of the petitioner together with others on the ground that the Award had been violated by such promo tions.
Nevertheless, the petitioner would be deemed to be duly represented by his Union on such a question.
He did not take any steps to assail or to get the judgment and order of the High Court set aside.
The grounds upon which the petitioner attacks the enforcement of what was treated as an Award against him, so that he was reverted, are: firstly, that the so called Award did not relate to matters covered by the previous settlement and subsequent agreement, but contained some observations which had been misinter preted by the High Court; secondly, that the High Court had misunderstood the Award inasmuch as it did not contain any direction that a "Trade Test" should be imposed upon those who belonged to the petitioner 's category before their promotion; and, thirdly, that he was not a party to the proceedings in the High Court which resulted in the quash ing of the document by which he was promoted so that the High Court 's order is not binding upon him.
We are not able to.
agree with the interpretation put forward on behalf of the petitioner upon the Award.
The High Court 's order shows that not even a counter affidavit was filed by an Opposite Party and no defence was offered by the Union which represented the petitioner.
In any case, the rights of the petitioner under an agreement or an Award, if he had any such right, could not be identified with rights under Article 16(1) of the Constitution.
The result of the quashing of the promotion order relating ton whole category of employees in the position of the petitioner was that all similarly situated shared the 392 same fate.
All of them had to pass the Trade Test to become entitled to promotion.
In this respect they were treated alike.
It could not be shown what opportunity was denied to the petitioner which was given to anybody else in the same category or with the same qualifications as the peti tioner had.
It was immaterial that somebody else, in another category altogether, was not required to pass the trade test which was essential, on the view taken by the High Court, before those in the petitioner 's category could claim promotion.
All those in the petitioner 's category and with his qualifications had been placed on an equal footing.
Hence, whatever else might have been con travened, it was certainly not a fundamental right under Article 16 (1 ) of the Constitution which could be held to have been violated.
And, no attempt was even made to show how a right of the petitioner under Article 31 (1) of the Constitution was affected.
The petitioner 's remedy when he claims a benefit under an agreement or an Award does not lie by means of a petition under Article 32 of the Constitution.
This article is reserved exclusively for the enforcement of a fundamental right.
As the petitioner has been unable to disclose how a fundamental right has been violated, this petition must be and is hereby dismissed.
We make no order as to costs.
Petition dismissed.
| IN-Abs | The appellant was a mechanic in the service of the erstwhile Transport Department of the Kerala State.
He thereafter became.
an employee of the Kerala State Transport Corporation when the same was set up in March, 1965.
In 1968, there was a settlement between the Corporation and its employees providing that a `trade test ' would have to be passed for promotion to.
posts in the higher grade while "grade promotions" would take place upto the post of Assist ant Chargeman.
Subsequently, in a dispute referred to arbitration, the Award provided that category wise seniori ty, together with trade test should determine the promo tions.
The petitioner alleged that thereafter, the Corpora tion and the workmen agreed to promotions in his wing by seniority alone and consequently, the petitioner and some others were promoted.
Their promotions were assailed as violative of the award, and were set aside by the High Court.
The petitioner filed a writ petition under article 32 of the Constitution claiming that his fundamental right under article 16(1) had been violated.
Dismissing the writ petition the Court, HELD: The rights of the petitioner under an agreement or an award, if he had any such right, could not be identified with rights under Article 16(1) of the Constitution.
The result of the quashing of the promotion order relating to a whole category of employees in the position of the petition er was that all similarly situated shared the same fate and all.
those in the petitioner 's category and with his quali fications had been placed on an equal looting.
The peti tioner 's remedy when he claims a benefit under an agreement or an award does not lie by means of a petition under article 32 of the Constitution.
[391 G H, 392 A C]
|
No. 2330 of 1968 (From the Judgment and Order dated the 12th March, 1968 of the Jammu & Kashmir High Court in Civil First Appeal No. 9 of 1966.) G.B. Pai, S.K. Bagga and Mrs. section Bagga; for the appel lants.
402 O. P. Malhotra, K.J. John and Shri Narain for the respond ent.
The Judgment of the Court was delivered by KAILASAM, J.
This appeal is preferred by the defendant in the suit on a certificate of fitness granted by the High Court of Jammu & Kashmir under Article 133 of the Constitu tion.
The respondent, Ishroo Devi, filed a suit for a decree for possession of all the three items of property mentioned in the plaint and for future mesne profits.
It was al leged that the three items of property mentioned in the ' plaint were the self acquired properties of one Purohit Mani Ram.
He executed a will on 25th May, 1959, out of his own free will in favour of the respondent.
The origi nal will was attached to the plaint.
Purohit Mani Ram died on 24th March, 1960, at Jammu and the respondent claimed to be the sole owner of the properties.
The first appellant is the son, the second appellant is the wife and the third appellant is the grand daughter of Purohit Mani Ram.
In the plaint it is alleged that the first appellant after the death of Purohit Mani Ram got rent deed executed in his favour and also recorded mutations in his name and dispossessed the respondent.
The respond ent also claimed that the three items of property were the separate properties of Purohit Mani Ram and that he was entitled to dispose of them under a will.
In the written statement the appellants averred that the properties be longed to the joint family of which the first appellant and his father, Purohit Mani Ram, were members and as the properties were joint family properties, they cannot be disposed of by will.
It was further alleged that the will was a forged one and is fictitious.
The respondent examined Janak Lal Sehgal, an advocate of the Supreme Court, and the scribe of the will one Bodh Raj.
P.W. 1, the advocate, stated that Mani Ram executed the will on 25th May, 1959, in favour of the respondent.
He saw Mani Ram affix his signature on the will the words (in vernacular) under which Janak Lal had signed as wit ness, were under the words (in vernacular) where Purohit Mani Ram had signed.
Janak Lal had given the date with his own hand where he had signed as witness.
The witness also testified that the mental condition of Purohit Mani Ram was good and he executed the will of his own free will and no pressure or fraud was played on him.
P.W. 2 Bodh Raj, is the scribe of the will.
He stated that he wrote the will at the instance of Mani Ram and after reading the.
will and explaining it to the testator, the testator affixed his signature and admitted it to be correct.
According to the witness the will was executed on 25th May, 1959, and on the same date the signature of the testator and those of the witnesses were affixed.
At the time of the examination the witness stated that the physical and the mental condition of the testator was good and he read out the will at the house of Janak Lal Sehgal and obtained the signatures of Mani Ram and that of P.W. 1, the advocate.
P.W. 3, Lodra Mani, stated that Mani Ram was the A.D.C. of Maharaja Pratap Singh and was in service for Maharaja 's Puja, and that the Maharaja was giving 403 lot of money to Purohit Mani Ram as present.
The witness also stated that item 1 of the properties was constructed by Mani Ram with his own income.
On behalf of the appellants a handwriting expert, Philip Hardless, and three witnesses were examined in addition to the first appellant.
The trial court accepted the evidence of P.W. 1, the advocate, and P.W. 2, the scribe and held that the will was proved.
Holding that items 1 (b) and 2 of the plaint schedule properties were ancestral properties found that Mani Ram had no authority to dispose of these two items of properties by will.
Therefore while decreeing the suit as regards item No. (1)(a) of the plaint schedule properties dismissed the claim as regards items 1 (b).and 2.
On appeal by the appellants a Bench of the Jammu & Kashmir High Court agreeing with the finding of the trial court and accepting the testimony of P.W. 1, the advocate, and P.W. 2, the scribe of the will, found it to be genuine and executed by Mani Ram.
The appellate court also con firmed the finding of the trial court that the item l(a) of the property is self acquired property of Mani Ram while items l(b) and 2 are the ancestral properties.
While confirming the decree of the trial court as regards item l(a) it allowed the respondent 's claim regarding items 1 (b) and 2 to the extent of one.half share holding that under section 27 of the Jammu & Kashmir , Mani Ram was entitled to dispose of his interest in the joint family property by will.
Aggrieved by the decision of the Bench of the Jammu & Kashmir High Court the appel lants have preferred this appeal.
Though the Concurrent finding of both the courts below is that the will was a valid one and was executed by Mani Ram of his own free will and when possessed of all his faculties Mr. Pai, the Counsel for the appellants, strenous ly contended that the finding should not be accepted.
He submitted that a look at the signature of Mani Ram in the will and his signatures in admitted documents would prove that the signature in the will is not that of Mani Ram.
He next contended that the will was antedated in order to escape the prohibition against alienation introduced by an Ordinance which came into force in July, 1959, Thirdly, he submitted that the will is a most unnatural one as it had not provided for the son, or the wife ' or near relatives but had given the entire property to a distant relation.
Fourthly, he submitted that in a suit which was filed by the son for partition against Mani Ram, the latter gave an undertaking not to alienate his properties and taking into account the proceedings it is most unlikely that he would have executed the will at time which it purports to be as he would have mentioned about his execution of the will in the proceedings.
We have examined all these points very care fully and we find that there is no substance in any one of them.
The plea that the will was executed after July, 1959, when there was a prohibition against the alienation and it was pre dated is without any substance.
The will is dated 25th May, 1959, and a contemporaneous record of the sub stance of the will is made by P.W. 2 404 in one of his regularly kept books.
We see no need for predating of the will and the basis of the argument that the will was not executed on the day on which it purports to be is without substance.
Regarding the next contention that the will is an unnat ural one it has to be seen that the son had filed a suit for partition and in the written statement the father had gone so far as to disown his paternity.
It is common ground that the relationship between Mani Ram and his son was greatly strained and it is not surprising that he has disowned him, in unmistakable terms in the will.
The submission that the will would not have been executed in mid 1959 is based on the plea that he had made a statement in December, 1959, that he had not alienated any property.
The son in the suit prayed for an order against Mani Ram restraining him from alienating the joint family properties except with the permission of the court.
A consent order was passed di recting Mani Ram not to alienate joint family properties.
There was no need for Mani Ram to mention about the will for it is not an alienation and in any event the will ac cording to Mani Ram did not relate to joint family proper ties.
The nondisclosure of the execution of the will is understandable because Mani Ram did not want anyone particu larly his son to know about his dispossessing of the proper ty by will.
This ground also is without substance.
The main ground of attack was that on the face of it, it is apparent that the signature is not that of Mani Ram.
The appellate court has found that Mani Ram was an illiter ate person and that he had no standard signature.
His signature is not well formed, but his signature in the Vakalatnama and in the will bear striking, resemblance as found by the Bench of the High Court.
Though there are certain dissimilarities between the signature in the will and in those of admitted documents we are unable to say that the signature in the will is not that of Mani Ram.
In this connection we have examined the evidence of the handwriting expert who gave evidence on behalf of the appellants.
We feel that his qualifications are not such as to accept him as a handwriting expert.
He has hardly done any work as an expert after 1950 and we find in his deposition that he has exceeded the limits as an expert and supported the appellants in matters which were not within his province.
We have no hesitation in agreeing with the High Court and rejecting his testimony.
A comment was made on the fact that the date and endorsement in the will is in a different ink and probably was not written at the same time.
In this connection a discrepancy in the evidence of the scribe, P.W. 2, as to where actually the date was noted whether it was in his house or that of the lawyer 's was made much of.
We do not think that this discrepancy would affect the.
truth of the matter.
It is seen that P.W. 2 in his record entered summary of the will on the same day.
It is significant that in the cross examination no question was asked challenging the genuineness.
The entry with regard to the will was made by P.W. 2 in the Register which is a public register and on examination we find there is nothing suspicious about it.
It 405 may also be noted that the first appellant, the son of Mani Ram, has not stated that the signature found in the will is not that of his father.
Apart from all these circumstances we find the evidence of P.W. 1 a respectable advocate, who speaks of his advising in the preparation of the will, his seeing the executant sign the will in his presence can be safely accepted.
Excepting that a statement which he made as a witness was rebutted by a District Judge nothing else has been suggested against him.
We have no hesitation in accepting the evidence of these two witnesses, as the two lower courts have done.
There is no ground at all for rejecting the evidence of P.W. 2, the scribe, whose evidence has been accepted by both the courts.
The scribe had immediately noted the gist of the will in one of his regu larly kept records which has not been challenged.
We have, therefore, no hesitation in accepting the finding of the two lower courts that the will is a genuine one.
and was execut ed by Mani Ram of his own free will.
Mr. Pai, counsel for the appellants, submitted that the High Court was in error in holding that item 1 (a) of the properties is the self acquired property of Mani Ram.
According to the learned counsel the hereditary profession of Mani Ram was that of a priest and whatever he earned while practising that profession and all his acquisisions should be held to be joint family property.
The evidence is that Main Ram was not only a priest but worked in three posts.
He was a priest and at the same time was in the private office of the Maharaja and was also an A.D.C. of the Maharaja and the Maharaja used to give presents to him.
It is in evidence that the Maharaja had given.
the land and himself constructed the Kothi before giving it to Mani Ram.
In support of the contention that the income derived from practice of a hereditary profession should be construed as ancestral property, the learned counsel re ferred us to two decisions in Ghelabhai Gavrishankar vs Hargowan Ramit & Others(1), and Hanso Pathak vs Harmandil Pathak and Another.(2).
Neither of the cases support the contention of the learned counsel.
In the first case the question that arose for consideration was about the nature of the office of a hereditary priest.
It was held that the hereditary right of the priest is immovable property.
Chandavarkar J. pointed out that hereditary priesthood vested in particular families is regarded as vritti or immoveable property but we do not find any support for the contention that the income of the hereditary priest will also be hereditary property.
In fact in Hanso Pathak vs Harmandil Pathak and Anr.
(supra) it has been made clear that in the United Provinces the income received as amounts paid by Yajamans at their discretion either by way of chari ty or by way of remuneration for personal services rendered by the priest, cannot be claimed as of right, and cannot amount to a family property.
Chief Justice Sulaiman ex pressed his view that the income received as amounts paid by people at their discretion either by way of charity or by way of remuneration for personal services rendered cannot be claimed as of right amount to family property.
Mukerji, J.in a concurring judgment after distinguishing Bom.
94. 2.
A.I.R. 1934.
All. 351. 406 Ghelabhai Gavrishankar vs Hargowan RamIi & Others (supra) held that the income is "Vidyadhana" which is the same thing as "gains of science" or what has been acquired by exercise of learning cannot be divided by partition.
We agree with the view thus expressed by the Allahabad High Court and find that the income from the practice of a hereditary profession will not be joint family property.
Mani Ram was getting Rs. 100 as A.D.C. and was in addi tion drawing a salary of Rs. 140 a month as an employee in the private Department of the Maharaja.
Thus he had ample means to acquire item 1 (a) of the property from his self acquisition.
On the other hand there is hardly any evi dence to prove that he had any ancestral nucleus.
It is stated that the family had some jewels and cash which were kept in the safe of the Maharaja and there is nothing to indicate that any thing out of the cash or jewellery was used in purchasing item 1 (a) of the property.
I was also contended that the property that belonged to Mani Ram was only the house and not the land attached to the house.
We have no hesitation in rejecting this desperate plea.
The result is we confirm the findings of the courts below that item 1 (a) of the property is the self acquisition and the decree of the appellate court so far as item 1 (a) is concerned is confirmed.
Regarding items 1 (b) and 2 the appellate court has found that they are joint family properties.
It is admit ted by both the parties that under section 27 of the Jammu & Kashmir , the interest of the coparacener in a joint Hindu family property can be disposed of by will.
Section 27 provides that any Hindu may dispose of by will any property which is capable of being disposed by him in law.
The EXplanation to the section makes it clear that the interest of a male Hindu in a Mitak shara coparacenary property be deemed to be property capa ble of being disposed of by him within the meaning of the sub section.
As the joint family consisted of Mani Ram and his son, the first appellant, the appellate court gave a decree in favour of the respondent so far as one half share of items 1 (b) and 2 of the properties are concerned.
The counsel for the appellant submitted that the appellate court was in error in determining the interest of the testator as one half share in the two items of joint family property.
He submitted that according to Mitakshara law except in Madras when there is a partition between the son and his father, mother is entitled to a share equal to that of the son.
In support of his contention the learned counsel referred to Mulla 's Hindu Law, 14th Ed., p.403, paragraph 315, where it is stated that while the wife cannot demand a partition, but if a partition does take place between her husband and his sons, she is entitled to receive a share equal to that of a son and to hold and enjoy that share separately even from her husband.
To the same effect is the passage in Mayne 's Hindu Law, 11th Ed., p. 534, paragraph 434, where it is stated "According to the Mitakshara law, the mother or the.
grandmother is entitled to a share when sons or grandsons divide the family estate between them selves, but she cannot be recognised as the owner of such share until the division is actually made, as she has no pre existing right in the estate except a right of mainte nance.
" Reference 407 was also made to the decisions reported in Dular Koeri vs Dwarkanath Misser(1), where it was held that under the Mitakshara law when partition of joint family property takes place during the father 's lifetime at the,instance of the son, the mother of the son is entitled to a share equal to that of her husband and her son and she is entitled o have the share separately allotted and to enjoy that share when so allotted.
In Sumrun Thakoor vs Chunder Mun Misser & Others ,(2) it was held that under the Mitakshara law where a paration takes place between a father and a son, the wife of the father is entitled to a share.
In Hosbanna Devanna Naik vs Devenna Sannappa Naik and Others(3), it was held that a step mother is entitled to a share on parti tion between the father and his sons.
In Partap Singh vs Dalip Singh, (4) in a partition between a Hindu father and his son it was held that the wife of the .father has a right to a share equal to that of the father or the sons.
In Madras, though Mitakshara law is applicable it has been held that on a partition between the sons and the father, the mother is not entitled to any share.
(Mulla 's Hindu Law, 14th Ed., p.403 "Madras State.
In Southern India the practice of allotting shares upon partition to females has long since become obsolete.").
So far as Jammu & Kashmir is concerned there is no decisions regarding the interest of a male Hindu in property.
This question as.
to what is the interest of Mani Ram in the joint family property at the time of his death was not, raised before the High Court.
In fact, the case first appellant was that the joint family consisted of himself and his father alone, though in the partition suit filed by him he claimed onethird share con ceding that his father and mother are entitled to the other two third share.
Though the question was not raised in any of the courts below, we feel that being a pure question of law, interests of justice require that the question be decided.
The High Court will decide the interest which Mani Ram had in the joint family property at the time of his death which he could dispose of by his will.
In remitting this question to the High Court, we decree he suit of the respondent in respect of item 1 (a) one third share in items 1 (b) and 2 of the plaint schedule properties as to that extent her share is not questioned.
The question as to what is the extent of the interest as regards items 1 (b) and 2 of the plaint schedule properties which can be bequeathed by Mani Ram in favour of the respondent is remitted to the High Court for its determination.
If the High Court finds that the respondent is entitled to one third share it will decide accordingly.
If it comes to the conclusion that Mani Ram was.
entitled to bequeath a greater share it will grant a decree accordingly.
There will be no order as to costs appeal disposed of accordingly.
S.R. Decree granted.
(1) I.L.R. (2)I.L.R. (3) I.L.R. (4)I.L.R. 52 All.
| IN-Abs | On the strength of a Will dated 25th May 1959, executed in her favour by one Purohit Mani Ram, the respondent Smt.
Ishroo Devi filed a suit for recovery of the schedule property in the plaint.
It was alleged in the plaint that the appellants (A 1, son; A 2, Wife; and A 3, grand daughter of Purohit Mani Ram) after the death of Purohit Mani Ram wrongfully disposed her after getting the name of appellant No. 1 mutated in the records and that the three items of the schedule property were the separate properties of the testa tor and that he was entitled to dispose them under the Will.
The appellants averred in their written statement that the properties belonged to the joint family of which the first appellant and his father Purohit Mani Ram were members and as the properties were joint family properties, they cannot he disposed of by Will.
It was further alleged that the Will was a forged one and is fictitious.
The trial court, accepting the evidence of PW1, an advocate, who advised in the preparation of the Will and also an attest ing witness, PW2 the scribe and PW3 who deposed the fact that the properties were self acquired ones of late Purohit Mani Ram, decreed the suit as regards item No. 1 (a) of the plaint schedule but dismissed the claim as regards items l(b) and 2 holding that they were ancestral ones.
On ap peal, the High Court accepted the findings of the trial court and confirmed the decree as regards item l(a) of the property but modified the order as regards item l(b) and 2 by allowing the claim of the respondent to the extent of 1/2 share since under section 27 of the Jammu & Kashmir Hindu Succession Act Mani Ram was entitled to dispose of his interest in the joint family property by Will.
In appeal by certificate to this Court, the appellant contended: (i) The Will was not a valid one for the reasons, namely, (a) it was ante dated in order to escape the prohi bition against alienation introduced by Ordinance which came into force in July 1959; (b) the signature on the Will was forged; (c) the Will is a most unnatural one as it had not provided for the son or the wife or any near relative but has provided to a distant relative and (d) in a suit for partition filed by the son against Mani Ram, the latter gave an undertaking in the court not to alienate his properties which would improbalise the execution of the Will; (ii) The hereditary profession of Mani Ram being that of a priest whatever he earned while practising that profession and all his acquisitions should be held to be joint family property.
(iii) In view of the Mitakshara law applicable to the estate when partition of the joint family property takes place during the father 's life time at the instance of the son, the mother also has a share equal to him.
The Court confirmed the decree in respect of item 1 (a) of the property in favour of the respondent, modified the decretal order of the High Court in respect of items 1(b) and 2 of the schedule property as 1/3rd in favour of appel lant No. 1, 1/3rd in favour of appellant No. 2 and 1/3rd in favour of respondent as entitled by the Will.
The Court, HELD: (1) The plea that the Will was executed after July 1959 when there was a prohibition against the alienation and that it was pre dated and not executed 401 on the day on which it purports to be is without any sub stance and against the evidence on record.
[403 H, 404 A] (2) The contention that the Will is an unnatural one is also without substance.
The non disclosure of the execu tion of the Will is understandable because Mani Ram did not want anyone, particularly his son, to know about his pos sessing of the property by Will.
[404 B, D] (3) The findings of the two lower courts that the Will is a genuine one and was executed by Mani Ram by his own free will cannot be assailed.
In fact, there was no chal lenge to the gist of the Will noted by PW2, the scribe, in one of his regularly kept record; there was no denial by the first appellant, the son of Mani Ram that the signature found in the Will was not that of his father and there is no reason why the cogent evidence of PW 1, a respectable advocate who spoke of his advising in the preparation of the Will having seen the executant sign the Will in his presence be not accepted.
[405 A C] (4) The income from the practice of a hereditary profes sion will not be a joint family property.
Item 1 (a) of the Property is the self acquisition of Mani Ram and the decree of the appellate court so far as item No. 1 (a) is concerned must be confirmed.
[406 A, D] Hanso Pathak vs Harmandil Pathak and Anr., AIR 1934 Allahabad 851, approved.
Chalabhai Gaurishankar vs Hargowan Ramji & Ors.
I.L.R. 36 Born.
94, over ruled.
(5) Under the Mitakshara law excepting Madras, in the other states referred to in the decisions cited when there is a partition between the son and his father the mother is entitled to a share equal to that of the son.
In the in stant case the case of the first appellant was that the joint family consisted of himself and his father alone, though in the earlier partition suit filed by him he claimed 1/3rd share conceding that his father and mother are entitled to the other 2/3rd share.
As no decision in re spect of the interest of the male Hindu in Jammu & Kashmir was cited the question is remitted to the High Court for decision as to what is the extent of the interest as regards items I(b) & 2 of the plaint Schedule properties.
[406 E F, 407 B E] Dular Koeri vs Dwarkanath Misser ILR ; Sumrun Thakoor vs Chunder Mun Misser & Ors., ILR ; Hos banna Devanna Naik vs Devanna Sannappa Naik and Ors.
ILR and Pratap Singh vs Dalip Singh ILR 52 All.
596, approved.
(6) In view of section 27 of the Jammu & Kashmir which provides that any Hindu male may dispose of by Will any property which capable of being disposed of by him in law and also explanation to that section which makes it clear that the interest of a male Hindu in a Mitakahara coparcenary property be deemed to be property capable of being disposed of by him within the meaning of the sub section, in the instant case Mani Ram can dispose of his share under a Will.
Admittedly the respondent, will be entitled to 1/3rd share in respect of item l(b) and 2 of the plaint schedule in addition to the decree in her favour in respect of item 1 (a).
[406 D E, 407 E F] [The Court remitted the case back for the determination of the interest which Mani Ram had in the joint family property at the time of his death which he could dispose of by his Will and grant a decree accordingly.]
|
: Criminal Appeal No 592/ 1976.
(Appeal by Special Leave from the Judgment and Order dated 19.11.1975 of the Karnataka High Court in Crl.
A. No. 551 of 1974.
and Reference Case No. 56/74) R.B. Datar, for the appellant Narayan Nettar and R.C. Kaushik, for the respondent.
The Judgement of the Court was delivered by GOSWAMI, J. The short question in this.
appeal by spe cial leave is whether a person sentenced to imprisonment for life and later released by the Government by remission of the sentence under section 401, Criminal Procedure Code, 1898, continues to "being under sentence of imprisonment for life" fort the purpose of section.
303, Indian Penal Code.
The appellant had earlier been convicted on July 26, 1961, by the High Court of Mysore under section 302 IPC and sentenced to.
imprisonment for life in an appeal by the State against his acquittal.
395 The earlier murder was on December 3, 1959.
The State Government in exercise of its power under section 401 Cr.
P.C. conditionally remitted his sentence on Feburary 8, 1972.
Thus he was conditionally released from jail on Febu rary 8, 1972.
Tragically enough, on January 27, 1973, the appellant got himself involved in the present murder charge even before the expiry of the first year of his release.
He was convicted under section 302 and section 303 IPC by the Sessions Judge, Kolar, on November 7, 1974 and sentenced to death under section 303 IPC.
On an appeal to the High Court by the appellant which was heard along with the refer ence for confirmation, .the sentence of death under section 303 IPC was confirmed on November 19, 1976.
Hence this appeal by special leave limited to the question of ap plicability of section 303 IPC and the sentence.
The earlier sentence of imprisonment for life became final and inexorable so far as the judicial process was concerned.
It is only when such a sentence is "operative and executable" that section 303 IPC is attracted.
(See Dilip Kumar Sharrna & Ors.
vs State of Madhya Pradesh (1).
The remission of the sentence in this case is by the State of Karnataka in exercise of its statutory power under section 401 Cr.
The power has been exercised, in the instant case, laying down certain conditions which the convict had accepted.
The two conditions were that, during the unexpired period of his sentence conditionally remitted, (1 ) he will not commit any offence punishable by any law in Mysore and (2 ) he will not in any way associate with per sons known to.
be of bad character or lead a dissolute or evil life.
The portion of the remitted sentence, in this case, was a period of four years and four months after the appellant had undergone over years of his sentence including a little over five years ' remission earned by him in jail.
In the normal course, in absence of the order of remission, the appellant would have been released from jail on June 1976.
Shortly stated, was the appellant under sentence of impris onment for life on the date of occurrence of the second murder on January 27, 1973 ? If he was continuing to be under the sentence of imprisonment for life on that day the court cannot come to his rescue by exercising discretionary clemency in favour of the alternative sentence.
Then the only sentence the court has power and is obliged to impose, and no other, is the sentence of death.
That is the true effect of section 303 IPC.
The fact that the accused is of the age of 73 years will be of no consequence once he is found guilty under section 303 IPC.
The court will be helpless in such an event.
The Sessions Judge as well as the High Court held that section 303 IPC was applicable as this was a case of condi tional remission under section 401 Cr.
P.C. and the second murder was committed during the unexpired portion of the sentence of imprisonment for life.
(1) ; 396 It is the correctness of the above view of the law that falls for consideration before us.
That view receives support from the following decisions cited at the bar.
The first decision is from the Rangoon High Court in Po Kun vs The King(1).
It was held in that case that "if the sentence of transportation for life passed on a person is conditionally remitted by the Government under section 403 ? Criminal P.C., and the person is released, such person must still be deemed to be under, sentence of transportation for life in spite of the fact that he is not actually under sentence or in a penal settlement". 0 The next decision is from the Punjab High Court in Sohan Singh vs The State(2).
It was held in that case that "it is not essential for the applica tion of the section (303 IPC) that a person should be actually undergoing the sentence of imprisonment for life when he commits murder".
X X X X " . the effect of a conditional order of remission is not to altogether wipe out or efface the remitted portion of the sentence, but to.
keep it in abeyance.
As soon as there is breach of the conditions of the remission, the remission can be cancelled and the prisoner committed to custody to undergo the unexpired portion of the sentence.
In the circumstances.
the accused should be deemed to be under sentence of imprisonment for life when the present occurrence took place".
Our attention was drawn to a decision Of the Sind Court in Ghularn Muhammad Wali Muhammad vs Emperor(3) which was a case of unconditional remission of the sentence under sec tion 401 Cr.
It was held in that decision that since the Provincial Government had 'remitted the sentence without condition under section 401 Cr.
P.C. the accused committing the second murder after the remission would no longer be said to be "under a sentence of transportation for life, that sentence having in effect been served".
We are, however, clearly of opinion that for the purpose of section 303 IPC it does not make any difference whether the remission under section 401 Cr.
P.C. with or without conditions.
This: is clear from a perusal of sub section (3) of section 401 Cr.
P.C. which, reads as follows : 401 (3) "If any condition on which a sentence has been suspended or remitted, is in the opinion of the appropriate Government, not fulfilled, the appropriate Government may cancel the suspension or remission and there upon the person (1) A.I.R. 1939 Rangoon 124.
(2) (1) Punjab 201.
(3) A.I.R. 1943 Sind 114.
397 in whose favour the sentence has been suspend ed or remitted, may, if at large, be arrested by any police officer without warrant and remanded to undergo the unexpired portion of the sentence".
0 It is manifest from the above provision that on breach of any condition of the remission there is not an automatic revival of the sentence.
It will certainly be open to.
the Government in a particular case to cancel the remission but it may not.
The Government is not under a legal obligation to cancel the remission.
It is only when the Government chooses to pass an order of cancellation of the remission of sentence that the convict is arrested and is required to serve the unexpired portion of the sentence.
During the interregnum.
the accused who is released cannot be said to be under a sentence of imprisonment for life.
While he is in enjoyment of the freedom on account of remission, that period is not even reckoned under section 401 Cr.
P.C. for the purpose of calculation of the sentence to.
be served in the eventuallty.
Take the present case.
Suppose during the unexpired period of this sentence, which would had normally ended on January 9, 1976, the accused made breach of the first condi tion of the remission giving a slap to a person an offence punishable under section 358 IPC.
Clearly there is a breach of one of the conditions laid down, namely, that "he will not commit any offence punishable by any law in Mysore".
Can it be conceived that in such a case the Govern ment will immediately cancel the remission and remand him to serve the remaining period of his sentence of imprisonment for life ? That is why section 401 (3) Cr.
P.C. advisedly leaves it to the option of the Government to take the penal action and there is no automatic return of the prisoner to the jail.
Counsel for the State of Karnataka relies upon the above decisions and also upon the decision of this Court in Sarat Chandra Rabha and Others vs Khagendranath Nath and Others(1).
In Sarat Chandra Rabha case (supra) the ques tion of remission under section 401 Cr.
P.C. came up for consideration in the context of a disqualification clause under section 7(b) of the Representation of the People Act, 1951.
In that case the appellant 's nomination paper was rejected by the Returning Officer for incurring disqualifi cation under section 7(b) of the Representation of the People Act.
According to section 7(b) of the Act, a person shall be disqualified for being chosen as a member of either House of Parliament or of the Legislative Assembly or Legislative Council of a State if he is convicted by a court in India of any offence and sentenced to imprisonment for not less than two years, unless a period of five years, or such less period.
as the Election Commission may allow in any particular case, has elapsed.
, since his release.
It was admitted in that case that the appellant was convicted under section 4(b) of the Explosive Substances Act, (VI of 1908) and sentenced to three years ' rigorous impris onment on July 10, 1953 and the nomination paper was filed (1) ; 398 in January 1957 and the election was held in Feburary 1957 Thus the period of five years had not elapsed since iris release by the, State under section 401 Cr.
P.C. on November 14, 1954.
This Court held in that case that section 401 Cr.
P.C., unlike the grant of a free pardon, cannot wipe out either the conviction or the sentence.
and affirmed the order of rejection of the nomination paper on the ground of disqualification incurred under section 7(b) of the Representation the People Act.
Mr. Nettar for the State emphasises upon the observa tion of this Court in Sarat Chandra Rabha case (supra) that there is no wiping out of the conviction and sentence under section 401 Cr.
P.C. in the present case and, therefore, the present appellant 'section conviction and sentence subsisted on the date of the second murder.
In Sarat Chandra Rabha case (supra), this Court had to consider the effect of remission vis a vis a disqualifica tion clause under an Act which even provides for removal of disqualification by the Election Commission and which was not actually done.
There is a complete purging process provided in the Representation of the People Act itself by an efflux of a period of five years from release on expiry of the sentence.
Conviction and sentence recorded by a judicial court cannot be wiped out by executive remission under section 401 Cr.
P.C. in order to set at naught the penitentiary period provided for in the Act, in absence of removal of the disqualification by the Election Commission under the Act.
Those were the considerations which weighed with this Court when it refused to do away with the effect of the judicial conviction and sentence merely on the basis of executive remission.
Even if the sentence were run through without remission, the five years, ' period had to elapse for commencement of new electoral life.
The facturn of conviction and the sentence is sufficient and it does not matter whether it has been served out wholly or a portion of it has been remitted.
The person remains convicted and sentenced for the purpose of the Representation of the People Act notwithstanding the remission.
The decision in Sarat Chandra Rabha 'case (supra) does not at all support the submission that even after remission of the sentence the convict therein was under a sentence of imprisonment.
No such Corollary follows flora the above decision of this Court.
The observations of this Court in Sarat Chandra Rabha case (supra) with regard to wiping out of conviction and sentence cannot be pressed too far in a criminal trial where the provisions of the penal section have to be very strictly construed and in case of ambiguity or possibility of two views the benefit of construction must be in favour of the accused.
To revert, at the end, to the only question with which we started.
Was the appellant under sentence of imprisonment for life during the unexpired period of his imprisonment conditionally remitted under 1 section 401 Cr.
P.C.? We are clearly of opinion that an accused cannot be under a sen tence of imprisonment for life at the time of commission of the second murder unless he is actually undergoing such a sentence or there is legally extant a judicially final sentence 399 which he is bound to serve without the requirement of a separate order to breathe life into the sentence which was otherwise dead on account of remission under section 401 Cr.
P.C. Section 303 IPC is applicable only to an ac cused who, on the date of commission of the second offence of murder, had earlier committed a murder for which his conviction and sentence of imprisonment for life were beyond judicial controversy and were operative.
Unlike in the case of section 75, Indian Penal Code, section 303 IPC does not contemplate a mere enhanced punish ment for a convict with a past criminal history for the same offence.
Section 303 IPC creates a most aggravated form of offence when committed by a person under sentence of impris onment for life to be punished only with death, the maximum penalty under the law.
A person must be actually and irrev ocably a lifer beyond the pale of judicial controversy at the time of commission of the second offence of murder to be visited with the penalty of death under section 303 IPC.
If the sentence of a convict had already been remitted at the time of commission of the second murder he would cease to be an actual lifer to come within the lethal clamp of section 303 IPC.
For the purpose of section 303 IPC there can be no warrant for introducing a legal fiction of being deemed to be under a sentence of imprisonment for life.
The deci sion of the Punjab High Court in Sohan Singh case (supra); with respect, is not correct.
We are also, with respect, unable to agree with the view of the Rangoon High Court in Po Kun case (supra).
We find from the judgement of the trial court as well as that of the High Court that if the appellant were not con victed under section 303 IPC, a sentence of death would not have been ' imposed on him.
For the reasons set out earlier we are clearly of opinion that the appellant is not liable for conviction under section 303 IPC and his sentence of death is, therefore, set aside.
The judgment and order of the High Court are set aside to that extent.
The appel lant, however, stands convicted under section 302 IPC and is sentenced to imprisonment for life.
The appeal is partly allowed with the above modification of the sentence.
S.R. Appeal allowed in part.
| IN-Abs | Section 303 I.P.C. lays down that "whoever being under sentence of imprisonment for life commits murder shall be punished with death".
The appellant, for the offence of murder committed on December 3, 1959, had been convicted on July 26, 1961, by the High Court of Mysore under section 302 I.P.C. and sentenced to imprisonment for life in appeal by the State against his acquittal.
State Government, in exercise of its power under section 402 Cr.
P.C. conditionally remitted his sentence on February 8, 1972 and he was, there fore, conditionally released from jail on February 8, 1972.
The two conditions of the remission were that during the unexpired period of his sentence conditionally remitted (i) he will not commit any offence punishable by any law in Mysore and (ii) he will not in any way associate with per sons known to be of bad character or lead a dissolute or immoral life.
Even before the expiry of the first year of his.
release.
, the appellant got himself involved on January 27, 1973, in another murder charge.
He was convicted under section 302 read with section 303 I P.C. by the Sessions Judge, Kolar on November 7, 1974 and sentenced to death under section 303 I.P.C. On an appeal to the High Court which was heard along with the reference for confirmation, the sentence of death under section 302 I. P.C. was confirmed on November 19, 1975.
It held that section 303 I.P.C. was applicable.
as this was In case of conditional remission under section 401 Cr P.C. and the second murder was committed during the unexpired portion of the sentence of imprisonment for life.
This Court while granting the special leave limited it to the question of applicability of section 303 I.P.C. and the sentence.
Allowing the appeal parly and modifying the sentence of death to that of life imprisonment, the Court, HELD: (1) An accused cannot be under a sentence of im prisonment for life at the time of commission of the second murder unless he is actually undergoing such a sentence or there is legally extant judicially a final sentence which he is bound to serve without the requirement of a separate order to breathe life into the sentence which was otherwise dead on account of remission under section 401 Cr.
P.C. [398 H, 399 A] (2) The earlier sentence of imprisonment for life became final and inexor able so far as the judicial process was concerned.
It is only when such a sentence is "operative and executable that section 303 I.P.C. a attracted.
[395 C] Dilip Kumar Sharma & Ors.
State of Madhya Pradesh ; , referred to.
(3) Section 303 I.P.C. is applicable only to an accused who on the date of ,commission of the second offence of murder had earlier committed a murder for which his convic tion and sentence of imprisonment for life were beyond judi cial controversy and operative.
[399 A] (4) Unlike in the case of section 75.
LP.C., section 303 I.P.C. does not contemplate a mere enhanced punishment for a con vict with a past criminal history for the same offence Section 303 I.P.C. creates a most aggregated form of offence when, committed by a person under sentence of imprisonment for life to be punished only with death, the maximum penalty under the law.
The true effect 394 of section 303, I.P.C. is that if the accused was continuing to be under the sentence of imprisonment for life on the day of the second murder the court cannot come to his rescue by exercising discretionary clemency in favour of the alterna tive sentence.
The only sentence the court has power and is obliged to impose and no other is the sentence of death.
[399 B C] (5) A person must be actually and irrevocably the lifer beyond the pale of judicial controversy at the time of commission controversy of the second offence of murder to be vitiated with a penalty of death under section 303 I.P.C.
If the sentence of a convict had already been remitted at the time of commission of the second murder, he would cease to be an actual lifer to come within the lethal clamp of section 303 I.P.C. [399 C] (6) For the purpose of section 303 I.P.C. there, can be no warrant for introducing a legal fiction of being deemed to be under a sentence of imprisonment for .life.
In the instant case the appellant is not liable for conviction under section 303 I.P.C. [399 D] Sohan Singh vs State Punjab 201, over ruled.
(7) Section 401(3) makes it clear that for the purpose.
of section 303 I.P.C., it does not make any difference whether the remission under section 401 Cr.
P.C. is with or without condi tions.
[396 F] Po Kun vs King AIR 1939 Rangoon 124; Sogan Singh vs State Punjab 201; Gulam Mohammad Wali Mohammad vs Emperor AIR 1943 Sind 114 and Sarat Chandra Rabha & Ors.
vs Kagendranath & Ors.
[1961](2) SCR 133, referred to.
(8) Section 401(3) leaves it to the option of the Govern ment to take the penal action and there is no automatic return of the prisoner to the jail on breach of any condi tion of the remission.
It will certainly be open to the Government in a particular case to cancel the remission but it may not.
The Government is not under a legal obligation to cancel the remission.
It is only when the Government chooses to pass an order of cancellation of the remission of sentence that the convict is arrested and is required to serve the unexpired portion of the sentence.
During the interval the accused who is released cannot be said to be, under a sentence of imprisonment for life while.
is in enjoyment of the freedom on account of remission.
That period is not even reckoned under section 401 Cr.
P.C. for the purpose of calculation of the sentence to be served in the eventuality.
[397 B C, E]
|
Appeal No. 764 of 1977.
(Appeal by Special Leave from the Judgment and Order dated the 21st January 1977 of the Delhi High Court in Civil Revision No. 654 of 1976).
F.S. Nariman, D.P. Mukherjee and G.S. Chatterjee, for the appellant.
Prem Malhotra, for respondent No. 1 The Judgment of the Court was delivered by KRISHNA lYER, J.
So heartening to the judges ' bosom iS the happy ending of a bitterly fought litigation where the law is declared by the Court and justice is accomplished by the parties settling the differences, assisted by activ ist judicial suggestions and promoted by constructive Coun selling by advocates.
Such is the pleasing culmination of this case which relates to an ejectment proceeding under section 14A of the Delhi Rent Control Act, 1958 (Act 59 of 1958). 'the Controller directed eviction refusing leave to the tenant to contest the application for eviction.
The High Court, in the revision filed by the tenant, went into an elaborate discussion on many matters but somehow missed a plea fatal to the landlord 's claim and affirmed the relief ' of eviction although on different grounds.
The aggrieved tenant sought special leave to.
appeal which was granted and, thanks to the landlord appearing by caveat even at the preliminary hearing, leave was granted and the appeal itself was heard the very next day.
This at the Supreme Court level quick justice has been meted out and fortunately our judg ment has resulted in a re adjustment between the parties and, hopefully, the healing of the wounds of litigation.
A protracted forensic proceeding makes foes of friends, but a settlement of the dispute in accordance with law and justice makes friends of foes.
Some facts need to be narrated for getting the hang of the case and the issues of law raised.
The respondent is an Under Secretary to Government in the Housing Ministry.
He was in occupation of residential premises allotted to him by the Central Government and was required by government order to vacate such residential accommodation on the ground that he owned in Delhi a residential accommodation in his own name.
The building we are concerned with is 23/6, Shakti Nagar.
It is a two storeyed house but the litigation cen tres round part of the first floor.
The whole building belonged to one Pandit Saraswati Das who let out a portion of the first floor consisting of 4 rooms and a small enclo sure somewhere in August 1968 to the appellant.
Shri Das died in 1972 leaving behind the 1st respondent, two other sons (respondents 2 & 3) and a daughter (respondent 4).
It may be stated even here that the proceeding before the Controller was started by the 1st respondent and an objec tion was raised 414 by the appellant that the other heirs of the late Das were necessary parties they were not impleaded at this stage although the Controller ordered eviction over ruling the objection.
The High Court however, impleaded the other two Sons and the only daughter (respondents 2 to 4) and taking the view that their presence was necessary for the maintain ability of the action, the learned Judge decreed eviction.
A crucial objection, lethal to the case of the landlord, considered by the Controller but negatived by him, was raised in the revision petition but was not adverted to or adjudicated upon by the High Court.
Before us Shri Nariman has pressed it again and the fate of this case, so far as we are concerned, rests on the validity of that point.
The landlord 1st respondent, after receiving the order from government to vacate, as contemplated fin section 14A of the Act, applied for eviction of another tenant who was occupy ing a three room tenement on the first floor of the same building.
In fact, the first floor of the house consists of two dwelling apartments as it were, one consisting of three rooms and the other of 4 rooms.
By definition, 'premises means any part of a building which is, or is intended to be, let separately for use as a residence . .
In the present case the three room tenement being part of a build ing and let separately to a tenant, fell within the defini tion of 'perraises '.
Admittedly, the landlord exercise his right under section 14A to recover immediately possession of those premises.
He succeeded, secured possession and kept it vacant.
Even at the present time those premises which are adjacent to the suit promises are in his vacant posses sion.
Shri Nariman 's argument is that while it is open to a landlord who is a government servant directed to vacate allotted premises, and clothed with a new right to recover possession of any premises let out by him, to exercise it once, he cannot repeat the exercise ad libitem and go on evicting every tenant of his by using the weapon of section 14A.
He relies on the proviso to section 14A(1) to rein force his submission and we will deal with it presently.
Two other contentions urged by the appellant are that the first respondent is not his landlord and therofore is disentitled to evict him, under the Act, and secondly, the premises are not in his name and have not been let out by him.
In any case, the claim of the first respondent that the building in its entirety had been allotted by the late Shri Das by his will to the 1st respondent and his brother the 3rd respondent and that, subsequently, there had been an oral partition between the two whereunder the first floor was allotted in toto to the 1st respondent making him the sole owner and therefore the exclusive landlord, was con tested by the appellant tenant and this plea should have been allowed to be raised by grant of leave under section 25B by the Controller.
The presence of the co heirs at the High Court level was inconsequential, according to the appellant, and their absence at the trial stage vitiated the order of the Controller.
We will examine these contentions briefly.
The scheme of the statute is plain and has been earlier explained by this Court with special reference to sections 14A and 25B.
The government servant who owns his house, lets it out profitably and 415 occupies at lesser rent official quarters has to quit but, for that very purpose to be fulfilled, must be put in quick possessioon of his premises.
The legislative project and purpose turn not on niceties of little verbalism but on the actualities of rugged realism, and so, the construction of section 14A(1) must be illumined by the goal, though guided by the word.
We have, therefore, no hesitation in holding that section 14A(1) is available as a ground, if the prem ises are owned by him as inherited from propositus in whose name the property stood.
In his name, and let out by him read in the spirit of the provision and without violence to the words of the section, clearly convey the idea that the premises must be owned by him directly and the lease must be under him directly, which is the case where he, as heir, steps into his father 's 'shoes who owned the building in his own name and let it out himself.
He represents the former owner and lessor and squarely falls within section 14A. The accent on 'name ' is to pre empt the common class of benami evasions, not to attach special sanctity to nominalism.
Refusing the rule of ritualism we accept the reality the ownership and landlordism as the touchstone.
Nor do we set much store by the submission that the 1 st respondent is not a landlord, being only a co heir and the will in his favour having been disputed.
Equally without force in our view is the plea that one co lessor cannot sue for eviction even if the other co lessors have no objection.
Section 2(e) of the Act defines 'landlord ' thus: "2(e) 'Landlord ' means a person.
who, for the time being is receiving, or is enti tled to receive, the rent of any premises, whether on his own account or on account of or on behalf of, or for the benefit of, any other person or as a trustee, guardian or receiver for any other person or who would so receive the rent or be entitled to receive the rent, if the premises were let to a tenant." 'Tenant ', by definition [section 2(1)] means any person by whom or on whose account or behalf the rent of any premises is payable.
Read in the context of the Rent Control law, the simple sense of the situation is that there should be a building which is let.
There must be a landlord who col lects rent and a tenant who pays it to the one whom he recognizes as landlord.
The complications of estoppel or even the concepts of the Transfer of Property Act need not necessarily or inflexibly be imported into the proceedings under the rent control law, tried by special Tribunals under a special statute.
In this case, rent was being paid to the late Das who had let out to the appellant, on the death of the former, the rent was being paid by the 1st respondent who signed his name and added that it was on behalf of the estate of the deceased Das.
At a later stage the rent was being paid to and the receipts issued by the 1st respondent in his own name.
Not that the little change made in the later receipts makes much of a difference, but the fact remains that the tenant in this case had been paying the rent to the 1st respondent.
Therefore, the latter fell within the definition of 'landlord ' for the purposes of the Act.
we are 12 436SCI/77 416 not impressed with the investigation into the law of real property and estoppel between landlord and tenant, Shri Nariman invited us to make.
A fair understanding of the relationship between the parites leaves little room for doubt that the appellant was the tenant of the premises.
The 1st respondent, together with the other respondents, constituted the body of landlords and, by consent, implicit or otherwise, of the plurality of landlords, one of them representing them all, was collecting rent.
In short, he functioned, for all practical purposes as the landlord, and was therefore entitled to institute proceedings qua land lord.
This Court, in Sri Ram Pasricha(1) clarified that a co owner is as much an owner of the entire property as any sole owner of the property is: "Jurisprudentially, it is not correct to say that a co owner of property is not its owner.
He owns very part of the composite property alongwith others and it cannot be said that he is only a part owner or a fractional owner of the property .
It is therefore, not possible to accept the submission that the plaintiff, who is admittedly the landlord and co owner of the premises, is not the owner of the premises within the meaning of section 13 '(1) (f).
It is not necessary to establish that the plain tiff is the only owner of the property for the purpose of section 13 (1) (f) as long as he is a co owner of the property, being at the same time acknowledged landlord of the defendants.
" That case also was one for eviction under the rent control law of Bengal.
The law having been thus put beyond doubt, the contention that the absence of the other co owner on record disentitled the first respondent from suing for eviction, fails.
We are not called upon to consider the piquant situation that might arise if some of the co owners wanted the tenant to continue contrary to the relief claimed by the evicting co owner.
Shri Nariman urged that the will had not been proved and that he had not been given an opportunity to establish his challenge of the will of Shri Das.
In the High Court the other co heirs were parties and there is nothing on record to show that they objected to the claim of the 1st respond ent to the first floor on the strength of the will from his father.
An objection for the sake of an objection which has no realistic foundation, cannot be entertained seriously for the sake of processual punctiliousness.
We do not agree with the contention.
The last, and yet the lethal objection which had been lost sight of in the High Court, although raised there, loomed large before this Court, in Shri Nariman 's arguments.
The admitted fact is that on the same ground of the govern ment 's order to vacate, the first respondent had evicted a dwelling house on the first floor and is keeping it vacant.
He is again using the same Order to vacate passed by the government to evict the appellant 's dwelling house.
This is obviously contrary to the intendment of section 14A and is interdicted by the proviso to section 14A(1).
It is true that when an officer is sought to be evicted by the govern ment from its premises he has to be rehabilitated in his own house by an accelerated remedial procedure provid (1) (1976) 4 s.c.c.
184 417 ed by section 14A read with section 28B of the Act.
But this emergency provision available merely to put the govern ment servant back into his own residential accommodation cannot be used as a weapon for evicting several tenants if he has many houses let out to various persons.
The object of section 14A is fulfilled once the landlord recovers immediate possession of his premises from one of his ten ants.
The right is exhausted., thereby and is not available for continual applications for eviction against all other tenants holding under him.
This is made clear by the. provi so which makes plain that the section shall not be construed as conferring a right on a landlord owing two or more dwell ing houses to recover possession of more than one dwelling house.
Of course it gives him the choice since the proviso states that it shall be lawful for such landlord to indi cate, the particular dwelling house among a plurality owned by him, possession of which he intends to recover.
He can ordinarily recover one dwelling house 'but no more.
In the present case, admittedly he has recovered one dwelling house consisting of a three room apartment on the first floor by using the precise ground under section 14A(1).
It neces sarily follows that he cannot use section 14A for evicting the ' tenant appellant from another dwelling house.
On the last ground, therefore, the appeal must be allowed, although in the circumstances we .direct the parties to: bear their costs throughout.
Counsel on both sides; on the suggestion by the court, calculated to produce a salutary relationship between the parties, agreed that the three room dwelling house which lies vacant (having been evicted under section 14A) will be given possession of to the appellant in exchange for the appellant making over possession of the 4 room apartment the premises involved in the present case to gether with the appartement space.
The appellant has agreed to pay a sum of Rs. 250/ per month by way of rent for the adjacent three room apartment into which he will move, within one month from today and surrender possession of the 4 room apartment simultaneously.
In case the parties are able to adjust their differences and the 1st respondent makes over the additional space attached to the 4 room tenement for the use of the appellant, he will pay an extra sum of Rs. 75/ per mensem or other negotiated figure.
On these terms agreed to before us by counsel on both sides, after taking instructions from their parties, we direct that the 1st respondent do make over possession of the three room dwelling house on the first floor and take in exchange the 4 room dwelling house which is the subject matter of the present eviction proceedings.
We record this undertaking as indicated above and with this modification, allow the appeal.
P.H.P. Appeal allowed.
| IN-Abs | The respondent No. 1 is an Under Secretary in the Central Government He was in occupation of residential premises allotted to him by the Central Government and was required by the Government order to vacate such residential accommo dation on the ground that he owned in Delhi a residential accommodation in his own name at Shakti Nagar.
The Shakti Nagar House is a two storeyed house.
The first floor was let out to the appellant tenant and the ground floor to another tenant.
Relying on section 14A of the Delhi Rent Control Act, 1958, the respondent evicted the tenant on the ground floor.
Thereafter, the respondent sought eviction of the appellant on the same ground.
The Controller direct ed eviction refusing leave to the tenant to contest the application for eviction.
The Revision Application filed by the appellant before the High Court failed.
In appeal by special leave the appellant contended: (1) In view of the eviction of the tenant on the ground floor the right of the respondent to evict the tenant under section 14A was exhausted.
(2) The respondent No. 1 claims to be a legatee of the deceased landlord under a Will.
He has not got the will probated.
(3) Respondent No. 1 is only one of the co owners and, therefore, cannot file the application for eviction.
(4) The respondent No. 1 has not let out the premises to the appellant and the premises does not stand in the name of the respondent No. 1.
At the hearing, the parties settled their dispute by agree ing that the appellant would vacate the first floor premises consisting of 4 rooms and shift to the ground floor and respondent No. 1 would be handed over the possession of the first floor.
The parties also agreed to certain adjustment in the rent.
Disposing of the appeal in terms of the compromise the Court observed: (1) The landlord cannot use the same weapon.
of section 14A in getting two dwelling houses vacated.
It is contrary to the intendment of section 14A. The object of section 14A is fulfilled once the landlord recovers immediate possession of his premises from one of his tenants.
The right is exhausted thereby and is not available for continual applications for eviction against all other tenants holding under him.
This is made clear by the proviso to .s.
14A(1) which makes plain that the section shall.not be construed as conferring a right on a landlord owning two or more dwelling houses to recover possession of more than one dwelling house.
Of course, it gives choice to the landlord to indicate the particular house among a plurality owned by him, the pos session of which he intends to recover.
[417 A D] (2) A co owner is as much an owner of the entire proper ty as any sole owner of the property.
He owns every part of the composite property along with others and it cannot be said that he is only a part owner.
The absence of other co owners on record cannot disentitle the first respondent from suing for eviction.
From the definition of landlord in section 2(c) and tenant in section 2(1) when read in the context of the Rent Control Law is the simple sense of the situation is that there should be a building which is let.
There must be a landlord who 413 collects rent and a tenant who pays it to the one whom he recognises as landlord.
The complications of estoppel or the concepts of the Transfer of Property Act need not neces sarily or inflexibly be imported in the proceedings under the Rent Control Law, tried by special Tribunals under a special statute.
The Court left open the question if some co owner seek eviction of a tenant and others oppose it whether such application would be maintainable.
[416 C E]
|
Civil Appeal Nos.
2152 2153 of 1968 (From the Judgments and Orders dated the 25.2.1966 of the Punjab and Haryana High Court in Civil Writ Nos. 2588 and 2392/ 1964) V.C. Mahajan for the appellants (in CA 2152).
K.S. Surt and O.P. Sharma, for the the appel lants (in CA 1755) E.C. Agrawala, for respondent in CA 1754 Hardev Singh and R.S. Sodhi, for respondent in CA 1755 R.K. Mathut and V. Goswami, for respondent in CA 1497 N.N. Goswamy and A. Minocha, for respondent in CA 2153.
The Judgment of the Court was delivered by BEG, C.J.
The only question decided by the High Court of Punjab & Haryana in the cases now before us by special leave was whether section 3 of the Punjab Professions, Trades, Callings and Employments Taxation Act, 1956 (herein after referred to as 'the Act ') restricts taxation upon persons in Punjab to the income made within the State of Punjab.
This section reads as follows : "3.
Levy of tax Every person who carried on trade either by himself or by an agent or representative, or who follows a profession or calling, or who is in employ ment, either wholly or in part, within the State of Punjab, shall be liable to pay for each financial year or a part thereof a tax in respect of such profession, trade, calling or employment: Provided that for the purpose of this section a person on leave shall be deemed to be a person in employment".
Section 4 of the Act provides for taxation in accordance with a schedule annexed to it.
Section 5 lays down the manner of determination of the tax which is to be assessed on the total "gross income".
The term "total gross income" is defined by section 2 of the Act as "aggregate gross income derived from various professions, trades, callings and employment".
The Legislature amended this provision by adding in 1962, "Whether such profession or calling is followed, trade is carried on or employment is, within or outside the State of Punjab" to the definition.
The annexed schedule, conformably with the provisions of Article 276 of the Constitution does not tax any person, under the scale laid down in the schedule, to an extent more than Rs. 250/ per annum.
Nevertheless, it is clear, by reading the provi sions of section 5 and section 2 together, that the determination in accordance with the scale laid down in this schedule of the aggregate gross income on which tax is assessed, will have to take into account the income of the individual concerned earned both inside and outside Punjab.
The result is that the only condition for making a person taxable under the Act is that he must also have some profession, trade, calling 410 or occupation which is to be taxed, which he carries on within the State of Punjab.
It does not matter whether that person is employed or carries on the same or some other profession trade, or calling outside Punjab also.
Section 3 is only meant to indicate that the person who is to be made liable has carried on some profession, calling, trade, or occupation within Punjab.
It does nothing more.
It has nothing to do with the calculation of the aggregate amount of the tax to be levied.
That is dealt with by section 5 read with section 2 (b) of the Act as amended.
And, in determining the amount of tax which an assessee has to pay or the grade in which he falls, the amount he makes outside must also be added to what he makes inside Punjab.
His total gross income determines only his grade or amount of tax he has to pay.
His subjection to a profession or calling tax depends only On the fact that he carries on some business.
or has some trade or calling "within the State of Punjab".
The words qualifying the whole or a part of the calling which determines only the taxability of the person cannot possibly, on the language used, fix also the grade of taxa tion in which the individual falls.
We, however, find that the Punjab High Court, in accord ance with a view it had been consistently taking even before the amendment of section 2(b) of the Act, has held that, in determining the aggregate gross income, only the income made within Punjab by the calling, occupation, trade, or profes sion carried on must be taken into account.
We think that this view of the Punjab High Court is based on a very forced interpretation given to the; clear words of section 3 of the Act, probably because it thought it necessary to do so to make the effect of the section correspond to provisions of Article 245(1) of the Constitution.
We think that the Punjab High Court has clearly erred in interpreting section 3 in such a way as to make section 2(b), read with section 5 of the Act, useless in determining the tax in accordance with the grada tion laid down in the schedule 2 of the Act.
This amounts to nothing short of legislation.
We think that the view is an impossible one.
The principle that, where a provision is capable of one of two interpretations, the interpretation which validates rather than one which may invalidate a provision applies only where two views are possible.
It cannot be pushed so far as to alter the meanings of the clear words used in an enactment and to.
, in effect, repeal statutory provisions by making them useless without holding them to be void.
It is true that the question of the validity of the provisions of the Act on the ground that they contravene Article 245 (1) of the Constitution was also raised in the High Court, but, the High Court left this question open as it held in favour of the assessee on the first question.
As the first question was decided by clearly misinterpreting the provisions of the Act as they stand, we have to allow these appeals.
A Division Bench of the High Court, in the judgment under, appeal, had purported to follow an earlier Division Bench decision of the High Court in Beli Ram vs The Assessing Authority(1), which had interpreted the provi sions of section 3 of the Act as the Act stood before the amend ment of section 2 in the manner indicated above.
As the High (1) 411 Court had not decided the question of validity of the amend ment these cases cannot be disposed of without deciding that question.
We do not propose to express any opinion on this question as we do not have the benefit of the High Court 's views on it.
In the circumstances mentioned above, we set aside the judgments and orders of the High Court on these cases.
We send the cases back to the High Court for deciding the question of validity of the amendment to section 2 of the Act.
The parties will bear their own costs.
P.B.R. Appeals allowed.
| IN-Abs | Section 3 of the Punjab Professions, Trades, Callings and Employment$ Taxation Act, 1956, imposes a tax in re spect of a profession, trade, calling or employment carried on or followed within the State.
Section 5 lays down the manner of determination of tax .on the gross income.
The term "total gross income" is defined by section 2 of the Act as "aggregate gross income derived from various professions, trades, callings and employments".
The words "whether such profession or calling is followed, trade is carried on or employment within or outside the State" were added to the section by an amendment of 1962.
Before the amendment of section 2(b), the High Court had taken the view that in determining the aggregate gross income, only the income derived within the State by a call ing, occupation, trade or profession must be taken into account for the purposes of taxation.
On the question whether the Act restricts taxation of income made within the State.
Allowing the State 's appeal and remitting the case to the High Court HELD: By reading the provisions of section 5 and section 2 togeth er, it is clear that the determination in accordance with the scale laid down in the Schedule, of the aggregate gross income on which tax is assessed, will have to take into account the income of the individual concerned earned both inside and outside the State.
[409 G] 1 (a) The High Court has clearly erred in interpreting section 3 in such a manner as to make section 2(b) read with section 5 of the Act, useless in determining the tax in.
accordance with the gradation laid down in the Schedule to the Act.
This amounts nothing short of legislation.
[410 E F] (b) The only condition for making a person taxable under the Act is that he must also have some profession, trade, calling or occupation which is to be taxed, which he carries on within the State.
It does not matter whether the person is employed or carries on the same or other profession, trade, or calling outside the State also.
Section 3 is only meant to indicate that the person who is to be made liable had carried on some profession, calling, trade, or occupa tion within the State and it has nothing to do with the calculation of the aggregate amount of the tax to be levied.
That is dealt with by section 5 read with section 2(b) as amended.
In determining the amount of tax, the amount an assessee makes outside must also be added to what he makes inside the State.
His total gross income determines only his grade or amount of tax he has to pay.
His subjection to a profession or calling tax depends only on the fact that he carries on some business or has some trade or calling within the State.
[410 A C] 2.
The principle that where a provision 'is capable of one of two interpretations, the interpretation which vali dates rather the one which may invalidate a provision ap plies only where two views are possible.
It cannot be pushed so far as to alter the meaning of the clear words used in an enactment and to repeal statutory provisions by making them useless without holding them to be void.
[410 F] [The case was remanded to the High Court for deciding the validity of the amendment made to section 2(b) of the Act] 409
|
iminal Appeal No. 90 of 1955.
On appeal by special leave from the Judgment and order dated the 17th June 1955 of the Travancore Cochin High Court at Ernakulam in Criminal Miscellaneous Petition No. 113 of 1955 (R.T. 'No. 4 of 1954 and Criminal Appeal No. 136 of 1954).
B. R. L. Iyengar, for the appellant.
Sardar Bahadur, for the respondent, 1023 1955.
December 1.
The appellant was convicted of murder in Sessions Case No. 20 of 1954 by the Sessions Judge of Trichur now in the State of Travancore Cochin and sentenced to death.
The sentence was in due course confirmed by the High Court and an application for leave to appeal against it to this Court was rejected.
The appellant filed mercy petitions to the Raj Pramukh of Travancore Cochin and to the President of India and both of them were rejected.
After all these attempts had failed, the Sessions Judge issued a warrant on the 29th March, 1955, fixing 6th April, 1955, for the execution of the prisoner.
Meanwhile, the Superintendent, Central Jail, Viyyur, where the condemned prisoner was lodged, informed the Sessions Judge by his letter dated the 1st April, 1955, that the prisoner had sent a mercy petition to the Maharaja of Cochin and requested for directions, since no orders had been received in respect of that petition.
it may be mentioned that the Sessions Division of Trichur is admittedly in the former State of Cochin.
It does not appear from the record whether this mercy petition to the Maharaja of Cochin was sent before or after the mercy petitions to the Raj Pramukh of Travancore Cochin and to the President were disposed of.
On receipt of the letter dated the 1st April, 1955, from the Superintendent, Central Jail, the Sessions Judge passed an order that the circumstances of the case demanded that the execution of the sentence should not take place on the date already fixed.
He accordingly issued an order staying execution of the sentence, previously ordered by his warrant dated the 29th March, 1955.
At this stage, the Public Pro secutor filed an application to the Sessions Judge on the 30th May, 1955, praying that the stay may be vacated and that fresh directions to execute the warrant may be issued.
On that application, the Public Prosecutor raised the question that a mercy 1024 petition to the Maharaja of Cochin, who as such, has lost sovereignty over the territory forming part of the previous Cochin State, and hence also lost his prerogative of pardon, was incompetent and could not stand in the way of the warrant being executed.
The learned Sessions Judge dealt with this question and agreed with the contention of the Public Prosecutor.
Accordingly, he vacated the stay and issued a fresh warrant for execution of the prisoner giving a week 's time to the prisoner to take the matter on appeal to the High Court, if so advised.
The prisoner filed an appeal to the High Court and the learned Judges of the High Court after consideration of the arguments on both sides agreed with the view taken by the learned Sessions Judge, and dismissed the appeal by its judgment dated the 17th June, 1955.
The present appeal is against this order of the High Court.
For the hearing of this appeal counsel was assigned to the appellant amicus curiae and all the relevant constitutional provisions have been fully and fairly placed before us.
Learned counsel appearing for the State has also been heard.
We are satisfied that the question that has been raised does not admit of substantial argument and that the view taken by both the Courts below is correct.
The entire basis for any argument on behalf of the appellant is the pre existing undoubted power of the Maharaja of Cochin to exercise the prerogative of pardon in respect of a sentence of death passed by the courts within his State.
That prerogative right has been 'affirmed in Article XXI of the Covenant dated the 29th May, 1949, entered into between the Rulers of Travancore and Cochin for the formation of the United State of Travancore and Cochin.
The article is in the following terms: "Notwithstanding anything contained in the preceding provisions of this Covenant, the Rulers of Travancore and Cochin shall continue to have, and exercise, their present powers of suspension, remission or commutation of death sentences in respect of any person who may have been, or is hereafter, sentenced 1025 to death for capital offence committed within the territories of Travancore or Cochin as the case may be ' It is only on the assumption that the power thus recognised in this article of the Covenant still survives in the Maharaja of Cochin, notwithstanding that he had lost his sovereignty over the territories which constituted the State of Cochin that the appellant has any statable case.
But this assumption is clearly unfounded having regard to the events which culminated in the accession and integration of the State of Travancore Cochin with the Dominion of India and thereafter its absorption into the Union of India, when the Constitution of India came into operation on the 26th January, 1950.
The relevant historical events may briefly be stated.
In August, 1947, the Rulers of the States of Travancore and Cochin executed separate instruments of accession to the Dominion of India on the same lines as most other Indian States did, at the time.
In May, 1949, the two States formed into a United State under a Covenant signed by each of the Maharajas, the provisions of which were guaranteed by the Government of India.
It is Article XXI of this Covenant which has already been referred to and which provides for the continuance of the prerogative of the Maharaja of Cochin for commutation of death sentences within his State.
Under this Covenant it was also provided that the then Ruler of Travancore should be the first Raj Pramukh of the United State of Travancore Cochin.
It was specifically provided by Article IX thereof as follows: "The Raj Pramukh shall, within, a fortnight of the appointed day, execute on behalf of the United State an Instrument of Accession in accordance with the provisions of section 6 of the Government of India Act, 1935, and in place of the Instruments of Accession of the Covenanting States".
By Article X(4) of the Covenant it was provided that "The Legislature of the United State shall, subject to the provisions of this Covenant, have full power 1026 to make laws for the United State, including provisions as to the Constitution of the United State, within the framework of this Covenant and the Constitution of India".
In pursuance of article IX, the Raj Pramukh of Travancore Cochin executed an Instrument of Accession dated the 14th July, 1949, which was accepted by the Governor General of India on the 15th August, 1949.
By article I of this Instrument it was declared that the 'United State acceded to the Dominion of India.
In pursuance of Article X(4) the legislative assembly of the State of Travancore Coobin resolved that the Constitution framed by the Constituent Assembly be adopted by the State.
In consequence thereof the Raj Pramukh of Travancore Cochin issued a proclamation dated the 24th November, 1949, which runs as follows: "Whereas with the inauguration of the new Constitution for the whole of India now being framed by the Constituent Assembly of India, the Government of India Act, 1935, which now governs the constitutional relationship between this State and the Dominion of India will stand repealed; and whereas ' in the best interests of the United State of Travancore and Cochin, which is closely linked with the rest of India by a community of interests in the economic, political and other fields, it is desirable that the constitutional relationship established between this State and the Dominion of India, should not only be continued as between this State and the contemplated Union of India further strengthened, and the Constitution of India as drafted by the Constituent Assembly of India, which includes duly appointed representatives of this State, provides a suitable basis for doing so; And whereas by virtue of the power vesting in it under the Covenant establishing this State, the Legislative Assembly of the State has resolved that the Constitution framed by the Constituent Assembly of India be adopted by this State; I now hereby declare and direct 1027 That the Constitution of India shortly to be adopted by the Constituent Assembly of India shall be the Constitution for the United State of Travancore and Cochin as for the other parts of India and shall be enforced as such in accordance with the tenor of its provisions: That the provisions of the said Constitution shall as from the date of its commencement, supersede and abrogate all other constitutional provisions inconsistent therewith which are at present in force in this State".
For our present purposes, the last paragraph in this Proclamation is important.
On the coming into force of the Constitution of India on the 26th January, 1950, the State of Travancore Cochin became a part of the Union of India and was one of the Part B States as provided under article 1 clause (2) taken with Part B of the First Schedule.
The Constitution specifically provided for the prerogative of mercy in respect of sentences of death in articles 72, 161 and 238.
Article 72 provides for the power of the Presi dent, article 161 for the power of the Governor in a Part A State, and article 238 (1) taken with article 161 for the power of the Raj Pramukh of a Part B State.
In the light of these provisions the continuance of the prerogative of the Maharaja of Cochin relating to the execution of the death sentences with reference to the ex State of Cochin would be inconsistent with the new Constitution.
Such power, there fore, must be taken to have been superseded and abrogated as stated in the last para of the Proclamation above mentioned.
It would follow that article XXI of the Govenant of May, 1949, no longer survives.
Article 372(1) of the Constitution has also been relied upon on behalf of the appellant.
This runs as follows: "Notwithstanding the repeal by this Constitution of the enactments referred to in article 395 but subject to the other provisions of this Constitution, all the law in force in the territory of India immediately before the commencement of this Constitution shall continue in force therein until altered or re 130 1028 pealed or amended by a competent Legislature or other competent authority".
The argument based on this article is that the criminal law of the ex Cochin State continued to be in force in spite of the new Constitution having come into force and that the exercise of the prerogative by the Maharaja of Cochin in respect of the ex State of Cochin was an integral part of that law.
Apart from the question whether such prerogative which was incidental to his sovereignty, could survive after he lost his sovereignty over the territory, the difficulty in the way of this argument is twofold.
(1) The continuance is subject to the other provisions of the Constitution; and (2) The continuance is only until altered or repealed or amended by a competent Legislature.
As already pointed out, the continuance of the prerogative of the Maharaja of Cochin would be inconsistent with articles 72, 161 and 238 of the Constitution.
Further it is to be noticed that by the Code of Criminal Procedure (Amendment) Act, 1951, (Central Act I of 1951), passed by the Union Legislature, the Code of Criminal Procedure, 1898, has been made applicable to the whole of India by amending section I of the Code and by substitution therein for the words "whole of India except Part B States", the words "whole of India except the States of Jammu and Kashmir and Manipur".
The Code of Criminal Procedure and along with it sections 401, 402, and 402 A thereof, relating to commutation of sentences having thus been made specifically applicable to all Part B States by Central Act I of 1951, the prerogative under the old Cochin law must in any case be deemed to have been repealed or abrogated by competent legislative authority after the coming into force of the Constitution.
It was suggested in the Courts below that in so far as the Maharaja 's prero gative was concerned the Legislature was incompetent to abrogate it in view of article 362 of the Constitution.
But that article has no bearing.
It refers only to personal rights, privileges and dignities of the Rulers of Indian States.
It is obvious even from the Covenant, in which article XXI appears, that the 1029 power of pardon thereunder is different from "personal rights, privileges and dignities" which have been dealt with under articles XVI and XVII in the following terms.
The Ruler of each Covenanting State, as also the members of his family, shall be entitled to all the personal privileges, dignities and titles enjoyed by them, whether within or outside the territories of the State, immediately before the 15th day of August,1947.
XVII.(1) The succession, according to law and custom to the gaddi of each Covenanting State and to the personal rights, privileges, dignities and titles of the Ruler thereof is hereby guaranteed".
There is thus no substance in any of the arguments on which the case for the appellant can possibly be presented.
This appeal is accordingly dismissed.
| IN-Abs | A sentence of death passed on the appellant by the Sessions Judge of Trichur (now situated in the United State of Travancore Cochin and previously in the former State of Cochin) was confirmed by the High Court.
Mercy petitions presented to the Raj Pramukh of Travancore Cochin and to the President of India were rejected.
The question for determination was whether the appellant could rely on the pre existing power of the Maharaja of Cochin to exercise the power of pardon in respect of a sentence of death passed by the courts in his State, the prerogative right having been affirmed by article XXI of the Covenant dated the 29th May 1949, entered into between the Rulers of Travancore and Cochin.
Held that the pre existing prerogative right of pardon vested in the Maharaja of Cochin must be taken to have been superseded and abrogated having regard to the events which culminated in the accession and integration of the State of Travancore Cochin with the Dominion of India and thereafter its absorption into the Union of India when the Constitution of India came into force on the 26th January 1950, the continuance of such prerogative being inconsistent with articles 72, 161 and 238 of the Constitution.
|
l No. 1812 of 1969.
(From the Judgment and Order dated 31 1 1969 of the Rajasthan High Court in Civil Misc.
Writ No. 733 of 1968).
S.K. Mehta and Girish Chandra, for the appellant.
S.T. Desai, G. A. Shah and S.K. Dholakia, for respond ent No. 1.
L.M. Singhvi, S.M. Jain and Indra Mapwana, for respond ents 2 3 Leila Seth and G.S. Chatterjee for the Intervener.
The Judgment of the Court was delivered by: SARKARIA, J.
Whether on the facts of this case, the contract dated 15 6 1968 between the Union of India and the Central India 440 Machinery Manufacturing Company Ltd. (Wagon & Structural Division) Bharatpur (hereinatter called tile Company) for tile manufacture and supply of wagonS, was a contract of sale or work contract, is the principal question mat falls to be determined in this appeal by certificate, field by the Union of India against a judgment dated January 31, 1969 of the High Court of Rajasthan.
It arises out of these facts: The Company, Respondent No. 1 herein entered into a Contract (No. 67/Rs(1)/954/15/396, dated 15 6 1968 with the Union of India through the Railway Board for the manufacture and Supply of 258 BG Bogie covered BCX type wagons and 812 MG covered wagons of MBC type to the Railways.
The sales tax authorities of the State (Respondent 3 herein) under the Rajastan Sales Tax Act, levied the sales tax treating the contract as one of sale and delivery of wagons.
Under a similar past contract, the appellant reimbursed the Company the amount of sales tax for the wagons supplied by it to the appellant in the months of March and April, 1967.
In March 1967, the High Court of Mysore in the case of Hindustan Aeronautics Ltd., Bangalore Division vs The Commissioner of commercial Taxes, Mysore, C) held that the contract for the supply of wagons to the Railway Board by HAL was in the nature of works contract and therefore sales tax was not payable on such supplies.
In view of this decision, the Railway Board by its letter dated June 7, 1968 informed the Company that the money paid by it to the Company which was not deposited with the Sales tax Department should be re funded because the real nature of the transaction was that of a works contract and not a sale or purchase and therefore the Railway Board was not liable to reimburse the Company for the amount of sales tax if any, paid by the Company to the State of Rajasthan.
While in reply to the Railway Board at Company contended that the contract was for sale of wagons and not a contract for works, it took a contrary position in its representation to the Commissioner of Sales tax, Rajasthan.
Instead of giving any relief, the Sales tax Department informed the Company that it should stop purchasing material on the strength of Form 'C ' under the Central Sales tax Act.
Such stoppage would have saddled the Company with a further liability to pay tax at the enhanced rate on the purchase of material used for the manufacture of wagons.
The Commercial Tax Officer provisionally assessed the Company under section 7(D) of the Rajasthan Sales tax Act on the Sale of wagons to the Railway Board for the month of May 1968, and served a demand notice for payment of Rs. 1,91,827/79p.
including Rs. 1,899.29p/ as penalty.
Since the Company was registered as a dealer under the Sales tax Act, it had to bear, in the first instance, the charge of the tax although its incidence normally passes on to the purchaser, in the absence of a contract to the contrary under the provisions of section 64(a) of Sales of Goods Act.
By its letter of August 14, 1968, the Railway Board finally informed the Company that, in future it would not reimburse the Company ' for the sales tax if paid by it in connection with the supply of wagons (1) ; 441 The Company thereupon invoked the writ jurisdiction of the High Court by a petition under Article 226 of the Constitu tion.
In the writ petition, the Commercial Taxes Officer Special Circle Jaipur, the Union of India through the Rail way Board and the State of Rajasthan were impleaded as Respondents.
The relief prayed in the petition was: "(1) That an appropriate Order be made determining whether the contract in question is in the nature of a contract for sale of goods, or works contract.
(2) That in the event of a finding that the contract is in reality a contract for sale the respondent Union of India be prohibited from claiming refund from the petitioner of the sum of Rs. 1,56,703.20 lying in its hands for payment of Sales Tax.
(3) . . (4) That an appropriate writ, Directive or order be made directing the respondent Union of India through the Railway Board to reim burse the Petitioners in respect of Sales Tax for the purchases from May 1968 onwards from month to month.
" The writ petition was contested by the Union of India, inter alia, on the ground that the contract in question was contract for works and not a contract of sale.
The State of Rajasthan and the Commercial Taxes Officer in their joint reply contended that the contract was one for sale of wag ons.
At the final hearing before the High Court all the parties requested the Court to resolve the dispute in the exercise of its extraordinary jurisdiction under Article 226 of the Constitution, notwithstanding the availability of an alternative remedy.
The Court, in consequence, proceeded to decide the dispute on merits.
After examining in detail the terms and conditions of the contract as disclosed by the relevant documents on the record, the High Court took the view that the contract in question was a contract for the manufacture and Sale of wagons to the Union of India by the Company and as such sales tax was payable on these transac tions.
It thus decided the main issue against the Union of India and allowed the writ petition.
Hence this appeal by the Union of India.
The question, whether a contract is one for sale of goods or for executing works or rendering services, is largely one of fact, depending upon the terms of the Con tract, including the nature of the obligations to be dis charged thereunder and the surrounding circumstances.
It is therefore, necessary to examine the terms and conditions of contract in question.
There is no consolidated contract deed formally executed by the parties, on record.
There are however, several documents, including 442 the correspondence between the parties, which embody the terms and conditions of the contract.
By its letters No. 67/RS(1)/954/15 dated December 23, 1967, and letter dated June 15, 1968, the Railway Board communicated to the Company, the former 's acceptance of the offer made by the Company in its earlier letters, including the letter, dated 12 12 1967, to manufacture and supply, B.G. Bogie covered wagons BCX Type and M.G.
Covered wagon MBC Type.
The numbers of the wagons to be supplied and the price per wagon of each type were indicated in these let ters.
Paragraph 2 of the letter, dated December 23, 1967, stated: "2.
Terms and Conditions: The contract shall be governed by the General Conditions of Contract A5 51 (Revised) in so far as these are not inconsistent with the Special Condi tions of contract attached as per Annexure 'A ' and these given in Paras 3 and 7 below.
" Paragraphs 3 to 6 of the letter provide as under: "3.
Delivery: The delivery of the stock F.O.R, your works siding is required to be completed by 30 6 69.
Packing 01 axle boxes: Packing of axle boxes (Wherever necessary) will be done by Western Railway.
No packing charges on account of the same will be received from you." "5.
Inspecting Authority: Joint Direc tor (R.I.), R.D.S.D., Calcutta or his repre sentative shall constitute the Inspecting Authority for the inspection of stock built by you against this order.
Accounting and payments: F.A. & C.A.O., Northern Railway, New Delhi will maintain accounts and arrange all payments.
" Para 7 dealt with "Material Escalations", while in para 8 it was expressed that the order was being issued in the name of the President of India.
Now the salient Standard Conditions referred to in paragraph 2 of this letter may be seen, Conditions 1 and 2 are as follows: "1.
The "Purchaser" means the President of India in the case of carriage underframes and goods wagons (hereinafter called vehicles) ordered for Indian Railways.
" 2. "The work" includes materials of every kind" .
Standard Condition 15 is crucial and may be extracted in full.
"SYSTEM OF PAYMENT 15.
Payments for completed vehicles delivered by the Contractor shall be made in two instalments, viz. 90 per 443 cent on completion and 10 per cent as provided in paragraph (2) of this clause.
The proce dure for such payment will be as follows: (1 ) The Contractor on receipt of a Certifi cate signed by the Inspecting Officer (whose decision shall be final) to the effect that one or more vehicles have been completed will submit to the Purchaser on account bill for 90 per cent of the value of vehicles in question, together with the completion certificate, the Purchaser will pay the 90 per cent bill, and on payment of this bill the vehicles in ques tion will become the property of the Purchas er.
(underlining ours) (2) The balance of 10 percent shall be treated as security for the due fulfilment of the contract and the Contractor .shall be entitled to receive payment of the balance of 10 per cent on vehicles as completed on his receiving a certificate from the Purchaser to the effect that the actual delivery of the vehicles in question has been taken, that the delivery was made in the due time, and that the Contract has been duly fulfilled in every respect in so far as it relates to the com pleted vehicles.
Condition 16 lays down that if the "defect arises from inferiority of material or workmanship, or from imperfect protection or other default on the Contractor 's part, the Railway shall be at liberty to ask the Contractor to remedy the defect and deduct from any money due to the Contractor.
The Special Conditions of Contract contains in Annexure 'A ' to the letter dated 23 12 1967, are as under: SPECIAL CONDITIONS 1.3 Material Escalations: Adjustments due to variations in the cost of material will be confined to the variations in the prices of steel at Col. 1 rate through Governmental action for controlled categories and those fixed by J.P.C. for de controlled categories of steel.
The escalation would be allowed in respect of such of the quantities of the material which were purchased and paid for the manufacture of wagons on order after the variation in price over the base date and subject to examination of the actual amounts paid for the supply of such tonnage of steel which is considered reasonable for the manu facture of the wagons on order and for which prices have varied over the base date whether supplied to the Contractor or sub contractor . 4.
Specifications and Drawings: The stock shall be built conforming to specifications and drawings indicated in the order which axe obtainable on 444 payment from the Research Design and Standards Organisation, Lucknow, with such modifications as may be required or approved by the Railway Board, from time to time during the execution of this contract.
The basic price shall have reference to the specification shown in the order.
Any modification to specification or design shall be subject to price adjustment over and above the basic price . . ,, Special Condition 4 is important.
A good deal of .argument was made as to whether 90% advance made under this Condition should be taken as payment towards the price of the material or towards the price of the wagons.
This condition reads: "4 .
Terms of Payments: (a) 'On Account ' payment upto 90% of the value of steel and other raw materials pro cured by the firm for this order will be ,made against such materials, on its receipt in the firms ' works, on production of a cer tificate to that effect from the concerned officer of the Inspection and Liaison Organi sation and on the firm furnishing necessary indemnity bond to the paying Authority.
Note: 'On Account ' payment will be per missible on steel procured according to Joint Director (Iron & Steel), Calcutta 's planning after taking into consideration any steel offers from the floating stock held by the Railways.
If such offers are refused and steel of similar quality is obtained from other sources such quantities will be excluded from 'On Account ' payment.
The claim for 'On Account ' payment will be accompanied by a further certificate that similar steel has not been offered from the floating stock held by the Railways and refused by the Wagon Build ers.
(b) Payment of 90% of the full contract price less 'On Account ' payment already .made vide (a) above will be made on production of inspection certificate for each completed wagon.
(c) Payment of the balance 10% of the contract price will be made on the certifica tion by the consignee Railways that wagons have been received in complete condition and in good working order, provided that the payment so made shall be provisional and subject to adjustment and finalisation by deduction of rebate in acordance with provi sion of clause 1.4" (underlining ours) 445 The other material Special Conditions are: "5.
USE OF RAW MATERIALS SECURED WITH THE GOVERNMENT ASSISTANCE: Where any raw materials for the execu tion of the contract are procured with the assistance of Government either by issue from Government stock or purchase under arrange ments made or permit(s) or licence(s) issued by Government, the Contractor shall hold the said materials as trustee for Government and use such materials economically and solely for the purpose of the contract against which they are issued and not dispose of them, without the permission of the Government and return, if required by the purchaser, all surplus or unserviceable materials that may be left with after ' the completion of the con tract or at its termination for any reason whatsoever, on his being paid such price as Government may fix with due regard to the condition of the material.
The freight charges for the return of the materials according to the directions of the purchaser shah be borne by the Contractor, in the event of the contract being cancelled for any de fault on his part.
The decision of Government shall be final and conclusive.
(underlining ours) "10.
Sales Tax: If and .when State and Inter State Sales Tax on the stock on order becomes payable under Law such payments will be reimbursed by the Railway Board.
The Rail way Board will, not, however, be responsible for the payments of sales tax paid under mis apprehension of Law.
No sales tax on materi als including steel or components will be reimbursed by the Railway Board.
(underlining ours) The material part of the Indemnity Bond which was subse quently executed by the Company in connection with the Contract, provide: "Whereas under Railway Board 's order No. 67/ RS(1)/954/15 dated 23 12 1967, the said Contractor has been given the contract for manufacture of 258 Nos.
B.G. covered wagons BCX type with Transition type Centre Buffer couplers at both ends and 812 numbers MG covered wagons MBC type (1968 69 R.S.P.) at Bharatpur.
And whereas advance payment are to be made by the Railways to the Contractor against Railway Board 's said order .
That the Contractor shall hold at his works at Bharatput and/or at the works of his sub contractors the Stores and articles of the Railways in respect of which advance may be made to him against the said order.
2 502SCI/77 446 That the said Stores and articles shall be such as are required for the execution of the above contract and the advance made to him by the Railways is without prejudice to the provision of the contract and is subject to inspection and rejection of the Stores and any advance .made against stores and articles rejected or found unsatisfactory on inspection shall be refunded immediately to the Railways.
That the Contractor shah be solely responsible for the safe custody and protec tion of the said stores and articles against all risks till they are duly delivered to the Railways or as they may direct.
The said articles and materials shall at all times be open to inspection of any officer authorised by the Railways.
(underlining ours) Now these presents witnesseth that the Contractor . hereby undertakes to indemni fy the Railways, should any loss or damage or deterioration occur in respect of the said stores and articles while in his possession or in the possession of his sub contractors or if any refund becomes due to the Railways without prejudice to any other remedies available, the Railways may also deduct such amount from any sums due, or any sum which at any time herein after may become due to the Contractor . . " Clause (0) of section 2 of the Rajasthan Sales Tax Act, 1954, defines "sale".
It says: " 'Sale ' with all its grammatical varia tions and cognate explanations, means any transfer of property in goods for cash or for deferred payment or for any other valuable consideration, and includes a transfer of goods on the hirepurchase or other system of payment by instalments . " Thus, transfer of property in goods for a price is the linchpin of the definition.
Under Section 4 the , also, in the definition of the term "sale" stress is laid on the element of transfer of property in the goodS. According to the Roman jurists, also, the purport of a contract of sale is that the seller divests himself of all proprietory right in the thing sold in favour of the buyer.
It is this requisite which often distinguishes a contract of sale of goods from a contract for work and services.
Even so, the difficulty of distinguishing between these two types of contracts is an age old one.
It was much debated even by the Roman jurists (see Inst.
III, 24,4, and De Zuluete, The Roman, Law of Sale, pp. 15, 16).
Difficulty has also been felt in England and other Common law jurisdictions to the effect of a contract to make a chattel and deliver it when made.
Generally, such a contract is one of sale of Chattel, but not always.
Jurists have differed much and striven much about the test for distinguishing between these two types of contracts.
Since each contract presents its own features, and imponderables it has not been possible to devise an infallible test of universal application.
Accord ing to Pollock & Mulla, "the test would seem to be whether the thing 447 to be delivered has any individual existence before delivery as the sole property of the party who is to deliver it".
H the answer is in the affirmative, it is a 'sale ' of the thing, otherwise not.
Another learned author enunciates that "the general rule deducible from the cases seems to be that if the main object of the contract is the transfer from A to B, for a price, of the property in a thing in which B had no previous property, then the contract is a contract of sale," (See Chalmers Sale of Goods, 16th Edn, page 52).
The broad criteria for distinguishing between these two types of contracts have been neatly summed up in Halsbury 's Laws of England, (3rd Edn., Vol. 34, page 6) thus: "A contract of sale of goods must be distinguished from a contract for work and labour.
The distinction is often a fine one.
A contract of sale is a contract whose main object is the transfer of the property in and the delivery of the possession of, a chattel as a chattel to the buyer.
Where the main object of work undertaken by the payee of the price is not the transfer of a chattel qua chattel, the contract is one.
for work and labour.
The test is whether or not the work and labour bestowed end in anything that can properly become the subject of sale; neither the ownership materials, nor the value of the skill and labour as compared with the value of the materials is conclusive, although such matters may be taken into consideration in determining in the circumstances of a particu lar case, whether the contract is in substance one for work and labour or one for the sale of a chattel.
" Let us now apply the above criteria to the contract in question.
The contract is expressly one for the manufacture and supply of wagons for a price.
Price has been fixed taking the wagon as a unit.
Payment of the price is made for each vehicle on its completion and delivery by the contrac tor to the Purchaser, who is described as the Union of India acting through the Railway Board.
Such payment is made in two instalments, viz., 90 per cent of the value of the vehicle on completion against an 'On account ' bill, together with the Completion Certificate from the Inspecting Officer appointed by the Railway Board, and the balance of 10 per cent after delivery.
If clause (1) of the Standard Condi tion 15 is not inconsistent with anything in the Special Conditions, and as we shall presently notice it is not so it clinches the issue in as much as it declares in unequivocal terms the invention of the contracting parties that on.
payment of the 90 per cent of the value, 'the vehicles in question will become the property of the pur chaser.
" Prima facie, the contract in question has all the essential attributes of ' a contract of sale of moveable.
That is to say, hare is an agreement to sell finished goods manufactured by the Sellers (Company) for a price, the property in the goods passing to the Purchaser, on comple tion and delivery pursuant to the agreement.
Mr. Mehta, learned counsel for the appellant, contended that what clause (1) of Standard Condition 15 appears to convey about.
448 the transfer of the property in the completed vehicle stands inferentially negated and superseded by the terms of the Special Conditions and the Indemnity Bond to which the Standard Conditions, are subject.
It is urged that under Special Conditions read with the Indemnity Bond the property in the raw material purchased by the Company for the con struction of the wagons, passed to the Railway Board as soon as the latter advance 90 per cent of the value of such material, which thereafter is held by the Company merely as an agent or trustee for the Board.
Our attention has been invited to Special Condition 4 under which 'On Account ' payment upto 90% of the value of 'steel and other materials" procured by the Company for this Order" will be made against such materials, on production of a certificate from the officer of the Inspection and Liaison Organisation and on furnishing necessary indemnity Bond to the Paying Authority.
We are also adverted to the Note under clause ( 'a) of that Condition, according to which "On Account" payment will not be permissible against steel procured by the Company from a source other than the floating stock held by the Railways, except when an offer to procure it from that source is refused.
Counsel has also referred to Special Conditions 5 which obligates the contractor to hold "as trustee for Government" any raw materials for the execution of the contract" procured with the assistance of Government either by issue from Government stock or purchase under arrangement made or permit(s) or licence(s) and to "use such materials economically and solely for the purpose of the contract against which they are issued and ' not dispose of them, without the permission of the Government." Mr. Mehta fur ther pointed out that under Special Condition 6, other essential components, viz., wheelsets for all the stock (and roller bearing axle boxes and C.F. couplers Wherever ap plicable) are supplied to the contractor free of cost F.O.R. against a proper undertaking for their safe custody.
Counsel further took us through the contents of the Indemni ty Bond and placed special emphasis on its clause: "That the contractor shall hold at his works at Bharatpur and/or at the works of his Sub contractors the Stores and articles of the Railways in respect of which advance may, be made to him against the said order.
" From a conjoint reading of the Special Conditions 4, 5, 7 and the Indemnity Bond it is sought to be spelt out that all the raw materials and components used in the manufacture of the wagons, belonged to the Railway Board; such materials were either procured under Special Condition 4 against 90% 'On Account ' payment which should be taken as a payment towards the price of the material purchased and held by the Company on behalf of the Railway Board, or procured under Special Condition 6 free of cost.
It is maintained that since purchases of raw material against 90% 'On Account ' payment were made by the Company on behalf of and/or the Railway Board, that was why in the Indemnity Bond, the "stores and articles" in respect of which the advance has been made by the Railway Board, are described as 'of the Railways".
It is further submitted that in view of the facility available to the contractor, there was little or no possibility of any materials other than those procured against 90% 449 'on account ' payment, or supplied free of cost by the Rail way under Special Condition 6, being used in the manufacture of the wagons by the Company.
In sum, the proposition propounded is that since the raw materials and components used in the manufacture of a wagon under the terms of the contract belonged to the Railway Board, the wagon produced had, at the time of its completion and delivery, no individ ual existence as the sole property of the Company.
Although counsel has not specifically cited from Pollock and Mulla 's commentary on the , the test sought to be invoked is the same which has been suggested by the learned authors.
Judged by this test, proceeds the argument, the contract in question is not a contract of sale of wagons, but one for work and labour.
In support of his contentions, Mr. Mehta relies on three decisions of this Court: M/s. Hindustan Aeronautics Ltd., Bangalore Division vs The Commissioner of Commercial Taxes, Mysore(1) State of Gujarat vs Kailash Engineering Co.(2) and the other in State of Gujarat (Commissioner of Sales Tax, Ahmedabad), vs M/s. Variety Body Builders(3).
According to counsel, the terms and conditions of the contract which came up for considera tion in M/s. Hindustan Aeronautics were substantially the same, and there it was held that the contract was one for work and not of sale of vehicles.
On the other hand, Dr. L.M. Singhvi, Learned Advocate General appearing for the State of Rajasthan, and Shri section T. Desai, learned counsel appearing for the Company have pointed out that there is nothing in the Special Conditions which militates against or is inconsistent with the Standard Condition 15; that the Special Conditions, read as a whole, show beyond all doubt that the raw materials purchased by the Company against 90% advance payment do not become the property of the.
Railway Board or the Union of India, because under the express terms of the contract, such advance payment is made towards the "contract price" of the wagons and not towards the price of the materials purchased by the Company, al though to safeguard the interests of the Railway Board some restrictions have been placed with regard to the use and disposal of those materials on the Company who had become aware thereof by purchase for a price.
In refutation of the stand taken by the appellant, it is asserted that under the terms and conditions of the contract, it is not obligatory for the Company to purchase all the materials required for the construction of the wagons, from the Government Stores or with the assistance of the Government against 90% advance payment.
It is submitted that in accord with the terms of the contract, lot of raw material against which no such advance was taken, was purchased by the Company and used in the construction of the wagon.
With our permission, an affidavit has been filed before us on behalf of ' the Company to support this assertion of fact.
(1) ; (2) [1967] 195 S.T. (1360).
(3) ; 450 Dr. Singhvi has further submitted that the terms of the contract in question are materially different from those which were in question in Hindustan Aeronautics case and in M/s. Variety Body Builders (supra) and consequently those decisions cannot govern the instant case.
According to the Counsel, the instant case is more in line with the decisions of this Court in Patnaik and Company vs State of Orissa(1) and T.V. Sundram lyengar & Sons vs State of Madras.(2) The first question for consideration is: whether all the raw materials used in the construction of the wagons are those against the 90% value of which advance is drawn by the Company from the Railway under Special Condition 4 ? In this connection, it may be noted that there is noth ing in the terms and conditions of the contract which ex pressly or by necessary implication binds the Company to procure and use only this raw material for which advance has been drawn by it from the Railway.
There is positive evi dence (i.e. unrebutted affidavit of Shri C.P. Gupta, Senior Accounts and Finance Officer of the Company) that m execu tion of the contract in question, the Company has used such raw material also against which no advance was drawn from the Railway.
The raw material used in the manufacture of the wagons may be split up into three categories: 1.
Wheelsets, axle boxes supplied by the Railway free of cost (vide Special Condition 6).
Raw materials such as steel against which advance was drawn.
Raw materials against which no such advance wag drawn.
The first category was admittedly the property of the Railway There can be no dispute that the third category was, at all times material, the property of the Company.
Contro versy converges on category (2).
Does such material procured by the Company, against 90% advance, become the property of the Railway before its use in the manufacture of the wagons ? Should the "on account" payment received from the Railway by the Company under Special Condition 4, on 90% of the value of the materials, be taken as payment towards the price of the materials ? Or, should it be taken as payment towards the price of the wagons ? Answers to these questions turn on a construction of the terms and conditions of the contract.
A correct construc tion, in turn, depends on a reading of the Standard and Special conditions as a whole.
It would not be proper to cull out a sentence here or a sub clause there and read the same in isolation.
Again what is required is not a (1) [1965] 16, S.T.C. 369 (S.C.).
(2) [1975] 35, S.T.C. 24 (S.C.).
451 fragmentary examination in parts but an overall view and understanding of the whole.
Again, it is the substance of the documents constituting the contract, and not merely the Form which has to be looked into.
The real intention of the contracting parties is primarily to be sought within the four corners of the documents containing Standard and Special Conditions of the ContraCt.
If such intention is clearly discernible from these documents, it will not be proper to seek external aid from the stereotyped Indemnity Bond which is not only collateral but also posterior in point of time to the con tract.
It will bear repetition that there is no conflict or inconsistency between Standard Condition 15 and the Special Conditions.
The terms and conditions of the contract, read as a whole, indubitably lead to the conclusion that the property in the materials procured or purchased by the Company, against the 90% value of which advance is taken from the Railway, does not before their use.
in the con struction of the wagons, pass to the Railway.
Reasons for arriving at this conclusion are as under: (i) Clause (a) of Special Condition 4 which pro vides for "On Account" payment upto, 90% of the ' value of steel and other raw materials procured by the firm (Compa ny) is to be read with Clause (b) which makes it clear that such 'On Account ' payment is a part of the "full contract price" "for each completed wagon".
(ii) Condition 5 while imposing restrictions as to.
the use and disposal of materials against which advance is taken, further gives a pre emptive right to the Govern ment to purchase all surplus or unserviceable materials from the Company on its "being paid such price as Government may fix with due regard to the condition of 'the material".
If the materials belonged to the Government or the Railway, no question of purchasing the same from the Company could arise.
No one can be a seller and purchaser of the same property at the same time.
(iii) Special Condition to provides in unequivo cal terms that no Sales Tax on materials including steel or components will be reimbursed by the Railway.
Board".
This condition postulates two things: First, that the Company becomes the owner of the materials by purchase and therefore, in that capacity becomes liable to the charge of Sales Tax which it cannot, because of this covenant to the contrary, pass on to the President/Railway Board.
Second, such steel and components are not the property of the Rail way.
They were not supplied by the President/Railway free of charge under Special Condition 6.
(iv) There is no condition or term in the contract that the material purchased, by the Company after drawing 'on account ' payment to the extent of 90% of the value of the material shall become the property of the Railway.
452 (v) Standard Condition 16 provides that if within twelve months after delivery, any "defect arises from inferiority of material or workmanship" the Company shall be liable to remedy the deffect, and to deduction of money due to it.
This Condition also presupposes that the inferior material used was not the property of the Railway but of the Company.
(vi) The stipulation in the Indemnity Bond making the Company responsible for safe custody and protection of the "Stores and articles" against all risks till they are duly delivered to the Railway, or as they may direct, nor the use of the words "of the Railway", therein, in our opinion, in the face of clear Conditions of the contract, is a ground to hold that the materials purchased by the Company construc tion of the wagons would become the property of the Railway immediately on advance of an amount equal to 90% of their value under Special Condition 4.
As rightly pointed out by the High Court the word 'of ' in the expression "Of the Railway" used in the Indemnity Bond in the context of "stores and articles" appears to have been loosely used.
Moreover these "stores and articles" might include the wheel sets and articles supplied by the Railway free of charge from its stores under Special Condi tion 6.
The expression Of the Railways ' might have been possibly used in the context of such components belonging to the Railway.
Furthermore, under Condition 5, in respect of all surplus material, the Railway had been given a right of preemption.
Even so much capital cannot be made out of the use of this loose expression in the Indemnity Bond, when the Conditions embodied in the contract docu ments read as a whole, clearly show that the property in the materials purchased by the Company with the assistance of the ' Railway/Government does not pass to the Railway.
The upshot of the above discussion is that with the exception of wheelsets (with axle boxes and coupleS), sub stantially all the raw materials required for the construc tion of the wagons before their use belong to the Company and not to the President/Railway Board.
In other words with the exception of a relatively small proportion of the compo nents supplied under Special Condition 6, the entire wagons including the material at the time of its completion for delivery is the property of the Company.
This means that the general test suggested by Pollock and Chalmers has been substantially albeit not absolutely satisfied so as to indicate that the contract in question was one for the sale of wagons for a price, the Company being the seller and the President/Railway Board being the buyer.
It is true that technically the entire wagon including all the material and components used in its construction cannot be said to be the sole property of the Company before its delivery to the Purchaser.
But as pointed out by Lord Halsbury in the above quoted passage from his renowned work neither the ownership of the materials nor the value of the skill and labour as compared with the value of the materials used in the manu facture is conclusive.
Nevertheless, if the bulk of the material used in the construction belongs to the manufactur er 453 who sells the end product for a price that will be a strong pointer to the conclusion that the contract is in substance one for the sale of goods and not one for work and labour.
Be that as it may Clause (1) of Standard Condition 15 dispels all doubt with regard to the nature of the contract.
This clause stipulates in unmistakable terms that as soon as a vehicle has been completed, the Company will get it examined by the Inspecting Officer and submit to the Pur chaser an 'On Account ' Bill for 90% of the value of the vehicle and within 14 days of the receipt of such bill together with a certificate of the Inspecting Officer, the Purchaser will pay 90% bill and on such payment, the vehicle in question will become the property of the Purchaser.
There could be no clearer expression of the intention of the contracting parties than this clause that the contract was, in substance, one for the sale of manufactured wagons by the Company for a stipulated price.
We would therefore affirm the finding of the High Court on this point.
The ratio of Hindustan Aeronautics (supra) is not ap plicable.
The present case has some special features which did not figure in Hindustan Aeronautics.
In that case from the terms and conditions the contract then under considera tion and the report of the Commercial Tax Officer, these facts appeared to be well established: (i) the material used in the construction of coaches before its use was the property of the Railway.
(ii) There was no possibility of any other material being used excepting which belonged to the President/Railway before its use in the construction of coaches purch.
This fact was borne out from the report of the Commercial Tax Officer.
(iii) Further in the contract in question in that case, there was no term corresponding to Clause (1) of Standard Condition 15.
This Court therefore found that the difference between the price of a coach and the cost of material could only be the cost of services rendered by the assessee.
Such is not the case here.
The bulk of the material used in the construction of the wagons, as already discussed above, in the instant case belongs to the Company before its use.
State of Gujarat (Commissioner of Sales, Tax, Ahmeda bad) vs M/s. Variety Body Builders (supra) cited by Shri Mehta, also is clearly distinguishable from the facts of the instant case.
There the bulk of the materials used in the construction of coaches was supplied by the Railway.
Even labour was supplied by the Railway.
The contractor mainly contributed his labour and skill to manufacture the end product, being the Railway Coaches, under the constant supervision and control of the Railway.
From the totality of the material terms and conditions in the agreement, in that case, it was 454 not possible to hold that the parties intended that the Contractor transferred the property in the coach to the Railway after its completion.
Reality of the transaction as a whole indicated that the contract was one for work and labour while in the instant case the converse is true.
The case before us is more in line with the decision of this Court in Patnaik and Company vs state of Orissa (supra).
The appellants therein had entered into an agree ment with the State of Orissa for the construction of bus bodies on the chassis supplied by the Governor.
The agreement provided inter alia that the appellants were responsible for the safe custody of the chassis from the date of their receipt from the Governor till their delivery and they had to insure their premises against fire, theft etc.
at their own cost.
The appellants had to construct the bus bodies in the most substantial and workmanlike manner, both as regards materials and otherwise in every respect in strict accordance with the specifications.
They had to guarantee the durability of the body for two years from the date of delivery.
It was also provided that all works under the contract should be open to inspection by the Controller or Officers authorised by him and such officers had the right to stop any work which had been executed badly or with materials of inferior quality and on receipt of a written order the appellants had to dismantle or replace such defective work or material at their own cost.
The Builders were entitled to 50% of the cost of the body build ing at the time of delivery and the rest one month thereaf ter.
The question before the Constitution Bench of this Court was whether on these facts, the contract was one for work or a contract for sale of goods.
This Court held (by majority) that the contract as a whole was a contract for sale of goods and therefore the appellants were liable to sales tax on the amounts received from the State of Orissa for the construction of the bus bodies.
In reach ing at this conclusion the Court paid due regard to the fact that under that contract the property in the bus body did not pass to the Government till the chassis with the bus body was delivered at the destination to be named by the Controller.
Till the delivery was made the busbody re mained the property of the builder.
This clinching circum stance also prominently figures in Standard Condition 15 in the instant case, also.
For the foregoing reasons, the appeal fails and is dismissed with costs.
P.H.P. Appeal dismissed.
| IN-Abs | The appellant and respondent No. 1 company entered into a contract for the manufacture and supply of wagons.
By the correspondence exchanged, the number of wagons to be supplied and the price of wagon of each type was ,indicated.
It was provided that the contract would be governed by the Standard Conditions in so far as they are not inconsist ent with the ' correspondence exchanged between the parties.
Under the Standard conditions, 90 per cent of the payment had to be made against the Company submitting the bill to the purchaser together with the completion certificate and on payment of such 90 per cent price the vehicle in question would become the property of the purchaser.
The balance of 10 per cent was to be treated as security for the due ful filment of the contract.
The balance was to be received on the receipt of certificate from the purchaser to the effect that the actual delivery of the vehicle was taken and that the delivery was made in due time.
One of the clauses provided that where any raw materials for the execution of the contract are procured with the assistance of the appel lant the company would hold the said materials as trustee for Government and use such materials economically and solely for the purpose .of the contract against which they are issued and not dispose them of without the permission of the Government and return, if required by the purchas er.
all surplus or unserviceable materials that might be left after the completion of the contract or its termination for any reason whatsoever on his being paid such price as Government might fix with due regard to the condition of the material.
Clause 10 further provided that if and when the State and inter State Sales Tax on the stock on order becomes payable under law such payments would be reimbursed by the Railway Board.
The Railway Board, however, is not to be made.
liable for the payment of Sates Tax paid under misapprehension of law.
No sales tax on materials including steel and components would be reimbursed by the Railway Board.
That the stores and articles shall be such as arc required for the execution of the contract and the advance made by the Railways is without prejudice to, the provisions of the contract and is subject to inspection and rejection of the stores.
That the said articles and materials shall at all times be open to inspection of any officer authorised by the Railways.
There are 3 categories of materials, the first category admittedly was the property of the Railways; the second category is the material procured by the Company against 90 per cent advance; and the third category was at all times material of the Company.
Para graph 3 of the letter exchanged between the parties fixed the period of delivery.
Pars 4 provided for doing the packing of axle boxes by the Railway for which no packing charges were to be recovered from the Company.
Section 2(0) of the Rajasthan Sales Tax Act, 1954 defines sale as any transfer of property in goods for cash or for deferred payment or for any other valuable consideration.
The appellant relied on the following circumstances: Under the Special Conditions read with the indemnity bond the property in the raw materials purchased by the Company for the construction of the 438 wagons passed to the Railway Board as soon as the latter advanced 90 per cent of the value of such material; which thereafter is held by the Company merely as an agent or trustee for the Board.
Condition No. 5 obligates the con tractor to hold "as trustee for Government" and raw materi als for the execution of the contract procured with the assistance of Government and further requires the contractor to use such materials economically and solely for the pur pose of the contract against which they are issued and not to dispose them of without the permission of the Government.
The Railway wagon at the time of its delivery had no indi vidual existence as the sole property of the Company.
The respondents contended that there was nothing in the Special Conditions which militates or is inconsistent with the Standard Condition No. 15.
The Special Conditions, read as a whole show that the raw materials purchased by the Company against 90 per cent of advance payment do not become the property of the Railway Board or the Union of India because under the express terms of the contract such advance payment is made towards the contract price of the wagons ' and not towards price of the materials.
Dismissing the appeal, HELD: (1) Transfer of property in goods for a price is the linch pin of the definition of 'sale '.
The difficulties in distinguishing between the contract of sale and work contract is an age old one.
It was much debated even by the Roman Jurists.
According to Pollock & Mulla, the test would be whether the thing to be delivered has any individual existence before delivery as the sole property of the party who is to deliver it.
If the answer is in the affirmative it is sale of the thing otherwise not.
Another rule is that if the main object of the contract is the transfer from A to B for a price of the property in a thing in which B had no previous property then the contract is a contract of sale.
According to Lord Halsbury, the distinction is often a fine one.
A contract of sale is a contract whose main object is the transfer of the property in and the delivery of the possession of a chattel as a chattel to the buyer.
Where the main object of work undertaken by the payee of the price is not the transfer of a chattel qua chattel the contract is one for work and labour.
The test is whether or not the work and labour bestowed and in anything that can properly become the work and labour bestowed and in anything that can properly become the subject of sale, neither the ownership of materials nor the value of the skill and labour as com pared with the value of the materials is conclusive, al though such matters may be taken into consideration in determining in the circumstances of a particular case wheth er the contract is in substance one for work and labour or one for the sale of a chattel.
[446 F H, 447 A D] (2) The question, whether a contract is one for sale of goods or for executing work or rendering services is largely one of fact depending upon the terms of the contract includ ing the nature of the obligations to be discharged thereun der and the surrounding circumstances.
In the present case the contract is expressly one for the manufacture and supply of wagons for a price.
Price has been fixed taking the wagon as a unit.
Payment of the price is made for each vehicle on its completion and delivery by the contrac tor to the purchaser who is described as the Union of India acting through the Railway Board.
The payment is made in two instalments; 90 per. cent of the value of the vehicle on completion against an On Account Bill together with the completion certificate and 10 per cent after delivery.
The real intention of the contracting parties is pri marily to be sought within the four corners of the docu ments containing Standard and Special Condition of the contract.
If such intention is deafly discernible from these documents it would not be proper to seek external aid from the stereo typed indemnity bond.
The terms and condi tions of the contract read as a whole undoubtedly lead to the conclusion that the property in the material procured or purchased by the Company against the 90 per cent value of which 439 advance is taken from the Railways, does not before their use in the construction of the wagons, pass to the Railways, for the following reasons: (a) On account payment upto 90 per cent is a part of the full contract price for each completed wagon; (b) Condition No. 5 while imposing restric tion as to the use and disposal of material against which advance is taken further gives a pre emptive right to the Government to pur chase all surplus or unserviceable materials from the company on its "being paid such price as Government may fix with due regard to the condition of material".
If the materi al belonged to the Government or the Rail ways, no question of purchasing the same from the Company could arise.
No one can be seller and purchaser of the same property at the same time.
(c) Condition No. 10 which provides that no sales tax on materials including steel and components will be reimbursed by the Railway Board clearly postulates that the Company becomes the owner of the materials by pur chase and, therefore, becomes liable to pay the sales tax.
There is no condition or term in the contract that the material purchased by the Company after drawing on Account pay ment to the extent of 90 per cent of the value of the material became the property of the Railways.
The conditions embodied in the contract read as a whole clearly show that the property in the material purchased by the company with the assistance of the Railway, does not pass to the Railway.
Thus, most of the raw materials required for the construc tion of the wagons belong to the Company and not to the Railway Board.
With the exception of a relatively small proportion of the compo nents, the entire wagon including the materi al, at the time of its completion for deliv ery, is the property of the Company.
Clause 15 stipulates in unmistakable terms that as soon as a vehicle has been completed the Company will get it examined by the Inspecting officer and submit to .the purchaser an On Account Bill for 90 per cent of the value of the vehicle.
This clearly shows that the contract was in substance one for the sale of manufactured wagons by the Company for the stipulated prices.
[441 G, 447 E F, 451 B H & 455 B C] M/s.
Hindustan Aeronautics Ltd. Bangalore Division vs The Commissioner of Commercial Taxes, Mysore ; and State of Gujarat (Commissioner of Sales Tax, Ahmeda bad) vs M/s. Variety Body Builders ; , distin guished.
Patnaik & Company vs State of Orissa [19651 16 STC 369 (SC), followed.
|
Civil Appeal No. 783 of 1972).
(Appeal by Special Leave from the Judgment and Order dated the 1st December 1969 of the Calcutta High Court in Civil Rule No. 1274 of 1974).
S.C. Majumdar and Mrs. Laxmi Arvind, for the appellant.
G.C. Sharma and P.L. Juneja, for the respondent.
The Judgment of the Court was delivered by BHAGWATI, J.
This appeal by special leave raises a short question of law as to the scope of granishee proceed ing under section 73, sub section (5) of the read with section 46(5A) of the Indian Income Tax Act, 1922.
A brief narration of the facts giving rise to the appeal would be sufficient to explain the back ground against which the question arises for determination in the appeal.
One Raj Bhupati Nath Dev Bahadur died on 23rd September, 1959 leaving considerable movable and immovable properties which included inter alia a building situate at No. 13, India Exchange Place, Calcutta.
Respondents Nos. 3 and 4 Claiming respectively to be the son and daughter of the deceased delivered to the Assistant Controller of Estate Duty an account in form ED 1 of the properties in respect of which, according to them, estate duty was payable on the death of the deceased.
The account was filed by respond ents Nos. 3 and 4 in their capacity as executors of the Will dated 20th December, 1957 said to have been made by the deceased prior to his death.
The Assistant Controller issued notice under section 58,sub section (2) to respond ents Nos. 3 and 4 as accountable persons and after hearing them, made:an order dated 23rd September, 1960 assessing the principal value of the estate of the deceased and determin ing a sum of Rs. 1,40,090.20 as the amount payable as estate duty.
It appears that the Assistant Controller was not able to recover the amount of estate duty from re spondents Nos. 3 and 4, since most of the estate of the deceased consisted of immovable ' properties which wore let out to different tenants ' and according to respondents Nos. 3 and 4, rent was not being paid to them by the tenants.
One of the immovable properties left by the deceased, namely, the building situate at No. 13, India Exchange Place CalcUtta was in the possession of the appellant.
According to the 493 appellant, it had been let out to him by nine persons who were the nephews and nieces of the deceased and who claimed to be the heirs of the deceased on the basis that the de ceased died without making any Will and did not leave any widow or son or daughter surviving him.
The lease given to the appellant by these nine persons, who may for the sake of convenience be hereinafter referred to as the lessors, was under a registered deed dated 5th March, 1960 and it was a lease for a period of thirty one years with effect from 1st March, 1960 carrying rent at the rate of Rs. 1,400/ per month.
Since the leased premises that is how we propose to describe the building leased to the appellant by the les sors admittedly belonged to the estate of the deceased, the rent payable by the appellant was a fortjori an amount which in law belonged to the estate and hence the Assistant Con troller issued a notice dated 9th January, 1962 to the appellant under section 73, sub section (5) of the read with section 46, sub section (5A) of the Indian Income Tax Act, 1922 (hereinafter referred to as the Act of 1922) pointing out that "a sum of Rs. 1,40,090.20 is due from Shri Tulsi Charan Deb and others on account of estate duty as accountable persons to the estate of late Rai Bhupati Nath Deb" and requiring him to pay forth with "any amount due from you to or, held by you, for, or on account of the said estate of Bhupati Nath Deb Bahadur" upto the amount of Rs. 1,40,090.20 as also "to pay money which may subsequently become due from you to them or which you may subsequently hold for or on account of them upto the amount of arrears still remaining unpaid, forthwith on the money becoming due or being held by you as aforesaid, as such payment is required to meet the amount duo by the accountable person in respect of arrears of estate duty".
It was stated in the notice that any payment made by the appellant in compliance with the request contained in the notice would in law be "deemed to have been made under the authority of the accountable person" and the receipt of the Assistant Controller "will constitute a good and sufficient discharge of his liability to the person to the extent of the amount referred to in the receipt".
The appellant, on receipt of the notice, paid the rent for the months of December, 1961 and January 1962 aggregating to Rs. 2,800/ to the Assistant Controller and informed the lessors about the same.
The lessors, by their attorney 's letter dated 24th February, 1962, however, contended that the notice issued by the Assistant Controller against the appellant was ineffec tual, since the lessors had not been assessed to estate duty by the Assistant Controller as accountable persons and the Assistant Controller was, therefore, not competent to require the appellant to pay to him the amount of rent which was due from the appellant to the lessors and moreover, the notice required the appellant to pay only such amount as was due from the appellant to respondents Nos. 3 and 4 as ac countable persons and since the amount of rent was due from the appellant to the lessors and not to respondents Nos. 3 and 4, the appellant was not liable to pay the amount of rent in respect of the leased premises to the Assistant Controller.
The appellant acting on this letter of the lessors ' attorneys did not pay any further rent to the Assistant Controller but paid rent for the months from February to May 1962 to the lessors.
No further payment of 5 502 SCI/77 494 rent was thereafter made by the appellant either to the Assistant Controller or to the lessors.
Since the appellant did not pay any rent to the Assistant Controller for the period subsequent to January 1962 in defiance of the notice dated 9th January, 1962, the Assistant Controller issued a notice dated 5th March, 1964 to the appellant requiring him to show cause why penalty in the sum of Rs. 10,000/ should not be levied for the default committed by him.
The appellant addressed a letter dated 13th March, 1964 pointing out that the accountable persons mentioned in the notice dated 9th January, 1962 were "Shri TuIsi Chandra and others", that is, respondents Nos. 3 and 4 and the appellant had no concern or connection with these account able persons nor was any amount due from him to them and hence the notice dated 9th January 1962 was misconceived.
The appellant also called upon the Assistant Controller to refund the sum of Rs. 2,800/ paid by him in respect of rent for the months of December 1961 and January 1962 on the ground that this payment had been made by him under a bona fide mistake of law.
This explanation furnished by the appellant was found unacceptable and the Assistant Control ler passed an order dated 25th March, 1964 holding that rent for the months commencing from March 1962 and ending with March 1964 aggregating to Rs. 35,000/ had been paid by the appellant to the lessors in contravention of the notice dated 9th January, 1962 issued against him and imposing a penalty of Rs. 3,000/ under section 73, subsection (5) of the read with section 46(1) of the Act of 1922 and requiring the appellant to pay up the amounts of Rs. 35,000/ and Rs. 3,000/ on or before 6th April, 1964.
The appellant thereupon filed a writ petition in the High Court challenging the validity of the proceedings adopted by the Assistant Controller under section 73(5) or the read with section 46(5A) of the Act ' of 1922 for recovery of the amount of estate duty from the appellant as also the legality of the Order dated 25th March 1964 impos ing penalty of Rs. 3,000/ on the appellant.
The High Court, by a judgment dated 1st December, 1969, rejected the writ petition and hence the present appeal by special leave obtained from this Court.
There are two questions which arise for determination in this appeal: first, whether the notice dated 9th January, 1962 issued by the Assistant Controller to the appellant was a valid notice under which the appellant was bound to pay the amount of rent in respect of the leased premises to the Assistant Controller, and secondly, even if the notice dated 9th January, 1962 was a valid notice and it obligated the appellant to DaY the amount of rent to the Assistant ControlLer, whether any penalty could be levied on the appellant for contravention of the terms of the notice.
The first question is not free from difficulty but the second is relatively simple and hence it would be convenient to begin first with a discussion of the second question.
Now, at the date when the notice dated 9th January 1962 was issued by the Assistant Controller the Act of 1922 was in force and hence the notice was issued under section 73, sub section (5) of the read with section 495 46(5A) of the Act of 1922.
Section 73, sub section (5) of the provides inter alia that the provisions of sub sections (1), (1A), (2), (3), (4), (5), (5A), (6) and (7) of section 46 of the Act of 1922 shall apply as if the said provisions were provisions of and referred to estate duty and sums im posed by way of penalty or interest under the instead of to income tax and sums imposed by way of penalty or interest under the Act of 1922 and to Control ler of Estate Duty instead of to Income Tax Officer.
Section 46 of the Act of 1922 lays down the mode and time of recovery of incometax and two sub sections of this section are material, namely, subsections (1) and (5A) which read as follows: "(1) When an assessee is in default in making a payment of income tax, the Income tax Officer may in his discretion direct that, in addition to the amount of the arrears, a sum not exceeding that amount shall be recovered from the assessee by way of penalty." and "(5A) The Income tax Officer may at any time or from time to time, by notice in writ ing (a copy of which shall be forwarded to the assessee at his last address known to the Income tax Officer) require any person from whom money is due or may become due to the assessee or any person who holds or may subse quentiy hold money for or on account of the assessee to pay to the Income tax Officer, either forthwith upon the money becoming due or being held or at or within the time speci fied in the notice (not being before the money becomes due or is held) so much of the money as is sufficient to pay the amount due by the taxpayer in respect of arrears of income tax and penalty or the whole of the money when it is equal to or less than that amount.
The Income tax Officer may at any time or from time to time amend or revoke any such notice or extend the time for making any payment in pursuance of the notice.
Any person making any payment in compliance with a notice under this sub section shall be deemed to have made the payment under the authority of the assessee and the receipt of the Income tax Officer shall constitute a good and sufficient discharge of the liability of such person to the assessee to the extent of the amount referred to in the re ceipt.
Any person discharging any liability to the assessee after receipt of the notice referred to in this sub section shall be personally liable to the Income tax Officer to the extent of the liability discharged or to the extent of the ability of the assessee for tax and penalties, whichever is less.
496 If the person to whom a notice under this sub section is sent fails to make payment in pursuance thereof to the Income tax Offi cer, further proceeding may be taken by and before the Collector on the footing that the Income tax Officer 's notice has the same effect as an attachment by the Collector in exercise of his powers under the proviso to sub section (2) of section 46.
Where a person to whom a notice under this subsection is sent objects to it on the ground that the sum demanded or any part thereof is not due to the assessee or that he does not hold any money for or on account of the assessee, then, nothing contained in this section shall be deemed to require such person to pay any such sum or part thereof, as the case may be, to the Income tax Officer."
The penalty under sub section (1) of section 46 can obviously be imposed on an assessee only when the assessee is in default in making payment of income tax and under section 45, the assessee would be deemed to be in default when he fails to pay the amount of income tax specified as payable in a notice of demand served, inter alia, under section 29 within the time mentioned in the notice of demand or if no time is so mentioned, then on or before the first day of the second month following the date of service of the notice of demand.
Thus, two conditions must be fulfilled before penalty can be imposed under section 46, sub section (1): one is that the person on whom penalty is sought to be imposed must be an assessee and the other is that the assessee must be in default within the meaning of section 45.
Where a garnishee is required by notice issued under sub section (5A) of section 46 to pay to the Income tax Officer so much of the money due or which may become due from the garnishee to the assessee or held or which may subsequently be held by the garnishee for or on account of the assessee, as is sufficient to pay the amount due by the tax payer in respect of the arrears of income tax, he does not become an assessee as defined in section 2, sub section (2).
That sub section defines an assessee to mean a person by whom income tax or any other sum of money is payable under the Act and the amount which the garnishee is required to pay to.
the Income Tax Officer in virtue of a notice under sub section (5A) of section 46 is not "income tax or any other sum of money payable under this Act".
The garni shee merely pays the amount which is due from him to the assessee and such payment is in discharge of the debt owned by him to the assessee.
It is not a payment the liability for which is created under any provision of the Act.
The garnishee is thus not an assessee within the meaning of the definition of that term in section 2, sub section (2) nor is there any provision in the Act which by a legal fiction makes him an assessee.
The Act also does not contain any provision that the garnishee who fails to comply with the notice issued under sub section (5A) of section 46 shall be deemed to be an assessee in default.
It is interesting to compare the provisions of the Act of 1922 with the corre sponding provisions of the Income tax Act, 1961 (hereinafter referred to as the Act of 1961).
Clause (x) of sub section (3) of section 497 226 of the Act of 1961 provides in clear and explicit terms that if the garnishee, to whom a notice under sub section (3) is sent, fails to make payment in pursuance thereof to the Income Tax Officer, he shall be deemed to be an asses see in default in respect of the amount specified in the notice.
But no such provision is to be found in the Act of 1922.
It is, therefore, obvious that no penalty can be imposed on a garnishee under sub section (1) of section 46, even if he fails to comply with the notice issued to him under subsection (5A) of section 46.
Now the scheme of collection and recovery of estate duty under the is substantially the same as that under the in come tax law.
Section 73, sub sections (1) and (2) of the correspond to section 45, sub section (1) of the Act of 1922.
These two sub sections provide that where any estate duty, penalty or interest is due in conse quence of any order passed under the Act, the Controller shall serve upon the person accountable or other person liable to pay such estate duty, penalty on interest, a notice of demand in the prescribed form specifying the sum and the time within which it shall be payable and any amount specified as payable in the notice of demand shall be paid within the time, at the place and to the person mentioned in the notice, or if no time is so mentioned, then on or before the first day of the second month following the date of service of the notice and any person accountable failing so to pay shall be deemed to be in default.
The also, therefore, contemplates issue of a notice of demand to the accountable person after an order of assess ment is made under the Act and it is only when the account able person fails to pay in accordance with the requisition contained in the notice of demand that he is to be deemed to be in default.
Section 73, subsection (5) then incorporates the provisions of sub sections (1), (1A) (2), (3), (4), (5), (5A), (6) and (7) of section 46 and makes them applicable for the purpose of collection and recovery of estate duty.
It must follow a fortiori that penalty can be imposed on a garnishee under section 73, sub section (5) of the read with section 46, sub section (1) of the Act of 1922 only if the garnishee can be said to be an accountable person in default.
But, for like reason as those discussed while dealing with the provisions of the Act of 1922, the garnishee cannot be regarded as an accountable person, since section 2, sub section (12A) defines 'account able person to mean the person accountable for estate duty within the meaning of the Act and the garnishee does not come within the category of persons specified in sections 53 and 54 as persons accountable for estate duty.
There is also no provision in the deeming a defaulting garnishee as an accountable person in default by a legal fiction.
It is therefore, difficult to see how an order imposing penalty could be passed against the appellant even if the notice dated 9th January, 1962 was a valid notice under which the appellant was bound to pay the amount of rent in respect of the leased premises to the Assistant Controller and be failed to do so.
The order dated 25th March 1964 imposing penalty of Rs. 3000/ on the appellant must therefore be held to be outside the Dower of the Assistant Controller under the and it must be quashed and set aside.
498 That takes us to the consideration of the first question as to the validity of the notice dated 9th January, 1962.
We have already referred to the relevant provisions of this notice, but it would be desirable to recapitulate them here.
The notice starts with the recital of the fact that a sum of Rs. 1,40,090.20 is due from respondents Nos. 3 and 4 on account of estate duty "as accountable persons to the estate of late Bhupati Nath Deb Bahadur".
This recital states very clearly that the amount of Rs. 1,40,090.20 is due on account of estate duty payable on the death of the deceased.
Then it goes on to require the appellant to pay to the Assistant Controller the amount which is due or may become due from him to the estate of the deceased or which is held or may subsequently be held by him for or on account of the estate of the deceased upto the amount of Rs. 1,40,090.20.
Here the amount which the appellant is called upon to pay to the Assistant Controller is the amount due or to become due to the estate of the deceased.
The purpose for which such amount is required to be paid is to meet "the amount due by the accountable person in respect of the arrears of estate duty" and the appellant is intimated that any payment made by him in compliance with the notice would in law be "deemed to have been made under the authority of the accountable person" and the receipt of the Assistant Controller would constitute good and sufficient discharge of the liability of the appellant "to the accountable person.
" The argument of the appellant was that the words "accountable person" here in the context meant respondents Nos. 3 and 4 and since the amount of rent was payable by him to the lessors and not to respondents Nos. 3 and 4, the notice was inoperative and did not obligate him to pay the amount of rent to the Assistant Controller.
This argument may, at first blush, appear a little attractive, but a close look at the scheme and rele vant provisions of the would be suffi cient to repel it.
The has been enacted in exercise of the legislative power conferred under Entry 87 of List 1 of Seventh Schedule to the Constitution and it provides for levy and collection of estate duty in respect of property.
The charge of estate duty is imposed by section 5 which provides that in the case of every person dying after the commencement of the Act, there shall be levied and paid upon the principal value of property, settled or not set tled which passes on the death of such person, a duty called "estate duty" at the rate fixed in accordance with sect;on 35.
What property shall be deemed to pass on the death of a person is laid down in sections 6 to 16 which occur under the heading "Property which is deemed to pass".
Sections 17 to 20A enacts special provisions relating to transfers to controlled companies and there are certain exceptions to the charge of estate duty enumerated in sections 21 to 33.
The aggregation of property and rates of estate duty are provid ed in sections 34 and 35.
The node of determination of the principal value of the property passing on the death of a person is dealt with in sections 36 to 43 and certain deduc tions and allowances to be made in determining the principal value of the estate are to be found in sections 44 to 50 B.
Then follow a catena of sections providing for collection of estate duty.
Section 53 lays down as to who shall be accountable for estate duty and what 499 shall be the duties and liabilities of such person and it reads as follows: "53 (1) Where any property passes on the death of the deceased (a) every legal representative to whom such property so passes for any beneficial interest in possession or in whom any interest in the property so passing is at any time vested, (b) every trustee, quardian, committee or other person in whom any interest in the property so passing or the management thereof is at any time vested, and (c) every person in whom any interest in the property 'so passing is vested in posses sion by alienation or other derivative title, shall be accountable for the whole of the estate duty on the property passing on the death but shall not be liable for any duty in excess of the as sets of the deceased which he actually received or which, but for his own neglect or default, he might have received: x x x x (3) Every person accountable for estate duty under this section shall, within six months of the death of the deceased, deliver to the Controller an account in the prescribed form and verified in the prescribed manner of all the properties in respect of which estate duty is payable: Provided that the Controller may extend the period of six months aforesaid on such terms which may include payment of interest as may be prescribed.
(4) Where the person accountable knows of any property which he has not included in his account because he does not know its amount or value, he may state that such property exists, but he does not know the amount or value thereof and that he under takes, as soon as the amount and value are ascertained to bring a supplementary account thereof and to pay both the duty for which he may be liable in respect of such property and any further duty payable by reason thereof for which he may be liable in respect of the property mentioned in the original account.
(5) Where two or more persons are accountable, whether in the same capacity or in different capacities, for estate duty in respect of any, property passing on the death of the deceased they shall be liable jointly and severally for the whole of the estate duty on the property of passing.
500 The words 'legal representative ' occurring in clause (a) of sub section (1) of section 53 are defined in section 2, sub,section (12) to mean: "a person who in law represents the estate of a deceased person, and includes (i) an executor, (ii) as regards any obligation under this Act, any person who takes possession of, or intermeddles with, the estate of a deceased person or any part thereof, and (iii) where the deceased was a coparcener of a Hindu family, the manager for the time being of the family;" Another expression which occurs in section 53 and other provisions of the Act is 'person accountable ' or 'account able person ' and that is defined under section 2, sub,sec tion (12A) to mean: "the person accountable for estate duty within the meaning of this Act, and includes every person in respect of whom any proceeding under this Act has been taken for the assessment of the principal value of the estate of the deceased :" The power to make provisional assessment in advance of regular aSsessment is conferred under section 57 which reads as follows: "57( 1 ) Estate duty shah be due from the date of the death of the deceased, and the Controller may, at any time after the receipt of account delivered under section 53 or section 56, proceed to make in a summary manner a provisional assessment of the estate duty payable by the person delivering the account on the basis of the account so deliv ered.
(2) Upon a provisional assessment being made under sub,section (1), the person so assessed shall pay to the Controller, or furnish security to the satisfaction of the Controller for the payment of, the estate duty, if any, payable on the provisional assessment, and the Controller shall thereupon grant him a certificate that such duty has been or will be paid or that none is due, as the case may be, in respect of the property mentioned in the certificate.
(3) After regular assessment has been made under section 58 any amount paid towards the provisional assessment made under sub section (1) shall be deemed to have been paid towards the regular assessment.
X X X X" Section 58 provides for the making of regular assessment and confers power on the Controller to assess the principal value of the estate of the deceased and to determine the amount payable as estate duty.
Then there are provisions relating to reopening of assessment, penalty for default or concealment and rectification of mistakes in the assessment.
Section 62 provides inter alia that any person ob jecting to any valuation made by the Controller, or to any order made by the Controller determining the estate duty payable under section 58 or section 59 or denying his li ability to the amount of estate duty payable in respect of any property, may within thirty days of the date of receipt of the notice of demand under section 73, appeal to the Appellate Controller and the Appellate Controller is given the power to dispose of the appeal.
Then a further appeal is provided to the Appellate Tribunal under section 63 followed by a reference to the High Court under section 64 and an appeal to the Supreme Court under section 65.
There are certain other provisions following on these sections which are not material for our purpose until we come to section 73 to which we have already referred.
The last section which is material is section 74 which provides that, subject to the provision of section 19, the estate duty payable in respect of property, movable or immovable, pass ing on the death of the deceased shall be a first charge on the immovable property so passing, in whomsoever it may vest on his death, after the debts and encumbrances allowable under Part VI of the Act.
This is broadly the scheme of the and it is in the light of this scheme that we have to determine the question which arises ' for consideration in this appeal.
It is clear from the resume of the provisions of the which we have given above that under sub section (3) of section 53 every person accountable for estate duty under sub section (1) of that section is liable to deliver to the Controller within six months of the death of the deceased an account of all properties in respect of which estate .duty is payable on the death of the deceased.
There may be and in many cases there would be more than one person accountable for estate duty under sub section (1) of section 53 and the obligation to deliver an account of all the properties in respect of which estate duty is payable would be on each of the persons so accountable.
But one out of several accountable persons may deliver an account to the Controller under sub section (3) of section 53 and that would be sufficient to empower the Controller to proceed under section 57, sub section (1) to make a provisional assessment of the estate duty payable by such accountable person on the basis of the account so delivered and when such provisional assessment is made, the accountable person "so assessed" would be liable under subsection (2) of sec tion 57 to pay to the Controller" the estate duty, if any, payable on such provisional assessment.
The amount of estate duty provisionally assessed would be payable only by the accountable person on whom the provisional assessment is made.
The Controller would thereafter be entitled under section 58 to make an order of regular assessment assessing the principal value of the estate of the deceased and deter mining the amount payable as estate duty.
When an order of assessment is made, not only the accountable person in respect of whom proceeding for assessment has been taken, but also every other accountable person would be liable to pay the amount of estate duty, limited of course to "the assets of the deceased which he actually received or which, but for his own negligence or default, he 502 might have received".
That is the plain effect of section 53, subsection (1) read with section 73, sub section (1).
It may be noticed that So far as the estate duty payable on provisional assessment is concerned, sub section (2) of section 57 provides that "the person so assessed" shall pay the amount of such estate duty to the Controller, but when we turn to sub section (1) of section 53 and section 73, sub section (1), we find that the words "the person so assessed" are absent in both these provisions and the li ability to pay the amount of estate duty due in consequence of an order of assessment made under the Act is on every "person accountable", irrespective whether assessment is made on him or not.
But here a question of some difficulty arises, namely, whether each of the accountable persons in subclauses (a), (b) and (c) in section 53, sub section (1) is accountable for estate duty on the entire property pass ing on the death of the deceased or only for the estate duty on the particular property falling within the respective sub clauses which passes on the death.
The difficulty is created on account of the words "the property passing on the death" appearing in the expression "the whole" of the estate duty on the property passing on the death" in sub section (1) of section 53 These words, according to their plain grammatical construction, would seem to indicate that every accountable person would be accountable for the estate duty on the entire property passing or deemed to pass on death of the deceased.
But it was argued on behalf of the appellant that having regard to the words "where any property passes" appearing in the opening part of the sub section coupled with the words "such property so passes" and "the property so passing" appearing in the respective sub clauses, the word 'the ' appearing before the words "property passing on the death" must again refer to the same property which is referred to in the respective sub clause ( 'a), (b) or (c), as the case may be.
This argu ment, plausible though it may seem, is not well founded, for it ignores one very important circumstance.
namely that each of the persons mentioned in sub clauses (a), (b) and (c) is rendered accountable for the whole of the estate duty not mereIy "on the property so passing" but on "the property passing on the death".
Where the legisla ture wanted to refer to the specific property passing on the death of the deceased, described in the opening part of the sub section, the legislature used the words "such property so passed" and "the property so passing" in sub clauses (a), (b) and (c), but while imposing accountability for the estate duty, the legislature made a deliberate departure and instead of the words "the property so passing", which were familiar coinage, it used the words "the property passing on the death".
This departure in phraseology is highly significant and clearly indicates that the legisla tive intent was that each of the persons mentioned in sub clauses (a), (b) and (c) should be accountable for the estate duty on the entire property passing On the death.
It was for this reason that the liability of each of these persons had to be limited to "the assets of the deceased which he actually received or which.
but for his own neglect or default, he might have received".
If the liability of each of these persons was only to the extent of the estate duty on the particular property falling within the respec tive sub clauses, there was no need for limiting it to the assets of the deceased which such per 503 son received or ought to have received.
The appellant, however, contended that if this construction of sub section (1) of section 53 were accepted, it would lead to conse quences which could hardly have been intended by the legis lature.
He pointed out by way of an example that a trustee of an insurance policy taken out by the deceased under the Married Women 's Property Act, 1874, which policy is exempt from payment of estate duty by reason of the total amount payable thereunder being Rs. 50,000/ or less, would become accountable and consequently liable to pay, out of the policy monies, the estate duty payable in respect of the free estate of the deceased to the extent of the whole of the policy monies in the hand of the trustee even though the Married Women 's Property Act expressly provides that the estate of the husband is not to have any interest in the policy monies.
It is not necessary for us to decide wheth er such an anomaly would arise or not, because the possibil ity that an anomaly may arise on a particular construction is only a factor to ' be taken into account by the court where two interpretations are possible, but where the mean ing of a statutory provision is plain, it cannot alter such meaning.
Moreover, it appears to us prima facie that no such anomaly would arise on the interpretation which we are inclined to accept, because it seems that though the trustee of the insurance policy would fall within sub, clause (b) and hence become accountable for the estate duty on the entire property passing on the death, he would not be li able.
to pay the estate duty out of the policy monies, since the estate of the deceased would have no interest in the policy monies and the policy monies would not from part of the estate of the deceased and his liability as an ac countable person would be limited only to the assets of the deceased which he has actually received or which he ought to have received. '
The appellant then relied on the language of subsection (53 of section 53 and pointed out that even that sub section refers to the point and several liability of an accountable person "in respect of any property passing on the death of the deceased", only to be extent of "whole of the estate duty on the property so passing" and urged that if under sub section (1) of section 53 every accountable person were to be accountable for the whole of the estate duty on the entire property passing or deemed to pass on the death of the deceased, sub section (5) would be rendered superfluous.
But we do not think this is a correct way of looking at sub section (5) because what this section does is merely to emphasise the principle of joint and several liability where two or more persons are accountable for estate duty in respect of any property passing on the death of the deceased, regardless whether they are so accountable in the same capacity or in different capacities.
It would be reading much more in sub,section (5) than what its lan guage warrants to say that this sub section is consistent only with an accountable person mentioned in sub clause (a), (b) or (c) of sub section (1) being accountable only in respect of estate duty on the particular property passing to him on the death of the deceased.
The object of sub section (5) is to provided that every accountable person shall be liable not only jointly with other accountable persons, but also severally, for estate duty in respect of any and every property passing on the death of the deceased.
Sub section (5) does not, therefore, in our opinion, mili tate against the construction which we are inclined 504 to place upon sub section (1).
In fact section 76 clearly postulates that an accountable person may have to pay estate duty in respect of a property not passing to him and pro vides for his indemnification in such a contingency by saying that if a person accountable under section 53 pays any part of the estate duty in respect of any property not passing to him, it shall, where occasion requires, be repaid to him by the trustees or owners of that property.
If an accountable person mentioned in sub clauses (a), (b) or (c) of sub section (1) were liable for estate duty only in respect of the particular property passing to him, there would be no need for such a provision as section 76, because in such an even there would be no question of payment by an accountable person of estate duty in respect of any property not passing to him.
The provision for indemnification enacted in section 76 clearly suggests that an accountable person being liable for estate duty on the entire property passing on 'the death may have to pay estate duty even in respect of a property not passing to him, but in such a case he would be entitled to be reimbursed by the trustees or owners of that property in respect of the amount of estate duty paid by him.
We are, therefore, of the view that on a proper construction of sub section (1) of section 53, read in the context of the other provisions of the Act, each of the persons mentioned in sub clauses (a), (b) and (c) would be accountable for the estate duty on the entire property passing_ on the death and his accountability qua the Revenue would not be limited only to the estate duty on the particu lar property passing to him.
Though we are taking his view as a matter of construction, we must point out that it would be very harsh indeed if the Revenue were to proceed only against one accountable person for recovery of the whole of the estate duty, leaving out others to whom some property or the other may have passed, because that would drive the accountable person who is required to pay the estate duty in respect of the property not passing to him, to adopt proceedings against the owner of that property for recovery of the amount of estate duty so paid by him and that would unnecessarily foster litigation, apart from causing hardship to the accountable person and involving him in considerable waste of time and money.
We think it would be desirable if the Estate Duty Officer himself apportions the estate duty amongst different accountable persons in accordance with their respective interests in the property and seeks to recover from each accountable person only that part of the estate duty which is payable in respect of the property passing to him.
We are told that this is the practice which is at present being followed by the Estate Duty Office and we hope and trust that the Estate Duty Officer will continue to follow the same practice even under the law as interpreted by us.
Now let us consider the position of the lessors in the light of the aforesaid discussion of the law.
The lessors are clearly accountable persons since they admittedly took possession of and intermeddled with the leased premises which formed part of the estate of the deceased and if their contention is correct and we must assume it to be so since that was the case of the appellant the leased premises passed to them 505 for beneficial interest in possession and in any event interest in the leased premises became vested in them on the death of the deceased.
The order of assessment made by the Assistant Controller was not challenged by the appellant in the writ petition nor was it at any time declared invalid by a superior authority at the ' instance of the lessons.
Not even any steps appear to have been taken by the lessors for the purpose of challenging the order of assessment.
The order of assessment must therefore, be taken to be valid for the purpose of the present proceedings.
The lessors were in the circumstances accountable for the whole of the estate duty on the entire property passing on the death of the deceased and hence they were liable to pay the estate duty of Rs. 1,40,090.20 limited of course to the extent of the leased premises which constituted the asset of the deceased received by them.
Since the rent of the leased premises was payable by the appellant to the lessons under the lease deed and the lessors were liable to pay the estate duty of Rs. 1,40,090.20, it was competent to the Assistant Controller to issue a notice under section 73, sub section (5) read with section 46, sub section (5A) of the Act of 1922 requiring the appellant to pay the amount of rent due and to become due in respect of the leased premises.
Now it is true that in the notice dated 9th January, 1962, the lessors were not mentioned as the persons to whom the amount of rent was due from the appellant in respect of the leased promises but that does not render the notice invalid or ineffective.
What the notice dated 9th January, 1962 in substance and effect required the appellant to do was to pay to the Assistant Controller the amount due or to become due from the appellant to the lessors in respect of the leased premises; that amount could rightly and legiti mately be described as amount due to the estate of the deceased so as to be covered by the terms of the notice and hence under the notice the appellant was liable to Pay the arrears of rent and the amount of future rent in respect of the leased premises to the Assistant Controller to the extent of Rs. 1,40,090.20.
The appellant in fact rightly understood his obligation under the notice dated 9th January 1962 and paid 2 months rent aggregating to Rs. 2,800/ to the Assistant Controller and it is only thereafter that he refused to make further payment of rent, presumably with a view to obliging the lessors.
This was clearly in breach of the requisition contained in the notice dated 9th Janu ary, 1962.
Before we Close, we must refer to .one other contention urged on behalf of the appellant, namely, that no notice of demand having been issued under section 73, sub section (1) to the lessors, the amount of estate duty, though due in consequence of the order of assessment made by the Assistant Controller, was not payable by the leasors and consequently no notice under section 73 sub section (5) read with sec tion 46, sub section (5A) of the Act of 1922 could be issued against the appellant requiring him to pay the amount of rent due from him to the lessors and the notice dated 9th January 1962 was accordingly invalid.
The Revenue put forward a two fold argument in reply to tiffs contention.
The first answer made by the Revenue was that this conten tion was at no time raised in ,he writ petition nor was it urged before the High Court and since it rested on a ques tion of fact as to 506 whether notice of demand under section 73, sub section (1) was served on the lessors before issuing the notice dated 9th January, 1962, it could not be allowed to be raised for the first time at the meaning of the appeal before us.
This answer, in our opinion, affords complete refutation to the contention of the appellant.
The question whether notice of demand was served on the lessors under section 73, subsection (1) before issue of the notice dated 9th January, 1962 is essentially a question of fact and if it has not been raised in the writ petition, nor argued before the High Court, it cannot be allowed to be agitated for the first time before this Court.
Secondly it was urged that in any event, notice under section 73, sub section (5) read with section 46, sub section (5A) of the Act of 1922 could be validly issued against a garnishee without service of notice of demand on the accountable person under sub section (1) of section 73 and hence the notice dated 9th January, 1962 could not be assailed as invalid of the ground that it was not preceded by a notice of demand on the lessors under section 73, sub section (1).
Suppose for this contention was sought to be drawn from the decision of this Court in Third Income Tax Officer, Mangalore vs M. Damodar Bhat.(1) Now, this was a decision given with reference to sub,section (3) of section 226 of the Act of 1961 which corresponds to section 46, sub section (5A) of the Act of 1922 The question which arose for determination was whether action under section (3) could be taken only where the assessee was in default and this Court held that in a proceeding under section 226, sub section (3) it was not necessary that the assessee should be in default or should be deemed to be in default.
This Court, speaking through Shah, J., pointed out: "Section 226, however, provides other methods of recovery and there is no reference in section 226 (3) to, any default on ,the part of the assessee.
Section 226(3) merely states that the Income tax Officer may, at any time or from time to time ', by notice in writing require any person who holds or may subsequently hold money for or on account of the assessee, to pay to the Income tax Officer either forthwith so much of the money as iS sufficient to pay the amount due by the assessee in respect of arrears or the whole of the money when it is equal to or less than that amount.
In a proceeding under section 226(3) of the new Act, therefore, it is not necessary that the assessee should be in default or should be deemed to be in default and no such condition or limitation is imposed by the lan guage of that sub section.
" If this decision lays down the correct law on the subject and since this is a decision given by a Bench of three judges of this Court, it must be regarded as binding upon us it must be held, while inter preting the corresponding provisions of sub sections (1), (2) and (5) of section 73 of the read with section 46, sub section (5A) of the Act of 1922 that, in order that proceeding may be validly taken against a garnishee under section 73 sub section (5) read with section 46, sub section (5A), it is not necessary that the account able person must be deemed to be in default and hence such garnishee proceeding need not be preceded by a notice of demand on the accountable person under sub section (13 of section 73.
We must, however, point out that we are taking this view because the decision in Third Income Tax Officer, Mangalore.
vs (1) 507 Damodar Bhat (supra) binds us, though we do feel that the view taken in this decision is not correct.
In the first place, the decision seems to have overlooked the fact that it is only when a notice of demand is served on the asses see under section 156 and the period for payment of tax mentioned in it expires that the tax becomes payable by the assessee and it is only then the Income tax Officer can proceed to recover it from the assessee.
The garnishee proceeding under section 226, subsection (3) is merely one of the modes of recovery prescribed by law.
and it is diffi cult to see how it can be resorted to before the tax has become payable by the assessee.
Secondly, sub section (3) of section 226 permits garnishee proceeding to be taken for recovery only of 'arrears ' and no tax be said to be in arrears until the expiry of the period for payment of tax specified in.
the notice of demand, and thirdly, the concept of recovery by any mode whatever before the expiry of the time allowed for payment of tax is foreign to the whole scheme of recovery both under the Act of 1961 and the Act of 1962 But, as we have pointed out, the decision in Third Income Tax Officer, Mangalore vs M. Damodar Bhat (supra) is binding upon us and it affords a complete answer to the contention of the appellant.
We must, in the circumstances, hold that the notice dated 9th January, 1962 was a valid notice and the appellant was bound to comply with it and to pay to the Assistant Controller the amount of rent due or to become due in respect of the leased premises.
We accordingly allow the appeal in part and issue a writ quashing and setting aside the order dated 25th March, 1964 in so far as it imposes penalty of Rs. 3,000/ on the appel lant, but so far as the notice dated 9th January, 1962 is concerned, we uphold its validity and reject the appeal.
There will be no order as to costs throughout.
S.R. Appeal partly allowed.
| IN-Abs | The appellant, a tenant in the building situate at No. 13 India Exchange Place, Calcutta and belonging to one Rai Bhupathi Nath Deb Bahadur who died on September 23, 1959, was inducted in as a tenant through a registered lease deed dated 5th March 1960 for a period of thirty one years effec tive from 18th March 1960 and on a monthly rent of Rs. 1,400/ by nine persons who claimed to be the nephews and nieces of the 'said Bhupathi Nath Deb.
Respondents Nos. 3 and 4 claiming respectively to be the son and daughter of the deceased Bhupathi Nath, in their capacity as executors of the will dated 20th November 1957 said to have been made by the deceased prior to his death filed an account in form No. ED 1, of the properties includ ing the building at 13 India Exchange Place, in respect of which, according to them estate duty was payable on the death of the deceased.
The Assistant Controller of Estate Duty, after assessing the principal value of the estate under section 58 of the Act determined a sum of Rs. 1,40,090/28 as the amount of duty payable by the accountable persons.
Being unable to recover the amount, the Assistant Controller of Estate Duty, in.
view of the fact that the rent payable by the appellant was a fortiorari an amount which in law belonged to the estate issued a notice to the appellant section 73(5) of the Act r/w section 46(5A) of the Income Tax Act, 1922, pointing out that "a sum of Rs. 1,40,090/20 is due from Tulsi Charan Deb and others on account of estate duty as accountable persons to the estate of late Rai Bhupathi Nath Deb" and requiring him to pay forthwith "any amount due from you to or, held by you.
or on account of the said estate of Bhupathi Nath Deb Bahadur" upto the amount of Rs. 1,40,090/20.
The appellant on receipt of the notice paid a sum of Rs. 2800/ being the rent for the months of December 1961 and January 1962.
From February 1962 to May 1962, the appellant paid the rent to his lessors on the strength of a notice dated 24th February 1962 from the lessor 's attorney to the effect that the Assistant Controller had no jurisdic tion to demand from the appellant the rent, 'since the lessors were not the accountable persons as they were not assessed to estate duty.
No further payment of rent, there fore was made either to the lessors or to Revenue; but instead the appellant preferred a claim for refund of Rs. 2800/ on the ground that this payment had been made by him under a bonafide mistake of law.
By his order dated 25th March 1964, the Assistant Controller, holding that the appellant had acted in contravention of the notice dated 9th January 1962 issued against him, imposed a penalty of Rs. 3000/ under section 73(5) of the r/w. section 46(1) and required the appellant to pay up the amounts of Rs. 35,000/ and Rs. 3,000/ on or before 6th April 1964.
The writ petition filed by the appellant challenging the said order was rejected by the Calcutta High Court.
AlloWing the appeal by special leave in part, the Court, HELD: (1) Two conditions must be fulfilled before penalty Can be imposed 46(1) of the Income Tax Act, 1922: one is that the person on whom penalty is sought to be impoSed must be an assessee and the other is that the assessee must be in default within the meaning of section 45.
Where a garnishee is required by notice issued under sub section (5A) of section 46 to pay to the Income Tax Officer so much of the money due or which may become due from the garnishee to the assessee or held or which may subsequentiy be held by the garnishee for or on account of the assessee, as. 'is sufficient to pay the amount due by the tax payer in respect of the arrears of income tax, he does not become an assessee as defined in section 2, sub seCtion (2).
The garnishee merely pays the amount which is due from him to the assessee and such pay ment is in discharge of the debt owed by him to the as assessee.
It is not a payment the liability for which is created under any provision of the Act.
There is no provi sion 490 in the Act which by a legal fiction makes him an assessee.
Unlike section 226 (3 )(x) of 1961 Act, there is no provision in the 1922 Act that the garnishee who fails to comply with the notice issued under sub section
(SA) of section 46 shall be deemed to be an assessee in default.
No penalty, therefore, can be imposed on a garnishee under sub section
(1) of section 46, even if he fails tO comply with the notice issued to him under sub section
5A of section 46.
[496 G H, 497 A] (2) Section 73, sub sections (1) and (2) of the correspond to section 45(1) of the 1922 Act deeming the accountable person to be in default only on his failure tO pay in accordance with the requisition contained in the notice.
Since section 73, sub section (5) by incorporating the provisions of sub7 sections (1), (IA), (2), (3), (4), (5), (5A), (6) and (7) of section 46 of the 1922 Act makes them ap plicable for the purpose of collection and recovery of estate duty, it must follow a fortiori that penalty can be imposed on a garnishee, under section 73, sub section (5) of the read with section 46, sub section (1) of the ACt of 1922 only, if the garnishee can be said to be an accountable person in default.
The garnishee cannot be regarded as an accountable person, since section 2, sub section (12A) defines 'accountable person ' to mean the person accountable for estate duty within the meaning of the Act and the garnishee does not come within the category of persons specified in sections 53 and 54 as persons ac countable for estate duty.
There is also no provision in the , deeming a defaulting garnishee as an accountable person in default by a legal fiction.
In the instant case the order .dated 25th March, 1964, imposing penalty of RS.
3,000/ On the appellant is outside the power of the Assistant Controller under the .
[497 B, D H] (3) The plain effect of section 53, sub section
(1) read with section 73, sub sec.
(1) is that .when an order of assessment is made not only the accountable person in respect of whom proceeding for assessment has been taken, but also every other accountable person as defined in section 2(2) and (12A) would be liable to pay the amount of estate duty, limited of course to the assets of the deceased which he ' actually received or which, But for his own negligence or default, he might have received.
[501 C.H, 502 A] (4) The words "the property passing on the death", appearing in the expression "the whole of the estate duty on the property passing on the death" in subsection (1) of section 53, according to their plain grammatical construction, indicate that every accountable person would be accountable for the estate duty on the entire property passing or deemed to pass on the death of the deceased.
[502 C D] (5) The argument that having regard to the words "where any property passes" appearing in the opening part of the sub section, coupled with the words "such property so passes and "the property so passing ', appearing in the respective sub clauses, the word the" appearing before the words "property passing on the death" must again refer to the same property which is referred to in the respective sub clauses (a), (b) or (c), as the case may be is not well founded, for it ignores one very important circumstance namely, that each of the persons mentioned in sub clauses (a), (,b) and (c) is rendered accountable for the whole of the estate duty not, merely "on the property so passing", but on "the property passing on the death ".
[502 D F] (6) Where the legislature wanted to refer to the specif ic property passing on the death of the deceased described in the opening,part of the sub section, the legislature used the words "such property so passes" and 'the property so passing" in the sub clauses (a), (b) and (c), but while imposing accountability for the estate duty, the legislature ,made a deliberate departure and instead of the words the property so passing", which were familiar coinage, it used the words "the property passing on the death".
This highly significant departure in phraseology Clearly indicates that the legislative intent was that each of the persons men tioned in sub clauses (a), (,b) and (c) should be account able for the estate duty on the entire property passing on the death.
It was for this reason that the liability of each of these persons had to be limited to the assets of the deceased Which he actually received or which, but for his own neglect or default he might have received".
If the liability.
of each of these persons was only to the extent of the estate duty On the particular property falling within the respective sub; clause, there Was need for limit ing it to the assets of the deceased which such person received or ought to have received.
[502 F H, 503 A] 491 (7) The possibility that an anomaly may arise is only a factor to be taken into account by the court where two interpretations are possible, but where the meaning of a statutory provision is plain, it cannot alter such meaning.
Though the trustee of an insurance policy taken out by the deceased under the Married Women 's Property Act, 1874 would fall within sub clause (b) and hence become accountable for the estate .duty on the entire property passing on the death, he would not be liable to pay the estate duty out Of the policy monies, since the estate of the deceased would have no interest in the policy monies and the policy monies would not form part Of.the estate of the deceased and his liability as an accountable person would be limited only to the assets of the deceased which he has actually received or which he ought to have received.
[503 C D] (8).
Sub section (5) of section 53 merely emphasises the principle of joint and several liability where two or more persons are accountable for estate duty.
in respect of any property passing on the death of the deceased, regardless whether they are so accountable in the same capacity or in different capacities.
It would be reading much more in sub section (5) than what its language warrants to say that this sub section is consistent only with an accountable. person mentioned in sub clause (a), (b) or (c) of sub section (1) being accountable only in respect of estate duty on the.
particular property passing to him on the death of the deceased.
(9) The object of sub section (5) of section 53 is to provide that every accountable person shall be liable not only jointly with other accountable persons, but also severally for estate duty in respect of any and every property passing on the death of the deceased.
On a proper construction of sub section (1) of section 53, read in the context of the other provisions Of the Act, each of the persons mentioned in sub clauses (a), (b) and (c) would be accountable for the estate duty on the entire property, passing on the death and his accountability qua the Revenue would_not be limited only to the estate duty on the particular property passing to him.
C D] (10) In the instant case, the lessors were clearly accountable persons since they admittedly took possession of and intermeddled with the leased premises which formed part of the estate of the deceased.
The order of assessment made by the Assistant Controller of Estate Duty was not challenged by the appellant in the writ petition, nor was it decared invalid by a superior authority at the instance of the lessors.
Not even any steps appear to have been taken by the lessors for the purpose of challenging the order of assessment.
The lessors were in the circumstances, account able for the whole of the estate duty on the entire property passing on the death of the deceased and hence they were liable to pay the estate duty of Rs. 1,40,0920/20 limited of course to the extent of the leased premises which consti tuted the asset of the deceased received by them.
[504 H, 505 A B] (11 ) Since the rent of the leased premises was payable by the appellant to the lessors under the lease deed and the lessors were liable to pay the estate duty of Rs. 1,40,090/20 it was competent tO the Assistant Controller to issue a notice under section 73.
sub section (5) read with section 46, sub section (SA) of the Act of 1922 requiring the appellant to pay the amount of rent due and to become due in respect of the leased premises.
[505 C D] (12) The notice dated 9th January 1962 was a valid notice and the appellant was bound to comply with it .and to pay to the Assistant Controller the amount of rent due or to become due in respect of the leased premises.
Non mentioning of the lessors in the notice as the persons to whom the amount of rent .was due from the appellant in respect of the leased premises does not render the notice invalid or inef fective.
What the notice dated 9th January 1962, in sub stance and effect required the appellant to do was to pay to the Assistant Controller, the amount due or to become due from the appellant to the lessors in respect of the leased premises; that amount could rightly and legitimately be described as amount due to the estate of the deceased so as to be covered by the terms of the notice.
[505 H, 507 D] (13) Questions of fact not raised in the writ petition nor argued before the High Court, cannot be allowed to be agi tated for the first time before this Court.
[506 B] 492 (14) In order that proceeding may be validly taken against a garnishee under section 73, sub section (5) read with section 46, sub section (5A), it is not necessary that the accountable person must be deemed to be in default and hence such garnishee proceeding need not be preceded by a notice of demand on the accountable person under sub section (1) of section 73.
[506 G H] Third Income Tax Officer, Mangalore vs
M. Damadar Bhat, , followed.
[Their Lordships expressed their opinion that the view taken in this decision was not correct for three reasons given by them.]
|
Appeal No. 2339 of 1968.
(Appeal by Special Leave fro.m the Judgment and Order dated the 27 3 1968 of the Allahabad High Court in Second Appeal No. 2352 of 1963).
G.N. Dikshit, and O.P. Rana, for the appellant.
E.C. Agrawala, for the respondent.
The Judgment of the Court was delivered by SHINGHAAL, J.
Respondent Nawab Hussain was a confirmed SUbInspector of Police in Uttar Pradesh.
An anonymous complaint was made against him and was investigated by Inspector Suraj Singh who submitted his report to the Super intendent of Police on February 25, 1954.
Two cases were registered against him under the Prevention of Corruption Act and the Penal Code.
They were also investigated by Inspector Suraj Singh, and the respondent was dismissed from service by an order of the Deputy Inspector General of Police dated December 20,1954.
He filed an appeal, but it was dismissed on April 17, 1956.
He; then filed a writ petition in the Allahabad High Court for quashing the disci plinary proceedings on the ground that he was not afforded a reasonable opportunity to meet the allegations against him and the action taken against him was mala fide.
It was dismissed on October 30, 1959, ' The respondent then filed a suit in the court of Civil Judge, Etah, on January 7, 1960, in which he challenged the order of his dismissal on the ground, inter alia, that he had been appointed by the Inspector General of Police and that the Deputy Inspector General of Police was not competent to.
dismiss him by virtue of the provisions of article 311 (1) of the Constitu tion.
The State of Uttar Pradesh traversed the claim in the. suit on several grounds, including ' the plea that the suit was barred by res judicata as "all the matters in issue in this case had been raised or ought to have been raised both 430 in the writ petition and special appeal.
" The trial court dismissed the suit on July 21, 1960, mainly on the ground that the Deputy Inspector General of Police would be deemed to be the plaintiffs appointing authority.
It however held that the suit was not barred by the principle of res judica ta.
The District Judge upheld the trial court 's judgment and dismissed the appeal on February 15, 1963.
The respond ent preferred a second appeal which has been allowed by the impugned judgment of the High Court dated March 27, 1968, and the suit has been decreed.
The appellant State of Uttar Pradesh has therefore come up in appeal to this Court by special leave.
The High Court has taken the view that the suit was not barred by the principle of constructive res judicata and that the respondent could not be dismissed by an order of the Deputy Inspector General of Police .as he had been appointed by the Inspector General of Police.
As we have reached the conclusion that the High Court committed an error of law in deciding the objection regarding the bar of res judicata, it will , not be necessary for us to examine the other point.
The principle of estoppel per rem judicatam is a rule of evidence.
As has been stated in Marginson vs Blackburn Borough council,(1) it may be said to be "the broader rule of evidence which prohibits the reassertion of a cause of action." This doctrine is based on two theories: (i) the finality and conclusiveness of judicial decisions for the final termination of disputes in the general interest of the community as a matter of public policy, and (ii) the inter est of the indidual that he should be protected from multi plication of litigation.
It therefore serves not only a public but also a private purpose by obstructing the reopen ing of matters which have once been adjudicated upon.
It is thus not permissible to obtain a second judgment for the same civil relief .on the same cause of action, for other wise the spirit of contentiousness may give rise to con flicting judgments of equal authority, lead to multiplicity of actions and bring the administration of justice into disrepute.
It is the cause of action which gives rise to an action, and that is why it is necessary for the courts to recognise that a cause of action which results in a judgment must lose its identity and vitality.
and merge in the judg ment when pronounced.
It cannot therefore survive the judgment, or give rise to another cause of action on the same facts.
This is what is known as the general principle of res iudicata.
But it may be that the same set of facts may give rise to two or more causes of action.
If in such a case a person is allowed to choose and sue upon one cause of action at one time and to reserve the other for subsequent litigation, that would aggravate the burden of litigation.
Courts have therefore treated such a course of action as an abuse of its process and Somervell L.J., has answered it as follows in Greenhalgh vs Mallard(2) . "I think that on the authorities to which I will refer it would be accurate to say that res judicata for this purpose is (1) at p. 437.
(2) at p, 257.
431 not confined to the issues which the court is actually asked to decide, but that it covers issues or facts which are so clearly part of the subject matter of the litigation and so clearly could; have been raised that it would be an abuse of the process of the court to allow a new proceeding to be started in re spect of them.
" This is therefore another and an equally necessary and efficacious aspect of the same principle, for it helps in raising the bar of res judicata ,by suitably construing the general principle of subduing a cantankerous litigant.
That is why this other rule has .sometimes been referred to as constructive res judicata which, in reality, is an aspect or amplification of the general principle.
These simple but efficacious rules of evidence have been recognised for long, and it will be enough to refer ' to this Courts decision in Gulabchand Chhotalal Parikh vs State of Bombay(1) for the genesis of the doctrine and its develop ment over the years culminating in the present section 11 of the Code of Civil Procedure, 1908.
The section, with its six explanations, covers almost the whole field, and has admirably served the purpose of the doctrine.
But it relates to suits and former suits, and has, in terms, no direct application to a petition for the issue of a high preroga tive writ.
The general principles of res judicata and ,constructive res judicata have however been acted upon in cases of renewed applications for a writ.
Reference in this connection may be made to Ex Parte Thompson(2).
There A.J. Stephens moved for a rule calling upon the authorities concerned to show cause why a mandamus should not issue.
He obtained a rule nisi, but it was discharged as it did not appear that there had been a demand and a refusal.
He applied again saying that there had been a demand and a refusal since then.
Lord Denman C.J., observed that is Stephens was making an application which had already 'been refused, on fresh materials, he could not have "the Same application repeated from time to time" as they had "often refused rules" on that ground.
The same view has been taken in England in respect of renewed petition for certiorari, quo warranto and prohibition, and, as we shall show, that is also the position in this country.
We find that the High Court in this case 'took note of the decisions this Court in L. Janakimma lyer and others vs
P. M. Nilakanta lyer and others(3), Devilal Modi vs Sales Tax Officer, Ratlam and others(4) and Gulabchand Chhotalal Parikh vs State of Bombay (supra) and reached the following conclusion : "On a consideration of the law as laid down by the Supreme Court in ,the above three eases I am inclined to.
agree with the alter native argument of Sri K.C. Saxena, learn (1) ; (2) 6 Q.B. 720.
(3) [1962] Supp. 1 S.C.R. 206.
(4) ; 432 ed counsel for the plaintiff appellant, that the law as declared by the Supreme Court in regard to the plea of res judicata barring a subsequent suit on the ground of dismissal of a. prior writ petition under Article 226 of the Constitution is that only that issue between the parties will be res judicata which was raised in the earlier writ petition and was decided.
by the High Court after contest.
Since no plea questioning the validity of the dismissal order based on the incompetence.
of the Deputy Inspector General of Police was raised in the earlier writ petition filed by the plaintiff in the High Court: under Article 226 of the Constitution and the parties were never at issue on it and the High Court never considered or ' decided it.
I think it is competent for the plaintiff to raise such a plea in the subsequent 'suit and bar of res judicata will not apply.
" We have gone through these cases.
Janakirama lyer 's was a case where the suit which was brought by defendants 1 to 6 was withdrawn during the pendency of the appeal in the High Court and was dismissed.
In the mean time a suit was filed 'in a representative capacity under Order 1 rule 8 C.P.C. One of the defences there was the plea of res judicata.
The suit was decreed.
Appeals were filed against the decree, but the High Court dismissed them on the ground that there was no bar of res judicata When the matter came to this Court it was "fairly conceded" that" in terms section 11 of the Code of Civil Procedure could not apply because the suit was filed by the creditors defendants 1 to 6 in their repre sentative character and was conducted as a representative suit, and it could not be said that defendants 1 to 6 who were plaintiffs in the earlier suit and the creditors who had brought the subsequent suit were the same parties or parties who claimed through each other.
It was accordingly held that where section 11 was thus inapplicable, ' it would not be permissible to rely upon the general doctrine of res judicata, as the only ground on which res judicata could be urged in a suit could be the provisions of section 11 and no other.
That was therefore quite a different case ' and the High Court failed to appreciate that it had no bearing on the present controversy.
The High Court then proceeded to consider this Court 's decisions in Devilal Modi 's case (supra) and Gulabchand 's case (supra).
Gulabchand 's was the later of these two cases.
The High Court has interpreted it to mean as follows : "It was held that the decision of the High Court on a writ petition under Article 226 on the merits on a matter after contest will operate as res judicata in a subse quent regular suit between the same parties with respect to the same matter.
As appears from the report the above was majority view of the Court and the question whether the principles of constructive res judicata can be invoked by a party to the subsequent suit on the ground that a matter which might or ought to have been raised in the earlier proceedings was left open.
The learned Judges took care to 433 observe that they made it clear that it was not necessary and they had not considered that the principles of constructive res judicata could be invoked by a party to the subse quent suit on the ground that a matter which might Or ought to have been raised in the earlier proceeding was not so raised therein.
" As we shall show, that was quite an erroneous view of the decision of this Court ,on the question of constructive res judicata.
It will help in appreciating the view of this Court correctly if we make a brief reference to the.
earli er ' decisions in Amalgamated Coalfields Ltd. and others vs Janapada Sabha, Chhindwara(1) and Amalgamated Coalfields Ltd. and another vs Janapada Sabha, Chhindwara,(2) which was also a case between the same parties.
In the first of these cases a writ petition was filed to challenge the coal tax on some grounds.
An ' effort was made to canvass an addi tional ground, but that was not allowed by this Court and the writ petitton was dismissed.
Another writ petition was filed to challenge the levy of the tax for the subsequent periods on grounds distinct and separate from those which were rejected by this Court.
The High Court held that the writ petition was barred by res judicata 'because: of the earlier decision of this Court.
The matter came up in appeal to this Court in the second case.
The question which directly arose for decision was whether the principle of constructive res judicata was applicable to petitions under articles 32 and 226 of the Constitution and it was an swered as follows, "It is significant that the attack against the validity of the notices in the present proceedings is based on grounds different and distinct from the grounds raised on the earlier occasion.
It is not as if the same ground which was urged on the earlier occasion is placed before the Court in another form.
The grounds now urged are entirely distinct, and so, the decision of the High Court can be upheld only if the principle of constructive res judicata can be said to apply to writ petitions filed under article 32 or article 226.
In our opinion, constructive res judica ta which is a special and artificial form of res judicata enacted by section 11 of the Civil Procedure Code should not generally be applied to writ petitions field under article 32 or article '226.
We would be reluctant to apply this principle to the present appeals all the more because we are dealing with cases where the impungned tax liability is for different years.
" It may thus appear that this Court rejected the application of the principle of constructive res judicata on the ground that it was a "special and artificial form of res judica ta" and should not generally be applied to writ petitions, .but the matter did not rest there.
It again arose for consideration in Devilal Modi 's case (supra).
Gajendragadkar, J. who had spoken for the court in the second case of Amalgamated Coalfields Ltd. spoke for the Court in that case also.
The (1) ; (2) [1963].
Supp. 1.
S.C.R. 172. 434 petitioner in that case was assessed to sales tax and filed a writ petition to challenge the assessment.
The petition was dismissed by the High Court and he came in appeal to this Court.
He sought to make some ' additional contentions in this Court, but was not permitted to do so. He.
there fore filed another writ petition in the High Court raising ,those ' additional contentions and challenged the order of assessment for the same year.
The High Court dismissed the petition on merits, and the case came up again to this Court in appeal.
The question which specifically arose for consid eration was whether the principle of constructive res judicata was applicable to writ petitions of that kind.
While observing that the rule of constructive res judicata was "in a sense a somewhat technical or artificial rule prescribed by the Code of Civil Procedure", this Court declared the law in the following terms, "This rule postulates that if a plea could have been taken by a party in a proc ceding between him and his opponent, he would not b0 permitted to take that plea against the same party in a subsequent proceeding which is based on the same cause of action; but basi cally, even this view is founded on the same considerations of public policy, because if the doctrine of constructive res judicata is not applied to writ proceedings, it would be open.
to the party to take one proceeding after another an urge new grounds every time; and that plainly is inconsistent with consid erations of public policy to which we have just referred.
" While taking that view, Gajendragadkar C.J., tried to ex plain earlier decision in Amalgamated Coalfields Ltd. vs Janapada Sabha, Chhindwara(1) and categorically held that the principle of constructive res judicata was applicable to writ petitions also.
As has been stated, that case was brought to the notice of the High Court, but its signifi cance appears to have been lost because of the decisions, in Janakirama Iyer and others vs
P.M. Nilakanta lyer (supra) and Gulabchand 's ease (supra).
We have made a reference to the decision in Janakirama Iyer 's case which has no bearing on the ' present controversy, and we may refer to the deci sion in Gulabchand 's case as well.
That was a case where the question which specifically arose for consideration was whether a decision of the High Court on merits.
on a certain matter after contest, in a writ petition under article 226 of the Constitution, operates as res judicata in a regular suit with respect to the same matter between the same par ties.
After a consideration of the earlier decisions in England and in this country, Raghubar Dayal J., who spoke for the majority of this Court, observed as follows, These decisions of the Privy Council well lay down that the provisions of section 11 C.P.C. are not exhaustive with respect to an earlier decision in a proceeding operating as res judicata in a subsequent suit with respect ,to the same matter inter parties, and do not preclude the.
application to regular suits of the general principles of res judicata based on public policy ' and applied .from ancient.
times.
" (1) [1963] Supp. 1 S.C.R. 172. 435 He made a reference to the decision in Daryao and others vs The State of U.P. and others(1) on the question of res judi cata and the decisions in Amalgamated Coalfields Ltd. and others vs Janapada Sabha, Chhindwara(2) and Devilal Modi 's case (supra) and summarised the decision of the Court as follows : "As a result of the above discussion, we are of opinion that the provisions of section 11 C.P.C. are not exhaustive with respect to an earlier decision operating as res judicata between the same parties on the same matter in controversy in a subsequent regular suit and that on the general principle of res judicata, any previous decision on a matter in contro versy, decided after full contest or after affording fair opportunity to the parties to prove their case by a Court competent to decide it, will operate as res judicata in a subsequent regular suit.
It is not necessary that the Court deciding the matter formerly be competent to decide the subsequent suit or that the former proceeding and the subsequent suit have the same subject matter.
The nature of the former proceeding is immaterial.
" He however went on to make the following further observa tion, "We may make it clear that it was not necessary, and we have not considered, wheth er the principles of constructive res judicata can be invoked by a party to the subsequent suit on the ground that a matter which might or ought to have been raised in the earlier proceeding was not so, raised therein.
" It was this other observation which led the High Court to take the view that the question whether the principle of constructive res judicata could be invoked by a party to a subsequent suit on the ground that a plea which might or ought to have been raised in the earlier proceeding but was not so raised therein, was left open.
That in turn led the High Court to the conclusion that the principle of construc tive res judicata could not be made applicable to a writ petition, and that was why it took the view that it was competent for the plaintiff in this case to.
raise an additional plea in the suit even though it was available to him in the writ petition which was filed by him earlier but was not taken.
As is obvious, the High Court went wrong in taking that view because the law in regard to the applicability of the principle of constructive res judicata having been clearly laid down in the decision in Devilal Modi 's case (supra), .it was not necessary to reiterate it in Gulabchand 's case (supra) as it did not arise for consid eration there.
The clarificatory observation of this Court in Gulabchand 's case (supra) was thus misunderstood by the High Court in observing that the matter had been "left open" ' by this Court.
It is not in controversy before us that the respondent did not raise the plea, in the writ petition which had been filed in the High Court, that by virtue of clause (1) of article 311 of the Constitution he (1) ; (2) [1963] Supp.
1 S.C.R.172 436 could not be dismissed by the Deputy Inspector General of Police as he had been appointed by the Inspector General of Police.
It is also not in controversy that that was an important plea which was within the knowledge of the re spondent and could well have been taken in the writ peti tion, but he contented himself by raising the other pleas that he was not afforded a reasonable opportunity to meet the Case against him in the departmental inquiry and that the action taken against him was mala fide.
It was there fore not permissible for him to challenge his dismissal, in the subsequent suit, on the other ground that 'he had been dismissed by an authority subordinate to that by which he was appointed.
That was clearly barred by the principle constructive res judicata and the High Court erred in taking a contrary view.
The appeal is allowed, the impugned judgment of the High 'Court dated March 27, 1968, is set aside and the respond ent 's suit is dismissed.
In the circumstances of the case, we direct that the parties shall pay and bear their own costs.
P.B.R. Appeal allowed.
436SCI/77 2500 12 10 77 GIPF.
| IN-Abs | In a writ petition filed under article 226 of the Constitu tion impugning his dismissal from service, the respondent contended that since he had not been given a reasonable opportunity of meeting the allegations against him, his dismissal was void.
writ petition was dismissed.
Thereupon, the respondent flied a suit in a civil court challenging his dismissal on the ground, among others, that since he had been appointed by the Inspector General of Po lice, his dismissal by the Deputy Inspector General of Police was wrong.
The State took the plea that the suit was barred by res judicata.
Dismissing the suit, the trial court held that it was not barred by res judicata.
The first appellate court dismissed the respondent 's appeal.
Purporting to follow a line of decisions of this Court, the High Court held that only that issue between the parties would be res judicata which was raised in the earlier writ petition and was decided by the High Court after contest and since in this case the respondent did not raise in the earlier writ petition the plea of competence of the Deputy Inspector General of Police to dismiss him.
the parties were never at issue on it and that the High Court never consid ered and decided this issue in the writ petition.
On the question of invoking the principle of constructive res judicata by a party to the subsequent suit on the ground that the matter might or ought to have been raised in the earlier proceedings, the High Court held that this question was left open by the Supreme Court in Gulabchand Chhotalal Parikh vs State of Bombay ; , and allowed the respondent 's appeal.
Allowing the States appeal to this Court.
HELD: The High Court was wrong in its view because the law in regard to the applicability of the principle of constructive res judicata having been clearly laid down in Devi Lal Modi vs Sales Tax Officer Ratlam and Others ; it was not necessary to reiterate it in Gulabchand 's case as it did not arise for consideration in that case.
The clarificatory observation in Gulabchand 's case was misunderstood by the High Court in observing that the matter had been left open by this Court.
The doctrine of res judicata is based on two theo ries: (i) the finality and conclusiveness of judicial deci sions for the final termination of disputes in the general interest of the community as a matter of public policy, and (ii) the interest of the individual that he should be pro tected from multiplication of litigation.
[430 D] 2.
(a) In certain cases, the same set of facts may give rise to two or more causes of action.
In such cases res judicata is not confined to the issues which the Court is actually asked to decide but covers issues or facts which are so clearly part of the subject matter of the litigation and so clearly could have been raised that it would be an abuse of the process of the court to allow a new proceeding to be started in respect of them.
This rule has sometimes been referred to as constructive res judicata which is an aspect or amplification of the general principle.
[431 A] (b) Section 11 of the Code of Civil Procedure, with its six explanations, covers almost the whole field, but the section has, in terms, no application to a petition for the issue of a high prerogative writ.
[431 D] (c) Although in the Amalgamated Coalfields Ltd. and others vs Janapada Sabha, ; this Court held that constructive res judicata being a special and artifi cial form of res judicata should not generally be applied to writ petitions, in Devilat Modi 's this Court held that if the doctrine of constructive 429 res judicata was not applied to writ proceedings, it would be open to a party to take one proceeding after another and urge new grounds every time, which was plainly inconsistent with considerations of public policy.
The principle of constructive res judicata was, therefore, held applicable to writ petitions as well.
[433 G & 434 D] 3.
The High Court missed the significance of these deci sions and relied upon L. Jankirama lyer and 'Others vs
P.M. Nilakanta lyer and Others [1962] Supp. 1 S.C.R. 206 which had no bearing on the controversy.
In Gulabchand 's case, this Court observed that it did not consider it necessary to examine whether the principle of constructive res judicata could be invoked by a party to the subsequent suit oft the ground that a matter which might or ought to have been raised in the earlier proceeding but was not so raised therein could be raised again relying on which the High COurt concluded that the question was left open by this Court.
This in turn led the High Court to hold that the principle of resjudicata could not be made applicable to a writ petition.
[435 E F] In the instant case, the respondent did not raise the plea that he could not be dismissed by the Deputy Inspector General of Police.
This was an important plea which was within his knowledge and could well have been taken in the writ petition.
Instead he raised the plea that he was not afforded a reasonable opportunity of meeting the case in the departmental inquiry.
It was therefore not permissible for him to take in the subsequent suit the plea that he had been dismissed by an authority subordinate to that by which he was appointed.
That was clearly barred by the principle of constructive res judicata and the High Court erred in taking a contrary view.
[436 A B]
|
ivil Appeals Nos.
1895 1896 1907 of 1974.
(From the Judgment and Decree dated the 14 10 1974 of the Madras High Court in Election Petitions Nos. 1 and 2 of 1974).
R. N. Choudhary and Mrs. V.D. Khanna, for the appellant in CAs 1896/74.
Y.S. Chitley, T.N.S. Srinivasavaradacharya & G. Ramas wamy, C. Lakshminarain, S.R.L. Narain and Vineet Kumar, for the appellant in CA 1907/74.
T.N.C. Srinivasavaradacharya, S.C. Lakshminarain, S.R.L.Narayan, M.S. Narasimahan, for respondent No. 10 in CA 1895, Resp.
No. 6 in CA 1896 and respondent No. 7 in CA 1907.
A. V. Rangam and Miss A. Subshashini, for respondent No. 1 in all the appeals and for respondent No. 2 in 1907.
J. M. Khanna, for respondent No. 8 in CAs.
1895 1896.
The Judgment of the Court was delivered by SARKARIA, J.
The basic facts giving rise to these appeals being common, the same will be disposed of under one judgment.
Notice calling for nominations to be filed before 3 P.M. 11 3 1974, for filling six vacancies to the Rajya Sabha from the State of Tamil Nadu in the biennial elections was issued on March 4, 1974, Eleven candidates filed their nominations.
On scrutiny which was held on March 12, 1974.
all those nominations were found to be valid.
On 541 14 3 1974, which was the last date fixed for withdrawal, three candidates withdrew their nominations leaving eight in the field.
The poll was held on 21 3 1974.
Counting of votes took place on the same date.
The result was published, according to which, the contesting candidates secured the votes noted against their names as follows: 1.
Shri Khadar Sha . 3500 2.
Shri Khaja Mohideen . 3700 3.
Shri V. Subrahmanyam . 300 4.
Shri C.D. Natarajan . 3500 5.
Shri R. Mohanarangam .
Nil 6 .Shri section Ranaganathan . 4100 7.
G. Lakshmanan . 3600 8.
D.C. John @ Valampuri John . 3700 The requisite quota to secure the election of a candidate was fixed at 22,400/(6+1) +1 =3201 and candidates mentioned at serial Nos. 1, 2, 4, 6, 7 and 8 were declared elected.
Two Election Petitions were filed by the unsuccessful candidates.
Election Petition 1 of 1974 was filed by Shri R. Mohan Rangam and Election Petition 2 of 1974 by Shri V. Subrahmanyam.
The petitioners prayed that the election of Shri D.C. John be declared void and set aside under section 100 of the Representation of the People Act, 1951.
Each of the petitioners claimed that in the event of Shri John 's elec tion being set aside, he be declared elected under section 101 of the Act.
In addition to the Returning Officer, the Elec toral Registration Officer and the Chief Election Commis sioner, all the seven contestants were impleaded as respond ents.
The election of Shri John was assailed on the ground that on March 9, 1974, the date of the scrutiny of his nomination, he was less than 30 years ' of age and as such, did not possess the qualification as to age laid down in Article 84(b) of.the Constitution.
On these premises it was pleaded that the nomination of Shri John was improperly accepted and in consequence thereof, the result of the election has been materially affected.
A recriminatory petition No. 1/74 under section 97 read with section 83 of the Act was also filed by Shri V. Subrahmanyam petitioner in E.P. 2/ 74, opposing Mohana Rangam 's relief for declaration under section 101.
The recriminator alleged that since the petitioner in E.P. 1/74 had not secured any vote, he.
in the event of the election of Shri John being set aside, was entitled to be declared elected in the place of Shri John.
The learned trial Judge of the High Court tried all the three petitions together and decided them by a common judg ment.
8 502SCI/77 542 The trial Court held that on the date of the scrutiny of his nomination, Shri John being less than 30 years of age, was not qualified under article 84(b) of the Constitution, to contest the election to the Rajya Sabha.
On this short ground his election was set aside and the Election Petitions were accepted pro tanto.
The trial Court, however,declined to grant the further declaration under section 101 in favour of either of the election petitioners.
Aggrieved by that judgment, Shri John, has filed in this Court Civil Appeals 1895 1896 of 1974, and Shri V. Subrah manyam Civil Appeal 1907 of 1974.
The first question that fails to be determined in these appeals is: Whether Shri John Was born on May 14, 1946, as has been found by the Court below, or on May 14, 1943 as contended by him ? Mr. Chowdhary appearing for the appellant (Shri John) contends that the burden of proving that Shri John, was at the material date below 30 years of age was on the elec tion petitioner and that the latter had failed to discharge such burden.
Further grievance of Shri Chowdhary is that the High Court had wrongly rejected the oral and docu mentary evidence produced by Shri John.
We find these contentions wholly devoid of merit.
While it is true that the onus of proving that on the date fixed for the scrutiny of nominations, Shri John was less than 30 yea.rs of age, was on the election petitioners, they had amply discharged this onus by bringing on record overwhelming documentary evidence of a cogent and convinc ing character.
This documentary evidence includes no less than a dozen previous admissions and declarations made by Shri John himself about his age, between March 1964 and July 1973.
These documents containing such declarations consti tuting Shri John 's admissions are: (i) exhibit
P.7 Application for Pre University Examination.
(ii) exhibit
P 9 Application for B.A. Examination.
(iii) exhibit P l4 Application for appearing in University Examination.
(iv) exhibit
P l5 Application for the first B.G.L. Examination.
(v) exhibit
P l7 Application for admission to B.G.L. Examina tion.
(vi) exhibit
P l8 Application for second B.G.L. Examination April 1972.
(vii) exhibit
P 19 Application for second BGL Examination, Octo ber 1972.
(viii) exhibit
P 21 Application for admission into Law Col lege.
(iv) exhibit 22 Application for B.L. Degree Examination.
543 (x) Ex.
P 23(a), (b) & (c) Applications dated 23 71973 for enrolment as Advocate submitted to the Bar Council.
(xi) Ex.
P 27 Voters Card containing declaration of his age as 28 years signed by Shri John.
(xii) exhibit
P 87 a Book written by Shri John, containing a passage on its page 18 suggesting the inference that Shri John was born in 1946.
All these documents aforesaid contain admissions made by Shri John that he was born in 1946.
In several of these documents he declared 14 5 1946 as his date of birth.
It is well settled that a party 's admission as defined in Sees.
17 to 20, fulfilling the requirements of Sec. 21, Evidence Act, is substantive evidence proprio vigore.
An admission, if clearly and unequivocally made, is the best evidence against the party making it and though not conclu sive, shifts the onus on to the maker on the principle that "what a party himself admits to be true may reasonably be presumed to be so" and until the presumption was rebutted the fact admitted must be taken to be established.
The above principle will apply with greater force in the instant case.
Here, there are a number of clear admissions in prior declarations precisely and deliberately made in solemn documents by Shri John.
These admissions were made ante litem motam during the decade preceding the election in question.
These admissions were entitled to great weight.
They had shifted the burden on the appellant (Shri John) to show that they were incorrect.
The appellant had miserably failed to show that these admissions were incor rect.
Apart from the evidence of these prior admissions the election petitioners had brought other documentary evidence, also, pointing to the conclusion that Shri John was born on 14 5 1946 and not 14 5 1943.
This evidence consisted of 1.
(a) Exhibit P 1 an entry in the records of St. Xavier 's College School, wherein the date of Shri John 's birth is recorded as 14 5 1946; (b) exhibit
P.3 which purports to have been signed by the guardian of Shri John, declar ing his age as 14 5 1946; (c) Ex.
P 2, the E.Ss.
L.C. signed by Rama Prabhu, the Secretary to the Commission for Government Examinations.
This Certificate was issued under the authority of law.
exhibit
P 4 Secondary School Leaving Certifi cate wherein Shri John 's date of birth is entered as 14 5 1946.
544 3.
exhibit
P 50, copy of the Fort St. George Gazette, dated 19 2 1964 showing Shri John 's date of birth as 14 5 1946.
(a)Ex.
P 5 the transfer certificate issued by the St. Xavier 's High School.
(b) exhibit
P 10 transfer certificate issued by the Principal of the College.
(c) exhibit
P 13 entry in the admission register of the College for joining the first year B.G.L. (d) exhibit
P 16 entry in the admission regis ter of the College, for admission to second year B.G.L. Class.
(e) exhibit P 10 entry in admission register of the College, 5.
Bar Council Records relating to exhibit 'P 23. 6.
Marriage Register, exhibit
P 29, containing in the column captioned "Age" as against the name of Shri John, the entry "26 years" and the date of his baptism as 19 10 1946.
Ex.P.30, Periodical report from the Church es regarding marriages solemnised therein, required under the , showing that Shri John 's marriage was solemnised in St. Francis Xavier 's Church ' Madras, on 6 4 1972 by Fr. G.K. Swami, and that on the date of this marriage he was 26 years of age.
Exhibits P11, P 11(a), P 12 and P l2(a) records T.E.L.C. Kabis High School showing Shri John 's date of birth as 14 6 1946.
9. Ex.p 28 Book Varalatril Kalaignar Writ ten by Shri John containing biographical sketch.
Therein, his date of birth is men tioned as 14 10 1946.
The petitioner had also examined witnesses who testi fied with regard to these documents and the facts appear ing therein.
The learned trial Judge has carefully dis cussed and evaluated this documentary and oral evidence.
No material error or illegality on the part of the learned Judge in appreciating this evidence has been pointed out.
The learned Judge found that the entries, Ex.P.29, in the Marriage Register are of great evidentiary value.
Mr. Chaudhury assails this finding.
According to him, no legal provision or rule of practice requires that the date of Baptism should be entered in such Register.
Secondly, it is urged that the date of baptism given therein is 19 10 1946, which stands falsified by the evidence of Rev. Fr. Rosario, the Parish Priest who had baptised Shri John about 7 days after his birth in 1943.
It is further argued that the best evidence as to Shri John 's date of birth could be that of the entry in the Public Birth Register maintained under authority of law and that the election petitioner on whom the onus lay, did not produce that evidence.
545 We find no substance in these contentions.
In the witness box both Shri John (RW. 1 ) and his eider brother (RW 3 )admitted their respective signatures on this entry (Ex.P. 29) in the Marriage Register.
They however, con tended that the information about the date of baptism was not supplied by them to the Priest who solemnised the mar riage and made this entry.
The eider brother (RW. 3) howev er, admitted that they had signed the Register, notwith standing the fact that the age of Shri John was mentioned therein as 26 years.
Both the brothers however, admitted that Shri John 's marriage was solemnised in St. Francis Xavier Church on 6 4 1972.
In view of the admissions of RWs 1 and 3, the High Court was right in holding that Ex.P.29 stood proved, and the entries therein were entitled to great weight.
As regards the Birth Register of 1946, the election petitioner made repeated attempts to get the same summoned and produced in Court.
The process issued by the Court was returned with the report that the Register of 1946 was untraceable.
Thereafter, a direction was issued by the Court to trace and produce it.
A search for this record was made by the record remained untraceable.
The Election Petitioner contended before the High Court that Shri John had by the exercise of his influence, prevented the produc tion of this record.
The High Court found this charge to be incorrect.
Nevertheless, it held that the Public Birth Register of 1946 had been lost long ago.
This being the case, the non production of the Birth Register of 1946, must be held to be a neutral circumstance.
The discrepancy pointed out by Shri Choudhury as to the date of the baptism of Shri John, takes us to the evidence produced by him.
Shri John brought on the record three documents, R1, R2 and R4.
R 1 is an extract from the Bap tism Register kept by the Ovari Tuticorin Diocese.
The document R 1 according to the High Court was induct ed in a questionable manner, without even an application for it.
This was issued by the Parish Priest, Peter Royan (RW 5), and purports to be a copy of an entry in the Baptism Register, which according to the admission wrung out from RW 5, had itself been re written and copied from the original.
The Parish Priest conceded that he had burnt the original because it was in a very bad condition.
The High Court found and we think rightly that this explanation of non production of the original was thoroughly unsatisfactory, and unbecoming of any Christian, more so, one connected with Church affairs, that by this 'unholy act ' of burning the register which was a violation of.
Canon 777, Paragraph 676, the witness (RW 5) had done great disservice to Christianity and greater disservice to the cause of truth".
Since R 1 was only a copy of a copy (R 4), the prepara tion of which was itself suspect and the explanation about the non production of the original was palpably unbelieva ble, these documents were rightly ruled out of evidence.
R.W. 2, Rev. Fr.
Rosario stated that he positively remembered that in the year 1943 when he was the Parish Priest, he had baptised Shri John.
The witness was an old man.
He had no Baptism Regis 546 ter or any other contemporaneous record to refresh his memory with regard to an event which took place more than a quarter of a century back.
He was deposing to a fact in issue merely from memory.
Human memory being fallible, it was hazardous to accept his ipse dixit.
The oral evidence of the witness could not be preferred to the entry in the Marriage Register, exhibit P 29, showing that Shri John on the date of his marriage, which took place in 1972, was 26 year old and had been baptised in 1946.
It is true that there is a slight discrepancy between the date of his baptism as entered in the Marriage Register and the date of his birth as admitted by him in the various applications he submitted for admission to various classes in College or for enrolment as an Advocate.
But there is no discrepancy with regard to the year of birth as well as baptism being 1946.
In exhibit
P. 29, the date of his baptism is entered as 19 10 1946.
The biodata appearing in the book exhibit
P.28, which, according to the publisher, RW 4, was entered by him on the basis of information derived from Shri John, gives his date of birth as 14 10 1946, while all the numerous public records, the declarations constituting the prior admissions of Shri John, produced in evidence by the Election Petitioner, consistent ly show Shri John 's date of birth as 24 5 1946.
We have been taken through the oral evidence rendered by Shri John (RW 1) and his eider brother (RW 3).
Their inter ested testimony makes interesting reading.
Shri John was asked in cross examination to state how he came to contest the Rajya Sabha elections ? He replied that, as usual, in his village Ovari, he was having a dis cussion with the members of his community to settle a dispute between owners of catamaran and mechanised boats.
A suggestion was made to him that he should contest an elec tion to Parliament as a representative of the fishermen community.
Shri John told them that ". an election to the Council of States is fast approaching and the only thing is I cannot enter the Rajya Sabha, because I have not complet ed the age of 30 years." Shri John was further questioned by the Counsel: "Then what happened ?" He replied: "My eldest brother was one among those who were assembled there.
He told me along with another elderly gentleman, whose name I am not able to recollect now: "What non sense are you talking? You have compleated 30 years positively." Moreover they told me in adition : We have to refer to the Registers kept in the Church ' ".
With this idea put into his head, the witness next morning along with his brother visited the village Church and met Rev. Fr.
Peter (R.W. 5) and asked for the Baptism Register relating to the witness.
Rev. Fr.
Peter took out the Register, exhibit R 4, and turned .the leaves, and to the surprise of the witness, he saw his date of birth noted therein as 14 5 1943.
Thereafter, Shri John approached the Chief 547 Electoral Officer, Madras, and made an application (Ex.P.23) on 26 2 1974 for correction and change of the date of his birth, as noted in the Electoral Roll, from '14 5 1946 ' to '14 5 1943 '.
His application was allowed and the entry in the Electoral Roll as to age wag amended accordingly on the 6th or 7th March 1974.
On further cross examination, Shri John frankly conceded that before seeing the Baptism Register in the second week of February 1974, he had all along been under the genuine impression that he was born on 14 5 1946.
It was only on seeing the Register that he came to believe that he was born in 1943.
It is to be remembered that this Baptism Register (R. 4) is the same, which was found by the High Court to be a suspicious record, prepared in suspicious circumstances, wholly unworthy of reliance.
3, the eider brother of Shri John also stated that when the elders of the village asked him to contest the election, he replied that he had not attained the proper age, i.e. "31 years" which was necessary to contest the election.
Immediately, the witness intervened: "What non sense you are talking ? You have attained the proper age . you must go and refer in the Church".
About their going to Priest Rev. Fr.
Peter Royan at the village Church and scrutinising the Baptism Register his version is more or less the same as of RW 1.
This witness, as already noticed, admitted that at the time of his broth er, Shri John 's marriage, he had also signed the entry, exhibit
P 29, in the Marriage Register on 6 4 1972.
He further conceded that in this entry exhibit P 29, the age of the bride groom, Shri John, was mentioned as 26 years.
He further conceded that in exhibit P. 29, the date of Shri John 's baptism is noted as 19 10 1946.
But the witness, wanted the Court to have it believed that he had signed this entry without looking into it.
This version was too incredible to be swallowed without demur.
The conclusion was inescapable that on 6 4 1972, Shri J.D. Mohan, RW 3, the eldest brother of Shri John, whose parents were dead, knew that the particulars of this entry.
showing his age to be 26 years on 6 4 1972, and the date of his baptism in 1946, were true.
That is why he and his brother John, without raising any objection, affixed their signatures thereto in token of its correctness.
We need not dilate on the question of Shri John 's age further.
All aspects of this issue have been discussed threadbare by the High Court.
Suffice it to say, that from the evidence on record it stood clearly established that on the date of the scrutiny of the nominations, Shri John was less than 30 years of are and in view of Article 84(b) of the Constitution he was not competent to contest the elec tion for the Rajya Sabha.
His nomination was therefore improperly accepted by the Returning Officer, and this improper acceptance has, in so far as it concerned the returned candidate, Shri John, materially affected the result of the election.
Shri John 's election was thus rightly set aside by the High Court.
Now we come to the second question, whether Shri V. Subramanyan, appellant in C.A. 1907 of 1974, is entitled to be declared elected in lieu of Shri John whose election has been set aside ? 548 Shri Ramaswami, learned Counsel for this appellant, has advanced alternative arguments.
It is submitted that since Shri Mohana Rangam did not secure any vote at all, he had ceased to be a continuing candidate and stood ' automatically excluded, leaving only Shri Subramanyam, sole continuing candidate in the field.
It is emphasised that Shri Rangam has not filed any recriminatory petition.
In this situa tion, it is maintained, Shri Subramanyam would be deemed to have been elected, although he had secured only 300 votes.
Reference in this connection has been made to Rule 81(2) of the Conduct of Election Rules, 1961.
The alternative argument of Shri Ramaswami is that since Shri John was not a qualified candidate, the votes cast in his favour have to be treated as thrown away, and even if both Shri Mohan Rangam and Shri Subramanyam are assumed to be continuing_ candidates, the surplus votes cast in favour of the five successful candidates had to be trans ferred and redistributed in favour of these continuing candidates.
It is urged that for this purpose the Court should send for and scrutinise the ballot papers for further counting.
Shri Ramaswami further pointed out that the observations of this Court in Viswanatha Reddy vs Konap pa Rudrappa Nadganda(1) to the effect, that the votes cast in favour of the disqualified candidate are to be treated as thrown away, are equally applicable to the elections for filling vacant seats in the Council of States, notwithstand ing the fact that these elections are held according to the system of proportional representation with a single trans ferable vote whereunder there is no question of obtaining majority of valid votes, but only the required quota.
In support of his contentions Shri Ramaswami has copi ously referred to the treatise, the Single Transferable Vote by K.V. Krishnaswamy Aiyar published in 1946, and the rele vant provisions of the Conduct of Election Rules, 1961 (for short, referred to as the Election Rules).
The provisions material for our purpose are contained.in Part VII of the Election Rules.
Shri K.V.
Krishnaswamy Aiyar m his book,The Single Transferable Vote (1946 Edn.) page 23, sums up the general principles of this mode of election, thus: "The single vote is transferable from one nominee to another and that takes place in two contingencies where there would otherwise be a wastage of votes.
They are: (1 ) when a candidate obtains more than what is required for his success and therefore has an unnecessary surplus; (2) When a candidate polls so few votes that he has absolutely no chance and therefore the votes nominating him are liable to be wasted." Relevant Rules in Part VII of the Election Rules are modulated on the principles enunciated by Shri Aiyar in the aforesaid book.
The (1) A.I.R. 1969 S.C. 604.
549 material provisions are contained in Rule 2(1)(c), 67, 70, 71, 73 to 81 and 85.
Under the scheme and system envisaged by these Election Rules, each elector has only one vote, irrespective of the number of seats to be filled.
But that single vote is transferable from one candidate to another.
The ballot paper bears the names of the candidates, and the elector marks on it his preferences for the candidates by denoting it with the figures 1, 2, 3, 4 and so on against the names chosen by him and this denotation is understood to be alter native in the order indicated (vide Aiyar 's The Single Transferable Vote), The figure 1 set by the elector opposite the name of a candidate means "first preference"; the figure 2 set opposite the name of a candidate, the "second prefer ence", and so on [Rule 71(ii)].
The minimum number of valid votes requisite to secure the return of a candidate at the election is called the quota.
At an election where only one seat is to be filled, every ballot paper is deemed to be of the value of 1 at each count, and the quota is determined by adding the values credit to all the candi dates, and dividing the total by 2, and adding 1 to the quotient, ignoring the remainder, if any, and the resulting number is the quota, vide, Rule 75 (1 ).
At an election where more than one seat is to be filled, every ballot paper is deemed of the value of 100 and the quota is determined by adding the values credited to all the candidates, and divid ing the total by a number which exceeds by 1 the number of vacancies to be filled, and adding 1 to the quotient ignor ing the remainder, if any, and the resulting number is the quota (Rule 76).
The computation in the preliminary process is as under: The returning officer first deals with the covers containing the postal ballot papers, and then opens the ballot boxes, counts the ballot papers and sorts out and rejects the ballot papers found invalid.
A ballot paper is deemed invalid on which (a) the figure 1 is not marked; or (b) the figure 1 is set opposite the name of more than one candidate or is so placed as to render it doubtful to which candidate it is intended to apply; or (c) the figure 1 and some other figures are set opposite the name of the same candi date; or (d) there is any mark or writing by which the elector can be identified (Rule 73).
After rejecting the invalid papers, the returning officer (a) arranges the remaining ballot papers in parcels accord ing to the first preference recorded for each candidate; (b) counts and records the number of papers in each parcel and the total number; and (c) credits to each candidate the value of the papers in his parcel.
He then determines the quota in accordance with Rule 75(1), or Rule 76, if the election is to fill one seat or more than one seat, as the case may be.
550 If (at any election held for filling more than one seat) at the end of any count or at the end of the transfer of any parcel or sub parcel of an excluded candidate the value of ballot papers credited to a candidate is equal to, or great er than the quota, that candidate shall be declared elected (Rule 78).
if at the end of any count the value of the ballot papers credited to a candidate is greater than the quota, the surplus is transferred in accordance with the provisions of Rule 79, to the continuing candidates indicat ed in the ballot papers of that candidate as being next in order of the electors ' preference [Sub Rule (1 ) of Rule79] "Surplus" means the number by which the value of the votes original and transferred, of any candidate exceed the quota [Sub rule (6) of Rule 71].
"Continuing candidate" means any candidate not elected and not excluded from the poll at any given time [Sub rule (1 ) of Rule 71].
If more than one candidate have a surplus, the largest surplus is dealt with first and the others in order of magnitude, but every sur plus arising on the first count is dealt with before those arising on the second count and so on.
Where there are more surpluses than one to distribute and two or more surpluses are equal, regard shall be had to the original votes of each candidate and the candidate for whom most original votes are recorded shall have his surplus first distributed; and if the values of their original votes are equal,.
the returning officer decides by lot which candidate shall have his sur plus first distributed.
[Sub rules (2) & (3) of Rule 78]. "Original Vote", in relation to any candidate, means a vote derived from a ballot paper on which a first preference is recorded, for such candidate.
If the surplus of any candidate to be transferred arises from original votes only, the returning officer shall exam ine all the papers in the parcel belonging to that candi date, divide the unexhausted papers into sub parcels accord ing to the next preferences recorded thereon and make a separate sub parcel of the exhausted papers [Clause (a) of sub rule (4) of Rule 78].
"Exhausted paper" means a ballot paper on which no further preference is recorded for a continuing candidate, provided that a paper shall be deemed to have become exhausted whenever (a) the names of two or more candidates, whether continuing or not, are marked with the same figure and are next in order of preference; or (b) the name of the candidate next in order of preference, whether continuing or not, is marked by a figure not falling consecutively after some other figure on the ballot paper or by two or more figures [Sub Rule (3) of Rule 71].
The Returning Officer has to ascertain the value of the papers in each sub parcel and of all the unexhausted papers.
If the value of the unexhausted papers is equal or less than the surplus, he shall transfer all the unexhausted papers at the value at which they were received by the candidate whose surplus is being transferred.
If the value of the unex hausted paVers is greater than the surplus, he shall trans fer the sub parcels of unexhausted papers and the value at which each paper shall be transferred shall be ascertained by dividing the surplus by the total number of unexhausted Papers [Sub Rule (4) of Rule 78].
Sub Rule (5) indicates the procedure where the surplus of any candidate to be transferred arises from transferred as well as orginal votes; All papers in the parcel or sub parcel of an elected candidate not tansferred under this rule have to set apart as finally dealt with [Sub Rule (7) of Rule 78].
551 Rule 80 speaks of exclusion of candidates lowest on the poll.
It reads: "80.
Exclusion of candidates lowest on the poll.
(1) If after all surpluses have been transferred as hereinbefore provided, the number of candidates elected is less than the required number,, the returning officer shall exclude from the poll the candidate lowest on the poll and shall distribute his unexhausted papers among the continuing candi dates according to the next preferences re corded thereon; and any exhausted papers shall be set apart as finally dealt with.
(2) The papers containing original votes of an excluded candidate shall first be trans ferred, the transfer value of each paper being one hundred.
(3 ) The papers containing transferred votes of an excluded candidate shall then be transferred in the order of the transfers in which, and at the value at which, he obtained them.
(4) Each of such transfers shall be deemed to be a separate transfer but not a separate count.
(5) If, as a result of the transfer of papers, the value of votes obtained by a candidate is equal to or greater than the quota, the count then proceeding shall be completed but no further papers shall be transferred to him.
(6) The process directed by this rule shall be repeated on the successive exclusion one after another of the candidates lowest on the poll until such vacancy is filled either by the election of a candidate with the quota or as hereinafter provided.
(7) If at any time it becomes necessary to exclude a candidate and two or more candi dates have the same value of votes and are the lowest on the poll, regard shall be had to the original votes of each candidate and the candidate for whom fewest original votes are recorded shall be excluded; and if the values of their original votes are equal the candi date with the smallest value at the earliest count at which these candidates had unequal values shall be excluded.
(8) If two or more candidates are lowest on the poll and each has the same value of votes at all counts the returning officer shall decide by lot which candidate shall be excluded.
" Rule 81 deals with the filling of the last vacancies.
It may also be extracted in full because a good deal of argument is founded on it.
It provides: "81.
Filling the last vacancies. (1) When at the end of any count the number of continuing candidates is reduced to the number of vacancies remaining unfilled, the continu ing candidates shall be declared elected.
552 (2) When at the end of any count only one vacancy remains unfilled and the value of the papers of some one candidate exceeds the total value of the papers of all the other continuing candidates together with any sur plus not transferred, that candidate shall be declared elected.
(3 ) When at the end of any count only one vacancy remains unfilled and there are only two continuing candidates and each of them has the same value of votes and no sur plus remains capable of transfer, the return ing officer shall decide by lot which of them shall be excluded; and after excluding him in the manner aforesaid, declare the other candi date.
to be elected.
" The stage is now set for dealing with the contentions canvassed before us.
The first question that falls to be considered is: Whether Shri Mohana Rangam, on account of his failure to secure any vote in the first count is to be treated as excluded from the poll ? In other words, had he ceased to be a 'continuing candidate ' within the contempla tion of the Election Rules ? We have already referred to the definition of 'Continuing Candidate ' in Rule 71(1).
The definition has two elements which must be satisfied before a candidate can be said to be a continuing candidate.
He should be a "candidate not elected" and further.
he must not have been excluded from the poll at any given time.
Shri Mohann Rangam fulfils both these conditions.
Shri Ramaswami however,, contended that this definition is to be interpreted and applied in the light of what has been said in Rules 74 and 81.
The argument is that an essential pre requisite to the continuance of a candidate is the allotment of a "basket" or "parcel" under Rule 74, and only such candidate is entitled to the allotment of a 'ba sket ' who at the end of the count, gets some vote to his credit and opens his account.
Since Shri Rangam proceeds the argument did not get any vote whatever, he stood auto matically excluded and no question of allotting any "parcel" to him arose.
The contention must be repelled.
There is nothing in Rule 74 or any other Rule which, at an election to fill more than one seat, requires or empowers the returning officer to exclude a candidate from the poll merely on the ground that in the counting of the first preferences, he has not secured any valid vote.
SubRule (3) of Rule 75, to which reference was made at one stage, has no application to the instant case.
That sub rule which requires the returning officer to exclude from the poll a candidate whose score is the lowest governs the counting of votes where only one seat is to be filled and at the end of any count, no candidate can be declared elected.
Such is not the case before us.
Rule 80 also can have no application because it comes into operation at a stage "after all sur pluses have been transferred".
That stage never arrived in the instant case because in the first counting itself, all the six seats were filled up, six candidates 553 (including Shri John) having secured the requisite quota of first preference votes.
Nor did the stage for applying Rule 81 arise, because at the end of the first count, no vacancy remained unfilled.
We therefore, repel the contention of the learned coun sel and hold that Shri Mohana Rangam did not get automati cally excluded.
Both he and Shri Subramanyan were 'contin uing candidates '.
Shri Subramanyan could not be declared elected as he had not obtained the required quota of 3,201 votes.
This takes us to the next question.
Should all the votes that had polled in favour of the candidate (Shri John) who has been found by the Court to be statutorily disquali fied for election,, be regarded as thrown away, and in consequence, the appellant, Shri Subramanyan, who secured 300 votes as against none obtained by Shri Mohana Rangam, be declared elected ? Again, the answer to this question, in our opinion, must be in tire negative.
It is nobody 's case that the electors who voted for Shri John, had at the time of election, knowl edge or notice of the statutory disqualification of this candidate.
On the contrary, they must have been under the impression that Shri John was a candidate whose nomination had been validly accepted by the returning officer.
Had the electors notice of Shri John 's disqualification, how many of them would have voted for him and how many for the other continuing candidates, including Sarv Shri Subramanyan and Mohan Rangam, and in what preferential order, remains a question in the realm of speculation and unpredictability.
In the view we take, we are fortified by the observa tions in this Court 's decision in R.M. Seshadri vs
G.V. Pai (1).
In that case, the election of R.M. Seshadri to the Madras Legislative Council was set aside on the ground that he was guilty of the corrupt practice of hiring or procuring motor vehicles to carry voters.
The total votes polled were 12,153.
Since the voting was by a single transferable vote, three out of the five candidates were eliminated at different counts with the result that their votes were transferred to the second candidate named in the ballot.
At the final count Seshadri received 5643 votes and his nearest rival, G.V. Pal received 5388 votes.
The number of the voters who were carried in the hired or procured vehicles could not be ascertained.
Before this Court, it was contended that the election of Seshadri having been set aside, G.V. Pai who had polled the next highest number of votes should be declared elected.
Hidayatullah C.J. speaking for the Court, rejected this contention with these observations: "This (question) will depend on our reaching the conclusion that but for the fact that voters were brought through this cor rupt practiee to the polling booths, the result of the election had been materially affected In a single transferable vote, it is very difficult to say how the voting would have gone; , , at page 701 554 because if all the votes which Seshadri had got, had gone to one of the other candidates who got eliminated at the earlier counts, those candidates would have won.
We cannot order a recount because those voters were not free from complicity.
It would 'be speculating to decide how many of the voters were brought to the polling booths in car.
We think that we are not in a position to declare Vasanta Pai as elected, because that would be merely a guess or surmise as to the nature of the voting which would have taken place if this corrupt practice had not been perpetrated.
" The position in the instant case is no better.
It is extremely difficult, if not impossible, to predicate what the voting pattern would have been if the electors knew at the time of election, that Shri John was not qualified to contest the election.
In any case, Shri Subramanyan.
was neither the sole continuing candidate, nor had he secured the requisite quota of votes.
He cannot therefore, be declared elected.
The dictum of this Court in Viswanatha vs Konappa (supra) does not advance the case of the appellant, Shri Subramanyan.
In that case, the election in question was not held according to the system of a single transferable vote.
There were only two candidates, in the field for a single seat, and one of them was under a statutory disqualifica tion, Shah J. (as he then was) speaking for the Court, held that the votes cast in favour of the disqualified candidate may be regarded as thrown away, even if the voters who had voted for him were unaware of the disqualification, and the candidate securing the next highest number of votes was declared elected.
The learned Judge was however careful enough to add: "This is not to say that where there are more than two candidates in the field for a single seat, and one alone is disquali fied, on proof of disqualification all the votes cast in his favour will be discard ed and the candidate securing the next highest number of votes will be declared elected.
In such a case, question of notice to the voters may assume, significance, for the voters may not, if aware of the disqualification, have voted for the disqualified candidate" The ratio decidendi of Viswanatha vs Konappa is applicable only where (a) there are two contesting candidates and one of them is disqualified,.
(b) and the election is on the basis of single non transferable vote.
Both these condi tions do not exist in the present case.
As already dis cussed, Shri Subramanyan appellant was not the sole surviv ing continuing candidate left in the field, after exclusion of the disqualified candidate, Shri John.
The election in question was not held by mode of single transferable vote according to which a simple majority of votes secured en sures the success of a candidate, but by proportional repre sentation with single transferable vote, under which system the success of a candidate normally depends on his securing the requisite quota.
555 However, the principle underlying the obiter in Viswanatha vs Konappa, which we have extracted, is.
applica ble to the instant case because here, after the exclusion of the disqualified candidate, two continuing candidates were left in the field.
| IN-Abs | In the biennial elections of 1974 for filling six vacancies to the Rajya Sabha from the State of Tamil Nadu, there were eight contestants, including both the appellants and one R. Mohanarangam, the petitioner in Election Petition No. 1 of 1974.
The requisite quota to secure the election of a candidate was fixed at (22400 +1)/6+1 +1 =3201 and the appellant John secured 3700 votes.
While the appellant Subrahmanyam secured 300 votes, Mohanarangam failed to secure any.
The rest of them secured more than the quota, thus leaving "surplus votes" for transfer within the mean ing of Rule 71 (6) of the Conduct of Election Rules.
In the election petitions filed by Mohanarangam and Subrahmanyam, the election of Sri John was assailed on the ground that on March 12, 1974, the date of the scrutiny of the nominations, he was less than 30 years of age and as such he did not possess the qualifications as to age laid down under article 84(b) of the Constitution that the improper acceptance of John 's nomination has materially affected the election.
The petitioners prayed that the election of Sri John be declared void and set aside under section 100 of the Representation of Peoples Act, 1951.
Each of the petition ers claimed that in the event of Sri John 's election being set aside, he be declared elected under section 101 of the Act.
A recrimination petition No. 1/74 under section 97 read with section 83 of the Representation of Peoples Act was also filed by the appellant Subramanyam, opposing Mohanarangam 's relief for the declaration under section 101 of the Act, alleging that since the petitioner Mohanarangam in E.P. 1/74 had not secured any vote, he, in the event of the election of Sri John being set aside, was not entitled to be declared elect ed in the place of John.
The trial Judge of the High Court held that on the date of the scrutiny of nominations Sri John being.less than 30 years of age was not qualified under article 84(b) of the Constitution to contest the election to,the Rajya Sabha and accepting the election petition pro tanto set aside John s election.
The trial Judge, however, declined t.o grant further declaration under section 101 in favour of either of the election petitioner.
Dismissing the appeals, the Court, HELD: (1) From the evidence on record it stood clearly established that on the date of the scrutiny of nominations Sri John was less than 30 years of age 539 and in view of article 84(b) of the Constitution he was not competent to contest the election for the Rajya Sabha.
His nomination was, therefore, improperly accepted by the Re turning Officer, and this improper acceptance has, in so far as ' it concerned the returned candidate, Sri John materially affected the result of the election.
[547 F G] (2) The onus of proving that on the date fixed for the scrutiny of nominations, a contestant was less than 30 years of age was on the election petitioners.
In the instant case, the petitioners had amply discharged this onus by bringing on record over whelming documentary evidence of a cogent and convincing character.
This documentary evidence includes no less than a dozen previous admissions and declarations made between March 1964 and July 1973 by Sri John himself about his age, to the effect that he was born in 1946 and that his date of birth was 14.5.1946.
Apart from the evidence of these prior admissions the election petitioners had brought other documentary evidence viz., the school record purport edly signed by John 's guardian, Secondary School Leaving Certificate 'and various other documents of the educational institutions, Marriage Register Bar Council Record and Church records etc.
pointing to the conclusion that Sri John was born on 14.5.1946 and not on 14 5 1943.
[542 D H, 543 A B F] (3) It is well settled that a party 's admission as de fined in sections 17 to 20 fulfilling the requirements of section 21, Evidence Act is substantive evidence proprio vigore.
An admission, if clearly and unequivocally made is the best evidence against the party making it and though not conclusive, shifts the onus on to the maker on the principle that "what a party himself admits to be true may reasonably be presumed to be so" and until the presump tion was rebutted the fact admitted must be taken to be established.
In the instant case, there are a number of clear admissions in prior declarations precisely and delib erately made in solemn documents by Shri John.
These admis sions were made ante litem motam during the decade preceding the election in question.
These admissions were entitled to great weight.
They had shifted the burden on the appellant (Shri John) to show that they were incorrect.
The appel lant had miserably failed to show that these admissions were incorrect.
[543 C E] (4) Under Rule 71(1) of the Conduct of Election Rules, 1961, "Continuing candidate" means any candidate not elected and not excluded from the poll at any given time.
Two elements must, therefore, be satisfied before a candidate can be said to be a Continuing candidate.
He should be a "candidate not elected" and further he must not be excluded from the poll at any given time.
In the instant case Sri Mohanarangam fulfils both these conditions.
[550 B, 552 C] (5) The contention that an essential prerequisite to the continuance of a candidate is the allotment of a "bas ket" or "parcel" under Rule 74 and only such candidate is entitled to the allotment of a basket who at the end of the count gets some vote to his credit and opens his account, and since Mohanarangam did not get any vote whatever he stood automatically excluded is not correct.
There is nothing in Rule 74 or any other Rule which, at an election to fill more than one seat, requires or empowers the Return ing Officer to exclude a candidate from the poll merely on the ground that in the counting of the first preferences, he has not received any valid vote.
[552 E H] (6) Sub Rule (3) of Rule 75 which requires the Return ing Officer to exclude from the poll a candidate.
whose score is the lowest governs the counting of votes where only one seat is to be filled and at the end of any count, no candidate can be declared elected.
Sub Rule (3) of Rule 75 has no application to the instant case.
[552 G] (7) Rule 80 can have n6 application because, it comes into operation at a stage "after all surpluses have been trans ferred.
That stage never arrived in the instant case because in the first counting.
itself all the six seats were filled up six candidates (including Shri John) having received the requisite quota of first preference votes.
Nor did the stage for applying Rule 81 arise, because at the end of the first count, no vacancy remained untitled.
In the instant case, shri Mohanarangam did not get automatically excluded.
Both he and Sri Subrahmanyam were continuing candidates.
Sri Subrahmanyam could not be declared elected as he had not obtained the required quota of 3201 votes.
[522 H; 553 A] 540 (8) The ratio decidendi of Viswanatha vs Konappa is applica ble only where, (a) there are two contesting candidates and one of them is disqualified (b) and the election is on the basis of single non transferable vote.
In the instant case the election in question was not held by mode of single non transferable vote according to which a simple majority of votes secured ensures the success candidate, but by proportional representation with single transferable yore under which system the success of a candidate normally depends on his securing the requisite quota.
Shri Subrah manyam was not the sole surviving continuing candidate left in the field, after exclusion of the disqualified candi date, Shri John.
[554 G H, 555 A] Wiswanatha vs Konappa AIR 1969 S.C. 604, distinguished.
All the votes that had polled in favour of Shri John who has been found by the court to be statutorily disqualified for election cannot be regarded as thrown away and in conse quence, the appellant Shri Subrahmanyam who secure 300 votes as against none obtained by Shri Mohanarangam cannot be declared elected.
Shri Subrahmanyam was neither the sole continuing candidate not had be secured the requisite quota of votes.
It is nobody 's case that the electors who voted for Shri John had at the time of election knowledge or notice of the statutory disqualification of this candidate.
On the contrary, they must have been under the impression that Shri John was a candidate whose nomination had been validly accepted by the Returning Officer.
Had the electors notice of Shri John 's disqualification, how many of them would have voted for him and how many for the other continu ing candidates including Sarvashri Subrahmanyam and Mohana rangam and in what preferential order, remains a question in the realm of speculation and unpredictability.
[553 B E] R.M.
Seshadri vs
G.V. Pai ; @ p. 701, fol lowed.
|
Civil Appeal No. 89 of 1975.
(From the Judgment and Order dated the 4th May 1973 of the Madras High Court in Tax Case No. 183 of 1967).
N.A. Palkhivala, R. Balasubramanian, LB.
Dadachanji, A.C. Moneses, Mrs. A.K. Verma, C.R. Dun, Ravinder Narain and O.C. Mathur, for the appellant.
R.M. Mehta, and R.N. Sachthey, for the respondent.
K.R. Ramamani and 1.
Ramamurthi, for the Intervener.
The Judgment of the Court was delivered by UNTWALIA, J.
This is an appeal by certificate from the decision of the Madras High Court in a Reference made by the Income tax Appellate Tribunal under section 66(1) of the Income Tax Act, 1922 hereinafter referred to as the Act.
M/s Carborandum Co. of the United States of America hereinafter called the American ' Company or the Assessee Company, is: the appellant.
The Central Board of Revenue has declared it a Company under section 2(5A) of the Act.
It has specialized in the manufacture of bonded abra sive and coated abrasive products.
For the improvement and advancement in the line of its manufacture, it has a Re search Wing also.
The results of the research are incorpo rated in pamphlets prepared from time to time.
The Assessee Company entered into an agreement dated June 22, 1955 with M/s Carborandum Universal Ltd. hereinaf ter called the Indian company, having its registered office at Madras.
As per the terms of the agreement the American Company was to render and did render to the Indian Company certain technical and know how services of the following nature : (i) furnishing of technical information and know how" with respect to the manufacture of bonded abrasive and coated abrasive products; (ii) providing technical management including factory design and lay out, plant and equipment production, purchase of. mate rials, manufacturing specifications and quali ty of product; 4 502 SCI/77 478 (iii) furnishing comprehensive technical information of all developments in the manu facture of the special products; (iv) providing the Indian company With a resident factory manager for starting the plant and superintending its operations during its initial production stages, as also other technical personnel necessary for the operation of the plant; (v) training Indian personnel to replace the foreign technical personnel as quickly as possible.
In lieu of all the services aforesaid, as per the agreement, the American company was to receive from the Indian company an annual service fee equal to 3 per centum on the net sale proceeds of the products manufactured by the latter each year.
During the year of account relevant to the assessment year 1957 58 the assessee company received a sum of Rs. 95,762/ from the Indian company as its service fee.
A good slab of it was deducted at source by the Indian company on account of income tax and super tax payable .on the said sum.
The American company filed a Return of income for the year in question with an application for refund of the entire tax deducted at source.
The Income tax Officer took the view in his assessment order that 5% of the technical fee paid to the American company was earned by it in India and Only that small amount was assessable to income tax.
Consequently, he directed the refund of a major portion of the tax deducted at source to the assessee company.
The Commissioner of Income tax in exercise of his power under section 338 of the Act revised the order of the Income tax Officer and took the view that at least 75 % of the techni cal fee earned by the assessee company during the year of account had accured or arisen in India.
In the main, the basis of his order was that even though the technical infor mation was supplied by the assessee company from outside India, the information received by the Indian company was put to use only in the taxable territory and the technical fee paid by it was mainly on account of such use.
The Commissioner was also of the view that the technical person nel furnished by the assessee company to the Indian company although worked under the control of and was paid for by the latter, the situs of the services so rendered was in India.
Treating the technical fee in the nature of royalty paid, it directed the Income tax Officer to revise the assessment on the basis that 75% of it should be taken as income accruing or arising in India to the assessee company.
The American company went up in appeal to the Appellate Tribunal from the revisional order of the Commissioner.
The Tribunal Set aside the said order and restored that of the Income tax Officer, even though it seems to be of the view that even 5% of the technical fee could not be taken as income of the assessee company taxable under the Act.
But since the assessee company had not gone .in appeal because of the smallness of the amount of tax payable on the basis of 5%, the Tribunal was obliged to maintain the order of the Income tax Officer.
479 The Tribunal took some new materials into consider ation at the appellate stage in order to ascertain the true nature of the service rendered by the American company to the Indian company as per the term of the agreement and the place of rendering such service.
The findings of the Tribu nal are: (1) The American company rendered service to the Indian company for the starting of the factory in India in the shape of exami nation of the factory design and lay out prepared by the latter and sending its advice by post.
These services were not proved to have been rendered in India.
(2) The pamphlets and bulletins incorporating the results of research made by the American company were also furnished to the Indian company by post and thus.
the said service was also rendered outside India.
(3) That the services of the .foreign technical personnel were made available to the Indian company by the American company outside the country.
The former employed such person nel in India on the basis of the various agreements of employment entered between the Indian company and such personnel.
They were the employees of the Indian company under its Control for their day today working.
(4) The training of the Indian per sonnel directly by the employees of the asses see company was imparted outside India.
The Tribunal did not agree with the views of the Commissioner that the payment of the teChniCal fee of 3% was dependent upon the use of the information in India or on the volume and extent of such use.
The use of the technical assistance and knowhow given by the American Company and made use of by the Indian Company in the taxable territory could not make the former liable to payment of income tax on the amount of technical fee received by it nor was it any royalty.
A new stand taken before the Tribunal on behalf of the Revenue that the assessee company must be deemed to be working in conjunction with the Indian company in the manufacture of the products in question was also rejected.
The Commissioner of Income tax the respondent in this appeal, asked for a reference and the Tribunal referred the following question of law for the opinion of the High Court: "Whether on the facts and in the circumstances of the case, the technical fee in excess of 5 per cent received by the asses see company from the Indian company during the account year relevant to the assessment year 1957 58 has accrued or arisen in India?" Before the High Court on behalf of the Revenue the point of conjunction between the American company and the Indian company in the manufacture of abrasive products was put in the fore front.
480 Finding this stand unsustainable in face of the agreement between the two companies and in absence of any other mate rial in support of it, the High Court rejected this stand outright.
It, however, felt persuaded to permit the Revenue to change its stand even at the reference stage and to urge that the agreement Clearly established a business connection between the two companies; the technical fee received by the assessee company had accrued or arose from such business connection and hence it was assessable to income tax under section 4(1 ) (c) read.
with section 42 of the Act.
The objection of the assessee company to the entertainment of the new point at the reference stage that it did not arise out of the Tribunal 's order was over ruled by the High Court on the ground that the question referred was in general terms and comprehensive enough to embrace within its ambit the point of applicability of section 42(1) of the Act to the 'transactions in question.1 Upholding this stand taken on behalf of the Revenue the High Court answered the ques tion referred to ' it in its favour and against the assessee company.
Hence this appeal.
Mr. N.A. Palkhivala, learned counsel for the appellant company urged the following four points in support of this appeal : (1) That the High Court could not go into the matter of business connection between the two companies when .such a question was never raised or in issue at any earlier stage.
(2) That the High Court was wrong in founding the tax liability of the assessee company on the basis of the alleged business connection.
Its finding or view in that regard is wholly erroneous.
(3) That even assuming that the High Court was right in its view of basing the tax li ability of the assessee company on the alleged business connection, it failed to examine the question of apportionment under section 42(3) of the Act.
(4) That apportionment under section 42(3) and determination of the tax liability of the assessee company in pursuance thereof could not be more than the liability to pay tax on 5% of the total technical fee as found by the Income tax Officer and upheld by the Tribunal.
Certain other companies have intervened in this appeal and some argument was advanced on their behalf too in sup port of the main argument of Mr. Palkhivala, Section 4(1) of the Act provides : "Subject to the provisions of this Act, the total income of any previous year of any person includes all income, profits and gains from whatever source derived which . . . . . . (c) if such person is not resident in the taxable territories during such year, accrue or arise or are deemed to.
accrue or arise to him in ' the taxable territories during such year :" 481 The income assessable to income tax, therefore, is of two kinds viz (i) accruing or arising in the taxable territories and (ii) deemed to accrue or arise to the non resident in the taxable territory.
The concept of actual accrual or arising of income in the taxable territories, although not dependent upon the receipt of the income in the taxable territories, is quite distinct and apart from the notion of deemed accrual or arising of the income.
The High Court does not appear to have kept this distinction inview and mixed the one with the other while deciding the reference in question.
Section 42 of the Act concerns itself with a deemed accrual or arising of the income within the taxable territories.
Under sub section (1) "All income, profits or gains accruing or arising, whether directly or indirectly, through or from any business connection in the taxable territories . . . shall be deemed to be income accruing or arising within the taxable territories, and where the person entitled to the income, profits or gains is not resident in the taxable territories, shall be chargeable to income tax either in his name or in the name of his agent, and in the latter case such agent shall be deemed to be, for all the purposes of this Act, the assessee in re spect of such income tax :" If the whole of the deemed income can be roped in for the levy of tax under section (1) of section 42, no question of any apportionment arises.
If not, sub section ( 3 ) is attracted.
It says.
"In the case of business of which all the operations are not carried out in the taxable territories, the profits.
and gains of the business deemed under this section to accrue or arise in the taxable territories shall be only such profits and gains as are reasonably attributable to that part of the operations carried out in the taxable territo ries.
" In Commissioner of Income Tax, Bombay vs Scindia Steam Navigation Co. Ltd.(1) it has been pointed out that when a question of law was neither raised before the Tribunal nor considered by it, it will not be a question arising out of its order notwithstanding that it may arise on the findings given by it.
In the instant case the question of law based upon the theory of business connection was neither raised before the Tribunal nor considered by it, nor did it arise on the findings of fact recorded by it.
The High Court, therefore, was wrong in entertaining this new point at the reference stage on the basis of the allegedly general and compendious nature of the question referred to it by the Tribunal.
But we do not propose to rest our judgment only on this technical aspect of the matter as we find that even on merits the assessee company has a good case to succeed before us.
The High Court agreed with the Tribunal that the techni cal information furnished by the assessee company by post was a.service which could not be said to have been rendered in India; putting it to use in India is not relevant as opined by the Commissioner.
But in regard to the fact of the foreign technicians having been l.employed by the (1)42 I.T.R. 589.
482 Indian company on payment of salary in India, it took the view that the service was rendered in India as foreign technicians were deputed by the assessee company.
In the opinion of the High Court it did amount to some activity or service in India.
Then the High Court proceeds to say:" Therefore, we are of the view that the assessee having rendered at least some services in India which amounts to a business activity the technical fee should be taken to have accrued through or from its business Connection in India.
" Even though, according to the High Court, the finding aforesaid was sufficient to rope in the entire receipts of the assessee company as income having accrued or arisen in India as a result of its business connection, it felt obliged to make the apportionment to the extent of 75% because of the apportionment so made by the Commissioner.
In our judgment the High Court went wrong in its approach to the question raised before it and did not quite correctly appreciate the scope and applicablity of section 42 of the Act.
On a plain, reading of sub sections (1) and (3) of section 42 it would appear that income accruing or arising from any business connection in the taxable territories even though the.
income may accrue or arise outside the taxable territories will be deemed to be income accruing or arising in such territory provided operations in connection with such business, either all or a part, are carried out in the faxable territories.
If all such opera tions are carried out in the taxable territories, sub sec tion (1 ) would apply and the entire income accruing or arising outside the taxable territories but as a result of the operations in connection with the business giving rise to the income would be deemed to accrue or arise in the taxable territories.
If, however, all the operations are not carried out in the taxable territories the profits and gains of the business deemed to accure or arise in the taxable territories shall be only such profits and gains as are reasonably attributable to that part of the operations carried out in the taxable territories.
Thus comes in the question of apportionment under sub section (3) of section 42.
In Commissioner of Income lax Punjab vs B.D. Aggarwal and Co. and another,(1) Shall J, as he then was, speaking for this Court said at page 24: "A business connection in section 42 involves a relation between a business carried on by a non resident which yields profits or gains and some activity in the taxable ferri tories which contributes directly or indirect ly to the earning of these profits or gains.
It predicates an element of continuity.
be tween the business of the non resident and the activity in the taxable territories: a stray or isolated transaction is normally not to be regarded as a business connection.
Business.
connection may take several forms: it may include carrying on a part of the main busi ness or activity incidental to the main busi ness of the non resident through an agent, or it may merely be a relation between the busi ness of the nonresident and the.
activity in the taxable territories, which facilitates or ' assists the carrying on of that business.
In each case the ' question whether there is a business connection (1) 483 from or through which income., profits or gains arise or accrue to non resident must be determined upon the facts and circumstances of the case.
" The learned Judge says further "A relation to be a "business connec tion" must be real and intimate, and through or from which income must accrue or arise whether directly or indirectly to the nonres ident.
But it must in all cases.
be remem bered that by section 42 income, profit or gain which accrues or arises to a non resident outside the taxable territories is sought to be brought within the net of the income tax law, and not income, profit or gain which accrues or arises or is deemed to accrue or arise within the taxable territories.
Income received or deemed to be received or accruing or arising or deemed to be accruing or arising within the taxable territories in the previous year is taxable by section 4(1) (a) and (c) of the Act, whether the person earning is a resident or non resident.
If the agent of a non resident receives that income or is enti tled to receive that income, it may be taxed in the hands of the agent by the machinery provision enacted in section 40 (2).
Income not taxable under section 4 of the Act of a non resident becomes taxable under section 42 (1 ) if there subsists a connection between the activity in the taxable territories and the business of the non resident, and if throug or from that connection income directly or indirectly arises.
" The High Court was wrong in its view that activities.
of the foreign personnel lent or deputed by the American compa ny amounted to business activity .carried on by that company in the taxable territory.
The finding of the Tribunal in that regard was specific and clear and was unassailable in the reference in question.
The American company has made the services of the foreign personnel available to the Indian company outside the taxable territory.
The latter took them as their employees, paid their salary and they worked under the direct control of the Indian company.
The service rendered by the American company in that connection was wholly and solely rendered in the foreign territory.
Even assuming, however, that there was any business connec tion between the earning of the income in the shape of the technical fee by the American company and the affairs of the Indian company, yet no part of the activity or operation could be said to have been carried on by the American compa ny in India.
And in absence of such a sustainable finding by the High Court the provision of section 42, either of sub section (1) or of sub section (3), were not attracted at all.
The judgment of the High Court under appeal reported in Commissioner of Income Tax, Madras J, vs Carborandum Compa ny(1) is not correct.
It has rightly been pointed out by the Bombay High Court in Commissioner of Income Tax Bombay City I vs Tara Chemicals Ltd.(2) with reference to the similar or almost ( 484 identical provisions in section 9(1) of the Income tax Act, 1961 that in order to rope in the income of a non resident under the deeming provision it must be shown by the Depart ment that some of the operations ,were carried out in India in respect of which the income is sought to be assessed.
The finding of fact recorded by the Tribunal being against the department in that connection the Bombay High Court refused to call for a reference.
For the reasons stated above we hold that on the facts and in the circumstances of the case the technical service fee received by the Assessee company from the Indian company during the accounting year relevant to the assessment year 1957 58 did not accrue or arise in India nor could it be deemed to have accrued or arisen in India.
But since 5 % of the technical service fee was brought to tax by the Income Tax Officer and no appeal was filed against it 'on behalf of the Assessee Company, we cannot interfere with.
the addition of this 5% but if must be held that the technical leo in excess of 5 % was not taxable.
We accordingly allow the appeal, set aside the judgment of the High Court and answer the question referred by .the Tribunal in favour of the assessee and against the Revenue.
The Commissioner will pay the costs of the appeal as also of the reference to the assessee.
S.R. Appeal allowed.
| IN-Abs | The appellant a foreign company within the meaning of section 2(5A) of Income Tax Act, entered into an agreement with M/s. Carborandum Universal Ltd., having its registered office at Madras on June 22, 1955 and rendered certain technical and knowhow services.
In view of the said serv ices it was to 'receive from the Indian company an annual service fee equal to 3 per centum of the net sale proceeds of the products manufactured by the latter.
During the year of account relevant to the assessment year 1957 58 the appellant company received a sum of Rs. 95,762/ from the Indian company as its service fee.
A good slab of it was deducted at source on account of incometax and super tax.
The appellant company fried its return of income for the year in question with an application for refund of the entire tax deducted at source.
The income tax officer took the view in his assessment order that 5% of the technical fee paid to the American company was earned by it in India and only that small amount was assessable to in come tax and directed the refund of major portion of the tax deducted at source to the assessee company.
The Commission er of Income tax in exercise of his revisional powers under section 33B of the Act took the view that at least 75% of the technical fee earned by the assessing company during the year of account had accrued or .arisen in India even though the technical information was supplied by the assessee company from outside India and the technical personnel furnished by the assessee company to the Indian company although worked under the control of and was paid for by the latter inasmuch as the situs of the services so rendered was in India.
Treating the technical fee in the nature of royalty paid, it directed the Income tax Officer to revise the assessment on the basis that 75% of it should be taken as income accruing or arising in India to the assessee company.
On appeal, the Appellate Tribunal set aside the said order and restored that of the Income tax Officer even though it was of the view that even 5% of the technical fee could not be taken as income of the assessee.
company taxa ble under the Act.
The Tribunal held that the use of the technical assistance and know how given by the American Company and made use of by the Indian Company in the taxable territory could not make the former liable to payment of income tax on the amount of technical fee received by it nor was it any royalty.
It also rejected a new stand taken by the Revenue that the assessee company must be deemed to be working in conjunction with the Indian Company in the manu facture of its products.
On reference under section 66( 1 ).
of the Act the Revenue.
took another new plea that the agree ment clearly established a business connection between the two companies and as such technical fee received by the assessee company had accrued or arose from such business connection assessable to income tax under section 4(1)(c) read with section 42 of the Act.
The objection of the assessee.
company to the entertainment of the new point at the refer ence stage that it did not arise out of the Tribunal 's order was over ruled by the High Court on the ground that the question referred to was in general terms and comprehensive enough to embrace within its ambit the point of applicabili ty of section 42(1) of the Act to the transactions in question.
Upholding the stand taken on behalf of the Revenue the High Court answered the question referred to it in its favour against the assessee company.
On appeal by certificate the appellant contended: 476 (1) That the High Court could not go into the matter of business connection between the two companies when such a question was never raised or in issue at any earlier stage; (2) That the High Court was wrong in rounding the tax liability of the assessee company on the basis of the alleged business connection.
Its finding or view in that regard is wholly erroneous.
(3) That even assuming that the High Court was right in its view of basing the tax li ability of the assessee company on the alleged business connection, it failed to examine the question of apportionment under section 42(3) of the Act.
(4) That apportionment under section 42(3) and determination of the tax liability of the assessee company in pursuance thereof could not be more than the liability to pay tax on 5% of the total technical fee as found by the Income taxOfficer and upheld by the Tribunal, HELD: (1) The technical service fee received by the assessee company from the Indian company during the accounting year relevant to the assessment year 1957 58 did not accrue or arise in India.
Since 5% of the technical service fee was brought to tax by the I.T.O. and no appeal was filed against it on behalf of the assessee company, the technical fee in excess of 5% was not taxable.
[484 B D] (2) The High Court did not keep in view the distinction between the concept of actual accrual and the notion of deemed accrual evidenced from section 4(1) (c) & section 42 but mixed the one with the other while answering the reference in question.
The income assessable to income tax section 4(1)(c) is of two kinds viz. (1) accruing or arising in the taxable territories and (ii) deemed to accrue or arise to the non resident in the taxable territory.
The concept of actual accrual or arising of income in the taxable territories, although not depending upon the receipt of the income in the taxable territories is quite distinct and apart from the notion of deemed accrual or arising of the income.
[481 A B].
(3) The High Court was wrong in entertaining at the reference stage on the basis of the alleged general and compendious nature of the question referred to it by the Tribunal the new point based upon the theory of business connection, which was neither raised before the Tribunal nor considered by it; nor did it arise on the findings of fact recorded by it.
[481 F G] Commissioner of Income Tax, Bombay vs Scindia Steam Navigation Co. Ltd. ; , followed.
(4) The High Court went wrong in its approach to the question raised before it and did not quite correctly appre ciate the scope and applicability of section 42 of the Act.
On a plain reading of sub sections (1) and (3) of section 42, it would appear that income accruing or arising from any busi ness connection in the taxable territories even though the income may accrue or arise outside the taxable territories will be deemed to be income accruing or arising in such territory, provided operations in connection with such business, either all or a part, are carried out in the taxable territory.
If all such operations are carried out in the taxable territory, sub section (1.) would apply and the entire income accruing or arising outside the taxable territory but as a result of the operations in connection with the business giving rise to the income would be deemed to accrue or arise in the taxable territories.
If, however, all the operations are not carried out in the taxable terri tories, the profits and gains of the business deemed to accrue or arise in the taxable territories shall be only such 'profits and gains are reasonably attributable to that part of the operations carried out in the taxable territo ries.
Thus comes in the question of apportionment under subsection (3) of section 42.
[482 C F] Commissioner of Income Tax, Punjab vs R.D. Aggarwal & Co. and Anr.56 ITR 20, referred to.
(5) In the instant case the High Court was wrong in its view that activities of the foreign personnel lent or deput ed by the American company amounted to a business activity carried on by that company in the taxable territory.
The service rendered by the American company in that connection was wholly and 477 solely rendered in the foreign territory.
No part of the activity or operation could be said to have been carried on by the American company in India, even if there was any business connection between the earning of the income in the shape of the technical fee by the American company and the affairs of the Indian company.
In the absence of such a sustainable finding, the provisions of section 42 either of sub section (1) or of sub section (3):were not attracted at all.
In order to rope in the income of a non resident under the deeming provision it must be shown by the Department that some of the operations were carried out in India in respect of which the income is sought to be assessed.
[483 E H] Commissioner of Income Tax, Madras I vs Carborandum Co. overruled.
C.I.T. Bombay City IV.
Tata Chemicals Ltd. , approved.
|
ivil Appeal No. 1011 of 1972.
Appeal by Special Leave from the Judgment and Order dated the 18th August, 1971 of the Punjab and Haryana High Court in Income Tax Reference No. 17 of 1971.
section T. Desai, (Mrs.) A.K. Verma and Shri Narain for the Appellant.
T.A. Ramachandran and R.N. Sachthey for Respondent.
The Judgment of the Court was delivered by BHAGWATI, J.
The short question that arises for determination in this appeal is whether certain commission paid by the assessee to two of its employees is an allowable expenditure in computing the profits of the assessee from business.
The assessee is a registered firm which at all material times consisted of five partners, namely, Chaman Lal, Madan Lal, Harbans Lal, Raj Mohan and Saheb Dayal representing a trust.
Chaman Lal was the son of Saheb Daval and Raj Mohan was the son of one Gurditta Mal.
During the accounting year relevant to the assessment year 1963 64, Chaman Lal and Harbans Lal had their own independent factories and hence they were not attending 531 to the business of the assessee and Raj Mohan too was not actively associated with the conduct of the business of the assessee as he was working with the Oriental Carpet Manu facturers India Pvt. Ltd. (hereinafter referred to as OCM).
Thus, from amongst the partners, only Madan Lal was looking after the day to day management of the business of the assessee and he was assisted by Saheb Dayal and Gurditta Mal who were engaged as employees of the assessee.
Saheb Dayal and Gurditta Mal were .looking after the busi ness of the assessee since a long time and they were each paid remuneration of Rs. 1000/per month.
The business of the assessee consisted of sole selling agency of OCM in respect of yarn, cloth and blankets manufactured by OCM and for the sales affected by the assessee as such sole selling agents, commission was paid to the assessee by OCM.
The figures show that the business of the assessee prospered from year to year from 1959 60 onwards and there was a gradual increase in the turnover of the assessee which jumped from the figure of Rs. 39.99 lacs for the assessment year 1962 63 to the figures of Rs. 54.28 lacs for the as sessment year 1963 64.
Since the assessee showed very satisfactory turnover from year to year, OCM started giving to the assessee, in addition to the usual commission, over riding commission at the rate of 21/2% on the sales affected by the assessee and the. over riding commission thus re ceived by the assessee during the previous years correspond ing to the assessment year 1960 61 to 1963 64 was as fol lows: Assessment year Amount Received 1960 61 Rs. 35,964/ 1961 62 Rs. 61,818/ 1962 63 Rs. 83,922/ 1963 64 Rs. 1,13,449/ Since the turnover of the sales reached the figure of Rs. 54.28 lacs and overriding commission increased to Rs. 1,13,449/ during the previous year corresponding to the assessment year 1963 64, the assessee decided to give to each of Saheb Dayal and Gurdita Mal, who were look ing after the business and were primarily responsible for the increased prosperity of the assessee, commission at the rate of 1/2% of the sales out of 21/2% overriding commis sion received from OCM and each of these two employees was accordingly paid by the assessee a sum of Rs. 22,690/ by way of commission.
The aggregate amount of commission paid to Saheb Dayal and Gurditta Mal thus came to Rs. 45,380/ and this amount of commission was claimed by the assessee as a deductible expenditure in its assessment to income tax for the assessment year 1963 64.
The Income Tax Officer, disallowed the claim of the assessee on the ground that there was no material produced by the assessee which would "prove the nature of services rendered by these two gentlemen in lieu of which the commission is claimed to have been paid" and there being no evidence to show that the increase in sales during the relevant accounting year was due to the efforts of Saheb Dayal and Gurditta Mal, the claim for deduction of the amount of commission as a business expenditure remained unproved.
The assessee appealed against the disallowance of the amount of commission but the Appellate Assistant Commis sioner in appeal affirmed the disallowance on the ground that no evidence had been 532 produced by the assessee to prove that the activities of Saheb Dayal and Gurditta Mal in the relevant account year were or a nature different from those in the earlier years or that they put in any extra time or energy,in the conduct of the business of the assessee so as to justify the payment of the commission and hence it could not be said that the commisson was paid for services rendered by them.
The matter was carried in further appeal before the Tribu nal, but the Tribunal also took the same view and held that since there was no proof to show that any services were rendered by Saheb Dayal and Gurudayal Mal for which payment of commission in addition to salary and bonus could be justified, commission could not be said to have been paid for services rendered so as to attract the applicability of section 36, subsection (1 ) clause (ii).
The Tribunal observed that it was not possible to say "that the increase in the turnover in the year under appeal was due to the extra efforts put in by these two employees or that the employees had worked in the hope of receiving extra commission" and since bonus equivalent to three months ' salary was paid to saheb Dayal and Gurditta Mal in addition to their salary during the relevant accounting year, any extra services rendered by them, if any, "should be deemed to have been covered by the payment of this bonus" Since in the view taken by the Tribunal it was necessary that there should be some extra services rendered by Saheb Dayal and Gurditta Mal for which payment of commission could be said to be justi fied and there was nothing to show that any such extra services were rendered by them, the Tribunal came to the conclusion that the payment of commission could not be said to be justified on grounds of commercial expediency and section 36, sub section (1), clause (ii) had no application.
The assessee being aggrieved by the order made b the tribu nal applied for a reference of the question of law arising out of the order of the Tribunal and on the application of the assessee, the following question of law was referred for the opinion of the High Court: "Whether on the facts and circum stances of the case the sum of Rs. 45,380/ paid to L. Gurandittamal and L. Sahebdiyal, employees of the applicant firm is permissi ble deduction in computing the business income of the applicant ?" The High Court answered the question in favour of the Revenue.
The view taken by the High Court was that in order to attract the applicability of section 36, sub section (1), clause (ii), it was necessary that the payment of commission should be for services rendered and since there was no evidence led on behalf of the assessee to show that any extra services were rendered by Saheb Dayal and Gurditta Mal, which were responsible for increase in the sales and consequent enlargement of the overriding commission, there was no justification for payment of commission to them and the commission paid could not be said to be for services rendered.
The High Court in this view held that section 36, sub section (1), clause (ii) was not applicable and no claim for deduction could be sustained under it.
The correctness of this decision is impinged in the present appeal preferred by the assessee with special leave obtained from this Court.
533 Now, before we proceed to consider, the question which arises for determination before us, we must make it clear at the out set that m the present case the genuineness of the payment of commission made to Saheb Dayal and Gurditta Mal was at no time doubted by the Revenue authorities.
It was not the ease of the Revenue that this payment was not made or that it was sham or bogus.
If that had been the finding, there would have been an end of the case of the assessee.
No question would then have arisen for considering the applica bility of section 36, sub section (1), clause (ii).
No payment having been made, no deduction would have been permissible.
But here the commission was paid: it was a genuine payment and the only question was whether it was deductible as an allowable expenditure under section 36, sub section (1), clause (ii).
Section 36, sub section (1) provides for making of various deductions in computing the income of an assessee under the head: "Profits and Gains of Business or Profession" and one such deduction is set out in clause (ii) which, as it stood at the material time during the assessment year 1963 64, read as follows: "36(1)(ii) Any sum paid to an employee as bonus or commission for services rendered, where such sum would not have been payable to him as profit or dividend if it had not been paid as bonus or commission: Provided that the amount of bonus or commission is reasonable with reference to (a) the pay of the employee and the condi tions of his service; (b) the profits of the business or profes sion for the previous year in question; and (c) the general practice in similar busi ness or profession.
" Saheb Dayal and Gurditta Mal were admittedly employees of the assessee.
They were each paid a salary of Rs. 1000/ per month and for the previous year relevant to the assess ment year 1963 64 bonus equivalent to three months ' salary was also paid to each of them.
The income Tax Officer disal lowed even this salary and bonus paid to Saheb Dayal and Gurditta Mal on the ground that there was nothing to show that any services were rendered by them and the payment of salary and bonus appeared to be ex gratia.
But this deci sion was reversed in appeal by the Appellate Assistant Commissioner who, following his earlier order dated 12th December, 1967 in the appeal against the assessment to tax for the assessment year 1962 63, allowed the payment of salary and bonus as a deductible expenditure.
The Appel late Assistant Commissioner c:early recognised that Saheb Dayal and Gurditta Mal were employees of the assessee and were attending to the business of the assessee as such employees since a long time and Gurditta Mal was in fact "a seasoned and experienced businessman" and he looked after the assessee 's transactions with OCM and on behalf of 'he assessee advised OCM in connection with designs etc.
The Tribunal also found that Saheb Dayal and Gurditta Mal 534 "were looking after the business of the assessee firm for a long time".
Thus, there can be no doubt that services were rendered by Saheb Dayal and Gurditta Mal to the asses see and for these services, besides Salary and bonus, com mission was paid to them, because, according to the asses see, during the relevant accounting year, there was consid erable enlargement in the turnover of the sales with consequent increase in the amount of overriding commis sion and the assessee felt, on grounds of commercial expediency, that a part of the overriding commission should be paid to the two employees who had worked so well and contributed to the prosperity of the assessee.
The question is whether this commission qualifies for deduction as an allowable expenditure under section 36, sub section (1), cause (ii).
The only ground on which the High Court negatived the ap plicability of section 36, sub section (1), clause (ii) was that during the relevant accounting year Saheb Dayal and Gurditta Mal rendered the same services which they were rendering in earlier years and no extra services were ren dered by them which could justify payment of commission in addition to salary and bonus.
The High Court appeared to take the view that there must be correlation between the payment of commission and the services rendered and since commission was paid by the assessee for the first time during the relevant accounting year, there must be some extra services rendered by Saheb Dayal and Gurditta Mal in that year over and above the usual services rendered by them in the earlier years.
Since, according to the High Court, there was no proof that any extra services were rendered by Saheb Dayal and Gurditta Mal, the High Court held that the payment of commission could not be said to be for services rendered within the meaning of section 36, sub section (1), clause (ii).
This view taken by the High Court is, in our opinion, plainly erroneous.
Section 36, sub section (1 ), clause (ii) does not postulate that there should be any extra services rendered by an employee before payment of commission to him can be justi fied as on allowable expenditure.
What it requires is only this, namely, that commission paid to an employee should be for services rendered by him.
For example, if an employ ee has not rendered any services at all during the relevant accounting year, no commission can be paid to him which would be an allowable expenditure.
There must be some services rendered by an employee and where commission is paid for the services so rendered, section 36 sub section (1), clause (ii) would apply and the commission to the extent to which it is found reasonable would be an allowable expenditure under that provision.
It is not necessary that the commission should be paid under a contractual obligation.
It may be purely voluntary.
But it must be for services rendered and here services were in fact rendered by Saheb Dayal and Gurditta Mal during the relevant accounting year.
It is true that the services rendered by these two employees during the relevant accounting year were in no way greater or more onerous than the services ren dered by them in the earlier years, but that is immaterial.
There is no such requirement and the argument based on it cannot be sustained.
It is not justified by the language of section 36 sub section (1), clause (ii) and indeed, if it were pushed to its logical extreme, it would be difficult to support even payment of bonus as a permissible deduction under that provision.
Of course the circumstance that no additional services are rendered 535 by an employee would undoubtedly be of some relevance in determining the reasonableness of the amount of commission but it would have to be considered along with other circum stances and the question whether commercial expediency justified the payment of commission would have to be judged in the light of all the circumstances existing at the mate rial time.
This was the view taken by the Gujarat High Court in Laxmandas Sejram vs Commissioner of Income Tax, Gujarat, (1) and we wholly accept that view.
It is, therefore, no answer to the applicability of section 36, sub section (1), clause (ii) to say that no extra services were rendered by Saheb Dayal and Gurditta Mal during the relevant accounting year.
The amount of commission having been paid for services admittedly rendered by them, the only question would be whether it was reasonable under section 36, sub section (1), clause (ii).
Turning to the provisions of section 36, sub section (1), clause (ii), we find that the proviso to that clause lays down three factors for the purpose of determining the reasonableness of the commission paid to an employee.
The question whether the amount of the commission is a reasona ble amount or not has to be determined with reference to these three factors.
Sometimes these three factors are loosely described as conditions but they are not really conditions on the fulfilment of which alone the amount of commission paid to an employee can be regarded as reasona ble.
They are merely factors to be taken into account by the Revenue authorities in determining the reasonable ness of the amount of commission.
It may be that one of these factors yields a negative response.
To take an exam ple, there may be no general practice in similar business or profession to give commission to an employee, but, yet, having regard to the other circumstances, the amount of commission paid to the employee may be regarded as reasonable.
What the proviso requires is merely that the reason ableness of the amount of commission shall be determined with reference to the three factors.
But it is well settled that these factors are to be considered from the point of view of a normal, prudent businessman.
The reasonableness of the payment with reference to those factors has to be judged not on any subjective standard of the assessing authority but from the point of view of commercial expediency.
Let us see whether the amount of commission paid to Saheb Dayal and Gurditta Mal in the present case can be said to be reasonable from this stand point.
It is clear from the order of the Tribunal that reliance was placed by the Tribunal mainly and substantially on the fact that the nature of the work done by Saheb Dayal and Gurditra Mal remained unchanged in the relevant accounting year and there was nothing to show that the increase in the turnover during the relevant accounting year was as a result of any extra efforts made by these two employees and hence it could not be said that there were any special circumstances which warranted the payment of commission to them.
But, as al ready pointed out above the commission aid to an employee cannot be branded as unreasonable merely because the employ ee has done m the relevant accounting year the same work which he was doing in the earlier years.
Even where the nature of the work has remained the same, commercial expedi ency may require payment of commission to an employee.
Here, Saheb Dayal and Gurditta (1) 536 Mal were each receiving a salary of Rs. 1000/ per month and besides this salary, there were admittedly no other perqui sites given to them.
They were the persons attending to the business of the assessee and in fact Gurditta Mal was an experienced and seasoned businessman and it was he who was advising OCM in regard to designs etc.and he and Saheb Dayal were primarily responsible for the flourishing state of the business.
The turnover of the sales of the assessee steadily rose from 1960 61 and in the relevant accounting year, it reached the exciting figure of Rs. 54.28 lacs.
So also the overriding commission which started with the modest figure of Rs. 35,964/ in the accounting year relevant to the assessment year 1960 61 went on steadily increasing from year to year until it reached the figure of Rs. 1,13,449/ in the relevant accounting year.
The assessee, therefore, felt that in view of the tremendous progress in the business which was largely the result of the services rendered by Saheb Dayal and Gurditta Mal, apart of the overriding commission should be paid to them, so than they may carry a sense of satisfaction that their efforts have been suitably rewarded and they may have an added incentive to work and may be spurred to greater efficiency in the future.
It may be noted that the overriding commission of the assessee during the relevant accounting year was Rs. 1,13,449/ and the total profit was Rs. 3,08,034/ and if out of this total profit of Rs. 3,08,034/ , an aggregate sum of Rs. 45,380/ was paid to Saheb Dayal and Gurditta Mal as commission, it is difficult to see how such payment could be regarded as unreasonable.
It is true that there was no obligation on the assessee to make payment of this commission to Saheb Dayal and Gurditta Mal, but it is now well settled that the mere fact that commission is paid ex gratia would not necessarily mean that it is unreasonable.
Commercial expediency does not mean that an employer should not make any payment to all employee unless the employee is entitled to it under a contract.
Even where there is no contract, an employer may pay commission to an employee if he thinks that it would be in the interest of his business to do so.
It is obvious that no business can prosper unless the employees engaged in it are satisfied and contented and they feel a sense of involvement and identifi cation and this can be best secured by giving them a stake in the business and allowing them to share in the profits.
It would indeed be a wise step on the part of an employer to offer incentive to his employees by sharing a part of his profits with them.
This would not only be good business but also good ethics.
It would be in consonance with Gandhian concept as also modern socialistic thought which, with its deeply rooted faith in social and economic democracy, regards; the employees as much as the employer as co sharers in the business.
If an employer earns profits to which the employees have necessarily contributed by putting in their labour, there is no reason why the employer should not share a part of these profits with the employees.
That is the demand of social justice today and it is high time that the administration of our tax law recog nised it and encouraged sharing of profits by employers with employees by adopting a progressive and liberal approach in the applicability of section 36, sub section (1), clause (ii) What is the requirement of commercial expediency must bejudged not in the light of the 19th Century laissez faire doctrine which regarded man as an economic being concerned only to protect and 537 advance his serf interest but in the context of current socio economithinking which places the general interest of the community above the personal interest of the individu al and believes that a business or undertaking is the product of the combined efforts of the employer and the employees and where there is sufficiently large profit, after providing for the salary or remuneration of the employer and the employees and other prior charges such as interest on capital, depreciation, reserves etc,a part of it should in all fairness go to the employees.
We are, there fore, of the view that the sum of R.s. 45,380/ paid by the assessee to Saheb Dayal and Gurditta Mal by way of commission during the relevant accounting year was reasona ble having regard to all the circumstances of the case and it ought to have been allowed as a deductible expenditure under section 36, sub section (1), clause(ii).
We accordingly allow the appeal, set aside the judgment of the High Court and answer the question referred by the Tribunal in the affirmative in favour of the assessee.
The Commissioner will pay the costs of the appeal as also of the reference to the assessee.
S.R. Appeal allowed.
| IN-Abs | The appellants were the sole selling agents of the Oriental Carpet Manufacturers India Pvt. Ltd. in respect of yarn, cloth and blankets manufactured by them and for the sales effected by the appellants, as such sole selling agent 's commission was paid to them by OCM.
Since the appellants showed very satisfactory turnover from year to year, OCM started giving to them, in addition to the usual commission, over riding commission @ 21/2 per cent on the sales effected by the appellants.
Since the turnover of the sales reached the figure of Rs. 54.28 lacs and over riding commission increased to Rs. l,13,449/ during the previous year corresponding to the assessment year 1963 64, the appellants paid out of the over riding commission received by them a sum of Rs. 22,690/ (i.e. at the rate of 1/2% of the sales) each to two of their employees viz., Saheb Dayal and Gurditta Mall since they were primarily responsible for the increased prosperity of the appellants.
The commission so paid viz. Rs. 45,380/ was claimed by the appellants as a deductible expenditure in their assessment to income tax for the assessment year 1963 64.
The Income Tax Officer disallowed the claim on the ground that there was no evi dence to show that the increase in sales during the relevant accounting year was due to the efforts of Saheb Dayal and Gurditta Mal.
The Appellate Assistant Commissioner rejected the appeal preferred to him and held that since no evidence had been produced by the assessee to prove that the activi ties of Saheb Dayal and Gurditta Mal in the relevant account year were of a nature different from those: in the earlier years so that they put in any extra time or energy in the conduct of the business of the assessee so as to justify the payment of the commission, it could not be said that the commission was paid for services rendered by them.
The Tribunal, in further appeal took the same view and held that since there was no proof to show that any extra services were rendered by Saheb Dayal and Gurditta Mal for which payment of commission in addition to salary and bonus could be justified, commission could not be said to have been paid for services rendered so as to attract the applicability of section 36(1)(ii) of the Act.
The High Court was also of the same view and answered the reference made to it, in favour of the Revenue.
Allowing the appeal by special leave, the Court, HELD: (1) The sum of Rs. 45,380/ paid by the assessee to Saheb Dayal and Gurditta Mal by way of commission during the 'relevant accounting year was reasonable, having regard to all the circumstances of the case and it ought to have been allowed as a deductible expenditure section 36(1)(ii) of the Income Tax Act.
[537 B] (2) Section 36, sub section (1) clause (ii) does not postulate that there should be any extra services rendered by an employee before payment of commission to him can be justified as an allowable expenditure.
What it requires, is only this, namely, that commission paid to an employee should be for some services rendered by him.
It is not necessary that the commission should be paid under a con tractual obligation.
It may be purely voluntary.
(3) It is immaterial that the services rendered during the relevant accounting year were in no way greater or more onerous than the services rendered in the earlier years.
There is no such requirement under the section and it is not justified by the language of section 36, sub section(l), clause (ii) and indeed if it were pushed to its logical extreme, even payment of bonus cannot be treated as permissible deduction under that provision.
[534 G H] 530 (4) It is now well settled that the mere fact that commission is paid exgratia would not necessarily mean that it is unreasonable.
Commercial expediency does not mean that an employer should not make any payment to an employee unless the employee is entitled to it under a contract.
What is the requirement of commercial expediency must be judged not in the light of the 19th Century laissez faire doctrine which regarded man as an economic being concerned only to protect and advance his self interest but in the context of current socio economic thinking which places the general interest of the community above the personal interest of the individual and believes that a business or undertaking is the product of the combined efforts of the employer and the employees and where there is sufficiently large profit, after providing for the salary or remuneration of the employer and the employees and other prior charges such as interest on capital depreciation, reserves etc., as part of it should in all fairness go to the employees.
[536 E G] (5) The question whether commercial expediency justified the payment of commission would have to be judged in the light of.
all the circumstances existing at the material time.
In the instant case, the assessee felt, on grounds of commercial expediency that a part of the over riding commis sion should be raid besides salary and bonus to its two employees who had worked so well and contributed to the prosperity of the assessee and did make the payment.
[525 AB] Laxmandas Sejram vs C.I.T. Gujarat approved.
(6) The question whether the amount of the commission is a reasonable amount or not has to be determined with refer ence to the three factors laid down in section 36(1)(ii).
Though described loosely as conditions, they are not really conditions on the fulfilment of which alone the amount of commission paid to an employee can be regarded as reasona ble.
The reasonableness of the amount of commission has to be considered from the point of view of a normal, prudent businessman, and not on any subjecting standard of the assessing authority.
[525 C D] Observation: It is high time that the administration of our tax law recognised the demand of social justice today viz., profit sharing by the employees and encouraged it by adopting a progressive and liberal approach in the applicability of section 36, subsection (1), clause (ii).
[536 H]
|
Appeal No. 2022 of 1969.
Appeal,from the Judgment and Order dated 26.10.1968 of the Judicial Commissioner for Manipur in Civil Appln.
Case No. 23/67) R.K. Garg, S.C. Agarwal & V.J. Francis, for the Appel lant.
V.C. Mahajan & R.N. Sachthey, for Respondent Nos.
1 3 The Judgment of the Court was delivered by RAy,C.J.
This appeal is by certificate from the judg ment dated 26 October 1968 of the Judicial Commissioner for Manipur.
The appellant by a writ petition challenged the order of respondent No. 1 by which the appellant was compulsorily retired.
The Judicial Commissioner dismissed the writ petition of the appellant.
The appellant was born on 1 January 1911.
He joined the erstwhile State of ' Manipur as a junior clerk in 1935.
Though he was not a Law Graduate, he rose to become a permanent Puisne Judge in Manipur State Chief Court with effect from 5 October 1949.
After the Government of India took over the administration of Manipur the appellant was appointed as a Subordinate Judge with effect ' from 25 Janu ary 1950 on a temporary basis.
On the enactment of Manipur Courts Act 1955 the Court of Subordinate Judge was estab lished .on 1 March 1956.
The appellant was appointed as the Judge of that Subordinate Court from that date.
The appellant did not earn good reports from superior officers.
He was reverted to the post of subordinate Judge.
The appellant was served with a notice dated 30 June 1966 that he was required to retire from Government service with effect from 1 October 1966 in pursuance of the direc tions of the President in Paragraph 6 of the.
Government of India Decision No. 23 noted below Fundamental Rule 56.
The above Decision No. 23 was contained in the Memoran dum of the Government of India, Ministry of Home Affairs dated 30 November 1962.
The Decision came into force on 1 December 1962.
Under Paragraph 6 of the Decision the appointing authority was empowered to require a Government servant to retire after he had attained the age of 55 years on three months notice without assigning any reason.
This provision was really intended to retire an officer who had completed 30 years ' qualifying service.
The purpose of the provision was to weed out unsuitable employees after they attained the age of 55 years.
The Government Decision No. 23 below Fundamental Rule No. 56 which came into force on 1 December 1962 as aforesaid was substituted by new Rule .on 21 July 1965.
The new rule provided that 1024 if the appropriate authority is of, opinion that it is in public interest to do so, he has the absolute right to retire any Government servant after he attained the age of 55 years with notice of not less than three months.
The appellant on receiving the notice for retirement prayed for his being retained in service after the age of 55 years in public interest.
The representation of the appel lant was rejected.
It is in this background that the appel lant filed the writ petition.
The principal contention of the ,appellant was that the impugned order of compulsory retirement was null and void ab initio because the Fundamental Rule 56 at the material time contained no reservation, of any powers in the appointing authority to retire him without any reason on three months notice after the age of 55 years.
Emphasis was placed by counsel on the fact that the impugned order was made ex pressly under the authority of Government of India Decision No. 23 below Fundamental Rule 56 and this Decision was not subsisting at the time of the impugned notice.
It was also.
contended that the Government Decision was not incor porated in Fundamental Rule 56 and therefore it amounted to a mere executive instruction and not a rule within the meaning of Article 309.
The appellant also contended that in substance, the compulsory retirement was removal under Article 311.
Compulsory retirement is not a punishment.
There is no stigma in compulsory retirement.
See Tara Singh etc.
vs State of Rajsthan and ors.(1) It is also the view of this Court that if power can be traced to a valid power the fact that the power is purported to have been exercised under non existing power does not invalidate the exercise of the power.
See L. Hazari Mal Kuthiala vs Income tax Officer, Special Circle Ambala Court and Anr.(2) and Hukumchand Mills Ltd. vs State of Madhya Bharath & anr.(3) The Government case is that the Chief Commissioner by reason of the order of the President contained in Government of India, Ministry of Home Affairs Memorandum No. 33/18/62 ESTS(A) dated 30 November 1962, followed by Fundamental (Sixth Amendment) Rules, 1965, had the power to retire the Government servant without assigning any reason if he was of opinion that it was in the public interest to do so.
The relevant Fundamental Rule 56(J) is as follows : "Notwithstanding anything contained in this Rule, the appropriate authority shall, if it is of the opinion that it is in the public interest to do so, have the absolute right to retire any Government servant after he has attained the age (1) (2) [1961] 1 S.C.R. 892.=41.I.T.R. 12.
(3) ; I.T.R. 583.
1025 of 55 years by giving him notice of not less than three months in writing".
The affidavit evidence is that the order of compulsory retirement was made in public interest.
The absence of recital in the order of compulsory retirement that it is made in public interest is not fatal as long as power to make compulsory retirement in public interest is there and the power in fact is shown in the. facts and circumstances of the case to have been exercised in public interest.
In R.L. Butail vs Union of India & Ors.(1) this Court considered Fundamental Rule 56(j) and the circumstances under which compulsory retirement can be made in public interest.
It is true that in Butail 's case (supra), the notice in terms of Fundamental Rule 56(j) was served, namely that the order of complusory retirement was made in public interest.
A comparision between Paragraph 6 of Decision No. 23 below Fundamental Rule 56 and Fundamental Rule 56(j) of amended F.R. 56 shows that the two deal with the identical matter of compulsory retirement.
The common features are that the Government servant may be asked to retire after the age of 55 years.
Second, such retirement is ordered to be made by giving the Government servant a notice of three months.
Third, the power to retire is an absolute right without assigning any reason.
Fourth, under the amended Fundamental Rule 56(j) the power is exercised only if the appropriate authority is of opinion that it is in public interest to do so.
The Government affidavit is that the Chief Commissioner made the order because he was of opinion that it was in public interest to do so.
Whether the order is correct or not is not to be gone into by the court.
See Union of India vs J. N. Sinha.(2) In the present case, Counsel for the appellant contended that it did not appear in the order that there was any application of mind that the order was being made in public interest.
In Butail 's ease (supra) it was said that the plea that the appropriate authority had not applied its mind failed there in view of the clear averments made in that regard in the affidavit and, no reason was adequately shown to discord those statements as untrue Or Otherwise unbeliev able.
In the present case, the affidavit evidence estab lishes that the Commissioner exercised his powers because he was of the opinion that it was in pub, lie interest to make the order of compulsory retirement.
The order in the ,present case is made bona fide and nothing is on the record to show that the affidavit is unbelievable.
the foregoing reasons the appeal fails and is dismissed with no order as to costs.
S.R. Appeal dismissed.
(1) (2) [1971] 1 S.C.R. 791.
| IN-Abs | The appellant, a Sub ordinate Judge was compulsorily retired under the Government of India Decision No. 23.
below Fundamental Rule No. 56 though the said rule was later substituted as FR 56(j).
A writ petition assailing the order of compulsory retirement as in violation of Article 311 was dismissed by the Judicial Commissioner for Manipur.
On appeal by certificate the appellant contended that the impugned order of compulsory retirement was null and void ab initio because: (1) Fundamental Rule 56 at the material time contained no reservation of any power in the appointing authority to retire him without any reason on three month 's notice after the age of 55 years: (2) the impugned order was made expressly under a non subsisting authority viz., Gov ernment of India Decision No. 23 below Fundamental Rule 56, at the time ' of impugned notice and (3) the Government of India Decision not having been incorporated in Fundamental Rule 56, it amounted to a mere executive instruction and not a rule within the meaning of Article 309.
Dismissing the appeal, the Court HELD: (1) Compulsory retirement is not a punishment, there being no stigma in it.
[1024 D] Tara Singh etc.
vs State of Rajasthan and Ors. ; reiterated.
(2) If power can be traced to a valid power the fact that 1he power is purported to have been exercised under non existing power does not invalidate the exercise of the power.
In the .present case, the affidavit evidence estab lishes that the Commissioner exercised his powers and was of the opinion that it was in public interest to make the order of compulsory retirement.
[1024 E 1025 A] L. Hazari Mal Kuthiala vs Income tax Officer, special circle Ambala Cantt.
and Anr.
I.T.R. 12 and Hukumchand Mills Ltd. vs State of Madhya Bharath and Anr. ; I.T.R. 583 followed.
(3) The absence of recital in the order of compulsory retirement that it was made "in public interest" is not fatal as long as power to make compulsory retirement in public interest is there and the power, in fact, is shown in the facts and circumstances of the case, to have been exer cised in public interest.
Whether the, order is correct or not is not to be gone into by the Court.
In the instant case, the Government affidavit is that the Chief Commission er made the order because he was of the opinion.
that it was in public interest to do so.
The order is made bona fide and nothing us on the record to show that the affidavit is unbelievable.
[1025 A B, E G] Union of India vs J. N. Sinha [1971] 1 SCR 791 applied.
Butail vs Union of India & Ors.
referred to. 1023
|
Civil Appeal No. 309 of 1976.
Appeal by Special Leave from the Judgment and Order dated the 22nd January, 1975 of the Bombay High Court in Appeal No. 106 of 1969 in Misc.
Petition No. 320 of 1964.
7 502 SCI/77 526 I. N. Shroff and H.S. Parihar for the Appellants.
M.N. Shroff for Respondents 1 and 2.
V.P. Ram an, Addl.
Genl, K.J. John and Shri Narain for Respondent No. 3.
The Judgment of the Court was delivered by GUPTA, J.
Ahmedabad Jupiter Spinning Weaving and Manu facturing Company Limited was the owner of 5900 Sq.
yds of land forming part of its mill premises at Lower Parel in Bombay which was sought to be acquired by the Maharashtra Government for a municipal school.
Notifications under sections 4 and 6 were issued on June 19, 1961 and May 29, 1964 respectively.
The company filed a petition in the Bombay High Court challenging the validity of the notifica tions on several grounds.
A single Judge of the High Court having dismissed the writ petition on August 11, 1969 the company preferred a. letters patent appeal.
During the pendency of the appeal, the management of the company was taken over by the Central Government on October 8, 1972 under the Industries (Development and Regulation) Act, 1951.
On September 21, 1974 an ordinance called the Sick Textile Undertakings (Nationalisation) Ordinance, 1974 was .promulgated by virtue of which the textile undertaking of the company the 'management of which had been taken over by the Central Government, vested absolutely in the Central Government with effect from the "appointed day", which was April 1, 1974, and immediately thereafter stood transferred and vested in the National Textile Corporation.
The Ordi nance was later replaced by the Sick Textile Undertakings (Nationalisation) Act, 1974 (hereinafter referred to as Sick Textile Act).
Sections 3 and 4 of the Act are as follows: Acquisition of rights of owners in respect of sick textile undertakings.
(1 ) On the appointed day every sick textile taking and the right title and interest of the owner in relation to every such sick textile undertakings shall stand transferred to, and shall vest absolutely in, the Central Government.
(2) Every sick textile undertaking which stands vested in the Central Government by virtue of sub Section (1 ) shall, immediately after it has so vested, stand transferred to, and vested in, the National Textile Corpora tion.
General effect of vesting 4.
(1 ) The sick textile undertaking referred to in section 2 shall be deemed to include all assets, rights, leaseholds, powers, authorities and privileges and all property, movable and immovable, including lands, buildings, workshops, stores, instru ments, machinery and equipment, cash balances, cash on hand, reserve funds, investments and book debts and all other rights and interests in, or arising out of, such property as were immediately before the appointed 527 day in the ownership, possession, power or control of the owner of the sick textile undertaking, whether within or outside India, and all books of account, registers and all other documents of whatever nature relating thereto and shall also be deemed to include the liabilities and obligations speci fied in sub section (2) of section 5.
(2) All property as aforesaid which have vested in the Central Government under sub section (1) of section 3 shall, by force of such vesting, be freed and discharged from any trust, obligation, mortgage, charge, lien and all other incumbrances affecting it, and any attachment, injunction or decree or order of any court restricting the use of such property in any manner shall be deemed to have been withdrawn.
" The other sub sections of section 4 are not relevant for the present purpose.
The National Textile Corporation applied to the High Court for being substituted in place of the original appel lant in the letters patent appeal which was pending and the application was allowed.
The main contention on behalf of the substituted appellant in the High Court was that the two notifications under sections 4 and 6 of the Land Acqui sition Act must be held to have become ineffective in view of section 4(2) of the Sick Textile Act which provides that all property which vests in the Central Government under section 3(1) does so free from all "incumbrances affecting it.
" The High.
Court dismissed the appeal hold ing that the notifications under the Land Acquisition Act were not incumbrances within the meaning of section 4(2) of the Sick Textile Act.
In the appeal before us filed with special leave obtained from this Court, the National Textile Corporation questions the correctness of the view taken by the High Court.
Thus the only question for determination in the appeal is whether the notifications issued under the Land Acquisi tion Act are incumbrances within the meaning of the word as used in section 4(2} of the Sick Textile Act.
Section 3 and the first two sub sections of section 4 of the Sick Textile Act are the only provisions relevant in this context.
Section 3 provides that on the appointed day every sick textile undertaking shall vest absolutely in the Central Government, and then in the National Textile Corporation.
Subsection (1 ) of section 4 states that the undertakings vesting in the Central Government under section 3 shall be deemed to include all assets, rights and interests in the ownership, possession or control of the owners of such undertakings immediately before the appointed day.
Sub section (2) of section 4 provides that all property vesting in the Central Government under section 3 shall, "by force of such vesting, be freed and discharged from any trust, obligation, mortgage, charge, lien and all other incum brances affecting it, and any attachment, injunction or decree or order of any court restricting the use of such property in any manner shall be deemed to have been with drawn".
Counsel for the appellant argues that sub section (2) of section 4 is intended to vest the sick textile undertakings in the Central Govern 528 ment free from all fetters, and the notifications issued under the Land Acquisition Act which had the effect of freezing the price of the land were fetters falling in the category of "other incumbrances" mentioned in section 4(2) of the Sick Textile Act.
The term 'incumbrance ' has not been defined in the Act.
In Wharton 's Law lexicon incum brance is described as being a claim, lien or liability, attached to property.
This is the sense in which the term is ordinarily used.
An incumbrance in this sense ' has to be a liability "attached to property", it must be a burden or liability that runs with the land, as the High Court has held.
But a notification issued by the Government under the Land Acquisition Act is not a burden Or liability that is attached to the property.
The sovereign right of the State to take proceedings for the acquisition of any land for public purpose is similar to its right to impose a tax on the land which is paramount to the ownership over the land and outside it".
[see The Collector of Bombay vs Nusserwanji Rattanji Mistri & others ; (at 1323).
Under sub section (2) of section 4 of the Sick Tex tile Act all property which have vested in the Central Government under section 3 (1) shall be freed and discharged from any trust, obligation, mortgage, charge, lien and all other incumbrances affecting it, and any attachment, injunction or decree or order of any court restricting the use of such property shall be deemed to have been withdrawn.
Counsel for the respondent.
State of Maharashtra, submits that the term incumbrance should take colour from the dif ferent kinds of burden on the land specified in section 4(2) preceding the words all other incumbrances"it is argued that incumbrance in the context means ' Some burden or li ability that is attached to the property ,like mortgage, charge, lien That this is so would also appear from what follows the words "all other incumbrances affecting it".
Having said that the vesting will be free from trust, obligation, mortgage, charge, lien and all other incum brances affecting it.
sub section (2) goes on to add that "any attachment.
injunction or decree or order of any court restricting the use of such property in any manner shall be deemed to have been withdrawn" upon vesting.
If the appel lant 's construction of the provision were correct, and incumbrance meant any kind of fetter, any attachment, in junction or decree or order restricting the use of the property would be included in "all other incumbrances" and it would have been quite unnecessary to mention them sepa rately.
This makes it clear that fetters on the property like attachment, injunction or decree or order of any court restricting the use of the property which are deemed to have been withdrawn upon the property vesting in the Central Government are not really incumbrances within the meaning of the word as used in sub section (2) of section 4.
We therefore agree with the High Court that the notifica tions issued under sections 4 and 6 of the Land Acquisition Act are not incumbrances and cannot be held to have become inoperative on the land in question vesting in the Central Government.
The appeal is dismissed but in the circumstances of the case without any order as to cost.
P. B.R. Appeal dismissed.
| IN-Abs | The state Government issued two notifications under sections 4 and 6 of the Land Acquisition Act seeking to acquire certain land belonging to a textile mill.
When the Letters Patent Appeal of the 'Textile mill was pending before the High Court the mill was taken over by the Central Government and later the appellant was substituted for the original appellant.
By virtue of section 3 of the Sick Textile Undertakings (Nationalisation) Act, 1974 the management of every sick textile mill vested absolutely in the Central Government and later in the appellant.
Section 4(2) of the Act provides that all property which vested in the Central Government shall, by force of such vesting, be freed and discharged from trust, obligation, mortgage, charge, lien and all other incumbrances affecting it and any attachment, injunction or decree or order of any court restricting the use of such property in any manner shall be deemed to have been with drawn.
The appellants ' contention that by reason of ss.4(2)the two notifications must be held to have become ineffective because the section provides that all property vested in the Central Government shall be free from all incumbrances affecting it was rejected by the High Court.
Dismissing the appeal to this Court, HELD : The High Court was right in its view that the notifi cations issued under ss 4 and 6 of the Land Acquisition Act were not incumbrances and could not be held to have become inoperative on the land vesting in the Central Government.
[528 B] 1.The term "incumbrance" has not been defined in the Act, The dictionary meaning given to incumbrance is a claim, lien or liability attached to property.
An incum brance in this sense has to be a liability "attached to property".
a burden or liability that runs with the land.
The notifications issued under the Land Acquisition Act are not a burden or liability attached to the property.[528 B] 2.
"Incumbrance" in the context of section 4(2) means some burden or liability attached to the property ,like mortgage, charge, lien etc.
That this is so would appear from the words 'all other incumbrances affecting it".
Having said that the vesting will be free from trust etc.
, sub section
(2) goes on to add that "any attachment.
injunction or decree . shall be deemed to be withdrawn" upon vesting.
If "incumbrance" meant any kind of fetter, any attachment, injunction or decree or order restricting use of the proper ty would be included in "all other incumbrances" and it would have been quite unnecessary to mention them separate ly.
This means that fetters on the property like attach ment, injunction or decree or order of any court restricting the use of the property which are deemed to have been with drawn upon.
the property vesting in the Central Government are not really incumbrances within the meaning of the word as used in s.4(2) [528 E G]
|
: Criminal Appeal No. 277 of 1971.
Appeal by Special Leave from the Judgment and Order dated the 23rd June, 1971 of the Calcutta High Court in Crl.
A. No. 45 of 1964.
P.K. Chatterjee and Rathin Das for the Appellants.
D.N. Mukherjee and G.S. Chatterjee for Respondents.
The Judgment of the Court was delivered by SHINGHAL, J.
This appeal by special leave is directed against the judgment of the Calcutta High Court dated June 23, 1971, upholding the conviction of the appellants for offences under sections 420 and 420/120B of the Penal Code but reducing their sentences.
The charge related to cheat ing the passport issuing authority of the Hooghly 522 district by dishonestly inducing him to issue passports on the basis of false representations.
This Court has limited the special leave to the question whether the passports were "property" within the meaning of section 420 of the Penal Code ? Speaking broadly, the allegation against the appellants was that there was a conspiracy between them as a result of which 1480 applications were filed for the issue of pass ports from July, 1956 to April, 1957, by Muslims and Chinese nationals.
These applications were alleged to have been made by suppressing the real facts about the nationality and addresses of the applicants, and by making false repre sentations in several other respects.
The prosecution alleged that hundreds of passports were thus issued and delivered to persons who were not entitled to them under the law.
Some of the appellants were alleged to be directly concerned with those applications, and it was further alleged that the orders of the Passport Authority were obtained by dishonest inducement and false representation.
A passport is a document which, by its nature and pur pose, is a political document for the benefit of its holder.
It recognises him as a citizen of the country granting it and is in the nature of a request to the other country for his free passage there.
Its importance was examined by this Court in Satwant Singh Sawhney vs D. Ramarathnam(1) with reference to the provisions of the Indian , (hereinafter referred to as the Act) and the Rules made thereunder which were in force at the time when the offences were said to have been committed in this case.
After referring to sections 3 and 4 of the Act, and rules 4 and 5 of the Rules, this Court observed as follows, " . possession of passport, whatever may be its meaning or legal effect, is a necessary requisite for leaving India for travelling abroad.
The argument that the Act .does not impose the taking of a passport as a condition of exit from India, therefore it does not interfere with the right of a person to leave India, if we may say so, is rather hypertechnical and ignores the reali ties of the situation.
Apart from the fact that possession of passport is a necessary condition of travel in the international community, the prohibition against entry indirectly prevents the person from leaving India.
The State in fact tells a person living in India 'you can leave India at your pleasure without a passport, but you would not be allowed by foreign countries to enter them without it and you cannot also come back to India without it. ' No person in India can possibly travel on those conditions.
Indeed it is impossible for him to do so.
That apart, even that theoretical possibility of exit is expressly restricted by executive instructions and by refusal of foreign ex change.
" ' There can therefore be no doubt that a passport is a docu ment of importance for travel abroad and is of considerable value to its holder.
(1) 523 The word "property" has been defined in the Century, Dictionary, which is an encyclopedic lexicon of the English language, as follows, "the right to the use or enjoyment or the beneficial fight of disposal of anything that can be the subject of ownership; owner ship; estate; especially, ownership of tangi ble things . .: anything that may be exclusively possessed and enjoyed; . . possessions.
" As has been stated, a passport provides the several bene fits mentioned above.
It is a tangible thing and is capable of ownership.
There can therefore be no doubt that it is "property".
It is property of the State so long as it is with the passport issuing authority and has not been issued to the person concerned and, after issue, it becomes the property of the person to whom it has.been granted.
Our attention has not been invited to any case where the question now before us arose for consideration on an earlier occasion.
But a somewhat similar question was considered by this Court in Abhayanand Mishra vs The State of Bihar (1).
The appellant there applied to the Patna University for permission to appear at .the
M.A. examination as a private candidate, representing that he was a graduate having ob tained the B.A. degree in 1951 and had been teaching in a school.
On that basis, an admission card was despatched for him to the Headmaster of the school.
It was however found that he was neither a graduate nor a teacher.
He was prose cuted for the offence 'under section 420 read with section 511 of the Penal Code.
He contended that his conviction was unsustainable because the admission card had no pecuniary value and was not property.
This Court repelled the conten tion and held that although the admission card as such had no pecuniary value, it had immense value to the candidate appearing in the examination for he could not have appeared at the examination without it, and that it was therefore property within the meaning of section 415 of the Penal Code.
While reaching that conclusion, this Court relied on Queen Empress vs Appasami (2) and Queen Empress vs Sashi Bhushan.(3) In Appasami 's case it was held that the ticket entitling the accused to enter the examination room was "property", and in Sashi Bhushan 's case it was held that the term "property" included a written certificate to the effect that the accused had attended a course of lectures and had paid up his fees.
On a parity of reasoning, we have no doubt that looking to the importance and characteristics of a passport, the High Court rightly held that it was property within the meaning of sections 415 and 420 of the Penal Code.
We may make a reference to Ishwarlal Girdharlal Parekh vs State of Maharashtra and others (4) also.
There the question for consideration was whether an order of assess ment was "property" within the (1) ; (2) Mad.
(3) All.
(4) ; 524 meaning of section 420 I.P.C.
The charge in that case was that the appellant dishonestly or fradulently induced the income tax authorities and obtainer an assessment order for less income tax than due.
It was held that .the order of assessment received by an assessee was "property", since it was of great importance to the assessee, as con taining a computation, of his total assessable income and, as containtion or his tax liability.
This Court also expressed the view that the word "property" did not necessarily expressed that the thing, of which delivery was dishonestly desired by the person who cheats, "must have a money value or a market value, in the hand of the person cheated".
It was held that "even if the thing has no money value, in the hand of the person cheated, but becomes a thing of value, in the hand of the person, who may get possession of it as a result of the cheating practised by him, it would still fall within the connotation of the term 'property ' in section 420 I.P.C." This decision also lends support to the view we have taken for, as has been stated, a passport is a valuable document.
Our attention has also been invited to In re Packiana than(1) and Local Government vs Gangaram.(2) The accused in Packianathan 's case was prosecuted for an offence under section 419 read with section 511 of the Penal Code.
He was going to Ceylon, and he used the permit which stood in the name of one Kumarswami, while his own name was J. Packiana than.
On seeing the permit the Health Officer issued a health certificate.
It was held that the health certificate was "property" within the meaning of section 415 of the Penal Code and that if a person dishonestly and fraudulently induced the Health Officer to deliver it to him, he was guilty of an offence under section 419 I.P.C. Local Govern ment vs Gangaram was a case where the accused obtained a certificate from the Deputy Inspector of Schools by stating untruly that he had passed the examination.
It was held that the certificate was 'property ' within the meaning of sections 415 and 420 I.P.C. and that the accused was guilty of an offence punishable under section 420 I.P.C.
In taking that view the Nagpur High Court relied on Queen Empress vs Appasami (supra) and Queen Empress vs Sashi Bhushan (supra) on which reliance was placed by this Court in Abhayanand Mishra vs The State of Bihar (Supra) referred to above.
So as passport was a tangible thing, and was a useful.document, and could be the subject of ownership or exclusive possession, it was "property" within the meaning of sections 415 and 420 I.P.C.
There is therefore nothing wrong with the view which has been taken by the High Court and the appeal is hereby dismissed.
The appellants who are on bail shall surrender to serve out the remaining sentence.
P.H.P. Appeal dismissed.
(1) A.I.R. 3920 Mad.
131 (1) (2) A.I.R. 1922 Nagpur 229.
| IN-Abs | The appellants were charged under section 420 read with section 120B of the Indian Penal Code on the ground that there was a conspiracy between them as a result of which hundreds of applications were filed for the issue of pass ports.
The applications were made by suppressing the real facts about the .nationality and addresses of the applicants and by making false representations in several other re spects.
The prosecution alleged that hundreds of passports were issued and delivered to persons who were not entitled to have them under the law.
Special Leave was granted limited to the question whether the passports were property within the meaning of section 420 of the Indian Penal code.
Dismissing the appeal, HELD: 1.
A passport is a document which by its nature and purpose is a political document for the benefit Of its holder.
It recognises him as a citizen of the country granting it and is in the nature of a request to the other country for his free passage there.
[522 C] Satwant Singh Sawhney vs
D. Ramarathnam refered to; Ahayanand Mishra vs The State of Bihar ; followed; Queen Empress vs Appasami Mad.
151 and Queen Empress vs Sashi Bhushan All.
210 approved; Ishwarlal Girdharilal Parekh vs State of Maharashtra and Other followed.
In re Packianathan A.I.R. 1920 Mad. 131(1) and Local Government vs Ganga Ram A.I.R. 1922 Nagpur 229 approved.
The word 'property ' is defined as the right to the use or enjoyment or the beneficial right of disposal of anything that can be the subject of ownership, specially ownership of tangible things.
Passport is a tangible thing and is capa ble of ownership.
It is the property of the State so long as it is with the passport issuing authority and has not been issued to the person concerned, and after issue it becomes the property of the person to whom it has been granted.
Passport can be the subject of ownership or exclu sive possession and is therefore property within the meaning of sections 415 and 420 I.P.C. [523 A C, 524 G]
|
Appeal No. 1174 of 1974.
(From the Judgment and Order dated the 4 4 1974 of the Delhi High Court in Wealth Tax Ref.
No. 5 of 1972).
R.M. Mehta and, P.L. Juneja, for the appellant.
G.C. Sharma, M.L. Khanna, Anup Sharma, Miss Jaswal K.K. and K.R. Jagaraja and D.K. Jain, for the respondent.
The Judgment of the, Court was delivered by BHAGWATI, J.
This appeal raises a rather difficult but interesting question of law relating to valuation for the purpose of the Wealth Tax Act, 1957 of leasehold interest in land, when, there is, a covenant in the lease that the lessee shall not be entitled to assign the leasehold inter est without obtaining the prior approval in writing of the lesson and the lessor shall be entitled to, claim and recov er from the, lessee a certain specified proportion of the unearned increase in the value of the land at the time of the assignment.
13 436SCI/77 420 The controversy in this appeal, relates to the assess ment year 1968 69, the relevant valuation date being 31st December, 1967.
The assessee is assessed to wealth tax as an individual.
His net wealth on the valuation date included a property situate on plot No. 12, Block 39, Kauti lya Marg, Chanakyapuri.
the property consisted of leasehold interest in the land together with a house built upon it.
The land belonged to the President of India and it was leased by the President of India to one Vashesharan Devi on the terms and conditions set out in an agreement of lease dated 30th December, 1954 and the leasehold interest was acquired from Vashesharan Devi by the assessee.
The premium for the grant of the lease was Rs. 24,400/ and the annual rent was fixed at Rs. 610/ , subject to certain variations.
The terms and conditions of the lease are a little important and, so far material, they may be reproduced as follows: "13.the lessee shall before any assign ment or transfer of the said premises hereby demised or any part thereof obtain from the lessor or such officer or body as the lessor may authorise in this behalf approval in writing of the said assignment or transfer and all such assignees and transferees and the heirs of the lessee shall be bound by all the covenants and conditions herein contained and the answerable in all respect therefore.
Provided also that the lessor be enti tled to claim and recover a portion of the unearned increase (i.e. the difference between the premium already paid and current market value) in the value of land at the time of transfer (whether such transfer is an entire site or only a part thereof), the amount to be recovered being 50 per cent of the unearned increase.
The Lessor shall have a pre emptive right to the property after deducting 50 per cent of the unearned (torn) said.
" The assessee constructed a large building on the land and the question arose as to how the leasehold interest of the assessee in the land together with the building should be valued.
This property had been valued in the past assess ment years at Rs. 6,00,000/ and the assessee had accepted this valuation and not challenged it.
But in the assessment for the assessment year.
1968 69 the assessee valued this property in its return of net wealth at Rs. 4,52,000/ on the.
basis of a certificate obtained from M/s Anand Apte and Jhabvala, Architects who, are approved valuers recog nised by the Department.
The Architects estimated the value of the property at Rs. 5,82,268/and from this figure, they deducted a sum of Rs. 1,30,000/ representing 50 per cent of the: unearned increase in the value of the land, which under the terms and conditions of the lease.
belonged to the lessor and arrived at the value of Rs. 4,52,000/ .
The Wealth Tax Officer did not accept the estimate of the valua tion made by the Architects and taking the annual rent of Rs. 30,000/ fetched by the property as the basis, computed the net annual rent at Rs. 82,956/ 421 and arrived at the figure of Rs. 8,29,560/ as the value of the property by applying the multiple of ten.
to the annual rental value of Rs. 82,956/ .
The Wealth Tax Officer rejected the claim of the assessee to deduct from the value of the property 50 per cent of the unearned increase in the value of the land on the ground that this claim was based "merely on hypothetical presumptions" but reduced the value off the property from Rs. 8,29,560/ to Rs. 6,00,000/ , since that was the figure accepted by the Revenue in the past assessment years.
The assessee challenged the valua tion made by the Wealth Tax Officer in an appeal preferred before the Appellate Assistant Commissioner, but the appeal was unsuccessful as the Appellate Assistant Commis sioner took the same view as the Wealth Tax Officer.
The Tribunal also, in further appeal, affirmed the same view holding that "the fact that the assessee might have to Pay 50 per cent of the unearned increase to the lessor does not affect the valuation of the property under section 7 of the Wealth 'Tax Act" and the words used in that section "make it clear that the estimate which should be made by the Wealth Tax Officer is of the gross price" and hence no, part of the unearned increase was deductible in computing the value of the property for the purpose of the Wealth 'fax Act.
The Tribunal also upheld the rental method of valuation of the property and finding that the valuation of Rs. 6,00,000/ adopted by the Wealth Tax Officer was even less than eight times the annual rental value of Rs. 82,956/ , the Tribunal declined to interfere with the valuation made by the Wealth Tax Officer.
The assessee thereupon applied to the Tribunal for making a reference to the High Court and on the application of the assessee, the following question of law was referred by the Tribunal for the opinion of the High Court: "Whether on the facts and in the circum stances of the case, the Tribunal was justi fied in law in taking the view that 50% of the unearned increase payable to the lessor of the land formed part of, and was not deducti ble out of, the valuation of the property for the purposes of Wealth tax Act ?"
The High Court took the view that the liability to pay 50 per cent of the unearned increase in the value Of the land to the lessor at the time of the assignment was a disadvan tage attached to the leasehold interest in the land and hence its value was liable to be deducted from the value of the property in arriving at the net wealth of the assessee and on this view, it answered the question in the negative in favour of the assessee.
This led to the filing of the present appeal by the 'Revenue after obtaining a certificate of fitness from the High Court.
It would be convenient ' at the outset to refer to the relevant provisions of the Wealth Tax Act, 1957 before we .address ourselves to the question which arises for determination in the appeal, The Wealth Tax Act, 1957 was passed by the Parliament in exercise of the legislative power conferred under Entry 86 of List I of, the Seventh Schedule to the ' Constitution and, as pointed out by Shah, J., ih Sudhir 422 Chandra Nawa vs Wealth Tax Officer, Calcutta,(1) wealth tax "is a tax imposed ' on the capital value of the assets of individuals and companies on the valuation date . it is imposed on the total assets which the assessee owns" and it is levied on the value of those assets.
Section 3 is the charging section and it provides that, subject to the other provisions contained in the Act, there shah be charged for every assessment year commencing on and from the 1st day of April, 1957 a tax_in respect of the net wealth on the corre sponding valuation date of every individual, Hindu Undivided Family and company at the rate or rates specified in the Schedule.
Thus, wealth tax is a tax on the net wealth of the assessee on the valuation date.
Net wealth is de fined in section 2(m) to mean "the amount by which the aggregate value, computed in accordance with the provisions of this Act, of all the assets, wherever located, belonging to the assessee on the valuation date, including assets required to be included ' in his net wealth as on that date under this Act, is in excess of the aggregate value of all the, debts owed by the assessee on the valuation date" other than debts failing within certain specified categories.
The word 'asset ' used in section 2(m) is of the widest Signifi cation and under section 2(e), it includes property of every description, movable or immovable, barring certain excep tions which are not material for our purpose.
What is, therefore, necessary for the purpose of determining the net wealth of the assessee is., first to compute the aggregate value of all assets belonging to the assessee in accordance with the provisions of the Act and then to deduct from it the aggregate value of all the debts, and the resultant which is obtained would be the net wealth assessable to tax.
section 7, sub section (1) lays down the mode of determination of the value of an asset for the purposes of the Act and it says that, subject to any rules made in this behalf, the value of any asset other than cash "shall be estimated to be the price which, in the opinion of the Wealth Tax Officer it would fetch if sold in the open market on the valuation date".
Now, plainly one of the assets belonging to the assessee in the present case was the lease hold ' interest in the land together with the building upon it and for the purpose of computing the net wealth of the assessee, it was necessary to determine the value of this asset.
The question which must, therefore, be asked in terms of section 7( 1 ) is: what would be the price which this asset would fetch if sold in the open market on the valuation date ?
This question cannot be satisfactorily answered, unless we first determine what is the nature of this asset: what is the interest in property, qualitative as well as quantitative, which this asset represents ? The asset consists of leasehold interest of the asses see in the land together with the building constructed upon it.
The building, of ' course, belongs to the assessee having been constructed by him and the determination of its value should not present any difficulty, because there are recognised methods of valuation of buildings.
The diffi culty, however, arises in regard to valuation of the leasehold interest in the land.
The leasehold interest is held by the assessee under a lease deed executed by the President of India and apart from (1) 423 clause (13), which we have reproduced above, it is an ordi nary leasedeed of the usual kind.
Clause (13 ) of the lease deed provides that the assessee shall not be entitled to assign the leasehold interest in the land without obtain ing the prior approval in writing of the lessor and 50 per cent of the unearned in.crease in the value of the land at the time of the assignment shall be claimable by the lessor, and moreover, if the lessor so desires, he shall have pre emptive right to purchase the property after deducting 50 per cent of the unearned increase in the value of the land.
Does this covenant merely impose a personal obligation on the lessee which ,arises on assignment of the leasehold interest or it is a covenant running with the land ? That is a question which has a direct bearing on the valuation of the leasehold, interest.
Now, the last portion of the first paragraph of clause (13) provides that "all such assignees and transferees . shall be bound by all the covenants and conditions herein contained and be answerable in respect therefore".
This means that whenever an assign ment of the leasehold interest is made by the lessee, the assignee would be bound by all the covenants contained in the lease deed and these would indisputably include the covenant in clause (13 ).
Clause (13 ) would equally bind the assignee and if the assignee in his turn wants to assign his leasehold interest in the land, he would have to obtain the prior approval in writing of the lessor to such assignment and the lessor would be entitled to claim 50 per cent of the unearned increase in the Value of the land.
This indeed was not disputed on behalf of the Revenue.
The covenant in clause (13) is, therefore, clearly a cove nant running with the land and it would bind whosoever is the holder of the leasehold interest for the time being.
It is a Constituent part of the rights and liabilities and advantages and disadvantages which go to make up the lease hold interest and it is an incident which is in the nature of burden on the leasehold interest.
Plainly and indis putably it has the effect of depressing the value which the leasehold interest would fetch if were free from this burden or disadvantage.
Therefore, when the leasehold inter est in the land has to be valued, this burden or disadvan tage attaching to the leasehold interest must be duly dis counted in estimating the price which the leasehold interest would fetch.
To value the leasehold interest on the basis that this burden or disadvantage were to be ignored would be to value an asset different in content and quality from that actually owned by the assessee.
This was the principle applied by the Judicial Committee in Corrie vs MacDemott,(1) an appeal from Australia, where the question arose as to how certain land granted by the Government of Queensland to the trustees of the Acclimatisation Society of Queensland to be used only for the purpose of the Society should be valued on resumption by the Government.
The trustees had no general power of sale but they were by statute authorised to sell any part of the land to the local authority and to the National Agricultural and Industrial Association.
It was held by the judicial Committe that in view of this restric tion on the nature of the interest of the trustees in the land, the trustees were not entitled, upon resumption of the land by the Government, to be paid unrestricted.
free hold value of (1) 424 the land but only the value of the land to the trustees under the conditions upon which they held it.
The Judicial Committee pointed out that if the owner holds the property subject to restrictions, "it is a necessary point of enquiry how far these restrictions affect the value" and the proper ty cannot be valued as if it were "unrestricted in any way".
The burden or limitation attaching to the leasehold interest in the present case must, therefore, be taken into account in arriving at the value of the leasehold interest and it cannot be valued ignoring the burden or limitation.
This problem can also be looked at from a slightly different angle and this approach too would throw some light on the true nature of the leasehold interest required to be valued.
Let us approach the question from the point of view of the lessor.
What is the nature of the lessor 's interest in the land ? The lessor has undoubtedly the reversion, but coupled with it is also the right to 50 per cent .of the unearned increase in the value of the land at the time of assignment of the leasehold interest by the lessee as also the pre emptive right to the land after deducting 50 per cent of the unearned increase from the price obtainable by the lessee.
This is the asset of the lessor which would have to be valued when the lessor is sought to be assessed to wealth tax.
The right to 50 per cent of the unearned 'increase on assignment of the leasehold interest would certainly add to the value which the reversion would other wise fetch in the open market.
Now, once it is granted that under the lease deed the lessor has a bundle of rights, which includes 'something ' more than the reversion, that 'something ' would necessarily be subtracted from the inter est of the lessee and to that extent, the interest of the 'lessee would stand reduced.
The interest of the lessee would be the leasehold interest minus that 'something '.
What goes to augment the interest of the lessor would corre spondingly reduce the interest of the lessee and it Cannot be taxed as the wealth of both the lessor and the lessee.
It would be includable in the net wealth of the lessor and hence it cannot at the same time form part of the wealth of the lessee and must be subtracted in determining the nature and extent of the interest of the lessee.
That takes us to the question as to how the leasehold interest of the assessee with the burden or limitation attaching under clause (13) of the lease deed should be valued.
It is clear from the language of section 7, sub sectiOn (1 ) that what the Revenue is required to do for the purpose of determining the value of an asset is to assume that the asset which is to be valued is being sold in the open market and to fix its value for the purpose of wealth tax upon that hypothesis.
Now, whenever the value of an asset has to be determined on the basis of a hypothetical_ sale, the court has necessarily to embark upon speculations which may be quite difficult and in 'some cases, even arti ficial.
Here the asset to be valued is the leasehold inter est in the land with the burden or restriction contained in clause (13) of the lease deed and the inquiry has, there fore, to be directed to the question as to what is the price which this asset would fetch if sold in the open market.
What would be the realisable value of this asset ? It would indeed be difficult to speculate as to what 425 the leasehold interest in the land would fetch in the open marker when it is affected by the burden or restriction contained in clause (13) of the lease deed.
If the lease hold interest were free from this burden or restriction, it ' would be comparatively easy to determine its market value, for there are recognised methods of valuation of leasehold interest, but where the leasehold interest is cut down by this burden or restriction and some right of interest is abstracted from it, the problem of valuation becomes a difficult one and some method has to be evolved for resolv ing it.
The only way it can be done in a case of this kind is by taking the market value of the leasehold interest as if it were unencumbered or unaffected by the burden or restriction of clause (13) and deducting from it, 50 per cent of the unearned increase in the value of the land on the basis of the hypothetical sale, as representing the value of such 'burden or restriction.
There is also one other consideration which reinforces the adoption of this method of valuation.
When, for the purpose of valuation of the leasehold interest, it is as sumed that the leasehold interest is sold in the open market, the price received does not in its entirety belong to the assessee.
Fifty per cent of the unearned increase in the value of the land is diverted to the lessor by virtue of the paramount title contained in clause (13) and when re ceived by the assessee, it belongs to the lessor.
It is in truth and substance collected by the assessee on behalf of the lessor.
What is received by the assessee on his own account is only the price less 50 per cent of the unearned increase in the value of the land and that represents the net realisable worth of the asset in the hands of the asses see.
The Revenue contended that payment of 50 per cent of the unearned increase in the value of the land to the lessor is really an instance of application of the price received by the assessee and not diversion of a part of the price by paramount title and hence the whole of the price must be taken as the measure of the wealth of the assessee.
But this contention is, in our opinion, not well founded and cannot be sustained.
The true test for determining whether a payment made by an assessee out of an amount received by him is an application of part of the amount which belongs to him or it is payment of an amount which is diverted before it reaches the assessee so that at the time of receipt, it belongs to the payee and not to the assessee, has been explained by Hidayatullah, J., in C. 1. Sitadas Tirath das(1) in the following words: "In our opinion, the true test is wheth er the amount sought to be deducted, in truth, never reached the assessee as hi 's income.
Obligations, no doubt, there are in every case but it is the nature of the. obli gation which is the decisive fact.
There is a difference between an amount which a person is obliged to apply out of his income and an amount which by the nature of the obligation cannot be said to be a part of the income of the assessee.
Where by the obligation income is diverted before it reaches the assessee, it is deductible; but where the income is re quired to be applied to discharge an obliga tion after such income reaches the 426 assessee, the same consequence, in law, does not follow.
It is the first kind of payment which can truly be excused and not the second.
The second payment is merely an.obligation to pay another a portion of one 's own income, which has been received and is since applied.
The first is a case in which the income never reaches the assessee, who, even if he were to collect it, does so, not as part of his in come, but for and on ,behalf of the person to whom it is payable.
In our opinion, the present case is one in which the wife and children of the assessee who continued to be members of the family received a portion of the income of the assessee, after the assessee had received the income as his own.
The case is one of application of a portion of the income to discharge an obligation and not a case in which by an overriding charge the assessee became only a collector ' of another 's income."
It is clear on the application of this test that in the present case, 50 per cent of the unearned increase iii the value of the land would be diverted to the lessor before it reaches the hands of the assessee as part of the price.
The assessee holds the leasehold interest on condition that if he assigns it, 50 per cent of the unearned increase in the value of the land will be payable to the lessor.
That is the condition on which he has acquired the leasehold inter est arid hence 50 per cent of the unearned increase in the value of the land must be held to belong to the lessor at the time when it is received by the assessee and it would not be part of the net realisable worth of the leasehold interest in the hands of the assessee.
If a question is asked as to what is the real wealth of the assessee in terms of money so far as the leasehold interest is concerned, the answer would inevitably be that it is the price less 50 per cent of the unearned increase in the value of the land.
It is difficult to see how 50 per cent of the unearned increase in the value of the land which belongs to the lessor can be regarded as part of the wealth of the asses.see.
The posi tion would undoubtedly be different where a payment is made by an assessee which is an application of a part of the price received by him.
Where such is the case, the whole of the price would represent the net realisable worth of the asset in the hands of the assessee and what is paid out by the assessee would be merely a disbursement made after the price reaches the assessee as his own property.
That was the position in Pardit Lakshi Kant Jha vs Commissioner of Wealth Tax, Bihar(1) where the question arose whether the expenditure in connection with brokerage, commission or other expenses which would be liable to be incurred by the assessee in effectuating a sale would be deductible from the market value of the shares in determining their value for the purpose of assessment to wealth tax.
This Court held that in computing the value of the shares, the assessee is not entitled to deduction of brokerage and commission from the valuation of the shares as given in,the Stock Exchange quotations or quotations furnished by well known brokers.
It was pointed out by this Court that: (1) 427 "It is not the amount which the vendor would receive after deduction of this expense, but the price which the asset would fetch when sold in the open market which would constitute the value of the asset for the purpose of section 7(1) of the Act".
Obviously, this view 'was taken because the entire price, when received, would belong to the asses see and payment of brokerage and commission would be merely application of part of the price in meeting expenditure necessary for effectuating the sale and hence it would not be deductible in ascertaining the net realisable worth of the shares in the bands of the assessee.
We are, therefore, of the view that the question re ferred by the Tribunal must be answered in the negative and it must be held that in determining the value of the lease hold interest of the assessee in the land for the purpose of assessment to wealth tax, the price which the leasehold interest would fetch in the open market were it not encum bered or affected by the burden or restriction contained in clause (13) of the lease deed, would have to be reduced by 50 per cent of the unearned increase in the value of the land on the basis of the hypothetical sale on the valuation date.
The appeal accordingly Fails and must be dismissed with costs.
section R. Appeal dismissed.
| IN-Abs | The respondent an assessee to wealth tax as an individual, in the assessment for the assessment year 1968 69, valued his property situate on plot No. 12, Block 39 Kautilya Marg, Chanakyapuri in his return of net wealth @ Rs. 4,52,000 as against the value of Rs. 6,00,000 shown by him in the previ ous years.
The property consisted of leasehold interest in the land together with a house built on it.
The land be longed to the President of India and it was leased by the President of India to one Vashesharan Devi on the terms and conditions set out in an agreement of lease dated 30th December, 1954 and the leasehold interest was acquired from Vashesharan Devi by the assessee.
Clause (13) of the lease deed provided that the assessee shall not be entitled to assign the leasehold interest in the land without obtain ing the prior approval in writing of the lessor and 50 per cent of the unearned increase in the value of the land at the time of assignment shall be claimable by the lessor and moreover, if the lessor so desires, he shall have pre emp tive right to purchase the property after deducting 50% of the unearned increase in the value of the land.
It further provided that "all such assignees and transferees . . shall be bound by all the covenants and conditions herein contained and be answerable in respect therefor".
In accordance with this clause, the Architects who are approved valuers estimated the value of the property @ Rs. 5,82,268 and from this ' figure, they deducted a sum of Rs. 1,30,000 representing 50 per cent of the unearned in crease in the value of the land, which belonged to the lessor and arrived at the value of Rs. 4,52,268/ .
The Wealth Tax Officer did not accept the estimate of the valuation and taking the annual rental value of Rs. 1,32,000/ fetched by the property as the basis, computed the net annual rent at Rs. 82,956/ and arrived at the figure of Rs. 8,29,560/ as the value of the property by applying the multiple of ten to the net annual rental value of Rs. 82,956/ .
The claim of the assessee to deduct from the value of the property 50 per cent of the unearned in crease in the value of the land was rejected on the ground that this claim was based "merely on hypothetical presump tions".
The value of the property was, however, reduced from Rs. 8,29,560/ to Rs. 6,00,000/ since that was the figure accepted by the Revenue in the past assessment years.
The appeals before the Appellate Assistant Commissioner and the Tribunal failed.
On a reference, the High Court took the view that the liability to pay 50 per cent of the un earned increase in the value of the land to the lessor at the time of the assignment was a disadvantage attached to the leasehold interest in the land and hence its value was liable to be deducted from the value of the property in arriving at the net wealth.
Dismissing the appeals, the Court, HELD: (1) In determining the value of the leasehold interest of the assessee in the land for the purpose of assessment to wealth tax the price which the leasehold interest would fetch in the open market, were it not encumbered or affected by the burden of the restriction contained in clause (13) of the leasedeed, would have to be reduced by 50 per cent of the unearned increase in the value of the land on the basis of the hypothetical sale on the valuation date.
[427 C D] (2) The only way in which in a. case of this kind the valuation section 7(1) of the Wealth Tax Act can be done is by taking the market value of the leasehold interest as if it were unencumbered or unaffected by the burden or restriction contained in clause (13) and deducting from it, 50 per cent of the unearned 419 increase in the value of the land on the basis of the hypo thetical sale as representing the value of such burden or restriction.
[425 A C] (3) The true test for determining the matter of payment made by an assessee out of an amount received by him wheth er it is an application of part of the amount which belongs to him or it is payment of an amount which is diverted before it reaches the assessee so that at the time of re ceipt, it belongs to the 'payee and not to the assessee.
In the present case 50 per cent of the unearned increase in the value of the land would be diverted to the lessor before it reaches the hands of the assessee as part of the price.
[425 E F] C.I.T.v.
Sitaldas Tirathdas SC; applied.
Pandit Lakshmi Kant Jha vs Commissioner of Wealth Tax, Bihar , explained.
(4) The burden or limitation attaching to the leasehold interest must be taken into account in arriving at the value of the leasehold interest and it can not be value ignoring the burden or limitation The covnaent in clause (13) is clearly a covenant running with the land and it would bind whosoever is the holder of the leasehold interest for the time being.
It is a constituent part of the rights and liabilities and advantages and disadvantages which go to make up the leasehold interest and it is an incident which is in the nature of burden, on the leasehold interest.
Plainly and indisputably, it has the affect of depressing the value which the leasehold interest would fetch if it were free from this burden or disadvantage.
When the lease hold interest in the land has to be valued this burden or disadvantage attaching to the leasehold interest must be duly discounted in estimated the price which the leasehold interest would fetch.
To value the leasehold interest on the basis that this burden or disadvantage were to be ignored would be to value an asset different in content and quality from that actually owned by the assessee.
[424 B, 423 D H] Corrie vs MecDermott , quoted with approval.
(5) When under the lease deed the lessor has a bundle of rights which includes "something" more than the reversion, that "something" would necessarily be subtracted from the interest of the lessee and to that extent, the interest of the lessee would be the leasehold interest minus that "something".
What goes to augment the interest of the lessor would correspondingly reduce the interest of the lessee and it cannot be taxed as the wealth of both the lessor and the lessee.
It would be includible in the net wealth of the lessor and hence it cannot at the same time form part of the wealth of the lessee and must be subtracted in determining the nature and extent of the interest of the lessee.
[424 E F]
|
minal Appeal No. 143 of 1954.
On appeal by special leave from the judgment and order dated the 12th August 1953 of the Patna High Court in Criminal Appeal No. 345 of 1952 arising out of the judgment and order dated the 20th August 1952 of the Court of Additional Session Judge, Darbhanga in Session Case No. 12 of 1952.
H.J. Umrigar and B. C. Prasad, for the appellant.
B.K. Saran and M. M. Sinha, for the respondent. 1955.
December 8.
The Judgment of the Court was delivered by VENKATARAMA AYYAR J.
The appellants were charged before the Additional Sessions Judge, Darbhanga under section 302 read with section 34 of the Indian Penal Code for the murder of one Balbbadra Narain Singh.
They were also charged, some under section 147 and the others under section 148, for be ing members of an unlawful assembly and for rioting.
The case of the prosecution was as follows: The deceased and the appellants were pattidars in the village I of Mahe, and there was ill feeling between them on account of the village pattidari.
On 5 3 1951, at about 10 A.M. the deceased was returning from the river to his baithka.
Oil the way, the appellants who were armed with bhalas, sword and lathi, and some others surrounded him at the courtyard of the village school and attacked him.
One Harischandra Singh, who is still absconding, plunged his bhala into the abdomen of the deceased, and the appellants joined in the attack on him.
The deceased ran to his baithka, and from there, he was taken to the police station at Singhia.
There, he made a complaint which has been filed as the first information report, and therein beset out the incidents mentioned above, and implicated the appellants as concerned in the attack.
The deceased was then taken to the hospital, and in view of his precarious condition the doctor recorded his dying declaration.
The deceased was then sent 1045 for treatment to the hospital at Samastipur, but on the way he died.
On the basis of the first information report and on the enquiries made by them, the police charged the appellants under section 302 read with section 34 for murder and under sections 147 and 148 for rioting.
The defence of the appellant was that the deceased was attacked by some unknown ,assailants in his baithka in the early hours of 5 3 1951, and that they were not concerned in the offence.
The Additional Sessions Judge, Darbbanga accepted the evidence of the prosecution, and convicted the appellants under section 302 read with section 34, and sentenced them to transportation for life.
He also convicted them, some under section 147 and the others under section 148, but imposed no separate sentence under those sections.
The appellants took the matter in appeal to the High Court of Patna.
, The learned Judges agreed with the Sessions Judge in his conclusions of fact, but altered the conviction from one under section 302 read with section 34 to one under 'section 326 read with section 149, and the sentence from transportation for life to various terms of imprisonment.
The learned Judges also maintained the conviction of the appellants on the charge of rioting, but awarded no separate sentence therefor.
It is against this judgment that the present appeal is directed.
On behalf of the appellants, it was firstly contended by Mr. Umrigar that the finding of the courts below that the incident took place at the school courtyard and not at the baithka of the deceased was bad, because it was based on inadmissible evidence, viz., Exhibit P 7 and the testimony of P.Ws. 4, 7 and 12.
Exhibit P 7 is a statement of the deceased taken by the police officer subsequent to the lodging of the first information and after the investigation had begun, and its reception would be barred by section 162 of the Code of Criminal Procedure.
But the learned Judges thought that it would be admissible under section 32(1) of the Indian Evidence Act, and the correctness of this view is disputed by the appellants.
But even if Exhibit P 7 is inadmissible in evidence, 1046 that would not assist the appellants, as the learned Judges observed that apart from that document, they would have, on the other evidence, held that the deceased was attacked at the school courtyard.
Then, we come to the evidence of P.Ws. 4, 7 and 12 on which the courts below have relied in accepting the version of the incident as given by the prosecution.
Mr. Umrigar contended that their evidence was inadmissible, because they were examined by the police at the stage of investigation, and their statements were not recorded separately as required by section 161(3) of the Code of Criminal Procedure.
This is what the investigating officer, P.W. 18, deposed with reference to this matter. "The Daffadar produced Sital Singh (P.W. '12), Ram Karan Singh (P.W. 7) and Ramkinker (P.W. 4).
First of all, I examined them separately but recorded their joint statement in respect of common things.
I made a separate record about the identification and the weapons".
The recording of a joint statement of the examination of P.Ws. 4, 7 and 12 is clearly in contravention of section 161(3), and must be disapproved.
But the question is whether that renders the testimony of P.Ws. 4, 7 and 12 in court inadmissible.
Section 161(3) does not say so, and indeed, seeing that the police are not bound to make a record of the statements of witnesses in which case there is admittedly no bar to the reception of their testimony, it would be anomalous if we were to hold that their evidence is inadmissible, because the statements were also reduced to writing but not in the manner provided in the section.
The Indian Evidence Act contains elaborate provisions as to who are competent witnesses and on what matters their evidence is inadmissible.
And on these provisions P.Ws. 4, 7 and 12 are neither incompetent witnesses, nor is their evidence as to the incidents to which they deposed, inadmissible.
In Zahiruddin vs Emperor(1) it was held by the Privy Council that the failure to comply with the provisions of section 162(1) might greatly (1) A.I.R. 1947 P.C. 75.
1047 impair the value of the evidence of the witness, but that would not affect its admissibility.
On the same reasoning, it will follow that the evidence of P.Ws. 4, 7 and 12 is not inadmissible for the reason that their statements had been recorded by P.W. 18 jointly and not separately as required by section 161(3).
In support of his contention that their evidence is inadmissible, Mr. Umrigar relied on the decisions in Baliram Tikaram vs Emperor(1) and Maganlal Radhakishan vs Emperor(2).
In Baliram Tikaram vs Emperor(1), which was a decision under section 162 of the Code of Criminal Procedure the accused had not been furnished with copies of the statements recorded by the police officers under section 161, and it was held that that deprived the accused of a valuable right, and must have caused prejudice to them.
That was the view taken in Viswanath vs Emperor (3) , and no exception can be taken to it.
But the learned Judges went on to observe that the evidence of the witnesses who gave statements at the investigation would itself be inadmissible.
The reason for this opinion was thus stated by them: "How can the evidence be admissible and proper for consideration when the accused is robbed of his statutory means of cross examination and thereby denied the opportunity of effectively cross examining his adverse witnesses? No evidence recorded by the Court, unless it satisfies the requirement of section 138, Evidence Act, can become admissible and proper for consideration.
It would indeed be bold to say that the evidence of a witness is legally admissible against a party even though he at the time it was given had not the full opportunity to cross examine him".
This view was reiterated by the same learned Judges in Maganlal Radhakishan vs Emperor(2), but, for the reasons already given, we are unable to accept this as a correct statement of the law.
We are of the opinion that while the failure to comply with the requirements of section 161(3) might affect the weight to be (1) A.I.R. 1945 Nag.
(2) A.I.R. 1946 Nag.
(3) I.L.R. , 1048 attached to the evidence of the witnesses, it does not render it inadmissible.
That was so held by Harries, C.J. and Bachawat, J. in Bejoy Chand Patra vs The State(1), where this question arose directly for decision, and we are in agreement with this view.
In the present case, the attention of the learned Judges was drawn to the infirmity in the evidence of P.Ws.4, 7 and 12, arising by reason of the failure to observe section 161(3), but they were, nevertheless, prepared to accept it as reliable.
We must accordingly hold that the findings of the courts below are not open to attack on the ground that they were based on inadmissible evidence.
It was next contended that the charge on which the appellants were tried was one under section 302 read with section 34, and that the learned Judges of the High Court erred in convicting them under section 326 read with section 149.
Before the learned Judges the contention that was pressed was that there was no power in the court to substitute section 149 for section 34, but they declined to accept it.
The question has since been considered by this Court in Karnail Singh and others vs The State of Punjab( ') and Willie Slaney 's case( ').
It is conceded by Mr. Umrigar that in view of these decisions, the question is no longer open.
It must be answered adversely to the appellants.
It was finally contended that there had been no proper examination of the appellants under section 342, and that the conviction should accordingly be quashed.
What happened was that when the court commenced its examination under section 342, the appellants stated that they would file written statements.
Those statements were very elaborate and furnished the answer of the appellants to all the points raised in the prosecution evidence.
Mr. Umrigar was unable to suggest any question which could have been put, with reference to which the statements did not contain an answer.
Clearly, the appellants have not been prejudiced.
It is no doubt true that (1) A.I.R. 1950 Cal. 363.
(2) , (3) Criminal Appeal No. 6 of 1955, 1049 section 342 contemplates an 'examination in court) and the practice of filing statements is to be deprecated.
But that is not a ground for interference, unless prejudice is established.
And it is nothing unusual for the accused to prefer filing statements instead of answering questions under section 342 lest they should suffer by inadvertent admissions or by damaging statements.
As no prejudice has been shown, this contention also must be rejected.
In the result, the appeal is dismissed.
| IN-Abs | Although the joint recording of statements made by witnesses during an investigation is a contravention of section 161(3) of the Code of Criminal Procedure and must be disapproved, that by itself does not render the testimony given by such witnesses in court inadmissible.
It is, however, for the court to decide whether it will rely on such testimony or attach any weight to it.
Zahiruddin vs Emperor, (A.I.R. , applied.
Baliram Tikaram vs Emperor, (A.I.R. and Magan lal Radhakishan vs Emperor, (A.I.R. , disapproved.
Bejoy Chand Patra vs The State, (A.I.R. , ap proved.
The court has power to substitute a charge under section 149 of the Indian Penal Code for a charge under section 34.
Karnail Singh and others vs The State of Punjab, ([1954] S.C.R. 904)and Willie Slaney 's case, (Criminal Appeal No. 6 of 1955), referred to.
Although section 342 of the Code of Criminal Procedure contem plates oral examination of the accused in court and though the practice of filing written statements is to be deprecated, the fact that the accused filed a statement instead of being examined is no ground for interference unless he is shown to have been prejudiced thereby.
Consequently, in a case where the accused were put up for trial under section 302 read with section 34 of the Indian Penal Code, and the Additional Sessions Judge relying on the evidence of three of the prosecution witnesses whose statements during the investigation were recorded jointly in contravention of section 161(3) of the Code of Criminal Procedure, convicted and sentenced them to transportation for life and the High Court in appeal agreed with the findings of fact, but altered the conviction to one under section 326 read with section 149 of the Indian Penal Code, as also the sentence, their conviction was not liable to be set aside.
|
ON: Criminal Appeal No. 577/76 (Appeal by Special Leave from the judgment and Order dated the 4th Nov. 1976 of the Bombay High Court in Crimi nal Appeal No. 448 of 1973).
V.M. Tarkunde, section V. Tambwekar and Miss M. Tarkunde, for the appellant.
H.R. Khanna and M.N. Shroff, for the respondent.
515 (Goswami, J.
) The Judgment of the Court was delivered by GOSWAMI, J.
The appellant was convicted by the Judicial Magistrate, Udgir, under section 16(1)(a)(i) provi so (i) of the , read with section 2(i)(1) and section 7(i) of the said Act and sentenced to simple imprisonment till rising of the court and to pay a fine of Rs. 500/ , in default rigorous imprisonment for two months.
The appellant 's father who was also charged for the same offence was, however, acquitted.
The charge against the appellant was that he sold chilli powder which was adulterated inasmuch as the percentage of the total ash was more than the permissible limit.
The sample of chilli powder which was seized by the Food Inspec tor on April 13, 1974, contained 37.25% of the total ash against the permissible percentage of 8%.
It was stated in the Analyst 's report that the percentage of extraneous matter which was common salt mixed with the chilli powder was 32.4%.
The learned Magistrate found that the chilli powder was adulterated within the meaning of section 2(i)(1) although the prosecution was on the basis of the article being adulterated within the meaning of section 2(i)(c) of the (briefly the Act).
The State of Maharashtra preferred an appeal against the order of acquittal of the father of the appellant and against the inadequacy of the sentence awarded to the appel lant.
The High Court dismissed the appeal against acquittal of the appellant 's father but allowed the appeal of the State with regard to the inadequacy of the sentence.
The High Court while affirming the conviction of the appellant under section 16(1)(a)(i) read with sections 2(i)(1) and 7(i) of the Act enhanced the sentence to six months ' simple imprisonment and a fine of Rs. 1000/ , in default simple imprisonment for two months.
Hence this appeal by special leave.
Mr. Tarkunde, appearing on behalf of the appellant, submits that the appeal by the State of Maharashtra under section 377(1), Criminal Procedure Code, 1973, was incompe tent in view of the provisions of sub section (2) of that section.
He further submits that the High Court was not at all justified in a case of this nature to interfere with the sentence when the trial court had given adequate reasons for imposing the lesser sentence.
It is also pointed out, more or less as an alternative submission, that the power of the High Court to enhance sentence which was available under section 435/439 Cr.
P.C. of the old Code is replaced by the provision of appeal under section 377 Cr.
P.C. of the new Code.
It is also stated that the High Court 's power of revision, suo motu, long exercised under the old Code is now taken away under the new Code by providing for apppeal against inadequacy of sentence.
The above submission is put forward ex abundanti cautela lest we may not interfere with the sentence imposed by the High Court having regard to the possibility of exercise of pow ers, suo motu, by the High Court for enhancement of sentence assuming the appeal is incompetent on the ground urged by the appellant.
516 We should at once remove the misgiving that the new Code of Criminal Procedure, 1973, has abolished the High Court 's power of enhancement of sentence by exercising revisional jurisdiction, suo motu.
The provision for appeal against inadequacy of sentence by the State Government or 'the Central Government does not lead to such a conclusion.
High Court 's power of enhancement of sentence, in an appropriate case, by exercising suo motu power of revision is still extent under section 397 read with section 401 Criminal Procedure Code, 1973, inasmuch as the High Court can "by itself" call for the record of proceedings of any inferior criminal court under its jurisdiction.
The provision of section 401(4) is a bar to a party, who does not appeal, when appeal lies, but applies in revision.
Such a legal bar under section 401(4) does not stand in the way of the High Court 's exercise of power of revision, suo motu, which continues.
as before in the new Code.
Before we proceed further we may set out section 377(1) and (2) Cr.
P.C. with which we are concerned: 377.
(1) "Save as otherwise provided in sub section (2), the State Government may, in any case of conviction on a trial held by any Court other than a High Court, direct the Public Prosecutor to present an appeal to the High Court against the sen tence on the ground of its inadequacy.
(2) If such conviction is in a case in which the offence has been investigated by the Delhi Special Police Establishment, constituted under the , or by any other agency empowered to make investigation into an offence under any Central Act other than this Code, the Central Government may direct the Public Prosecutor to present an appeal to the High Court against the sentence on the ground of its inadequacy".
Mr. Tarkunde emphasised upon the difference of language in section 377(2) and section 378(2) Cr.
In the latter section the word "also" appears making provision for both the State Government the Central Government to appeal against acquittal.
On the other hand it is urged on behalf of the State that the word "also" may be read in section 377(2) Cr.
P.C. in the context of the scheme of the two provisions in section 377 and section 378 Cr.
It is true that section 378(2) follows the pattern of section 417(2) of the old Code and the right to appeal is conferred upon both the State Government and the Central Government in express terms in section 378(2).
It is clear that the legislature has maintained a watertight dichotomy while dealing the matter of appeal against inade quacy of sentence.
We agree that in the absence of a similar word "also" in section 377(2) it is not possible for the court 517 (Goswami, J.) to supply a casus omissus.
The two sections, section 377 and section 378 Cr.
P.C. being situated in such close prox imity, it is not possible to hold that omission of the word "also" in section 377(2) is due to oversight or per incuri am.
Section 377 Cr.
P.C. introduces a new right of appeal which was not earlier available under the old Code.
Under sub section (1) of section 377 Cr.
P.C. the State Government has a right to appeal against inadequacy of sentence in all cases other than those referred to in sub section (2) of that section.
This is made clear under section 377(1) by its opening clause "save as otherwise provided in sub section (2)".
Sub section (2) of section 377, on the other hand, confers a right of appeal on the Central Government against a sentence on the ground of its inadequacy in two types of cases: (1) Those cases where investigation is con ducted by the Delhi Special Police Establish ment constituted under the .
(2) Those other cases which are investi gated by any other agency empowered to make investigation under any Central Act not being the Code of Criminal Procedure.
There is no difficulty about the first type of cases which are investigated by the Delhi Special Police Estab lishment where, certainly, the Central Government is the competent authority to appeal against inadequacy of sen tence.
The controversy centres round the second type of cases viz., those which are investigated by any other agency empowered to make investigation under any Central Act not being the Code of Criminal Procedure.
The Criminal Procedure Code inter alia, provides for investigation of all categories of criminal offences.
The First Schedule of the Code classifies offences under the Indian Penal Code as well as offences against other laws.
Between the above two classifications the entire denotation of criminal offences is exhausted.
It is clear that the Delhi Special Police Establishment also has to comply with the provisions of the Code of Criminal Procedure in ' inves tigation of offences just as the State Police has to do.
By section 3 of the , the Central Government may by notification in the official gazette specify the offences or class of offences which are to be investigated by the Delhi Special Police Establishment.
It is only when such a notification is made by the Central Government that the Delhi Special Police Establishment is empowered to investigate the specified offences.
Similarly if in any other Central Act, not being the Code of Criminal Procedure, a provision is made for empowering a particular agency to make investigation of offences under that Act, then also the Central Government alone will be the competent authority to prefer appeal under section 377(2) Cr.
The true test, therefore, under section 377(2) Cr.
P.C. is whether the offence is investi gated by the 518 Delhi Special Police Establishment or is investigated by any other agency empowered to make investigation under any Central Act other than the Code of Criminal Procedure.
In other words, just like section 3 of the , there should be an express provi sion in the empowering the making of investigation under the Act.
But no such express provision is found in the .
Mr. Tarkunde took us through all the relevant provisions of the and in particu lar rule 9 of the Central Rules to point out that it is a self contained code detailing the requisite manner of inves tigation for the purpose of efficient prosecution of offenders under that Act.
Mere provision of an in built mechanism of some kind of investigation in that Act is not decisive of the matter.
There should be an express provi sion in that Act empowering the Food Inspectors to make investigation of offences under the Act.
It is true that investigation under section 2(h) Cr.
P.C. is an inclusive definition and is of wide import.
It may also be true that some of the powers exercised by the Food Inspectors under section 10 of the Act are included in the investigatory process of the police although the Food Inspectors have no powers of arrest of the offenders unless they refuse to give name and residence or give suspicious name or residence.
This procedure in the Act follows from the fact that on the date of taking a sample of an article, the Food Inspector is not in a position to come to a con clusion whether the article is adulterated within the mean ing of the Act.
It is only on receipt of the Analyst 's report certifying the article to be adulterated that the Food Inspector will be able to submit a report to the Magis trate for taking cognizance of the offence and his report will have to be accompanied also by a written consent of the appropriate authority under section 20 of the Act.
The scheme of the Act is such that the case is instituted on his report and dealt with under the Criminal Procedure Code as a case of which cognizance is taken under section 190(1)(a) of the Criminal Procedure Code.
In the absence of any express provision in the Act in that behalf it is not possible to hold that the Food Inspectors are empowered to make .inves tigation under the Act.
Section 377(2) Cr.
P.C., therefore.
is not attracted and the appeal under section 377(1) Cr.
P.C. at the instance of the State Government is maintain able.
The first submission of the appellant has no force.
With regard to the second and last submission on sen tence Mr. Khanna on behalf of the State submits that this was a case under section 16 for violation of section 2(i)(c) of the Act in which case the Magistrate had no jurisdiction to award a sentence less than six months.
According to counsel, the High Court was right in enhancing the sen tence of the appellant.
We are concerned in this case with the prior to the amendment by Act 34 of 1976.
which 519 (Goswami, J) inter alia, amended section 2(i)(1) and added a sub clause (m) to section 2(i).
It is true.
that under section 16(1)(a)(i) if any person sells any article of food which is adulterated he shall be` punishable with imprisonment for a term which shall not be less than six months but which may extend to six years and a fine which shall not be less than one thousand rupees.
The proviso to that section, however, relieves an offence trader sub clause (i) of clause (a) when inter alia, it is with respect to an article of food which is adulterated under sub clause (1 ) of clause (i) of section 2, from the rigour of the above penal provision and the court may, for any adequate and special reason, impose a sentence of im prisonment for a term of less than six months or a fine of less than one thousand rupees etc.
It is by invoking the above proviso that the trial court sentenced.
the appellant as set out above.
Mr. Khanna submits that we should.
alter the finding of conviction to one for violation of section 2(i)(c) from section 2(i)(1), since, according to him, that will be the proper conviction on the facts of the case.
We are unable to entertain this plea for altering the conviction in such a manner for the purpose of enhancing the sentence under section 377 Cr.
The State did not appeal against the acquittal of the appellant under section 16(1)(a)(i) read with section 2(i)(c) and proceeded on the basis that the article was adulterated within the meaning of section 2(i)(1) as held by the trial court.
This is clear also from the judgment of the High Court.
In an appeal against inade quacy of sentence it is not permissible to alter the convic tion to an aggravated category of offence for which the accused wan not convicted.
While the accused in such an appeal under section 377 Cr.
P.C. can show that he is inno cent of the offence, the prosecution is not entitled to show that he is guilty of a graver offence and on that basis the sentence should be enhanced.
The prosecution will only be able to urge that the sentence is inadequate on the charge as found or even on an altered less graver charge.
The submission of Mr. Khanna is clearly untenable.
Mr. Khanna next submits that this Court should not interfere with the sentence in a case under the as the offence is against society at large affecting the health and wellbeing of the people in general.
We are alive to the seriousness of offences under the .
Courts have to give due recognition to the intent of the legislature in awarding proper sentence including the minimum sentence in appropriate eases described under the Act.
Such offences cannot be treated in a lighthearted manner.
Even so justice has to be done in accordance with law.
The , itself, permits for some leniency in an excepted category of cases as pointed out earlier.
When the legislature itself intends not to visit an offence under the Act with an equal degree of severity under specified circumstances, it is permissible for the courts to give the benefit in suitable cases.
As seen earlier, the provides that when conviction is under section 16(1)(a)(i) for selling an adulterated article coming within the defini tion of section 2(i)(1), the 520 Magistrate, by recording adequate and special reasons, has jurisdiction to award a sentence less than the minimum.
In an appeal under section 377 Cr.
P.C. the High, Court may interfere with the sentence if no reasons for awarding a lesser sentence are recorded by the Magistrate Again, if the reasons recorded by the Magistrate are irrelevant, extrane ous, without materials and grossly inadequate, the High Court will ' be justified in enhancing the sentence.
While dealing with the question of sentence the Magis trate noted that the appellant was a small retail shopkeeper who had only 3 kgs.
of chilli powder in his shop for sale out of which 450 gms. were purchased by the Food Inspector.
He also considered the nature of the offence as disclosed in the report of the Public Analyst.
There is nothing in the evidence to show that any injurious ingredient to health was mixed with the article.
We find that the Magistrate had the jurisdiction under the first proviso to section 16(1) to award less than the minimum sentence in this case by record ing adequate and special reasons.
We are unable to hold that the reasons given by the Magistrate are so grossly inadequate that the High Court was right in interfering with the sentence in this petty case.
We must hasten to add that the matter would have been absolutely different if the article sold contained ingredients injurious to health.
Our attention is drawn to a disquieting feature in the procedure adopted by the learned single Judge (G. N. Vaidya, J. ) in disposing of the appeal.
The learned Judge ignored the decision of another single Judge of the same court (J. M. Gandhi, J.) who had earlier held m a similar case that the appeal by the State was not competent under section 377(1) Cr.
It is true that the decision is pending.
before, this Court in appeal by special leave.
That, howev er, cannot be sufficient reason for the learned Judge to ignore it and observe that it is "unnecessary to keep back this matter till the Supreme Court decides matter".
When there was a decision of a coordinate court, it was open to the learned Judge to differ from it but in that case the only judicial alternative was to refer it to a larger bench and not to dispose of the appeal by taking a contrary view.
Judicial discipline as well as decorum should suggest that as the only course.
In the result the appeal is allowed and the judgment and order of the High Court are set aside.
The appellant shall be discharged from his bail bond.
S.R. Appeal allowed.
| IN-Abs | The appellant and his father were charged section 2(1) (c) of the for adul teration of chilly powder.
The sample of chilli powder which was seized by the Food Inspector on April 13, 1974 contained 37.25% of the total ash against the permissible percentage of 8%.
It was stated in the Analyst 's report that the percentage of extraneous matter which was common salt mixed with the chilli power was 32.4%.
The judicial magistrate, Udgir, found that the chilli powder was adulter ated within the meaning of section 2(i) of the Act and convicted the appellant under section 16(1) (a) (i), proviso I of the r/w section 2(i)(1) and section 7(1) of the said Act and sentenced him to simple impris onment till the rising of the court and to pay a fine of Rs. 500/ and in default rigorous imprisonment for two months.
The appellant 's father was, however, acquitted.
The State of Maharashtra preferred an appeal against the order of acquittal of the father and against the inadequacy of the sentence awarded to the appellant.
The High Court dismissed the appeal against acquittal of the appellant 's father but allowed the appeal of the State with regard to the inadequa cy of the sentence.
Affirming the conviction of the appel lant under section 16(1) (a) (i) r/w sections 2(1)(i) and 7(1) of the Act, the High Court enhanced the sentence to six months ' simple imprisonment and a fine of Rs. 1000/ , in default simple imprisonment for two months.
Allowing the appeal by special leave, the Court, HELD: (1) The new Code of Criminal Procedure, 1973 has not abolished the High Court 's power of enhancement of sentence by exercising revisional jurisdiction suo motu.
The provision for appeal against inadequacy of sentence by the State Government or the Central Government does not lead to such a conclusion.
High Courts power of enhancement of sentence in an appropriate case by exercising suo motu power of revision is still extent section 397 read with section 401 Crimi nal Procedure Code, 1973, inasmuch as the High Court can "by itself" call for the record of proceedings of any inferior criminal court under its jurisdiction.
The provision of section 401 (4) is a bar to a party who does not appeal when appeal lies, but applies to revision.
Such a legal bar under section 401(4) does not stand in the way of the High Courts exercise of power of revision suo motu, which continues as before in the new .Code.
[545H, 546A C] 514 (2) Under sub section (1) of section 377, the State Govern ment has a right to appeal against the inadequacy of sen tence in all cases other than those referred to in sub section (2) of that section.
The true test under section 377(2) Criminal Procedure Code is whether the offence is investi gated by the Delhi Special Police Establishment or is investigated by any other agency empowered to make investi gation under any Central Act other than the Code of Criminal Procedure.
In other words, just like section 3 of the Delhi Special Police Establishment Act, there should be an express provision in an Act empowering the making of investigation under the Act.
No such express provision is found in the .
Mere provision of an in built mechanism of some kind of investigation in that Act is not decisive of the matter.
There should be an express provision in that Act empowering the Food Inspectors to make investigation of offences under the Act.
In the absence of any express provision in the Act in that behalf, it cannot be held that the Food Inspectors are empowered to make investigation under the Act.
Section 377(2) Criminal Proce dure Code, therefore, is not attracted and the appeal under section 377(1), Criminal Procedure Code at the instance of the.
State Government is maintainable.
[517 A, H, 518A, B, C, F] (3) The provides that when conviction is under section 16(1) (a) (i) for selling an adulterated article coming within the definition of section 2(i)(1 ), the Magistrate by recording adequate and special reasons has jurisdiction to award a sentence less than the minimum, [519 H 520 A C] (4) Courts have to give due recognition to the intent of the Legislature in awarding proper sentence including the minimum sentence in appropriate cases described under the Act.
When the Legislature itself intends not to visit an offence under the Act with an equal degree of severity under specified circumstances, it is permissible for the courts to give the benefit in suitable cases.
[519 F G] (5) In an appeal under section 377, Criminal Procedure Code, the High Court may interfere with the sentence, if no rea sons for awarding a lesser sentence are recorded by the Magistrate.
Again if the reasons recorded by the Magistrate are irrelevant, extraneous, without materials and grossly inadequate, the High Court will be justified in enhancing the sentence.
In the instant case the reasons given by the Magistrate were not so grossly inadequate that the High Court could interfere with the sentence in a petty case.
[520 A B, C] (6) In an appeal against inadequacy of sentence it is not permissible to alter a conviction to an aggravated category of offence for which the accused was not convicted.
While the accused in such an appeal under section 377 can show that he is innocent of the offence, the prosecution is not entitled to show that he is guilty of graver offence and that on that basis the sentence should be enhanced.
The prosecution will only be able to urge that the sentence is inadequate on the charge as found or even on an altered less graver charge.
[519 D E] (7) When there is a decision of a co ordinate court, it is open to the judge to differ from it, but in that case,the only judicial alternative is to refer to a larger Bench and not to dispose of the appeal by taking a contrary view.
judicial discipline as well as decorum should suggest that as the only course.
[520 F]
|
: Criminal Appeal No. 126 of 1977.
Appeal by Special Leave from the Judgment and Order dated the 12 1 1976 of the Punjab and Haryana High Court in Crl.
A. No. 583/ 72 R.N. Sachthey and H.S. Marwah for the Appellant.
595 Hardyal Hardy and S.K. Sabbarwal for Respondent.
The Judgment of the Court was delivered by SARKARIA, J.
This appeal by the State is directed against a judgment of the Punjab and Haryana High Court setting aside the conviction of the respondent herein in respect of offences under ss.5(2) read with s.5(1)(d) of the Prevention of Corruption Act, 1947 and 161, Penal Code on the sole ground that the sanction for his prosecution had not been accorded by a competent authority.
N.C. Tandon, respondent Was a civilian in the defence service in the rank of temporary Superintendent Building and Roads, Grade I.
It was alleged that he had accepted illegal gratification of Rs. 300/ from one Brij Bhushan Lal, Con tractor on 11 3 1971 as a motive or reward for doing an official act.
The Contractor was at the material time doing the construction of main sewers in Chandigarh Cantonment near Panchkula.
The respondent 's duty was to supervise that construction.
The respondent, it is alleged, demanded the bribe as a reward for recording correct measurements.
Brij Bhushan Lal did not, in fact, want to pay the gratifi cation.
He therefore informed the Special Police Establish ment authorities who on 10 11 1971 trapped the accused and allegedly recovered the tainted money from his possession.
The sanction for the prosecution of the accused was accorded by Brig.
Naresh Prasad, Chief Engineer, North Western Zone, Chandigarh on 24 6 1971.
The Special Judge, Ambala tried and convicted the accused on the aforesaid charges and sentenced him to one year 's rigorous imprison ment and a fine of Rs. 1,000/ .
Tandon appealed to the High Court.
The appeal was heard by a learned Single Judge who held that on 24 6 1971, when Brig.
Naresh Prasad Chief Engineer, North Western Zone passed the order of sanction for prosecution, he had under the relevant Rules, no plenary or delegated power to appoint to a post in Class III Service and that such a power was delegated to Chief Engineers of Zones for the first time on 14 1 1972.
The learned Judge noted that the authority competent to appoint the accused respondent on 24 6 71, was the Chief Engineer Western Command, Simla, and not the Zonal Chief Engineer.
He therefore concluded that the sanction for prosecution of the accused had not been given by the compe tent authority.
On this short ground, the High Court al lowed Tandon 's appeal, without going into the merits of the case.
At the outset, we may notice the general principles which govern the sanction for prosecution in such cases.
Sub section(1) of section 6 of the Prevention of Corruption Act says: "No court shall take cognizance of an offence punishable under section 161 (or sec.
164) or section 165 of the Indian Penal Code, or under sub section (2) (or sub section (3A) of section 5 of this Act, alleged to have been committed by a public servant, except with the previous sanction of the authorities enumerat ed in clauses (a) (b) and (c) of that section.
" 596 Sub section (2) of the section provides: "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 servant from his office at the time when the Offence was alleged.to have been committed." (emphasis added) Thus the test as indicated in this sub section, for judging the competency of the authority giving the sanction is, whether at the time of the alleged commission of the offence, it had the power to remove the public servant from his office.
Another principle to be borne in mind is, that unless a different intention appears, the power to appoint to an office includes the power to dismiss or remove from that office (vide section 16, General Clauses Act).
We may further clear the ground and have a short, swift look at the relevant statutory rules.
It is common ground that the post of Superintendent, Grade I (B & R) which the accused was temporarily holding, is a post of Class Iii Services, and the members of this Service are governed by Central Civil Services (Classification, Control and Appeal) Rules, 1965 (for short, hereinafter called 1965 Rules).
The 1965 Rules were promulgated on November 20, 1965.
Rule 34 of the 1965 Rules repealed the earlier Rules of 1952 and any notification or orders issued thereunder "in so far as they are inconsistent with (the 1965 Rules)".
One of the provisions of the 1952 Rules, which is relevant for our purpose, and which has substantially been repro duced in the 1965 Rules, is Rule 10.
It reads as under: "10.
All first appointments to Class I and Class II Services shall be made by the Govern ment.
All first appointments to Class III and Class IV services shall be made by the author ities specified in column 3 of Schedule IV in respect of posts mentioned against them or by officers empowered in this behalf by such authorities." (emphasis added).
schedule IV reffered to in the rule ran as follows: "Schedule IV (Vide Rules, 10, 11, 12, 14 and 19).
Posts Appointing Auth Authority em No. orities in respect powered to im of Class III and pose penalties Class IV posts (i),(ii),(iv) (vide rule 10) and (v) of rule 13 for Class II officers (Vide r. 14) 1 to 7 . .
Posts in lower for E in C C. Es.
of the mation under E in C 's Commands.
Branch X X X." 597 The former Rule 10 as recast into Rule 9 of the 1965 Rules reads as below: "9(1) All appointments to Central Civil Services (other than General Civil Service) Class II, Class.
III and Class IV shall be made by the authorities specified in this behalf in the Schedule.
Provided that in respect of Class III and Class IV Civilian Services, or civil ian posts in the Defence Services appointments may be made by officers powered in this behalf by the aforesaid authorities.
(emphasis added) (2) All appointments to the Central Civil Posts,Class II, Class III and Class IV includ ed in the General Central Civil Service shall be made by the authorities specified in this behalf by a general or special order made, by the authorities specified in this behalf in the Schedule.
" It may be noted that both under the old Rule 10 and the Proviso to new Rule 9(1), the appointing authority is compe tent to delegate the power of appointment in respect of Class III Service.
Rule 13 enumerated these penalties which could be im posed upon the servants subject to the Rules: (i) Censure.
(ii) Withholding of increments or promotion.
(iii) Reduction to a lower post or time scale or to a lower stage in a time scale.
(iv) Recovery from pay of the whole or part of any pecuniary loss caused to Government by negligence or breach of orders (v) Suspension.
(vi) Removal from the civil service of the Government, which does not disqualify from future employment.
(Vii) Dismissal from the civil service of the Government which ordinarily disqualifies from future employment.
(viii) Compulsory retirement . " Rule 14 of 1952 Rules specified who could impose these penalties.
It provided : "14(1) Any of the penalties specified in rule 13 may be imposed on any person subject to these rules by the Government or by the appointing authority.
598 (2) Without prejudice to the provisions of sub rule (1), any of the penalties specified in clauses (i), (ii), (iv) or (v) of rule 13 may be imposed.
(a) . . (b) in the case of members of Class III and IV services by the authority empowered in this behalf by the appointing authority.
Explanation.
In this rule the expression "appointing authority" includes an officer empowered under Rule 10 to make first appoint ments to Class III and Class IV Services.
" Rules 11 and 12 of the 1965 Rules correspond to Rules 13 and 14 of 1952 in all material aspects, excepting two, namely, (1) Suspension has been taken out of the category of penalties, and (2) the Explanation appended to Rule 14 has been omitted because in the 1965 Rules, the subject matter of that Explanation has been made a part of the definition of "Appointing Authority" given in Rule 2(a).
The main submission of Mr. Sachthey learned Counsel for the appellant is that by an order communicated per letter, dated 27 4 1956, made under Rule 10 of the 1956 Rules, (.subsequently reiterated in letter dated 23 1 1963) the Engineer in Chief had empowered all Chief Engineers in Military Engineering Service to make first appointments, inter alia, to posts in Class III Service, and that the operation of the aforesaid order was preserved and contin ued by the saving clause in Rule 34(1) of the 1965 Rules.
On these premises, it is maintained, that the High Court was wrong in holding that the Chief Engineer of the North Western Zone, Chandigarh.
was not the 'appointing authority competent to remove the accused from service.
As against this, Mr. Hardyal Hardy, learned Counsel for the respondent submits that the order, dated 27 4 56, ex pressly delegates the power of making first appointments.
only to the Chief Engineers of the three Commands, then in existence, and to the other authorities specified therein.
It is pointed out that in 1956 when this order was made, there were no Zonal Chief Engineers which came into exist ence on reorganization in December 1962, as a class apart, working under the orerail administrative control of the Chief Engineers of Commands.
The point pressed into argu ments is that a general delegation of the power in favour of Chief Engineers of Commands, as a class, cannot, by any reckoning, amount to a delegation in favour of the Zonal Chief Engineers, also, working under the control of the Chief Engineers of Commands.
Mr. Hardy has further submitted that the letter dated 23 1 1963 has not been issued under the signature of the Engineer in Chief, nor can it, by any stretch of language, be construed as a delegation of the power of appointment under Rule 10.
In the alternative, it is submitted the power delegated by the Engineer in Chief to the Chief Engineers was a qualified one inasmuch as no power was given to them to dismiss 599 or remove a Government servant of Class III Service.
It is maintained that by the aforesaid letter, the Chief Engineers were empowered to impose only minor penalties other than that of dismissal and removal.
It is urged, in view of this restricted delegation in the matter of inflicting.
penalties, it cannot be said that on the principle underly ing Sec.
16 of the General Clauses Act power of appointment will automatically include the power to remove the person appointed from his office.
In reply, Mr. Sachthey has pointed out that the fetter placed on the power given to the Chief Engineers by the letter dated 27 4 56, in the matter of removal or dismissal of Class III servants, operates only in case of persons appointed by the Engineer in Chief, and not where he was appointed by the Chief Engineer of a Command.
It is pointed out that in the instant case, the accused was appointed not by E in C but by the Chief Engineer, Western Command, Simla.
The main question that falls to be considered is whether the E in C 's order communicated through letter, dated 27 4 1956, can be construed as a valid delegation of the power of appointment tO posts in Class III Service to Zonal Chief Engineers, which came into existence on re organization in December, 1962 ? The material part of this letter reads as under: "TO The Chief Engineer, Southern Command, Poona Eastern Command, Lucknow Western Command, Simla X X X Subject: Civilians in DefenCe Services (Classification, Control and Appeal Rules, 1962).
With reference to Rule 10 of the Civilians in Defence Services (Classification, Control and Appeal) Rules, 1962, I hereby authorise the authorities mentioned hereunder to make first appointments to Class III and IV Services to the extent indicated below: Authority Posts (a) Chief Engineers . .
All posts with the excepetion of per (b) CWO, NDES . .
manent appointments to the following categories: (i) Superintendent, B/R Grade I. * * * 2.
Under Rule 14(b) of CDS (CC&A) Rules, 1952 the under mentioned authorities are empowered to impose penalties referred to in Rule 13 ibid, to the extent indicated below : (a) Chief Engineers and Penalties at (i), (ii), (iv) and (v) of Rule 13 on Class III employees in respect of whom E in C is the appoint ing authority," 600 A perusal of this letter will show that it is (among others) addressed to the Chief Engineers, Southern Command, Eastern Command, Lucknow, and Western Command, Simla.
On the date of this letter there were only three Commands; two commands were created subsequently.
There were no Zones or Zonal Chief Engineers at that time.
Therefore, the Chief Engineers to whom the powers have been delegated under this letter could only be the Chief Engineers of the Commands, as a class.
Since the delegation has been to the Chief Engi neers of the Commands, as a class, it will cover the Chief Engineers of these Commands, also, which were subsequently created.
But, the question is will it take in Chief Engi neer of Zones and amount to a delegation of power in their favour, too, on their creation six years later in 1962 ? Answer to this question will depend on whether the Chief Engineers of Zones belong to the same class holding the same rank and exercising same administrative powers and control as the Chief Engineers of Commands ? At the final hearing, we had asked Shri Sachthey, to make available to us the official order, regulations and like material throwing light on this aspect of the problem From the material furnished by him, it appears that the decision to reorganize the Military Engineering Service was taken by the Government in December, 1962.
Pursuant to that deci sion, the Zones were created and Engineering Services in each Zone were placed under the charge of a Chief Engineer, of that Zone.
Chandigarh area was also made North Western Zone, for this purpose.
This reorganisation took effect from January 1, 1963.
The main object of creation of Zonal Chief Engineers as stated in C in C 's letter No. 66161/II/E2A, dated 13 12 1962, was to "effect maximum possible decentralisation and thereby achieve speed and efficiency in the planning and execution of work services.
" As is apparent from the letter dated 22/26 12 1962 from the Engineer in Chief, the Zonal Chief Engineers have to work "under the command and technical control of CEs Com mands for the planning and execution of works.
" E in C 's letter, No. 6161/II/E2A, dated December 13, 1962 addressed to the Chief Engineers, Commands and others, also, makes it clear that under the re organized set up, "C.E. located at each Command H.Q. will be responsible for all engineer matters in the Command, administration and training of engineer troops and for the coordination of works.
Under the Command and technical control of this Chief Engineer there will be number of CEs/CSWE. on zonal basis.
" These two letters unmistakably show that the zonal Chief Engineers are a class apart from the Chief Engineers of Com mands.
Although extensive financial powers have been dele gated to the Zonal Chief Engineers, which are almost the same as that of the Chief Engineers of the Commands, the fact remains that they are under the overall administrative control of the Chief Engineer of the Commands concerned.
601 In this view of the matter the scope of the delegation of the powers made under the letter dated 27 4 1956, must be construed as a delegation only to the Chief Engineers of Commands, as distinguished from the Chief Engineers of Zones which were then not even in embryo.
This takes us to the letter dated January 23, 1963 from the Army H.Qrs., E in C 's Branch.
In the first place, this letter is not signed by the E in C.
It appears to have been signed by some other person "for E in Chief"; secondly it does not purport to have been issued pursuant to any sepa rately passed order of the E in C expressly delegating under Rule 10, the powers of appointment to posts in Class III Service.
The opening sentence of this letter, no doubt, refers to HQ Letters No. 66161/II E2A, dated 8 Dec. 1962, para 4 and even No. of 22 Dec. 1962, which we have already noticed.
There is nothing in them which delegates the powers of appointment to any posts to the Zonal Chief Engi neers.
On the contrary, para 8 of this letter says "All Class III and IV personnel will be provided by the Command CE and will continue to be borne on the strength of that Command for purposes of (a) All documentation (b) Temporary promotion (c) Permanency (d) Retrenchment and reversion (e) Pension progress by the Unit but overall control by the Command CE." (Emphasis added) Mr. Sachthey has placed great stress on para 12 of this letter which says: "The normal powers of Chief Engineer in all matters relating to appointments, punish ments etc.
vest with each Zonal Chief Engi neer in accordance with this HQ letter No. 27304/ELD(2) dated 27th April 1956.
In exer cising these powers it will be necessary to consult CE Command prior to recruitment and replacements.
" The argument advanced on behalf of the appellant is that the very authority that had issued the letter dated April 27, 1956 has construed it as delegating the powers of ap pointment, punishment etc.
to the Zonal CEs.
also, and therefore, the Court should accept that interpretation.
We are unable to accept this argument.
We have already pointed out that this letter, dated 23 1 63, has not been issued under the signature of the same authority from which the order, dated 27 4 56, had emanated.
It does not ex facie show that any order, apart from that dated 27 4 56, had been passed by the Engineer in Chief under Rule 10.
For reasons given earlier, we have no hesitation in holding that the assumption made in Paragraph 12 of this letter ex tracted above, to the effect that the Zonal Chief Engineers were vested with powers of appointments, punishments etc.
in accordance with H.Q. letter dated 27 April 1956 was clearly incorrect, Perhaps, that was why on 14 1 1972, the necessity of making a proper order delegating such powers to Zonal Chief Engineers and others, under Rule 9 was felt by the Engineer in Chief.
602 No other order of the Engineer in Chief made prior to 24 6 1971 under Rule 10 of 1952 Rules or under Rule 9(1) of the 1965 Rules delegating the power of appointment to posts in Class III Services, has been placed before us.
We have therefore no alternative but to hold that on 24 6 1971, Brig.
Naresh Prasad, Zonal Chief Engineer, North Western Zone, Chandigarh, was not competent to remove the accused respondent, Tandon, from the post of Superintendent, B&R Grade I, Chandigarh and as such, the order sanctioning the prosecution of the respondent was bad in law.
In view of this finding, we do not think it necessary to examine the alternative contention advanced by Shri Hardy.
The case fails because there is no valid sanction, as re quired by the law.
Obviously, this does not preclude a fresh prosecution for the same offence but it is a matter for the State, in the circumstances of the case, to consider whether prosecution should be launched against the respond ent or not.
We make this observation only to remove a possible misapprehension.
In the result, the appeal fails and is dismissed.
P.H.P. Appeal dismissed.
| IN-Abs | The respondent was convicted for an offence under section 5(2) read with section 5(1)(d) of the Prevention of Corruption Act, 1947 and section 161 of the I.P.C.
The conviction was set aside by the High Court on the sole ground that the sanction for his prosecution was not accorded by a competent authority.
The respondent was a Civilian in the Defence Services in the rank of temporary Superintendent, Building and oRads Grade I. The prosecution case was that he had accepted illegal gratification of Rs. 300/ from one Brij Bhushan Lal,Contractor, as a motive or reward for doing an official act.
The sanction for the prosecution of the re spondent was accorded by Brig.
Naresh Prasad Chief Engineer, North Western Zone, Chandigarh.
The High Court held that Brig.
Naresh Prasad had no authority under the relevant rules either plenary or dele gated to appoint a person to a post in class III service at the time when he passed the order for sanction of prose cution.
That such a power was delegated to him subsequent ly.
The learned Judge held that the authority was the Chief Engineer, Western Command and not the Zonal Chief Engineer.
Section 6(1) of the Prevention of Corruption Act pro vides that no Court shall take cognizance of the offence in question alleged to have been committed by a public servant except with the previous sanction of the officer enumerated in clauses (a), (b) and (c) of that section.
Sub section 2 of section 6 further provides that 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 servant from his office at the time when the offence was alleged to have been committed.
The appellant contended that by an order communicated by letter dated 27 4 1956 (subsequently reiterated in letter dr. 23 1 1963) made under rule 10 the Engineer in Chief had empowered all Chief Engineers in Military Engg.
Service to make first appointments and that the operation of the said order was preserved by the saving clause in rule 34(1) of the 1965 Rules.
The appellant further contended that the fetter placed on the power given to the Chief Engineers in the matter of removal or dismissal of Class III servants operates only in case of persons appointed by the Engineer in Chief and not where he was appointed by the Chief Engi neer of a Command.
In the present case, the respondent was appointed not by Engineer in Chief but by the Chief Engi neer, Western Command.
The respondent contended that the order dated 27 4 1956 expressly delegates the power of making first appointments only to the Chief Engineers of the three commands then in existence and of the 'other departments specified therein.
In 1956, when the order was made there were no zonal Chief Enginers, which 594 came into existence in December, 1962 as a class apart working under the overall administrative control of the Chief Engineers of Commands.
A general delegation of the power in favour of the Chief Engineers of Commands as a class cannot by any reckoning amount to a delegation in favour of the Zonal Engineers also working under the control of the Chief Engineers of Commands.
Secondly, the letter dated 23 1 1963 was not issued under the signature of the Engineer in Chief nor can it be construed as a delegation of the power of appointment under rule 10.
Alternatively, the power delegated by the Engineer in Chief to the Chief Engi neers was a qualified one inasmuch as no power was given to them to dismiss or remove a Government servant of Class III service.
Dismissing the appeal, HELD: (1 ) Unless a different intention appears the power to appoint to an office includes the power to dis miss or remove from that office as provided in section 16 of General Clauses Act.
The post which the respondent was holding is a post of Class III service and the members of the service are governed by Central CiVil Services (Classi fication, Control and Appeal) Rules, 1965.
1965 Rules repeal the earlier 1952 Rules and any notification or orders issued thereunder in so far as they were inconsistent with the 1965 rules.
Under rule 10, appointments to Class III and Class IV Civilian Service are to be made by the officers empowered by the Engineer in Chief.
Thus the appointing authority is competent to delegate the power of appointment.
[596 B, C, G H, 597D] (2) A perusal of the letter dated 27 4 1956 communicat ing the order of the Engineer in Chief shows that it is addressed to the Chief Engineers, Southern Command, Eastern Command and Western Command.
On the date of this letter there were only 3 Commands; two Commands were created subse quently.
There were no Zones or Zonal Chief Engineers at that time.
Therefore, the Chief Engineers to whom the powers have been delegated under this letter could only be the Chief Engineers of the Commands as a class and it would cover Chief Engineers of the Commands which were subsequent ly created.
But it would not include the Chief Engineers of Zone.
Zonal Chief Engineers have, to work under the Command and technical control of Chief Engineers of Com mands.
Zonal Chief Engineers are a class apart from the Chief Engineers of Commands.
They are under the administra tive control of the Chief Engineers of Command.
Thus the delegation is to the Chief Engineers of Commands and not to the Zonal Chief Engineers.
[600 A B, F H 601 A B] (3) The letter dated 23 1 1963 is not signed by the Engineer in Chief.
It appears to have been signed by some other person for Engineer in Chief.
Nor does it purport to have been issued pursuant to any separately passed order of the Engineer in Chief expressly delegating the powers of appointment to posts in Class III service under Rule 10.
There is nothing in the letter to show that the delegation was to the Zonal Chief Engineers.
On the contrary, para 8 of the letter talks of the Command Chief Engineers.
The way in which the Engineer in Chief has construed the letter is not relevant.
[601 G H, 602AB] (4) Brig.
Naresh Prasad, Zonal Chief Engineer was not competent to remove the respondent and as such, the order sanctioning the prosecution of the respondent was bad in law.
[602 C]
|
ivil Appeal No. 2071 of 1968.
(From the Judgment and Order dated 20 4 1967 of the Madhya Pradesh High Court in Misc.
First Appeal No. 104/66).
Rameshwar Nath, for the appellants U.R. Lalit and A.G. Ratnaparkhi, for respondent No. 1.
Naunit Lal and Miss Lalita Kohli, for respondent No. 2.
The Judgment of the Court was delivered by KAILASAM, J.
This is an appeal by certificate under Article 133 (1)(a) of the Constitution granted by the High Court of Madhya Pradesh.
The appellants filed a claim for compensation of a sum of rupees one lakh under section 110 of the before the Claims Tribunal, Jabalpur.
The first claimant is the wife and the claimants 2 to 8 are the children of one Purshottam Tulsidas Udeshi who met with his death in a motor car accident on 18th December, 1960 when he was travelling in the car which was driven by Madhavjibhai Mathuradas Ved, the Manager of the first opponent company, M/s. Ranjit Ginning and Pressing Co. Private Ltd., in a rash and negligent manner near a village called Chincholivad which was 16 miles from Saoner.
The car which was .a
Hindustan Ambassador Saloon was insured with second opponent, Union 375 Fire Accident and General Insurance Co. Ltd. The deceased was aged 58 years at the time of ' his death and according to the petitioners was earning annually about Rs. 9,000.
They claimed a compensation of rupees one lakh.
The opposite parties, the owner and the insurance company, opposed.
the claim.
While admitting that the vehicle was proceeding from Nagpur on its way to Pandhurna for the purpose men tioned by the applicants they denied that the vehicle was driven in a rash and negligent manner and pleaded that the vehicle was at the time of accident in perfectly sound condition.
It Was submitted that the husband of the appli cant No. 1 was travelling in the said vehicle on his own responsibility and for his own purpose and absolutely gratis and not on behalf of or at the instance of the opposite party No. 1, or the driver of the vehicle and therefore the claimants are not entitled to any compensa tion.
The opposite parties pleaded that the incident was as a result of inevitable accident and not due to any act of rashness or negligence on the part Of the driver.
They opposed the claim of the compensation as highly exaggerated.
The Motor Accidents Claims Tribunal, Jabalpur, found that the accident of the motor vehicle was as a result of negligent driving of the vehicle by the Manager, Madhavjib hai Mathuradas Ved, the driver of the vehicle.
It also found that the first respondent, the owner of the company, is liable to pay compensation to the claimants on account of the negligence of their employee Madhavjibhai which caused the death of Purshottam Tulsidas Udeshi.
Regarding the compensation payable the Tribunal fixed Rs. 31,209.15 as general damages in addition to Rs. 2,000 as special damages for funeral and post funeral expenses.
The owner, first opponent, preferred an appeal to the High Court impleading the claimants and the insurance company as respondents against the award passed by the.
Claims Tribunal.
The High Court did not decide the question as to whether the accident was due to the rash and negligent driving or the quantum of compensation to which the claimants were entitled to as it allowed the appeal by the owner on the ground that the owner cannot be held vicariously liable for the act of Madhavjib hai in taking Purshottam as a passenger as the said act was neither in the course of his employment nor under any au thority whatsoever and that there was no evidence that the owners of the vehicle were aware that Purshottam was being taken in the car as a passenger by their Manager, Madhavjib hai.
Holding that so far as the owners are concerned Pur shottam was no better than a trespasser the High Court held that the owners were not vicariously liable.
On an applica tion by the claimants the High Court granted a certificate and thus this appeal has come before this Court.
The questions that arise for consideration are whether on the facts of the case the claimants have established (1) that the accident was due to the rash and negligent driving of Madhaviibhai Mathuradas Ved, the Manager of the company, and (2) whether the incident took place during the course of the employment of the driver.
In the event the claimants succeed on these two points the amount of compensation to which they are entitled would have to be determined.
376 The High Court relying on three decisions in Sitgram Motilal Kalal vs Santanuprasad Jaishankar Bhatt(1), Canadian Pacific Railway Company vs Leonard Lockhall(2), and Conway vs George Wimpey & Co. Ltd.(3), came to the conclusion that the rash and negligent driving by the Manager was not in the course of his employment.
The learned counsel for the respondent relied on some other decisions which will be referred to in due course.
The High Court has not gone into the question as to whether the car was.
being driven rashly and negligently by the owner 's employee as it held that the act was not in the course of his employment.
We feel that the question as to whether the car was being driven rashly and negligently would have to be decided on the facts of the case first for, if the claimants fail to establish rash ' and negligent act no other question would arise.
We would therefore proceed to deal with this question first.
The claimants did not lead any direct evidence as to how the accident occurred.
No eye witness was examined.
But P.W. 1, the younger brother of the deceased Purshottam Udeshi, who went to the spot soon after the accident was examined.
He stated that he went with one of his relatives and an employee of his brother 's employer and saw that the car had dashed against a tree while proceeding from Nagpur to Pandurna.
The tree was on the right hand side of the road, four feet away from the right hand side of the main metalled road.
The vehicle will have to proceed on the left hand side of the road.
The road was 15 feet wide and was a straight metalled road.
On either side of the road there were fields.
The fields were of lower level.
The tree against which the car dashed was uprooted about 9 to 10 inches from the ground.
The car dashed so heavily that it was broken in the front side.
A photograph taken at that time was also filed.
According to the witness the vehicle struck so heavily that the machine of the car from its original posi tion went back about a foot.
The steering wheel and the engine of the car receded back on driver 's side and by the said impact the occupants died and front seat also moved back.
The witness was not cross examined on what he saw about the state of the car and the tree.
It was not sug gested to him that the car was not driven in a rash and negligent manner.
In fact there is no cross examination on the aspect of rash and negligent driving.
The Claims Tribu nal on this evidence found that "it was admittedly a mishap on the right side of the road wherein the vehicle had dashed against a tree beyond the pavement so violently as not only to damage the vehicle badly but also entailing death of its three occupants, maxim 'res ipsa loquitur ' applies (See Ellor vs Selfridge The Tribunal proceeded to discuss the evidence of P.W. 1 and found on the evidence that it cannot.help concluding that the dashing of the car against the tree was most violent and that it was for the respondents to establish that it was a case of inevitable accident.
They have led no evidence.
It may at once be stated that though the opposite parties had pleaded that this is a case of inevitable accident they have (1) (2) A.I.R. 1943 P.C. 63.
(3) 377 not led any evidence to establish their plea.
The burden rests on the opposite party to prove the inevitable acci dent.
To succeed in such a defence the opposite party will have to establish that the cause of the accident could not have been avoided by exercise of ordinary care and caution.
"To establish a defence of inevitable accident the defendant must either show what caused the accident and that the result was inevitable, or he must show all possible causes, one or more of which produced the effect, and with regard to each of such possible causes he must show that the result could not have been avoided." (Halsbury 's Laws of England, Third Ed., Vol.
28, p. 81).
No such attempt was made and before us the plea of inevitable accident was not raised.
We have therefore to consider whether the claimants have made out a case of rash and negligent driving.
As found by the Tribunal there is no eye witness and therefore the question is whether from the facts established the case of rash and negligent act could be inferred.
The Tribunal has applied the doctrine of "resipsa loquitur".
It has to be considered whether under the circumstances the Tribunal was justified in applying the doctrine.
The normal rule is that it is for the plaintiff to prove negligence but as in some cases considerable hardship is caused to the plaintiff as the true cause of the accident is not known to him but is solely within the knowledge of the defendant who.
caused it, the plaintiff can prove the acci dent but cannot prove how it happened to establish negli gence on the part of the defendant, This hardship is sought to be avoided by applying the principle of res ipsa loqui tur.
The general purport of the words res ipsa loquitur is that the accident "speaks for itself" or tell 's its own story.
There are cases in which the accident speaks for itself so that it is sufficient for the plaintiff to prove the accident and nothing more.
It will then be for the defendant to establish that the accident happened due to some other cause that his own negligence.
Salmond on the Law of Torts (15th Ed.) at p. 306 states: "The maxim res ipsa loquitur applies whenever it is so improbable that such an accident would have happened without the negligence of the defendant that a reasonable jury could find without further evidence that it was so caused.
" In Halsbury 's Laws of England, 3rd Ed., Vol.
28, at p. 77, the position is stated thus: "An exception to the general rule that the burden of proof of the alleged negligence is in the first instance on the plaintiff occurs wherever the facts already established are such that .the proper and natural inference arising from them is ,that the injury complained of was caused by the defendant 's negligence, or where the event charged as negligence "tells its own story ' of negligence on the part of the defendant, the story so told being clear and unambiguous.
" Where the maxim is applied the burden is on the defendant to show either that in fact he was not negligent or that the accident might more probably have happened in a manner which did not connote negligence on his part.
For the application of the principle it must be shown that the car was under the management of the defendant and that the accident is such as in ordinary course of things does not happen if those who had the management used proper care.
Applying the principles stated above we have to see whether the requirements of the principle 378 have been satisfied.
There can be no dispute that the car was under the management of the company 's manager and that from the facts disclosed by P.W. 1 if the driver had used proper care in the ordinary course of things the car could not have gone to the right extreme of the road, dashed against a tree and moved it a few inches away.
The learned counsel for the respondents submitted that the road is a very narrow road of the width of about 15 feet on either side of which were fields and that it is quite probable that cattle might have strayed.
into the road suddenly causing the accident.
We are unable to accept the plea for in a country road with a width of about 15 feet with fields on either side ordinary care requires that the car should be driven at a speed in which it could be controlled 'if some stray cattle happened to come into the road.
From the description of the accident given by P.W. 1 which stands unchallenged the car had proceeded to the right extremity of the road which is the wrong side and dashed against a tree uprooting it about 9 inches from the ground.
The car was broken on the front side and the vehicle struck the tree so heavily that the engine of the car was displaced from its original position one foot on the back and the steering wheel and the engine of the car had receded back on the driver 's side.
The car could not have gone to the right extremity and dashed with such violence on the tree if the driver had exercised reasonable care and caution.
On the facts made out the doctrine is applicable and it is for the opponents to prove that the incident did not take ' place due to their negligence.
This they have not even attempted to do.
In the circumstances we find that the Tribunal was justified in applying the doctrine.
It was submitted by the Learned counsel for the respondents that as the High Court did not consider the question this point may be remitted to the High Court.
We do not think it necessary to do so for the evidence on record is convicing to prove the case of rash and negligent driving set up by the claimants.
The second contention that was raised by the counsel for the appellants is that the High Court was in error in hold ing that the incident did not take place in the course of the employment or under the authority of the company.
The High Court found that there is no evidence that the owner of the vehicle was aware that Purshottam was being taken in the car as a passenger by Madhavjibhai and in the circumstances the owner cannot be held liable for the tortious act of the servant.
The High Court found that the car was going from Nagpur to Pandhurna on the business of the company and it may also be that Madhavjibhai, the Manager of the owner 's car, was also going on the business of the owner and it may also be that he had implied authority to drive the vehicle.
Having agreed with the contentions of the claim ants so far the High Court came to the conclusion that there were no pleadings or material on record to establish that Purshottam was travelling in the vehicle either on some business of the owner of the vehicle or under any ostensible authority from them to their manager Madhavjibhai to take Purshottam as a passenger in the vehicle.
Before dealing with the right of Purshottam as a passenger, we will consid er the question whether the 379 accident took place during the course of the employment of Madhavjibhai by the company.
It is admitted in the written statement by the owner, that Madhavjibhai was the Manager of opposite party No. 1 and that the vehicle was proceeding from Nagpur on its way to Pandhurna for purpose of deliver ing an amount of Rs. 20,000 to the Ginning.
and Pressing factory at Pandhurna.
The Tribunal found on the plead ings that Madhavjibhai was the employee of the company and during the course of employment by driving the motor car he negligently caused the death of Purshottam.
The High Court also confirmed the findings and found that Madhavjibhai, the Manager .of the owner of the car, was going on the business Of the said owner and that it may be that the Manager had the implied authority to drive the vehicle.
On such a finding which is not disputed before us, it is difficult to resist the conclusion that the accident was due to the negligence of the servant in the course of his employment and that the master is liable.
On the facts found the law is very clear but as the question of the company 's liability was argued at some length we will proceed to refer to the law on the subject.
It is now firmly established that the master 's liability is based on the ground that the act is done in the scope or course of his employment or authority.
The position was stated by Lord Justice Denning in Young vs Edward Box and Co. Ltd.(1).
The plaintiff and fellow workmen were given a lift on one of the defendants ' lorries with the consent of his foreman and of the driver of the lorry.
On a Sunday evening the plaintiff, in the course of that journey, was injured by the negligence of the driver of the lorry and the plaintiff brought an action against the defendants claiming damages for his injuries.
The defence was that the plain tiff, when on the lorry, was a trespasser.
The traffic manager of the defendants pleaded that he had never given instructions to the foreman that he should arrange for lifts being given to the plaintiff and his fellow workmen on Sundays and that the foreman had no authority to consent to the plaintiff 's riding on the lorry.
While two learned Judges held that the right to give the plaintiff leave to ride on the lorry was within the ostensible authority of the foreman, and that the plaintiff was entitled to rely on that authority and in that respect was a licensee, Lord Denning held that although the plaintiff, when on the lorry, was a trespasser, so far as the defendants were concerned, the driver was acting in the course of his employment in giving the plaintiff a lift and that was sufficient to make the defendants liable and that he did not base his judgment on the consent of 'the foreman.
Lord Justice Denning stated the position thus: " . the first question is to see whether ' the servant was liable.
If the answer is Yes, the second question is to see whether the employer must shoulder the serv ant 's liability.
So far as the driver is concerned, his liability depends on whether the plaintiff was on the lorry with his con sent or not.
X X X X X. (1) at 793.
380 The next question is how far the employers are liable for their servant 's conduct.
In order to make the employers liable to the passenger it is not sufficient that they should be liable for theft servant 's negli gence in driving.
They must also be responsi ble for his conduct in giving the man a lift.
If the servant has been forbidden, or is unau thorised, to give anyone a lift, then No. doubt the passenger is a trespasser on ' the lorry so far as the owners are concerned; but that is not of itself an answer to the claim.
X X X X X In my opinion, when the owner of a lorry sends his servant on a journey with it, thereby putting the servant in a position, not only to drive it, but also be give people a lift in it, then he is answerable/or the manner in which the servant conducts himself on the journey, not only in the driving of it, but also in giving lifts in it, provided, of course, that in so doing the servant is acting in the course of his employment." Lord Justice Denning concluded by observing that the passen ger was therefore a trespasser, so far as the employers were concerned; but nevertheless the driver was acting in the course of his employment, and that is sufficient to make the employers liable.
It will thus be seen that while two of the learned Judges held that the right to give the plaintiff leave to ride on the lorry was within the ostensible author ity of the foreman and the plaintiff was entitled to rely on that authority as a licensee, Lord Denning based it on the ground that even though the plaintiff was a trespasser so far as the defendants were concerned, as the driver was acting in the course of his employment in giving the plain tiff a lift, it was sufficient to make the defendants li able.
Applying the test laid down there can be no difficul ty in concluding that the right to give leave to Purshottam to ride in the car was within the ostensible authority of the Manager of the company who was driving the car and that the Manager was acting in the course of his employment in giving lift to Purshottam.
Under both the tests the respond ents would be liable.
We will now refer to the three cases relied on by the High Court for coming to the conclusion that the accident did not take place during the course of employment.
The first case referred to is Sitaram Motilal Kalal vs Santanu prasad Jaishankar Bhatt(1).
The owner of a vehicle entrust ed it to A for plying it as a taxi.
B who used to clean the taxi was either employed by the owner or on his behalf by A. A trained B to assist him in driving the taxi and took B for obtaining a licence for driving.
While taking the test B caused bodily injury to the respondent.
A was not present in the vehicle at the time of the accident.
On the question whether the owner was liable the majority held the view that the owner was not liable.
On the facts the court found that the person who had borrowed the taxi for taking out a licence and the driver who lent the same was not acting in the course of his business.
The court on an application of the test laid down in various decisions held that there is no proof that the second defendant, the driver, was author ized to coach the cleaner so that the cleaner ' (1) [19661 3 S.C.R. 527.] 381 might become a driver and drive the taxi and that it ap peared more probable that the second defendant wanted some one to assist him in driving the taxi for part of the time and was training the third defendant to share the task of driving.
The owner 's plea that it had not given any such authority was accepted by the court.
Holding that it had not been proved that the act was impliedly authorized by the owner or to come within any of the extensions of the doc trine of scope of employment the court held that the owner is not liable.
This Court has held that the test is whether the act was done on the owner 's business or that it was proved to have been impliedly authorized by the owner.
At page 537 it is stated that the law is settled that master is vicariously liable for the acts of his servants acting in the course of his employment.
Unless the act is done in the course of employment, the servant 's act does not make the employer liable.
In other words, for the master 's liability to arise, the act must be a wrongful act authorised by the master or a wrongful and unauthorized mode of doing some act authorised by the master.
The extension of the doctrine of the scope of employment noticed in the judgment refers to the decision of Ormrod and Another vs Crosville Motor Serv ices Ltd., and Another (1), where Lord Denning stated: "It has often been supposed that the owner of a vehicle is only liable for the negligence of the driver if that driver is his servant acting in the course of his employment.
This is not correct.
The owner is also liable if the driver is, with the owner 's consent, driving the car on the owner 's business or for the owner 's purposes." The Supreme Court accepted the test and to that extent this may be taken as an extension of the doctrine of scope of employment.
Thus, on the facts as we have found that the accident took place during the course of employment the decision in Sitaram Motilal Kalal is of no help to the respondents.
The next ease which is referred to by the High Court is Canadian Pacific Railway Company vs Lockhart(2).
In that case one S was employed as a carpenter by the railway compa ny.
In the course of his employment he was required to make repairs of various kinds to employer 's property.
He made a key for use in a lock in the station at N far away from his headquarters at W. He was paid per hour and the railway company kept vehicles to be used by S available for him.
S, however, had a car of his own and without communicating his intention to anyone he used it on his way to N.
An accident happened on the way owing to S 's negligence.
It was also in evidence that the railway company had issued notice to its servants particularly to S warning him against using their private cars unless they had got their cars insured against third party risk.
On the facts, the Privy Council held that the means of transport used by the carpenter was clearly incidental to ' execution of that for which he was employed.
As what was prohibited was not acting as a driver but using a non insured car, the prohibition merely limited the way in which the servant was to execute the work which he was employed to do and that breach of the prohibition did not exclude the liability of the master to third party.
We do not see how this case would help the respondents.
On (1) (2) 382 the other hand it supports the contention of the counsel for the appellants that when the Manager was driving the car for the purposes of the company it was in the course of his employment.
The third case that is referred to by the High Court is Conway vs George Wimpey & Co. Ltd. (1).
The defendants, a firm of contractors, were engaged in building work at an aerodrome, and they provided lorries to convey their employ ees to the various places of their work on the site.
In the cab of each lorry was a notice indicating that the driver was under strict orders not to carry passengers other than the employees of the defendants during the course of, and in connection with, their employment, and that any other person travelling on the vehicle did so at his own risk.
Further the driver of the lorry had received clear oral instructions prohibiting him fro.m taking other persons.
The plaintiff who was employed as a labourer by another firm Of contrac tors at the aerodrome, while on his way to work, was permit ted by the driver to ride on one of the defendants ' lorries for some distance across the aerodrome and while dismounting the plaintiff was injured owing to driver 's negligence.
The court held that on the facts of the case the taking of the defendants ' employees on the vehicle was not merely a wrong ful, mode of performing an act of the class which the driver in the present case was employed to perform but was the performance of an act of a class which he was not employed to perform at all.
The facts stated above are entirely different from those which arise in the present case before us as in the case before the Court of Appeal(2) there was a notice indicating that the driver was under strict orders not to carry passengers and the driver was instructed not to carry others while in the present case a responsible officer of the company, the Manager, had permitted Purshottam to have a ride in the car.
Taking into account the high posi tion of the driver who was the Manager of the company, it is reasonable to presume, in the absence of any evidence to the contrary, that the Manager had authority to carry Purshottam and was acting in the course of his employment.
We do not see any support for the conclusion arrived at by the High Court that the driver was not acting in the course of his employment.
We will now proceed to refer to some cases which were cited by the learned counsel for the respondents.
The learned counsel placed reliance on the decision in Houghton vs Pilkington.(1) In that case the plaintiff at the request of a servant of the defendant got into the defendant 's cart which was then in the chrage of the servant, in order to render assistance to another servant of the defendant who had been rendered unconscious by an accident.
The plaintiff fell out of the cart and was injured through the negligence of the servant in charge of the cart in causing the horse to start.
In an action against the defendent for damages for the injuries sustained by the plaintiff it was held that the existence of an emergency gave no implied authority to the servant to invite the plaintiff into.
the cart and that the defendant was not liable (1) (2) (3) 383 to the plaintiff.
Justice Bankes while agreeing with Justice Bray who delivered the leading judgment expressed his view that the lower court had taken the view that an emergency had arisen which gave the defendant 's servant implied au thority to invite the plaintiff into the cart for the pur pose of rendering assistance to.
the injured boy.
The learned Judge was first inclined to agree with that view but because of the case being governed by Cox vs Midland Coun ties Ry.
Co. ; he felt he could not consistent ly with that decision hold that in the circumstances the driver of the cart had any implied authority to invite the plaintiff to get into the car.
The facts in Houghton vs Pilkington are entirely different and the decision was based on the ground that existence of the emergency did not confer on the driver of the cart authority to invite the plain tiff into the cart.
The next case that was cited by the learned counsel for the respondents was Twine vs Bean 's Express, Limited(1).
The defendants provided for the use of a bank a commercial van and a driver on the terms that the driver remained the servant of the defendants and that the defendants accepted no responsibility for injury suffered by persons riding in the van who were not employed by them.
There were two notices on the van, one stating that no unauthorized person was allowed on the vehicle, and the other that driver had instructions not to allow unauthorized travellers in the van, and that in no event would the defendants be responsi ble for damage happening to them.
One T who was not author ized to ride in the van got a rift in the van with the consent of the driver.
Owing to the negligence of the driver the accident occurred and T was killed.
The conten tion that the accident arose while the driver was engaged on a duly authorized journey was negatived and it was held that defendants owed no duty to T to take care.
This case was taken up on appeal which confirmed the view of the trial court holding that the driver in giving the lift to T was clearly not acting within the Scope of his employment and his employers were consequently not liable.
The facts are totally different.
The learned counsel for the respondents was not able to produce any authority which would support his contention that on the facts of the case found, the company should not be held liable.
Before we conclude, we would like to point out that the recent trend in law is to make the master liable for acts which do not strictly fall within the term "in the course of the employment" as ordinarily understood.
We have referred to Sitaram Motilal Kalal vs Santanuprasad Jaishankar Bhat (supra) where this Court accepted the law laid down by Lord Denning in Ormrod and Another rs.
Crosville Motor Services Ltd. and Another (supra) that the owner is not only liable for the negligence of the driver if that driver is his servant acting in the course of his employment but also when the driver is, with the owner 's consent, driving the car on the owner 's business or for the owner 's purposes.
This extension has been accepted by this Court.
The law as laid down by Lord Denning in Young vs Edward Box and Co. Ltd. already referred to i.e. the first question is to see wheth er the servant is liable (1) 155, year 1945 56.
10 36SCI/77 384 and if the answer is yes, the second question is to see whether the em1oyer must shoulder the servant 's liability, has been uniformally accepted as stated in Salmond Law of Torts, 15th Ed., p. 60 '6, in Crown Proceedings Act, 1947 and approved by the House of Lords in Staveley Iron & Chemical Co. Ltd. vs Jones(1) and I.C.I. Ltd. vs Shatwell(2).
The scope of the course of employment has been extended in Navarro vs Moregrand Ltd. & Anr(3) where the plaintiff who wanted to acquire the tenancy of a certain flat, applied to the second defendant, a person with ostensible authority to conduct the business of letting the particular fiat for the first defendant, the landlord.
The second defendant demand ed from the plaintiff a payment of Pound 225 if he wanted the flat and 'the plaintiff paid the amount.
The plaintiff sought to recover the sum from the landlord under the Land lord and Tenant (Rent Control) Act, 1949.
The Court of Appeal held that the mere fact that the second defendent was making an illegal request did not constitute notice to the plaintiff that he was exceeding his authority and that, though the second defendant was not acting within his actual or ostensible authority in asking for the premium, a.s the landlord had entrusted him with the letting of the flat, and as it was in the very course of conducting that business that he committed the wrong complained of he was acting in the course of his employment.
Lord Denning took the view that though the second defendant was acting illegally in asking for and receiving a premium and had no actual or ostensible authority to do an illegal act, nevertheless, he was plainly acting in the course of his employment, because his employers, the landlords, had entrusted him with the full business of letting the property, and it was in the very course of conducting that business 'that he did the wrong of which complaint is made.
This decision has extended the scope of acting in the course of employment to include an illegal act of asking for and receiving a premium though the receiving of the premium was not authorized.
We do.
not feel called upon to consider whether this extended meaning should be accepted by this Court.
It appears Lord Goddard, Chief Justice, had gone further in Barker vs Levinson(4) and stated that "the master is responsible for a criminal act of the servant if the act is done within the general scope of the servant 's employment." Lord Justice Denning would not go to this extent and felt relieved to find that in the authorized Law Reports , the passage quoted above was struck out.
We respectfully agree with the view of Lord Denning that the passage attributed to Lord Chief Justice Goddard went a bit too far.
On a consideration of the cases, we confirm the law as laid down by this Court in Sitararn Motilal Kalal vs Santa nuprasad Jaishankar Bhatt (suvra) and find that in this case the driver was acting in the course of his employment.
and as such the owner is liable.
We therefore set aside the finding of the High Court that the act was not committed in the course of employment or under the authority of the master, and allow the appeal.
2) (1965) A.C. 656.
(3) (4) 66 The Times L.R. (Pt. 2) 717.
385 The only point that remains is the determination of the quantum of compensation to which the appellants are entitled to.
The High Court did not go into this question but the Tribunal after taking into consideration the various facts fixed the compensation at Rs. 33,209.15 with costs and directed that the insurance company shall indemnify the owner to the extent of Rs. 15,000.
The Tribunal fixed special damages for funeral and post funeral expenses in cluding transport charges at Rs. 2,000.
This item is not disputed.
The second item is a sum of Rs. 31,209.15 which according to the Tribunal would have been the amount which the deceased would have earned by continuing to work for a period of 5 years.
The Tribunal accepted the documents produced by the claimants regarding the income of the de ceased and fixed it at Rs. 9,316.83 per annum.
Out of this amount the Tribunal rightly excluded a sum of Rs. 1,875 which is the bonus the deceased would have got as it cannot be taken into account and fixed the net amount of earning at Rs. 7,441.83 per year and Rs. 37,209.15 for 5 years.
After deducting Rs. 6,000 which the deceased might have spent on himself the Tribunal arrived at a figure of Rs. 31,209.15 under this head.
The learned counsel for the respondents referring to item No. 27 pointed out that the pay of the deceased was only Rs. 425 per month and that the Tribunal was in error in including the dearness allowance, conveyance allowance and other expenses and that the income of the deceased should have been taken as only Rs. 425 per month.
The learned counsel for the appellants accepts this figure.
Taking Rs. 425/ being the monthly income the annual income totals up to Rs. 5,100/ and for 5 years to Rs. 25,500/ .
Adding to this Rs. 2,000/ which was given as special dam ages the total amount will come to Rs. 27,500/ .
We accept ' this calculation as correct and restore the award passed by the Claims Tribunal but restrict it to an amount of Rs. 27,500/ .
As the Union Fire Accident & General Insurance Co. Ltd., Paris, carrying on business at Nagpur has been nationalised, though the second respondent before the Tribunal was repre sented by a counsel, we directed notice to the nationalised insurance company so.
that they would also be heard.
The nationalised insurance company has taken notice and appeared through Mr. Naunit Lal, advocate.
The insurance company had nothing further to add except as to the quantum of liability of the insurance company so far as injuries to the passengers are concerned.
Mr. Naunit Lal submitted that the scope of the statutory insurance does not cover the injury suffered by the passengers and as the owner has specifically insured under the insurance policy the risk to passengers to the extent of Rs. 15,000 only the liability of the insurance company should be limited to Rs. 15,000.
On behalf of the owner it was submitted that the insurance cover under the Act extended to the injury to the passengers also and sought to support his contention by referring to section 95(1)(b)(i) which provides against any liability to the owner which may be incurred by him in respect of death of or bodily injury to any person or damage to any property of a third party caused by or arising out of the use of the vehicle in a public place.
386 As section 95 of the Motor Vehicles Act, 1935 as amended by Act 56 of 1969 is based on the English Act it is useful to refer to that.
Neither the Road Traffic Act, 1960, or the earlier 1930 Act required users of.
motor vehicles to be insured in respect of liability for death or bodily injury to passengers in the vehicle being .used except a vehicle in which passengers were carried for hire or reward or by reason of or in pursuance of a contract of employment.
In fact, sub section 203(4) of the 1960 Act provided that the policy shall not be required to cover liability in respect of death of or bodily injury to persons being carried in or upon, or entering or getting on to or alighting from, the vehicle at the time of the occurrence of the event out of which the claims arise.
The provisions of the English Act being explicit the risk to passengers is not covered by the insurance policy.
The provisions under the English Road Traffic Act, 1960, were introduced by the amendment of section 95 of the Indian Motor Vehicles Act.
The law as regards general exclusion of passengers is stated in Hals bury 's Laws of England, Third Edition, Vol. 22, at p. 368, para 755 as follows : "Subject to certain exceptions a policy is not required to cover liability in respect of the death of, or bodily injury to, a person being carried in or upon, or entering or getting into or alighting from, the vehicle at the time of the occurrence of the event out of which the claim arises," It is unnecessary to refer to the subsequent development of the English law and as the subsequent changes have not been adopted in the Indian statute.
Suffice it to say that the Motor Vehicle (Passenger Insurance) Act, 1971, made insur ance cover for passenger liability compulsory by repealing paragraph (a) and the proviso of sub section 203(4).
But this Act was repealed by Road Traffic Act, 1972 though under section 145 of 1972.
Act the coming into force of the provi sions of Act 1971 covering passenger liability was delayed under December 1, 1972.
(vide Bingham 's Motor Claims Cases, 7th Ed., p. 704).
Section 95(a) and 95(b)(i) of the Motor Vehicles Act adopted the provisions of the English Road Traffic Act, 1960, and excluded the liability of the insurance company regarding the risk to the passengers.
Section 95 provides that a policy of insurance must be a policy which insures the persons against any liability which may be incurred by him in respect of death or bodily injury to any person or damage to any property of a third party caused by or arising out of the use of the vehicle in a public place.
The plea that the words "third party" are wide enough to cover all persons except the person and the insurer is negatived as the insurance cover is not available to the passengers made clear by the proviso to sub section which provides that a policy shall not be required "(ii) except where the vehicle is a vehi cle in which passengers are carried for hire or reward or by reason of or in pursuance of a contract of employment, to cover liability in respect of the death of or bodily injury to persons being 387 carried in or upon or entering or mounting or alighting from the vehicle at the time of the occurrence of the event out of which a claim arises.
" Therefore it is not required that a policy of ' insurance should cover risk to the passengers who are not carried for hire or reward.
As under section 95 the risk to a passenger in a vehicle who is not carried for hire or reward is not required to be insured the plea of the counsel for the insurance company will have to be accepted and the insurance company held not liable under the requirements of the Motor Vehicles Act.
The insurer can always take policies covering risks which are not covered by the requirements of section 95.
In this case the insurer had insured with the insurance company the risk to.
the passengers.
By an endorsement to.
the policy the insurance company had insured the liability regarding the accidents to passengers in the following terms: "In consideration of the payment of an additional premium it is hereby understood and agreed that the Company undertakes to pay compensation on the scale provided below for bodily injury as hereinafter defined sustained by any passenger . . ." The scale of compensation is fixed at Rs. 15,000.
The insurance company is ready and willing to pay compensation to the extent of Rs. 15,000 according to this endorsement but the learned counsel for the insured submitted that the liability of the insurance ' company is unlimited with regard to risk to the passengers.
The counsel relied on Section II of the Policy which relates to liability to third parties.
The clause relied on is extracted in full: "Section II Liability to Third Parties.
The Company will indemnify the in sured in the event of accident caused by or arising out of the use of the Motor Car against all sums including claimant 's costs and expenses which the insured shall become ' legally liable to pay in respect of (a) death of or bodily injury to any person but except so far as is necessary to meet the requirements of Section 95 of the Motor Vehi cles Act, 1939, the Company shall not be liable where such death or injury arises out of and in the course of the employment of such person by the insured.
" It was submitted that the wording of clause 1 is wide enough to cover all risks including injuries to passengers.
The clause provides that the Company will indemnify the insured against all sums including claimant 's costs and expenses which the insured shall become legally liable.
This accord ing to the learned counsel would 'include legal liability to pay for risk to passengers.
The legal liability is re stricted to 388 clause 1 (a) which states that the indemnity is in relation to the legal liability to pay in respect of death of or bodily injury to any person bur except so far as is neces sary to meet the requirements of section 95 of the Motor Vehicles Act.
The Company shall not be liable where such death or injury arises out of and in the course of the employment of such person by the insured.
Clause 1 and 1 (a) is not very clearly worded but the words "except so far as is necessary to meet the requirements of Section 95 of the ," would indicate that the liability is restricted to the liability arising out of the statutory requirements under section 95.
The second part of clause 1(a) refers to the non liability for injuries arising in the course of employment of such person.
The meaning of this sub clause becomes clear when we look to the other clauses of the insurance policy.
The policy also provides for insurance of risks which are not covered under section 95 of the Act by stipulating payment of extra premium.
These clauses would themselves indicate that what was in tended to be covered under clause 1 and 1 (a) is the risk required to be covered under section 95 of the Motor Vehi cles Act.
On a construction of the insurance policy we accept the plea of the insurance company that the policy had insured the owner only to the extent of Rs. 15,000 regarding the injury to the passenger.
In the result we hold that the liability of the insurance company is restricted to Rs. 15,000.
There shah be a decree in favour of the claimants appellants to the extent of Rs. 27,500 against ' the respond ents out of which the liability of the insurance company will be restricted to Rs. 15,000.
The appeal is allowed with the costs of the appellant which will be paid by the respondents in equal share.
P.H.P. Appeal allowed.
| IN-Abs | Purshottam Udeshi was travelling in a car which was driven by Manager of the first respondent company.
The car was insured with the second respondent.
The car dashed against a tree while proceeding from Nagpur to Pandurna.
Purshottam, who was aged 58 years at that time, died in the. accident.
His annual income was about Rs. 9000/ .
The widow and children of Purshottam filed a claim for compensation for a sum of Rs. 1 lac under section 110 of the , before the Claims Tribunal.
The respondents denied that the vehicle was driven in a rash or negligent manner and contended tbat the vehicle at the time of accident was perfectly in sound condition.
It was also contended that Purshottam was travelling in the said vehicle on his own responsibility and for his own purpose absolutely gratis and not on behalf of or at the instance of respondent No. 1 or the driver of the vehicle and, therefore, the claimants were not entitled to any compensation.
The respondent pleaded inevitable accident.
The Tribunal found that the accident was as a result of negligent driving of the vehicle by the Manager.
It also found that the first respondent the owner of the company was liable, to pay compensation to the claimants on account of negligence of their employee.
Tribunal awarded Rs. 31,209/ as general damages on the basis of 5 years ' earning less the, amount which the deceased might have spent on himself and Rs. 2,000/. as special damages for funeral and post funeral expenses.
The Tribunal took into account the pay, D.A., conveyance allowance etc.
for the purpose of determining income of the deceased.
Both the respond ents.
filed appeals in the.
High Court.
The High Court did not decide the question as to whether the accident was due to rash and negligent driving or the quantum of compensation allowed by the Tribunal was proper or not on the ground that the respondent No. 1 cannot be held vicariously liable for the act of their Manager in taking Purshottam as a passen ger as the said act was neither in the course of his employ ment nor under any authority whatsoever; that no evidence was led to show that the respondent No. 1 was aware that Purshottam was being taken in the car as a passenger by their Manager.
The High Court held that Purshottam was no better than a trespasser as far as respondent No. 1 is concerned and that, therefore., respondent No. 1 cannot be made vicariously liable.
In an appeal by certificate, the appellants claimants con tended: (1) That the accident was due to the, rash and negligent driving of the Manager of re spondent No. 1.
(2) The accident took place during the course of the employment of the driver.
Allowing the appeal, HELD: (1) The car was being driven rashly and negligent ly.
Although no eye witness was examined P.W.I. the brother of the deceased who went to the spot soon after the accident was examined.
He deposed that the car dashed 373 against a tree.
The tree was on the right hand side of the road, 4 ft.
away from the right hand side of the main met alled road.
The road was 15 ft. wide and was a metalled road.
On other side of the road there were fields at lower level.
The tree against which the car dashed was uprooted about 9 to 10" from the ground.
The car dashed so vio lently that it was broken in the front side.
The vehicle struck so violently that the machine of the car went back about a foot from its original position.
The steering wheel of the engine of the car receded back on the driver 's side and the said impact on the driver 's side and by the said impact the occupants died and front seat also moved back.
The witness was not cross examined on these facts.
The maxim of "Res ipsa 1oquitur" clearly applies in the present case.
In view of the proved facts the burden was on the respondents to prove the inevitable accident.
[376 B H] Eller vs Selfridge , referred to.
The normal rule is that it is for the plaintiff to prove negligence but in some cases considerable hardship is caused to ' the plaintiff as the true, cause! of the accident is not known to him but is solely within the knowledge of the, defendant who caused it.
The plaintiff can prove the acci dent but cannot prove how it happened to establish negli gence on the part of the defendant.
This hardship is sought to be avoided by applying the principle of res ipsa 1oqui tur.
It means the accident "speaks for itself" or "tells its own story".
The car could not have gone to the right extremity and dashed with such violence with the tree if the driver had exercised reasonable care and caution.
The Court did not think it necessary to remand the matter to the High Court to consider the question of rash and negligent driving since the evidence was convincing.
[377 D E, 378, A. E] (2) It is an admitted fact that the driver of the car, the Manager of respondent No. 1, was proceeding from Nagpur to Pandhurna for purpose of delivering an amount of Rs. 20,000/ .
He was driving the car in the course of the employment of respondent No. 1.
It is now firmly estab lished that the master 's liability is based on the ground that the.
act is done in the scope or sourse of his employ ment or authority.
[379 A G] Young vs Edward Box and Co. Ltd. at 793, approved.
Sitaram Motilal Kalal vs Santanuprasad Jaishankar Bhatt (1966)3 SCR 527; Conway vs George Wimpey & Co. Ltd. and , distinguished.
Ormrod and Another vs Crosville Motor Services Ltd. (1953)2 All E.R. 753 and Canadian Pacific Railway Co. vs Lockhart , referred to.
(3) The Manager permitted Purshottam to have a ride in the car.
Taking into account the high position of the driver who was the Manager of the company it is reasonable, to presume in the absence of any evidence to the contrary the Manager had authority to carry Purshottam or acting in the course of his employment.
There is nothing to support the conclusion of the High Court that the driver was not acting in the course of his employment.
[382 D F] Cox vs Midland Counties Ry.
Co. ; and Honghton vs Pilkington, distinguished.
Twine vs Bean 's Express, Ltd. 62 T.L.R.p.
155, year 1945 46 distinguished.
Recent trend in law is to make the master liable for acts which do not strictly fall within the term "in the course of employment" as ordinarily understood.
[383 F] 5.
The High Court did not go into the question of quantum of compensation.
The Tribunal, however, ought not to have taken D.A., Conveyance Allowance etc.
, into account for the purposes of determining the income of the deceased.
Thus, the income of 5 years would stand reduced from Rs. 31,000/to Rs. 25,500/ over and above special damage of Rs. 2,000/ [385 A, C D] 374 6.
As far as respondent No. 2 Insurance Co. is con cerned it contended that since the Company had specifically limited its liability in respect of injury to passengers to Rs. 15,000/ it cannot be made liable for anything in excess of Rs. 15,000/ .
The respondent No. 1 contended that the insurance cover under the Act extended to the injury to the passengers also and relied on Section 95(1) (b)(i) which provides against any libility to the owner which may be incurred by him in respect of death or bodily injury to any person or damage to any person of a third party caused by or arising out of the use of the vehicle in a public place.
Section 95 of the as amended by Act 56 of 1969, is based on the Road Traffic Act of 1960 or the earlier Act of 1930 in England.
Section 95(a) and 95(b)(i) of the Act adopts the provisions of the English Road Traffic Act, 1960, and excludes the liability of the Insurance Co. regarding the.
risk to the passengers.
Section 95 provides that a policy of insurance must be a policy which insures the persons against any liability which may be incurred by him in respect of death or bodily injury to any person or damage.
to any property of a third party caused by or arising out of use of the vehicle in a public place.
Proviso 2 to Section 95(b) makes it clear that it is not required that a policy of insurance should cover risk of the passengers who are not carried for hire or reward.
Under section 95, the risk to a passenger in a vehicle who is not carried for hire or reward is not required to be insured.
The Insurer can however always take policies for a risk which is not covered by section 95.
In the present case, the insurer had insured with the Insurance Co. the risk to the passenger to the extent of Rs. 15,000/ .
Clause 1 of the section 2 to the Insurance Policy which requires the Insurance Co. to indemnify the insured in respect of claimants ' claim which becomes legally payable: in respect of death of or bodily injury to any person is not happily worded.
However, since the said clause .talks of "except so far as necessary to meet the requirements of section 95 of the " would indicate that the liability is restricted ,to the liability aris ing out of the statutory requirements under section 95.
The policy read with the other clauses makes it clear that the respondent No. 2 would be liable to the extent of Rs. 15,000/ .
[385 G H, 386 A, F, A D]
|
Civil Appeal No. 217 of 1976.
Appeal by Special Leave from the Judgment ' and Order of the Gujarat High Court dt.
18th/l9th September, 1975 in Civil Revision Appln.
No. 67 of 1973.
P.H. Parekh, Ajit R. Oza, Kailash Vasdev and (Miss) Manju JarIey for the Appellant.
M.V. Goswami for the Respondent.
delivered by BEG C.J. This is a landlord 's appeal by special leave against the judgment and order of the High Court of, Gujarat allowing a revision application of the tenant under section 29(2) of the Bombay Rents, 571 Hotel and Lodging House Rates Control Act, 1947 (thereinaf ter referred to as 'the Act ') It appears from the statement of facts in the judgment of the High Court that there was no dispute that the monthly rent of the premises was Rs. 30/ and that the tenant had also to pay the charges for electricity consumed by him.
It was, however, at first disputed whether the tenant had to pay house tax and the education cess also.
The landlord had brought a suit for arrears of rent amounting to Rs. 990/ from 6 3 67 to 5 12 69 and also to recover a sum of Rs. 27.49 paid as house tax and another sum of Rs. 210.18 paid by the landlord for the electricity consumed by the tenant.
On 5 1 1970, the landlord had served a notice upon the tenant terminating the tenancy on the ground that dues amounting to Rs. 1227.67 had not been paid.
The tenant filed an application for fixation of the standard rent within a month of.
the service of the above mentioned no tice.
He also filed an application for fixation of interim rent on the ground that he, being a poor man, was unable to pay rent and the total amount due at once.
On these appli cations, the interim rent was fixed at Rs. 25/ and the applicant was directed "to deposit arrears of rent and future rent at this rate on or before 10th of the next month".
Although, the trial Court held the notice terminating the tenancy to be legally valid and the agreed rate of rent to be Rs. 30/ p.m., so that the plaintiff was entitled to the decree for arrears of rent from 6 3 67 to 5 12 1969 and also the amount of Rs. 27.49 as house tax and Rs. 210.18 towards electricity charges, making up the total of Rs. 1227.67, yet, it held that as the defendant tenant was "ready and willing" to pay the rent to the plaintiff.
Hence, the suit for ejectment could not be decreed.
The appellate Court, on the other hand, held that the unwilling ness of the defendant respondent to pay the rent, which was apparent from the patent facts and admissions and conduct of the defendant respondent, disentitled him for protection sought.
It, therefore, decreed the suit for ejectment.
Learned counsel for the appellant has contended that the High Court had proceeded upon the wrong assumption that the standard rent was fixed in the lower appellate Court for the first time when the appeal was decided.
It is very diffi cult to find the basis for this opinion of the High Court.
The application for fixing the standard rent, initiating a separate proceeding, was dismissed, as is admitted on behalf of the tenant respondent, for non prosecution.
Hence, no standard rent could be fixed section 11.
Section 5, sub section
(10) defines standard rent as follows : 5. Definitions.
In this Act unless there is anything repugnant to the subject or context (10) "Standard rent" in relation to any prem ises means (a) "Where the standard rent is fixed by the Court and the Controller respectively under the Bombay Rent Restriction Act, 1939 (Bom.
XVI of 1939), or the 572 Bombay Rents, Hotel and Lodging House Rates (Control) Act, 1944 (Bombay VII of 1944), such standard rent; or (b) where the standard rent is not so fixed subject to the provisions of section 11, (i) the rent at which the premises were let on the first day of September 1940, or (ii) where they were not let on the first day of September 1940, the rent at which they were first let before that day, or (iii) where they were first let after the first day of September 1940, the rent at which they were first let, or (iv) in any of the cases specified in section 11, the rent fixed by the Court".
Both the sides before us are agreed that no question of a standard rent actually and finally fixed section 11 of the Act arose in the circumstances of this case.
Section 11 of the Act reads as follows : "11.
Court may fix standard rent and permit increases in certain cases.
(1) In any of the following cases the Court may, upon an application made to it for that purpose, or in any suit or proceeding, fix the standard rent at such amount as, having regard to the provisions of this Act and the circumstances of the case, the Court deems just (a) where any premises are first let after the specified date and the rent at which they are so let is in the opinion of the Court exces sive; or (b) where the Court is satisfied that there is no sufficient evidence to ascertain the rent at which the premises were let in any one of the cases mentioned in sub clauses (i) to (iii) of clause (b) of sub section (10) of section 5; or (c) where by reason of the premises having been let at one time as a whole or in parts and at another time in parts or as a whole, or for any other reasons, any difficulty arises in giving effect to this Part; or (d) where any premises have been or are let rentfree or at a nominal rent or for some consideration in addition to rent; or (e) where there is any dispute be tween the landlord and the tenant regarding the amount of standard rent.
573 (2 ) If there is any dispute between the landlord and the tenant regarding the amount of permitted increases the court may determine such amount.
(3) If an application for fixing the standard rent or for determining the permitted increases is made by a tenant who has received a notice from his landlord under subsection (2) of section 12, the Court shall make an order directing the tenant to deposit in Court forthwith and thereafter monthly or periodi cally, such amount of rent or permitted in creases as the Court considers to be reasona bly due to the landlord pending the final decision of the application, and a copy of such order shall be served upon the landlord.
Out of the amount so deposited, the Court may make order for the payment of such reasonable sum to the landlord towards payment of rent or increases due to.
him, as it thinks fit.
If the tenant fails to deposit such amount, his application shall be.
dismissed.
(4) Where at any stage of a suit for recovery of rent whether with or without a claim for possession of the premises, the Court is satisfied that the tenant is withholding the rent on the ground that the rent is excessive and standard rent should be fixed the Court shall, and in any other case if it appears to the Court that it is just and proper to make such an order the Court may, make an order directing the tenant to deposit in Court forthwith such amount of rent as the Court considers to be reasonably due to the land lord.
The Court may further make an order directing the tenant to deposit in Court, monthly or periodically, such amount as it considers proper as interim standard rent during the pendency of the suit.
The Court may also direct that if the tenant fails to comply with any such order within such time as may be allowed by it he shall not be entitled to appear in or defend the suit except with leave of the Court which leave may be granted subject to such terms and conditions as the.
court may specify.
(5) No appeal shall lie from any order of the Court made under sub section (3) or (4).
(6) An application under this section may be made jointly by all or any of the tenants interested in respect of the premises situated in the same building".
A "fixation" of standard rent can only take place by means of the specified procedure provided for it.
There is nothing in the case before us which could be "deemed" a fixation under the Act.
Apparently, the High Court thought that the dismissal of an application for fixation of rent meant an automatic "fixation" of it at Rs. 30/ p.m.
In the face of detailed findings 'given by the Appellate Court, which the High Court could not upset without a good enough legal ground for 10 502 SCI/77 574 doing so and did not actually set aside, it is difficult to see how the tenant could be said to be "ready and willing" to pay the rent so as to avoid passing of a decree for eviction against him.
On behalf of the landlord appellant, it is submitted that, in an affidavit dated 18 9 75, which the respondent himself filed in the High Court, it is admit ted that the tenant had not been paying the rent regularly as contemplated by 'the order of 3 2 70.
Under that order, the tenant had to deposit arrears of rent.
In addition, he had to deposit future rent at the rate fixed for the "interim rent".
The part of the order for future rent could not refer to arrears of rent.
However, if the tenant was not quite clear about the meaning of the order, he could have applied to the Court to clarify the order and could have gone on depositing rent at Rs. 25/ p.m. after depositing "arrears of rent" so clarified.
Learned counsel for the respondent could only contend that the deposit of future rent on or before the 10th of the next month indicat ed that the deposit could be made at any time before the rent was due and could cover subsequent accruals of rent so that it could cover several months if amount deposited was enough for that.
Learned counsel for the appellant points out that the interpretation put forward on behalf of the respondent tenant is not only an unreason? able one but would not, even if accepted, justify defaults admitted by the respondent tenant even if an advance deposit could wipe off the effects of some defaults.
The High Court had itself not only not set aside the finding relating to the defaults found by the appellate court.
but, after assuming, quite erroneously.
that the standard rent was fixed for the first time in the Appellate Court, it had condoned all defaults in payment of rent right up to the time of the making of the application before the High Court on 18 9 75 and the accept ance of a fresh deposit in the High Court itself to cover the arrears.
The question is whether the statutory powers of the Court laid down in section 12 of the Act could be used in this manner.
Section 12 of the Act reads as follows : "12.
No ejectment ordinarily to he made if tenant pays or is ready and willing to pay standard rent and permitted increases ( 1 ) A landlord shall not be entitled to the recov ery of possession of any premises so long as the tenant pays, or is ready and willing to pay, the amount of the standard rent and permitted increases, if any, and observes and performs the other conditions of the tenancy, in so far as they are consistent with the provisions of this Act.
(2) No suit for recovery of possession shall he instituted by a landlord against a tenant on the ground of non payment of the standard rent or permitted increases due, until the expiration of one month next after notice in writing of the demand of the standard rent or permitted increases has been served upon the tenant in the manner provided in section 106 of the Transfer of property Act, 1882.
575 (3) (a).
Where the rent is payable by the month and there is no dispute regarding the amount of standard rent or permitted in creases, if such rent or increases are in arrears for a period of six months or more and the tenant neglects to make payment thereof until the expiration of the period of one month after notice referred to in sub section (2), the Court may pass a decree for evic tion in any such suit for recovery of posses sion.
(b) In any other case, no decree for eviction shall be passed in any such suit if, on the first day of heating of the suit or on or before such other date as the court may fix, the tenant pays or tenders in Court the standard rent and permitted increases then due and thereafter continues to pay or tender in Court regularly such rent and permitted in creases till the suit is finally decided and also pays costs of the suit as directed by the Court.
(4) Pending the disposal of any such suit, the Court may out of any amount paid or tendered by the tenant pay to the landlord such amount towards payment of rent or permit ted increases due to him as the Court thinks fit.
Explanation In any case where there is a dispute as to the amount of standard rent or permitted increases recoverable under this Act the tenant shall be deemed to be ready and willing to pay such amount, if, before the expiry of the period of one month after notice referred to in sub section (2),, he makes an application to the Court under sub section (3) of section 11 and thereafter pays or tenders the amount of rent or permitted increases specified in the order made by the court In Vora Abbasbhai Alimahomed vs Haji Gulamnabi Haji Safibhai,(1) it was held that, according to section 12(3) (a) of the Act, the Court was bound to pass the decree for eviction if statutory terms are not complied with.
The answer given on behalf of the respondenttenant was that the case before us is governed by the provisions of section 12(3)(b) of the Act.
But, this section applies only to cases where either on the date of first heating of the suit or on such other dates as the Court may fix for the purpose, the tenant pays or tenders in Court the standard rent with permitted increases.
It was laid down in Abbasbhai 's case (supra) that the ' explanation to section 12 introduces only a rule of evidence.
It appears to us that where a tenant does not prosecute an application for fixation of standard rent and deliber ately permits it to be dismissed for non prosecution it could be reasonably inferred that it was not a bona fide application at all.
In the case before us, it being admit ted that the agreed rent was Rs. 30/ p.m. that should be the "standard rent" as defined by section 5(10) of the Act.
That was the rate at which rent was payable.
Non prosecution of the application for (1) ; 576 standard rent indicated that there was no real dispute regarding the standard rent or permitted increases.
In such cases, if the provisions of section 12(3)(a) are not shown to be complied with, the Court is bound to pass a decree for eviction.
The statutory protection can only be given in accordance with the terms on which it is permissible.
The Act certain ly does not confer a power upon the Court to excuse a viola tion of the provisions of the Act by making wrong assump tions or on compassionate grounds.
The Court could not, therefore, exercise what would be, in effect, a power to condone infringement of the provisions of the Act.
In Shah Dhansukhlal Chhaganlal vs Dalichand Virchand Shroff & Ors.,(1) this Court explained the provisions of section 12 of the Act and laid down that a failure to deposit the rent regularly as required by the Act will take the case out of the provisions of s.12(3)(,b).
On facts found, there was such a failure to deposit in the case before us.
The High Court appears to have condoned the defaults by accept ing the version of the defendant respondent that the default was due to his difficulty in finding money to pay up the rent.
Hence, on the admission of the defendant respondent also, it seems a clear case of defaults which deprive the defendant respondent of the protection of section 12 of the Act.
Learned counsel for the plaintiff appellant has, very rightly, pointed out that the High Court had not set aside the findings of the fact arrived at by the appellate Court which took the case of the defendant respondent clearly outside the protection conferred by the Act.
The High Court seems to have accepted the erroneous.
view that stand ard rent was actually fixed by the appellate Court for the first time whereas what had happened was that the applica tion for fixation of standard rent had been dismissed for non prosecution.
This was not "fixation" of standard rent, as already pointed out.
Hence, no question of giving time to pay up arrears after a "fixation" of standard rent arose here.
We think that the case is clearly outside the protec tion conferred upon tenants under the Act.
The readiness and the willingness of the tenant to pay could be ,found: only if he had complied with the provi sions of the Act.
The Act does not cover the case of a person who is unable to pay owing to want of means but is otherwise "ready and willing".
Such a case is no doubt a hard one, but, unfortunately, it does not enable Courts to make a special law for such hard cases which fall outside the statutory protection.
We understand that the defendant respondent is a Carp.enter.
If he is unable to find means to pay rent we cannot dismiss the suit for his eviction on the ground of non payment of rent.
In view of his disability, on account of alleged illness, we propose to modify the decree of the appellate Court to the extent that he will have four months ' time from 5th April 1977 before the eviction order can be executed against him provided he deposits within a month from today all the arrears due (i) ; 577 and goes on depositing Rs. 30/ p.m. regularly, in advance, before the 5th of each month on which his tenancy begins.
He must,, however, vacate the premises before 5th August, 1977, and may leave it earlier if he is unable to pay the required rent regularly in advance.
The decree for eviction will become executable on breach of the conditions laid down, or, after 5th August, 1977.
The result is that we set aside the judgment and order of the High Court and restore the decree of the appellate Court subject to the modification indicated above.
The parties will bear their own costs.
S.R. Appeal allowed.
| IN-Abs | Under section 12(1 ) of the Bombay Rents.
Hotel and lodging House Rates Control Act, 1947, a tenant is entitled to claim protection from eviction so long as he is willing and ready to pay the standard rent as defined in section 5(10) and permit ted increases and observes other conditions of the Act.
The protection is subject to the limitations contained in section 12(2) and 12(3).
Under section 12(3)(a) where the rent is pay able by the month and there is no dispute regarding the amount of standard rent or permitted increases, if such rent or increases arc in arrears for a period of 6 months or more and the tenant neglects to make payment thereof until the expiration of the period of one mouth after notice referred to in sub section (2), the court may pass a decree for eviction in any such suit for recovery of possession.
Under a 12(3)(b) no decree for eviction shall be passed in any suit if on the first day of hearing of the suit or on or before such other date as the court may fix the tenant pays or tenders in court the standard rent and permitted in creases then due and thereafter continues to pay or tender in court regularly such rent and permitted increases till the suit is finally decided and also pays costs of the suit as directed by the court.
The respondent tenant was in arrears of rent amounting to Rs. 990/ for the period from 6th March 1967 to 5th December 1969, house tax amounting to Rs. 27.49 and elec tricity charges amounting to Rs. 210.18.
The appellant landlord served a notice upon him under section 106 of the Trans fer of Property Act terminating the tenancy and filed a suit for eviction.
The respondent filed an application for fixation Of the standard rent within a month trader section 11(2) of the Act.
He also filed an application for fixation of interim rent on the ground that he being a poor man was unable to pay rent and the total amount due at once.
On these applications, the interim rent was fixed at Rs. 25/ by an order dated 3 2 1970 and he was directed to deposit arrears of rent and future rent at this rate on or before 1oth of the next month.
These applications were dismissed for non prosecution later on.
The trial court held that as the respondent tenant was "ready and willing" to pay the rent to the appellant landlord, the suit for ejectment could not be decreed in spite of the fact it found that the notice was validly issued and the arrears were true and correct.
The appellate court held that the unwillingness of the respondent to pay the rent which was apparent from the patent facts and admissions and conduct disentitled him from the protection under section 12 and decreed the suit for eject ment.
The High Court.
however, relying on an affidavit dated 18 9 75 filed by the respondent allowed the revision application made by him under section 29(2) of the Act.
Allowing the apppeal by special leave, the Court.
HELD: (1) The statutory protection can only be given in accordance with the terms on which it is permissible.
The Bombay Rents.
Hotel and Lodging House Rates Control Act, 1947 does not confer a power upon the court to excuse a violation of the provisions of the Act by making wrong assumptions or on compassionate grounds.
The Court.
could not, therefore, exercise what would be in effect a power to condone infringement of the Act.
[575F, 576B] (2) In cases where there is no dispute regarding the amount of standard rent if the provisions of section 12(3)(a) are nor shown to be complied with.
570 the Court is bound to pass a decree for eviction.
Where a tenant does not prosecute an application for fixation of standard rent and deliberately permits to be dismissed for non prosecution, it could be reasonably inferred that it was not a bona fide application at all.
[575 G H, 576 A] (3) A fixation of standard rent can only take place by means of the specified procedure provided for it.
There is nothing in the instant case which could be "deemed" a fixa tion under the Act.
It being admitted that the agreed rent was Rs. 30/ per mensem that would be the standard rent as defined by section 5(10) of the Act.
That was the rate on which the rent was payable.
Non prosecution of the application for standard rent indicate that there was no real dispute regarding standard rent or permitted increases.
[571A 573G, 575FG] (4) Section 12(3)(b) applies only to cases where either on the first hearing of the suit or on such other dates as the court may fix for the purpose, the tenant pays or tenders in court the standard rent with permitted increases pays or In the instant case the respondent did not comply with the orders dated 3 2 1970 fixing the interim rent.
Under the order dated 3 2 1970, the tenant had to deposit arrears of rent and in addition he had to deposit future rent at the rate fixed for the interim rent.
The part of the order for future rent could not refer to arrears of rent.
If the tenant was not quite clear about the meaning of the order, he could have applied to the court to clarify the orders and could have gone on depositing rent at Rs. 25/ per month after depositing arrears of rent so clarified.
[575 FG, 574 B C] Vora Abbashai Alimahorned vs Haji Gulamnabi Haji Safibhai ; referred to.
(5) The readiness and willingness of the tenant to pay could be found only if he had complied with the provisions of the Act.
The Act does not cover the case of a person who is unable to pay owing to want of means but is otherwise "ready and willing".
The Act, unfortunately, does not enable courts to make special law for such hard cases which fall outside the statutory protection.
The instant case is clearly outside the protection conferred upon tenants under section 12 of the Act.
The tenant could not be said to be "ready and willing" to pay the rent so as to avoid passing of a decree for eviction against him, in the face of detailed findings given by the appellate court.
After assuming quite erroneously that the standard rent was fixed for the first time in the appellate court and by accepting the version of the tenant respondent that his default was due to his diffi culty in finding money to pay the rent, the High Court had erroneously condoned all defaults in payment of rent right upto the time of the making of the application before it on 18 9 1975.
[576 B G] Shah Dhansukhlal Chaganlal vs Dalichand Virchand Shroff & Ors. ; applied.
|
Appeal No. 144 of 1977.
Appeal by Special leave from the Judgment and order dated the 2nd January, 1976 of the Karnataka High Court in Writ Appeal No. 430 of 1974.
509 V.N. Satyanarayana, K. Rajendra Chowdhary and Veena Devi (Mrs.) Khanna for the Appellant.
S.S. JavaIi, B.P. Singh and A. K. Srivastava for Re spondent.
The Judgment of the Court was delivered by KAILASAM, J.
This appeal is by the Karnataka Electrici ty Board by its Secretary by Special leave granted by this Court against the judgment of the Karnataka High Court allowing the writ petition filed by the respondent and issuing a writ of mandamus to the appellant to consider the case of the respondent for promotion as an Accounts Superin tendent as on 30th December, 1966, and to promote him to that post with effect from that date.
The respondent was serving as an Accountant, Grade II, in the Electricity Department of the former .State of Hyd erabad.
On the reorganisation of the States in pursuance of the , he was allotted to the new State of Mysore (now Karnataka) with effect from 1st November, 1956.
The post which he held came to be equated with that of I Division Clerk in the former State of Mysore.
On 1st October, 1957, the Mysore State Electricity Board now Karnataka State Electricity Board was constituted under the Indian Electricity (Supply.) Act.
An option was given to the respondent to continue in the Government service or to opt to the Board.
On 1st October, 1957, the respondent opted to the Service under the Board and ceased to be an employee of the Government with effect from that date.
In the year 1960 the Board framed Recruitment and Promo tions Regulations in the exercise of its powers conferred on it under section 79(c) of the Act.
The Regulations were subsequently amended on 16th December, 1966.
The amended Rules prescribed that the posts of Accounts Superintendents were to be filled by promotion of I Division Clerks on the basis of seniority cum merit on their having passed Part I and II of the S.A.S. examination.
On 30th December, 1966, some persons junior to the respondent were promoted on their having passed the S.A.S. examination while promotion was denied to the respondent as he had not passed the examination.
The respondent made several representations one such representation being on 24th December, 1970.
On 21st November, 1972, the respond ent 's representations were rejected.
The respondent there after filed a writ petition before the High Court on 13th February, 1973.
The learned Single Judge who heard the petition dismissed it and the respondent preferred an appeal to a Bench of the Karnataka High Court.
On behalf of the appellant, Karnataka Electricity Board, it was contended before the court that the writ petition ought to be dis missed on the ground of inordinate delay and laches on the part of the respondent and also on the ground that in view of the later Resolution of the Board dated 5th January, 1970, it was no longer open to the respondent to rely on the Resolution dated 19th May, 1969.
The Bench of the Karnataka High Court held that the writ petition cannot 6 502SCI/77 510 be thrown out on the ground of delay.
On a consideration of the two Resolutions of the Board, namely that of 19th May, 1969 and 5th January, 1970, it found that the respondent as an allottee was exempted from complying with the require ments of passing the examination and therefore allowed the writ petition.
We do not see any ground for not accepting the view of the High Court that in the circumstances of the case the relief to the respondent should not be denied on the ground of delay and laches.
The only ground therefore on which the order of the High Court was challenged by the appellant is that the court was in error in construing the relevant provisions of the Regulations and the Resolutions and holding that the re spondent is exempted from passing the S.A.S. examination before qualifying for the promotion.
Before referring to the two Resolutions the relevant provisions of the law and Regulations made thereunder may be referred to.
The Elec tricity (Supply) Act, 1948, by section 79 empowers the Board to make Regulations not inconsistent with the Act and the rules made thereunder to provide for all or any of the matters referred to in clauses (a) to (k) of the section, Sub clause (c) empowers the Board to make Regulations re garding the duties of officers and servants of the Board and their salaries, allowances and other conditions of service.
By virtue of the powers conferred on the Board it framed Mysore State Electricity Board Recruitment and Promotion of Employees of .the
Board Regulation, 1960.
The method of recruitment prescribed for promotion to Accounts Superin tendents is prescribed in Chapter V of Annexure 2.
The method of recruitment is by promotion from the cadre of I Grade Clerks on the basis of seniority cum merit, The minimum qualification prescribed is that the candidate ought to have passed S.A.S. examination Part I and Part II.
This provision which was enacted in 1960 continued to be in force during the relevant time.
If this Regulation is applicable, the respondent 's plea has to be rejected as it is incumbent on him to pass the S.A.S. examination.
The Resolution of the Board relied on by the respondent is 19th May, 1969 and the material paragraph runs as follows : "It is hereby directed that the candi dates appointed to Government/Board Service for the first time after the date of States Re organisation i.e., 1st November 1956 (as they are not allottees) should pass the De partmental Examinations and Kannada Language Tests for purposes of earning increments and for promotion.
" The Resolution requires the passing of the examination and Kannada language test for the purpose of earning incre ments and for promotion for candidates appointed after/st November, 1956.
But as it is not made applicable to the allottees, it is contended that the allottees are by impli cation exempted from passing the Departmental Examination I and Kannada language test.
This contention cannot be ac cepted for the Resolution is silent regarding the allottees and is not made applicable to them.
It is not possible to infer from the Resolution that the 511 allottees are exempted from passing the Departmental Exami nation and the Kannada language test.
the Resolution was ' passed by the Board in pursuance of certain proceedings of the Government referred to in the Resolution itself.
Paragraph 2 of the Resolution reads thus: "Approval is accorded for the adoption of the Government Order Nos.
(1) GAD 123 SSH 65 dated 21 11 1966 (2) GAD dated 3 8 1957 and (3) GAD dated 20 7 1968.
" The three Government orders referred to in the Resolution relate to the requirement of passing of the Departmental Examination and Kannada language test as a consequence of the judgment of the High Court of Mysore and the Supreme Court.
The ' orders specifically states that unless.
in the Recruitment Rules relating to the service concerned Depart mental Examination had been incorporated and prescribed and unless it is clearly specified for what purpose the tests are prescribed viz., whether for increments or promotions, the passing of Departmental tests cannot be legally insist ed upon for grant of increments or for according promotion to higher posts.
The three Government orders make it clear that the relaxation of the rule relating to passing of the Departmental Examinations and Kannada language test is only as regards services where the rules do not specifically require the passing of the examinations and the language test.
These G.O.s do not apply in the present case as the Regulations framed by the Board under section 79(c) specifi cally prescribe the passing of the S.A.S. test.
We are unable to construe the Resolution dated 19th May, 1969 as exempting the allottees from passing the test.
In any event the plea of the respondent will have to fail on the ground that the Regulations framed under section 79(c) of the Board requiting the passing of the examination was not relaxed by amending the Regulations.
The passing of the Resolution by the Board cannot have the effect of modifying a Regulation which was passed by the Board in the exercise of the powers conferred by the statute.
Apart from this circumstance by a subsequent Resolution the Board itself considered the ques tion in all its aspects and resolved that passing of the S.A.S. examination for promotion to the cadre of Accounts Superintendents as before be insisted.
Whatever might have been the purport of the Resolution dated 19th May, 1969, the Board by a subsequent Resolution had resolved on insisting on the passing of the examination.
The High Court found that the later Resolution did not affect the earlier Resolu tion on the ground that the subsequent Resolution did not make any reference to the earlier Resolution and that there is no reference to the allottees at all.
Relying on the words "the passing of the S.A.S. Examination for promotion to the cadre of Accounts Superintendents as before be in sisted" the court found that it would .mean that where the passing of the S.A.S. Examination was insisted prior to that Resolution in the same shall continue to be insisted in future also, and if passing of the S.A.S. Examination was not insisted prior to that Resolution in the case of allot tees for promotion to the cadre of Accounts Superintendents.
The Resolution dated 5th January, 1970, cannot be understood as altering the position existing "as before".
This reasoning is 512 erroneous for, as pointed out by us the earlier Resolution was not intended to cover the case of allottees and merely because the allottees were excluded from the operation of the Resolution the inference that the allottees were exempt ed from the passing 'of the ' examination is not justified.
Further before the Resolution there is nothing to indicate that the allottees were not required to pass the examina tion.
The conclusion of the High Court cannot be upheld as the binding nature of the Regulations passed by the Board under section 79(c) has not been taken due note of.
This is the view taken by the Single Judge of the High Court.
In the result we allow the appeal, set aside the judg ment of the lower appellate court and restore that of the Single judge.
There will be no order as to costs.
P.H.P. Appeal allowed.
| IN-Abs | The respondent was serving as an Accountant in 'the Electricity Department of the former State of Hyderabad.
On the reorganisation of the States in pursuance of the , he was allotted to the new State of Mysore with effect from 1st November, 1956.
Option was given to the respondent to continue in the Government serv ice or to opt to the BOard.
On 1st October, 1957, the re spondent opted to the service under the Board and ceased to be an employee of the Government with effect from that date.
In 1960, the Board framed Recruitment and Promotion Regula tion in exercise of its powers conferred under section 79(c) of the Indian Electricity Supply Act, 1948.
The regulations were subsequently amended on 16.12.1966.
The amended The regulations prescribed that the posts of Accounts Super intendents were to be filled on the basis of seniority cum merit on their having passed SAS examination.
In December, 1966, some persons junior to the respondent were promoted on their having passed the SAS examination, while promotion was denied to the respondent as he had not passed the examina tion.
After the respondent 's representations were rejected he filed a Writ Petition.
The Single Judge dismissed the Petition.
The Division Bench refused to throw out the Writ Petition on the ground of delay.
It found on consideration of the two resolution of the Board one dated 19.5.1969 and another dated 5.1.1970 that the respondent being an allottee was exempted from complying with the requirements of passing the examination.
Allowing the appeal.
HELD: (1) The Division Bench rightly refused to deny relief to the respondent on the ground of delay and laches.
[510 B] (2) Section 79 of the Act empowers the Board to make regulations not inconsistent with the Act and rules made thereunder to provide for all or any of the matters referred to hi cls.
(a) to (k) of the section.
Sub section
(c) empowers the Board to make regulations regarding the duties of offi cers and servants of the Board and their salaries, allow ances and other conditions of service.
By virtue of the said powers the Board framed Mysore State Electricity Board Recruitment and Promotion of Employees of the Board Regula tions, 1960.
The minimum qualification prescribed is pass ing of SAS examination.
The resolution.
of the Board dated 19.5.1969 merely provides that the candidates appointed to the Government Board services for the first time after 1st November, 1956, must pass the department examination for purposes of earning increments and promotion.
The said resolution does not deal with cases of allottees.
It is silent about allottees and, therefore, it is not possible to infer from that resolution that the allottees were exempted from passing the departmental examination.
In any case, the passing of the resolution cannot have the effect of relax ing statutory regulations.
Apart from that by the subse quent resolution of 1970, the Board made it absolutely clear that the SAS examination had to be passed.
[510 C D, G H, 511 E F]
|
vil Appeal No. 2176 of 1968.
Appeal from the Judgment and Decree dated the 18 8 1965 of the Mysore High Court in M.F.A. No. 341 of 1964.
S.T. Desai, K.N. Bhat and R.B. Datar for the Appellants.
Narayan Nettar for Respondent.
The Judgment of the Court was delivered by GUPTA, J.
The only question disputed in this appeal is whether a temple, known as Varadaraj Venkataramana Temple at Gutput in Mangalore Taluk, in Karnataka, is a public temple or a temple belonging to Goud Saraswat Brahmin Community of Gurpur.
This is an ancient temple founded about 400 years ago.
In a proceeding under section 57 of the Madras Hindu Reli gious and Charitable Endowments Act, 1951 (hereinafter referred to as the Act), the Deputy Commissioner by his order dated January 17, 1961 held that the temple was a public temple and the Commissioner on appeal affirmed the order of the Deputy Commissioner on June 12, 1961.
Thereaf ter the appellants who are the trustees of the temple insti tuted a suit, O.S. No. 106 of 1961, in the court of the Subordinate Judge, South Kanara, for a declaration that the temple was a private temple and not a temple as defined in section 6(17) of the Act or, in the alternative, for a declaration that it was a denominational or sectional temple belonging to the Goud Saraswat Brahmin community of Gurpur.
There was also a prayer for cancellation or modification of the order of Commissioner dated June 12, 1961 affirming that of the Deputy Commissioner that this was a public temple.
The Subordinate Judge held on the evidence that this was a denominational or sectional temple belonging to the Goud Saraswat Brahmin community of Gurpur and not a private temple.
He further held that there was no evidence before the Deputy Commissioner justifying his order which was affirmed by the Commissioner that it was a public temple.
He observed that "it is incorrect to draw an inference of dedication to the public merely from the fact of user by the public".
Accordingly, he allowed the alternative declaration asked for by the plaintiffs and modified the order of June 12, 1961 made by the Commissioner affirming the order of the Deputy Commissioner dated January 17, 1961.
From the deci sion of the trial court, the respondents preferred an appeal to the High Court.
The appellants before us also filed a cross objection contending that the Subordinate Judge should have held that the temple was a private temple and not a denominational or sectional temple.
The High Court found that this was a temple as defined in section 6(17) of the Act.
On the evidence also the High Court took a different view from the trial court and held that the temple was a place of religious worship dedicated to and used as of right by the general Hindu community and was thus a public temple.
On this 634 view the High Court allowed the appeal and dismissed the cross objection.
The appeal before us is by the plaintiffs on certificate granted by the Karnataka High Court.
The Subordinate Judge held on the evidence that the temple was founded by 37 Goud Saraswat Brahmin families of Gurpur, that the trustees managing the temple belonged always to the members of the said community, that the landed properties owned by the temple had all been endowed by members of this community, and that there was no reliable evidence of endowment of any immovable property by any person outside the community.
The Subordinate Judge on considering the evidence of defendants ' witness Nos. 2 to 4, on whom the defendants relied to prove that the temple was dedicated to the general Hindu community, found that none of them claimed a right of worship in the temple and the 'sevas ' offered by them were voluntary and the income from such sevas was also small.
He further found that it was only the members of the Goud Saraswat Brahmin community who were allowed to participate in the more important ceremo nies.
It was observed that the fact that Hindus other than those belonging to the Goud Saraswat Brahmin community were not prevented from worshipping in the temple did not "de prive the temple of its sectional character", that it was "incorrect to draw an inference of dedication to the public merely from the fact of the user by the public".
Thus the decision of the Subordinate Judge was that the temple was not a public temple because it was not dedicated to the general Hindu community but for the benefit of Goud Saraswat Brahmin community of Gurpur.
The High Court held that the definition of temple in section 6(17) of the Act covers the temple in question.
The definition is as follows: ""temple" means a place by whatever designation known, used as a place of public religious worship, and dedicated to, or for the benefit of or used as of right by, the Hindu community or any section thereof, as a place of public religious worship;" Even on the findings recorded by the Subordinate Judge, this would be a temple dedicated to or for the benefit of a section of the Hindu community and as such covered by the definition.
The High Court reversed the decision of the Subordinate Judge and held that "facts of the present case lend support to the conclusion that the temple must have been dedicated for the benefit of and used by the Hindu community and is being used by them, as of right, as a place of public religious worship".
The facts that weighed with the High Court were that Hindus generally came to worship in the temple and were not turned away and that when the deity is taken out in procession, members o.f the Hindu community other than Goud Saraswat Brahmins also offer "araties".
The claim made by some of the witnesses for the defendants that they used to consult the oracle in the temple also seemed to the High Court a significant circumstance.
But the High Court appears to have overlooked that these witnesses admit ted that "before consulting the oracle, 635 the manager must be told of it and it is he, who could consult on their behalf".
The High Court has recorded a finding that "numerous endowments" have been made by Hindus not belonging to Goud Saraswat Brahmin community.
This is not however supported by the evidence in the case.
Another circumstance which impressed the High Court was the recital in an award (Ext.
A 13) which was made part of the decree (Ext.
A 3) in a previous proceeding between the members of Goud Saraswat Brahmin community themselves, that the trus tees of the temple should place the accounts of income and expenditure before the "general body".
This "general body" according to the High Court implied, the Hindu community generally.
In the context of the award (Ext.
A 13) it is however clear that the 'general body ' mentioned therein could only refer to the members of the Goud Saras wat Brahmin community because the proceeding concluded by the decree was confined to the members of the community.
The law is now well settled that "the mere fact of the public having been freely admitted to the temple cannot mean that courts should readily infer therefrom dedication to the public.
The value of such public user as evidence of dedi cation depends on the circumstances which give strength to the inference that the user was as of right".
(see Bihar State Board.
Religious Trust, Patna vs Mahant Sri Biseshwar Das(1).
We find that the circumstances disclosed in evi dence in this case do not support the inference that Hindus generally used the temple as a place of worship as of right.
The appeal is accordingly allowed.
The Judgment of the High Court is set aside and that of the trial court re stored.
In the circumstances of the case we make no order as to costs.
S.R. Appeal allowed.
(1) (689).
502SCI/77 2500 23 11 77 GIPF.
| IN-Abs | section 6(17) of the Madras Hindu Religious and Charitable Endowments Act, 1951 defines a temple as "temple" means a place by whatever designation known, used as a place of public religious worship, and dedication to, or for the benefit of or used as of right by, the Hindu Community or any section thereof, as a place of public religious worship.
The Deputy Commissioner, in a proceeding u/s 57 of Madras Hindu Religious and Charitable Endowments Act, 1951 and the Commissioner on appeal held that an ancient temple founded about 400 years ago known as Varadaraj Venkataraman Temple at Gurpur in Mangalore Taluk in Karnataka as a 'Public Temple '.
But in the suit No. DS.
106/1961 instituted by the appellant trustees of the temple for a declaration that the temple was a private temple and not a temple as defined in section 6(17) or in the alternative that it was a denominational or sectional temple belonging to the Goud Saraswat Brahmin Community of Gurpur, the Subordinate judge South Kanara, held on the evidence that this was a denominational or sectional temple belonging to the Goud Saraswat Community and allowed the alternative declaration.
The High Court on appeal found that this was a temple as defined in section 6(17) of the Act and taking a different view of the evidence held that the temple was a place of religious worship dedicated to and used as of right by the general Hindu Community and was thus a public temple.
On appeal by certificate the Court, HELD: (1) It is now well settled that "the mere fact of the public having been freely admitted to the temple cannot mean that Courts should readily infer therefrom dedication to the public.
The value of such public user as evidence of dedication depends on the circumstances which give strength to the inference that the user was as of right." [635 B C] Bihar State Board Religious Trust, Patna vs Mahant Sri Biseshwar Das, (689) referred to.
(2) In the instant case the circumstances disclosed in evidence do not support the inference that Hindus generally used the temple as a place of worship as of right.
The evidence is to the effect (i) that the temple was founded by 37 Goud Saraswat Brahmin families of Gurpur, (ii) that the trustee managing the temple belonged always to the members of said community, (iii) that the lended properties owned by the temple had all been endowed by members of the Community, (iv) that none of the witnesses claimed a right of ownership in the temple and the small sevas were voluntary, (v) that it was the members of the Goud Saraswat Brahmin Community who were allowed to participate in the more important cere monies.
[634 B D; 635D] (3) The High Court 's finding that "numerous endowment" have been made by Hindus not belonging to Goud Saraswat Brahmin Community, is not subpotted by the evidence in the case.
In the context of the Award (Ext.
A 13) the term general body mentioned therein could only refer to the members 633 of the Goud Saraswat Brahmin Community and not to the Hindu Community generally, because the proceeding concluded by the decree was confined to the members of the Community.
[635 A B]
|
Civil Appeal Nos.
2254 & 2255 of 1968.
(From the Judgment and Order dated the 10 1 1967 of the Madhya Pradesh High Court in Misc.
First Appeal No. 12/64) Ram Panjwani, Rameshwar Nath, for the appellant in both the appeals.
A. G. Ratnaparkhi, for respondent No. 1 in CA 2254/68.
S.K. Gambhir, for respondent No. 1 in CA No. 2255/68.
The Judgment of the Court was delivered by GUPTA, J.
On June 23, 1961 a bus owned by the appellant which was going from Gwalior to Indore met with an accident as a result of which two of the passengers, Mrs. Usha Kotas thane, aged about 23 years, and her one year old son, died and several others received serious injuries.
Among the injured was one Sailesh Kumar, a boy of about four years.
Claims for compensation were filed before the Motor Acci dent Claims Tribunal at Gwalior.
The application for com pensation for the death of Mrs. Usha Kotasthane and her child was made by her husband Shri Sudhakar Kotasthane, and the claim in respect of the injury to minor Sailesh Kumar was made on his behalf by his guardian mother Shrimati Indubala Bhandari.
Sudhakar Kotasthane and Indubala Bhand ari were also travelling in the same bus and both sustained injuries and were awarded compensation by the tribunal, but these appeals do not concern their cases or the claim in respect of Kotasthane 's dead child.
The two appeals before us at the instance of the Madhya Pradesh State Road Trans port Corporation, on certificate granted by the Madhya Pradesh High Court, are against the common judgment of the High Court enhancing the quantum of damages awarded by the claims tribunal in respect of the death of Mrs. Usha Kotas thane and the injury sustained by Sailesh Kumar.
C.A. 2254 of 1968 relates to the award in Mrs. Kotasthane 's case and C.A. 2255 of 1968 to that in the case of Sailesh Kumar.
629 As regards the death of Mrs. Usha Kotasthane, the claims tribunal awarded Rs. 15000/ as damages to her hus band Sudhakar.
At the time of her death she was employed as a Physical Instructress in a school at Indore, getting a salary of Rs. 190/ per month, in the grade of Rs.150 10 250.
Admittedly Sudhakar remarried within a year of the death of his first wife.
This is how the tribu nal dealt with the claim: "In the present case, it is a case of the death of the wife.
The husband was not dependent on the earning of his wife.
He was himself earning independently.
The applicant has no where stated that on account of the death of his former wife, he has been deprived of her income, nor that he was dependant upon her.
It is true; that 'the wife of the appli cant was educated, healthy, employed, and earning.
As far as, the loss of companionship is concerned, it is again true that he faced this loss for nearly, 11 months, after which, he married for the second time.
No cross examination has been led by the non applicant on the point that the second wife is as accom plished, educated, and healthy as the former one was.
The death of the wife of the appli cant must have caused him mental shock, pain and inconvenient in his house hold.
The work in the house, which he could take from his wife in looking to the household was also not available to the applicant during this period of 11 month.
The advantage of established married life with a child in the lap, was also lossed to the applicant during this time.
Taking into consideration all these facts, in favour of the applicant, and the fact, against him that he was married again after 11 months, of the death of his wife, I think, it will be proper to award damages amounting to Rs. 15000/ for the loss of life of his wife, which resulted into conditions of inconven ience, suffering shock derangement in house and the life, for a period of nearly 11 months.
" Both sudhakar Kotasthane and Madhya Pradesh State Road Transport Corporation preferred appeals to the High Court from the decision of the tribunal.
The High Court proceeded as follows.
The "span of her earning life" was counted as 35 years taking 58 years as the age of superannuation.
For the first six years from the date of accident, the High Court took Rs. 200/ as the average monthly income, and for the remaining twenty nine years of service the average income per month was fixed at Rs. 250/ .
On this basis the High Court computed her total earning to be Rs. 96,000/ .
Giving allowance for her own expenses and also taking into account the promotions and consequently the increased salary she might have earned, the High Court thought that she could have "easily spread" half of this amount for the household and estimated the loss of income on account of her death in round figures, at Rs. 50,000/ .The High Court enhanced the compensation accordingly.
Regarding Sudhakar 's second, marriage the High Court observed: 630 "But even so the second marriage cannot be said to be a substitute for the ' first one.
The second wife is not an earning member of the family nor is it shown that Sudhakar has in any way benefitted from the second marriage financial ly.
Therefore the financial loss would be there despite the second marriage.
" On these findings the High Court allowed the appeal filed by Sudhakar Kotasthane and dismissed that preferred by the Madhya Pradesh State Road Transport Corporation.
The extract from the tribunal 's order quoted above suggests that in fixing the quantum of compensation the tribunal was under the impression that the applicant had made no claim on the ground of ' pecuniary loss resulting from his wife 's death.
In this the tribunal was clearly in error.
In paragraph 11 of the claim petition, Rs. 75,000/is claimed as compensation and the paragraph makes it clear, that the sum is computed on the deceased 's expected earn ings.
If there were no such claim the tribunal would have been hardly justified in awarding Rs. 15000/ as damages for the mental shock and inconvenience suffered by the applicant for a period of 11 months only, after which he remarried.
The High Court also does not seem to be right in estimating the damages at Rs. 50,000/ in the manner it did.
Whether the deceased 's average monthly salary is taken to be Rs. 200/ or Rs. 250/we find it difficult to agree that only half of that amount would have been sufficient for her monthly expenses till she retired from service, so that the remaining half may be taken as the measure of her husband 's monthly loss.
It is not impossible that she would have contributed half of her salary to the household but then it is reasonable to suppose that the husband who was employed at a slightly higher salary would have contributed his share to the common pool which would have been utilised for the lodging and board of both of them.
We do not therefore think it is correct to assume that the husband 's loss amounted to half the monthly salary the deceased was likely to draw until she retired.
If on an average she contributed Rs. 100/every month to the common pool, then his loss would be roughly not more than Rs. 50/ a month and, assuming she worked till she was 58 years, the total loss would not exceed Rs. 19,000/ .
But in assessing damages certain other factors have to be taken note of which the High Court over looked, such as the uncertainties of life and the fact of accelerated payment that the husband would be getting a lump sum payment which but for his wife 's death would have been available to him in driblets over a number of years Allowance must be made for the uncertainties and the total figure scaled down accordingly.
The deceased might not have been able to earn till the age of retirement for some reason or other, like illness or for having.
to spend more time to look after the family which was expected to grow.
Thus the amount assessed has to be reduced taking into account these imponderable factors.
Some element of conjecture is inevitable in assessing damages Pearce in Mallet v Mc Monagle, 1970 (A.C.) (H.L.) 166 Lord( 174)calls it "reson able prophecy"sTaking note of all the relevant factors, the sum of Rs.15000/ awarded by the tribunal appears to be a reasonable figure which h we do not find any reason to disturb.
631 A method of assessing damages, usually followed in England, as appears from Mallet vs Mc Monagle (supra), is to calculate the net pecuniary loss upon an annual basis and to "arrive at the total award b multiplying the figure as sessed as the amount of the annual "dependency" by a number of "year 's purchase" ", (p. 178) that is, the number of years the benefit was expected to last, taking into consid eration the imponderable factors in fixing either the multi plier or the multiplicand, The husband may not be dependant on the wife 's income, the basis of assessing the damages payable to the husband for the death of his wife would be similar.
Here, the lady had 35 years of service before her when she died.
We have found that the claimant 's loss reasonably works out to Rs. 50/ a month i.e. Rs. 600/ a year.
Keeping in mind all the relevant facts and contingen cies and taking 20 as the suitable multiplier, the figure come to Rs. 12,000/ .
The tribunal 's award cannot there fore ' be challenged as too low though it was not based on proper grounds.
In a decision of the Kerala.
High Court relied on by the appellant (P. B. Kader vs Thatchamma: AIR 1970 Kerala 241 ), to which one of us was a party, the same method of assessing compensation was adopted.
The other appeal (C.A. No. 2255 of 1968) relates to the injury sustained by a boy aged about four years.
He suf fered compound fracture of his right tibia and fabula lower third near the ankle joint with infection of the wound.
Skin grafting had to be done and the boy had to remain in hospital from June 25, to August 4, 1961.
AccOrding to the doctor who examined him, the child was likely to develop a permanent limp which might require another operation at the age of 16 years or so.
In any case, in the opinion of the doctor the deformity was certain to persist till the boy was 16 years when another operation might remove it.
The tribu nal awarded Rs. 10,000/as general damages and Rs. 890/ as special damages.
The High Court increased the general damages to Rs. 20,000/ .
It appears from the evidence that the boy comes from a well to do family.
Though the possibil ity was there of the deformity being removed by surgical operation when he grew up to be 16 years, the other possi bility cannot be altogether ruled out.
That being the position, we are not inclined to interfere with the sum awarded by the High Court.
In the result, appeal No. 2254 of 1968 is allowed, the judgment of the High Court is set aside and the award of the tribunal is restored; appeal No. 2255 of 1968 is dismissed.
There will be no order as to costs in either appeal.
C.A. 2254 of 1968 allowed.
S.R. C.A. 2255 of 1968 dismissed.
| IN-Abs | In a bus accident on June 23, 1961, one Mrs. Usha Kotas thane and her one year old son died.
One Sailesh Kumar.
a boy of about four years coming from a well to do family was disabled due to a compound fracture of his right tibia and fabula lower third near the ankle joint.
_ Sudhakar Kotas thane, the husband of the deceased and respondent No. 1 in C.A. 2254 of 1968 and Smt.
Indu Bala Bhandari.
mother of Sailesh Kumar and respondent No. 1 in C.A. 2255 of 1968 applied to the Motor Accident Claims Tribunal, Gwalior for compensation.
The Tribunal took into consideration (i) the loss of life of Sudhakar 's wife which resulted into condi tions of inconvenience, suffering, shock, derangement in house and the life for a period of nearly 11 months i.e., till he remarried and (ii) The fact that Mrs. Usha was working as Physical Instructress in a school getting a salary of Rs. 190/ p,m.
in the scale of Rs. 150 10 250 and awarded a sum of Rs. 15,000/ as compensation as against the claim of Rs. 75,000/ computed on the deceased 's earn ings.
The Tribunal also awarded a sum of Rs. 10,000/ as damages and Rs. 890/ as special damages to Smt.
Indubala.
Both the respondents and the appellant preferred appeals to the High Court from the decision of the Tribunal.
The High Court enhanced the compensation to Rs. 50,000/ in the case of Sudhakar and to Rs. 20,000/ in the case of Indubala.
Allowing the appeal in C.A. No. 2254 of 1968 and dis missing the appeal in C.A. No. 2255 of 1968, the Court.
HELD: (1) A method of assessing damages usually followed in England is to calculate the net pecuniary loss upon an annual basis and "to arrive at a total award by multiplying the figure assessed as the amount of the annual 'dependency ' by a number of year 's purchase", that is, the number of years that benefit was expected to last taking into consid eration the imponderable factors in fixing either the multi plier or the multiplicand.
The husband may not be dependant on the wife 's income.
the basis of assessing the damages payable to the husband for the death of his wife would be similar.
[631 AB] Rule in Mallet vs Mc Mongale 1970 (A.C.) H.L. 166 at 174 quoted with approval.
P.B. Kaclar vs Thatchamma AIR 1970 Kerala 241, approved.
In assessing damages certain other factors have to be taken note of, such as, the uncertainties of life and the fact of accelerated payment that the husband would be getting a lump sum payment which but for his wife 's death would have been available to him in driblets over a number of years.
Allowance must be made for the uncertainties and the total figure sealed down accordingly.
The deceased might not have been able to earn till the age of retirement 628 for some reason or other, like illness or for having to spend more time to look after the family which was expected to grow.
Thus, the amount assessed has to be reduced taking into account these imponderable factors.
[630 G H] In the instant case, the deceased had 35 years of serv ice before her when she died.
The claimant 's loss reasona bly works out to Rs. 50/ a month i.e., Rs. 600/ a year.
Keeping in mind all the relevant factors and contingencies and taking 20 as the suitable multiplier, the figure comes to Rs. 12,000.
The Tribunal 's award cannot, therefore, be challenged as too low though it was not based on proper grounds.
The High Court was also not right in estimating the damages at Rs. 50,000/ in the manner it did.
2255 of 1968: Though the possibility was there, in the instant case, of the deformity being removed by surgical operation when the boy grew up to be 16 years, the other possibility of "likelihood to develop a permanent limp" cannot be altogeth er ruled out.
That being the position, the increase of general damages to Rs. 20,000/ , in the instant case, in addition to Rs. 890/ as special damages is proper.
[631 D F]
|
Appeal No. 680 of 1976.
From the Judgment and Order dated the 17th March, 1976 of the Monopolies and Restrictive Trade Practices Commis sion, New Delhi in R.T.P. Enquiry No. 11 of 1974.
L.M. Singhvi, Ravinder Narain, Talat Ansari and Shri Narain for the Appellant.
L.N. Sinha, Sol.General, B. Datta and Girish Chandra for Respondents Nos. 1 and 2.
G.A. Shah and N. Nettar for Respondent No. 13 The Judgment of the Court was delivered by C.J.
This is an appeal under section 55 of the Monop olies & Restrictive Trade Practices Act, 1969 (hereinafter referred to as 'the Act ') against the order and judgment of the Monopolies & Restrictive Trade Practices Commission, New Delhi (hereinafter referred to as the 'Commission '), in proceedings started under section 10(a) (iv) of the Act against the appellant M/s. Hindustan Lever Ltd. (hereinafter referred to as 'the Company '), upon information furnished by Bhogilal Manilal Shah of M/s. Shah Manilal Motichand & Sons of Poona (hereinafter referred to as the 'informant ').
The informant was a redistribution stockist of the appellant company carrying on business regulated by the terms of an agreement, known as the redistribution stockists agreement of the company, found in a standard printed form, entered into with each stockist.
The agreement has 23 terms or clauses in it.
The clauses complained of are 5 and 9, which may be reproduced here: "5.The Redistribution Stockist shall use his best endeavours to maintain and in crease the trade of the Products in the said town and for this purpose he shall at all times keep and 'maintain adequate stocks of the Products in all its packings and he shall carry.
out all instructions and directions including those as to the maximum resale price which may from time to time be given by the Company or by the Company 's accredited repre sentatives in respect of the sale or resale or disposal by the Redistribution Stockist of stocks of the Products supplied to him in pursuance of this Agreement.
The Redistribution Stockist is prohibited from charging in excess of the maximum resale prices stipulated by the Company, but he may, at his discretion, charge prices lower than the said maximum resale prices.
The Redistribution 459 Stockist shall purchase and accept from the Company such stock as the Company shall at its discretion send to the Redistribution Stockist for fulfilling its obligations under this Agreement.
In order to ensure equitable and reasonable distribution of stocks at fair prices, the Redistribution Stockist shall not rebook or in any way convey, transport or despatch parts of stocks of the products received by him outside the aforesaid town except when he is so expressly directed in writing by the Company.
He shall also whenev er so required by the Company make available from the stocks of Company 's merchandise purchased by him such part as the Company directs him.
to do for purposes of resale on his behalf by the Company 's employee."
It is alleged that the two clauses, set out above found in identical agreements entered into by the Company with its stockists, whose number is quite large, constitute or autho rise restrictions which are unreasonable and illegal.
Hence, it was submitted by the respondents that it must be struck down or modified so as to make the business and trade of the appellant company and its stockists conform to the requirements of law.
The Commission had accepted the case brought to its notice by the informant and made the following order : "(1).
Clause 5 of the Agreement (Exhib it F) shall stand modified so that the follow ing shall be substituted in place thereof: "5.
The Redistribution Stockists shall use his best endeavours to maintain and in crease the trade of the products in the said town and for this purpose he shah at all times keep and maintain adequate stocks of the products in all its packings and he shall carry out the instructions and directions including those as to maximum resale price which may from time to time be given by the Company or by the Company 's accredited repre sentatives in respect of the sale or resale or disposal by the Redistribution Stockist of stocks of the products supplied to him in pursuance of this Agreement.
The Redistribu tion Stockist is prohibited from charging in excess of the maximum resale prices stipulated by the Company but he may at his discretion charge prices lower than the said maximum resale prices". "(2).
The practices of resale price maintenance and full line forcing to which original clause 5 of the agreement related, shall be discontinued and shall not be repeat ed.
(3) Clause 9 of the Agreement (Exhibit F) shall be void.
(4) The practice of area allocation to which clause 9 of the Agreement (Exhibit F) related, shall be discontinued and shall not be repeated.
460 (5) In all future price circulars or lists to be issued by the Respondents, it shall be clearly stated that the prices there in mentioned are maximum prices and that prices lower than these prices may be charged.
(6) This order shall come into force with effect from 1st July, 1976.
On or before the said date, the Respondents shall intimate all Redistribution Stockists of the modifica tions in Clauses 5 of the Agreement (Exhibit F) and the voidity of clause 9 of the Agree ment (Exhibit F)".
There was some argument before us on the question whether proceedings before the Commission were maintainable at the instance of a "complainant" who had reasons to nurse a grievance against the Company and whose motives could be questioned.
It was pointed out that the agreement of the company with the informant had been terminated.
The version of the informant was that this had been done because his firm had sold Vanaspati at the rate of Rs. 127/ per tin which was below the price of Rs. 129.05 per tin fixed by the Company.
The informant stockist said that the price had to be reduced by him to remove public discontent.
We think that the motives of the informant are quite irrelevant in such a case.
All that the Commission, and, on appeal, this Court has to examine is whether what would undoubtedly be a "practice" by the appellant company, of introducing the two clauses complained of, in its agreements with its stockists, amounted to a restrictive trade practice.
The distinction sought to be made .,on behalf of the appellant, between a practice and clauses in a contract which give a company the power to regulate trade in a manner which may constitute a restriction, appears to be inconse quential here.
We do not think that we can isolate the terms of a contract from the actual practice of the company.
It is not the case of the company anywhere that the clauses in its agreement with its stockists are to be treated as deadletter.
Its case is that they do not operate as restrictions.
The introduction of such clauses in so many agreements meant to regulate relations, either between a principal and an agent or the seller and the stockist who acquires complete proprietary rights in the stock of goods purchased, is itself a trade practice.
The simple question before us is: Can powers conferred upon the company under such clauses be exercised in such a way as to constitute restrictive trade practices?
It is true that the practice of imposing restrictions under such clauses is one thing and the practice of intro ducing such clauses is quite another thing.
Both may con stitute separate practices.
Nevertheless, the introduction of such clauses into an agreement between the manufacturer and the seller who purchases and stocks his goods is in itself something practised.
It is immaterial that the use of powers under such clauses may constitute another set of practices which depend upon the existence of 'such clauses as sources or springs.
Inasmuch as the introduction of clauses in such an agreement is a practice, taken by itself, the question whether such a practice amounts to a restric tive trade practice or not could only be decided by consid ering 461 whether the clauses could be so used as to unjustifiably restrict trade? It would be specious reasoning, in such a case, to separate the clauses in the agreement from action under the agreement and then to urge that, as evidence of action under the clauses is meagre or even absent, the clauses are innocuous and should not be modified or struck down because we are only concerned with what is actually being practised under them or with the use that is being made of such clauses and not with what is permissible or possible under the clauses of the agreement of the kind before us.
This argument seems to us to overlook the definition of "restrictive trade practice" contained in section 2(0) of the Act which lays down: "(0) "restrictive trade practice" means a trade practice which has, or may have, the effect of preventing distorting or restricting competition in any manner and in particular (i) which tends to obstruct the flow of capital or resources into the stream of pro duction, or (ii) which tends to bring about manipula tion of prices, or conditions of delivery or to affect the flow of supplies in the market relating to goods or services in such manner as to impose on the consumers unjustified costs or restrictions." 0 It is clear from a bare perusal of the above mentioned definition that it is not only the actual practice of a restriction under a clause which is struck by the provisions of the Act, but also a "trade practice" which "may have" the effect of restrictions falling within the mischief" provided for.
In other words, if the introduction of the clause in itself is a trade practice and could be used to prevent, distort or restrict competition "in any manner" it may be struck down.
A trade practice is defined by section 2(u) of the Act as follows : "(u) "trade practice" means any practice relating to the carrying on of any trade, and includes (i) anything done by any person which controls or affects the price charged by, or the method of trading of, any trader or any class of traders.
(ii) a single or isolated action of any person in relation to any trade".
This definition is wide enough to include any "trade practice" if it is in relation to the carrying on of a trade.
It cannot be argued that the introduction of the clauses complained of does not amount to an action which relates to the carrying on of a trade.
If the result of that action or what could reasonably flow from it is to restrict trade in the manner indicated, it will, undoubted ly, be struck by the provisions of the Act.
Reliance was sought to be placed by learned counsel for the appellant company on a recent decision of this Court in Tata Engineering & Locomotive Co. Ltd. vs The Registrar of the Restrictive 3 502 SCI/77 462 Trade Agreements, New Delhi(1) (hereinafter referred to as the "Telco" case) where it was held: "The definition of restrictive trade practice iS an exhaustive and not, an inclusive one.
The decision whether trade practice is restrictive or not has to be arrived at by applying the rule of reason and not on the doctrine that any restriction as to area or price will per se be a restrictive trade practice.
Every trade agreement restrains or binds persons or places or prices.
The ques tion is whether the restraint is such as regulates and thereby promotes competition or whether it is such as may suppress or even destroy competition.
To determine this ques tion three matters are to be considered.
First, what facts are peculiar to the business to which the restraint is applied.
Second, what was the condition before and after the restraint was imposed.
Third, what is the nature of the restraint and what is its actual or probable effect".
It was also held there: "The question of competition cannot be considered in vacuo or in a doctrinaire spirit.
The concept of competition is to be understood in a commer cial sense.
Territorial restriction will promote competi tion whereas the removal of territorial restriction would reduce competition.
As a result of territorial restriction there is in each part of India open competition among the four manufacturers.
If the territorial restriction is removed there will be pockets without any competition in certain parts of India.
If the dealer in Kashmir is allowed to sell anywhere in India wealthy cities like Delhi, Bombay, Calcutta will buy up trucks allocated for Kashmir and the buyer in Kashmir will not be able to get the trucks.
The other three manufacturers whose trucks are not in equal demand will have Kashmir as an open field to them without competition by Telco.
Therefore, competition will be re duced in Kashmir by the successful competition being put out of the field".
It is evident that in the Telco case this Court was considering the territorial restrictions placed upon the stockists of Telco in the Light of the special facts and circumstances of that particular case.
Each type of busi ness has, undoubtedly, its peculiarities, its own mode of operation, the special features relating to the market for it, and the requirements of distribution of particular goods which may be the subject matter of an agreement so as to secure a just and equitable distribution consistently with maintenance of freedom of competition so that prices are not artificially pushed up.
In the Telco case, the subject matter of the agreement was sale of trucks of a type in which the Telco had a monopoly inasmuch as no other firm produced trucks which were of such special quality and specifications.
Hence, there was great demand for these trucks, which were in short supply.
Again, for the mainte nance and running of those especially designed trucks the manufacturer had to provide especially trained and skilled personnel and special equipment and tools so as to enable stockists to service and repair trucks distributed.
Unless the manufacturers were able to impose restrictions upon sales outside the areas in which they had (1) ; 463 established their stockist cum servicing suppliers, they could not at all render the kind of service they were giving in addition to selling.
In other words, it was a mixed practice for purchase of trucks and provision of specialised service to the consumers, through the stockists.
On the peculiar facts and circumstances of that case, it was found that the agreements did not, on the whole, result in re stricting trade or curtailing competition.
The facts of the case before us are entirely different.
We are concerned here with a manufacturer of mixed consumer goods of different varieties.
The appellant company pro duces dehydrogenated oil (known in the market as "Vanas pati"), toilet preparations of various kinds such as soaps, shaving creams, toothpastes, and baby milk powder, and animal feeds.
The soaps manufactured by it are undoubtedly the main type of goods supplied.
But, it manufactures other type of goods too.
It can, therefore, compel stockists to by them, whether stockists want these other goods or not, if the terms of the agreement are to be held to be binding and enforceable.
The manufacturer is under no obligation to render any service in relation to maintenance of the goods supplied.
The whole trade is completely unlike that of manufacture and sale of motor trucks for which the stock ists, selling to the actual consumers, had to, as already pointed out, also have the services of the manufacturer 's trained personnel for the purposes of maintenance and repair of the vehicles supplied.
It would mount to an application of the law in a thoroughly doctrinaire fashion if we were to deduce some general principles, from the very different facts of the Telco case and attempt to apply them to those of the case now before us.
Thus, the contention advanced on behalf of the appellant, against a doctrinaire approach in such cases, really weighs against the appellant company.
In the Telco case, the agreement could not be understood without reference to the actual facts to which they were sought to be applied.
Those facts explained the nature of the special agreements for restriction or distribution of areas.
In the case before us, the problem entirely different.
This is not a case in which certain terms of the agreement require to be explained by the facts to which they were meant to be applied.
It is a Clear case in which the meanings of the clauses are decisive.
If these clauses are capable of being so used, on the meanings which appear unambiguously from them, as to undoubtedly restrict trade, the intention to so use them to restrict trade could reason ably be inferred without any difficulty.
Otherwise, why have them ? No oral evidence could be led to deduce their meaning or to vary it in view of the provisions of sections 91 and 92 of the Evidence Act.
the principles of which were we think rightly applied by the Commission.
The Telco case, on the other hand, was one in which extraneous evi dence could be led under section 92 proviso (6)of the Evidence Act which may be set out here with Section 92: "92.When the terms of any such contract, grant or other disposition of property or any matter required by law to be reduced to the form of a document, have been proved 464 according to the last section, no evidence of any oral agreement or statement shah be admit ted, as between the parties to any such in strument or their representatives in interest, for the purpose of contradicting, varying, adding to or subtracting from, its terms: Proviso (6) Any fact may be proved which shows in what manner the language of a document is related to existing fact".
The principle embodied in section 92(6) of the Evidence Act, which was applicable in Telco case (supra), is not, for the reasons given above, applicable in the case now before us.
Indeed, no attempt has been made by reference to any case law apart from the Telco case '(supra), which we have dis tinguished above, to show that extraneous evidence could have been led herein order to apply section 92 proviso (6) of the Evidence Act.
In the Telco case this provision was not directly referred to, but, we think, that it could have been applied there.
Thus, we think that the basic difficulty, placed before us by learned counsel for the appellant, in the way of examining the plain meaning and effect of clauses 5 and 9 of the Distribution Stockists agreement, does not exist at all in the case now under consideration.
We must, therefore, proceed to examine the meanings of these clauses from the point of view of what could be done by the Company under them.
If what may be done under these clauses could be a restrictive practice as defined by the Act, it was enough to vitiate them.
A clause having been introduced in an agreement entered into, as a part of the settled practice of the company, could be struck by the provisions of section 2(0) of the Act, set out above, quite apart from what is actually done under it.
We do not think that any other question is really relevant or need be considered by us at all in such a case.
It is not a case in which we could be taken through the oral evidence, as has been attempted to be done, because that is shut out by an application of provisions of sections 91 and 92 of the Evidence Act if all we need do is to interpret the agreement.
We are unable to see why these provisions do not apply here.
Not much argument appears to us to be needed to demon strate that the last sentence in paragraph 5 of the above mentioned clause places the redistribution stockist at the mercy of the company which can dictate to him what amounts of various commodities he "shall purchase and accept from the company" in the form of a total lot supplied to him.
The company need only send to the redistribution stockists what it "shah at its discretion send to the Redistribution Stockists for fulfilling its obligations under this Agree ment".
The meaning and effect are obvious here.
The intro duction of the word "shall" does not bind down the exercise of the discretion by reference to any requirements of the consumers in a particular area which the stockists may convey to the company.
Hence, if the stockists want to remain on the list of the redistribution stockists of the company.
the stockist is bound to accept and carry out the decision of the company.
Even if in view of some other practice adopted by the company 465 a power given in such wide terms was not meant to be exer cised unreasonably, its presence in the agreement would be a needless surplusage which could, whenever the company wanted it, be used to impede freedom of competition and trade.
This result was enough to make it quite objectionable.
We, therefore, think that the Commission was quite right in reframing clause 5 in the way it did.
We are unable to find any flaw in the detailed reasons given by the Commission for doing that.
The Commission rightly points out that, among agreements the registration of which is compulsory according to the provisions of Chapter V of the Act is, under section 33(1)(b) is "any agreement requiring a purchaser of goods, as a condition of such purchase, to purchase some other goods".
The last part of clause 5, as we have observed, clearly makes it necessary ,for the stockist to purchase such goods and in such combination as the company may de cide.
Hence, it would be struck by section 33(1)(b) of the Act.
It has not been shown to have been registered under the Act.
It is also submitted on behalf of the respondent that clause 5 of the agreement infringes section 33(1)(f) of the Act which requires registration of .
"any agreement to sell goods on condi tion that the prices to be charged on resale by the purchaser shall be the prices stipulat ed by the seller unless it is clearly stated that prices lower than those prices may be charged". 0 The Commission held that clause 5 of the agreement meant provision for "prices stipulated" and that it had been so treated by the company in its circulars stating that prices lower than the "maximum resale price stipulated" by the company may be charged.
If that was clear, there was no reason why the company should have attempted to clarify by means of its circulars what, according to it, the stockist is free to do under the agreement.
Even if the practice of the company by issuing circulars is established, it does not justify the retention of clause 5 in a form which can be used to compel stockists to act on the company 's behests whether reasonable or not.
On the other hand, it justifies its clarification by an alteration of it in the manner directed by the Commission so as to make the clause covering price regulation also very clear.
The order of the Commis sion modifying clause 5 only makes the position crystal clear.
Inasmuch as clause 5, even before deletion of the last sentence of it by the Commission, expressly gives the stockist the discretion to sell at lower than maximum resale prices stipulated, the agreement was not struck by section 33(1)(b) of the Act.
But, the deletion of the last sentence was essential to prevent possible misuse of the company 's powers, by resort to it, so as to even regulate prices contrary to express provisions found earlier in the clause.
Turning now to clause 9 of the agreement, we think that the Commission was right in rejecting the argument that evidence led on behalf of the company was enough to estab lish that clause 9 fell within one 466 of the "gateways" provided by section 38 of the Act.
A power to impose restrictions falling under this provision had to be justified by the company by actual proof of a public interest which could not be better served without it.
The submission that section 38 could be applied here amounts at least to a concession that a clause conferring such wide power upon the manufacturer may be so used as to amount to a restrictive practice.
It is the practice of putting in such a clause which has to be justified.
The power given to the company under clause 9 is very wide.
The manufacturer can compel the redistribution stock ists to make available to the company any stocks purchased by the stockist.
It also compels the stockist to take the permission of the company for conveying, transporting, or despatching parts of stocks of the products received by him outside a specified town except when he is so expressly directed in writing by the company.
It directly prevents him from doing so without the company 's permission.
If the stockist violates this condition the whole agreement can be revoked by the company so that the stockist loses his right to carry on business under the agreement.
If what had to be justified is not how this power is actually used, but the practice of conferring such powers upon the company by placing the stockist at the mercy of the company, the evi dence of facts showing how the power is exercised could be relevant only very indirectly.
However, if it could be shown that some facts did exist which make it imperative to confer such a power on the company for the benefit of ' the public, that may be relevant to establish the existence of a "gateway" under section 38.
But, it could certainly not be used to determine the meaning of a clause for which it is not necessary here to go beyond the language of the clause involved.
We are primarily concerned in this case, as we have repeatedly emphasized, with the clear meanings of the two clauses.
As the Commission pointed out, it is immaterial that a purchaser from outside may be able to get round clause 9 by purchasing across the counter from the stockist inside a town.
The clause itself, however, gives to the company an unreasonably wide power of deciding what is actually fair and equitable distribution.
The Commission very rightly points out that this is more properly a part of the duty of governmental authorities which may be entrusted with powers of rationing such consumers ' goods if this is found to be necessary in public interest.
However, before any question of reasonableness of a power to ration any goods is entrusted by any method to any person or authority those goods must be shown to be scarce or in Short supply.
That was the position in the Telco case (supra).
Evidence establishing such a need has not been shown to exist.
And, in any case, it has to be a very exceptional set of facts indeed which could justify lodging of such a power in the manufacturer.
The Commission has dealt with a good deal of evidence to justify its conclusion that the need to justify the lodging of such a power in the company has not been established.
We see no reason to disturb it.
Under the provisions of section 55 of the Act, an appeal lies to this Court only on one of the grounds mentioned in section 100 of the 467 Code of Civil Procedure.
It is, therefore, necessary in all such cases for counsel to clearly formulate and direct our attention to only questions of law which arise so that these may be decided.
It is not permissible to go over the whole range of evidence led as was attempted before us.
Learned counsel for the appellant when asked by us to formulate the questions of law which arise mentioned the following questions: Firstly, whether the Commission was right in applying what he described as the "per se" rule as opposed to "the rule of reason".
It was submitted that the correct rule which should have been applied is stated in Board of Trade of the City of Chicago vs United States of America, as follows (at p. 237): "Every agreement concerning trade, every regulation of trade, restrains.
To bind to restrain, is of their very essence.
The true test of legality is whether the restraint imposed is such as merely regulates and per haps thereby promotes competition, or whether it is such as may suppress or even destroy competition.
To determine that question the Court must ordinarily consider the facts peculiar to the business to which the re straint is applied; its condition before and after the restraint was imposed; the nature of the restraint, and its effect, actual or probable.
The history of the restraint, the evil believed to exist, the reason for adopt ing the particular remedy, the purpose or end sought to be attained, are all relevant facts.
This is not because a good intention will save an otherwise objectionable regulation, or the reverse; but because knowledge of intent may help the court to interpret facts and to predict consequences".
We find no objection whatsoever in adopting the rule indi cated above in cases to which it applies.
That was a case in which a rule adopted by the Board of Trade of the City of Chicago (supra) prohibiting offers to purchase during the period between the close of the call and the opening of the session on the next business day for sales of wheat, corn, oats, or rye at a price other than at the closing bid, was challenged.
Hence, questions relating to effects of the rule arose so as to determine its reasonableness.
Such questions could not be determined without examining evidence of facts to which the rule was meant to apply and findings as to how it operated.
The issue was whether the rule, having regard to the facts to which it was to be applied, offended against the Anti trust laws.
The Government 's case was thus stated by Mr. Justice Brandeis (at p. 237) : "The Government proved the existence of the rule and described its application and the change in business practice involved.
It made no attempt to show that the rule was designed to or that it had the effect of limiting the amount of (1) 62 Law.p. 231.468 grain shipped to Chicago; or of retarding or accelerating shipment; or of raising or depressing prices; or of discriminating against any part of the public; or that it resulted in hardship to anyone.
The case was rested upon the bald proposition that a rule or agreement by which men occupying positions of strength in any branch of trade fixed prices at which they could buy or sell during an important part of the business day is an illegal restraint of trade under the Anti trust Law.
But the legality of an agree ment or regulation cannot be determined by so simple a test as whether it restrains competi tion".
Apparently, Dr. Singhvi means, by his plea against the use of a "per se rule", nothing more than an assumption, that a restriction is illegal in itself, should not be made without examining its impact upon the particular trade involved.
As contrasted with any such assumption what the learned counsel describes as "the rule of reason" was stated in the earlier passage quoted above giving the nature of facts to be considered so aS to determine the context in which the restraint was imposed.
This Court accepted the correctness, in the Telco case (supra), of the approach that no bald or simple test, divorced from the context or sur rounding circumstances, should be adopted in judging the legality of a restraint upon trade.
Such a view, applicable to actual restrictions imposed, has really nothing to do with the rules relating to interpretation of documents which are used in finding out the effect and intent of words used in a document.
It is after a difficulty of interpretation, if any, is resolved and a rule or a clause in an agreement is found to have either a clear meaning or to be ambiguous that its effect can be considered.
No doubt that effect has to be examined to determine how a restraint actually imposed affects trade.
It is one thing to say that the impact of the restraint imposed on trade should be considered with refer ence to the nature of the trade or business to be regulated.
It is quite another to say that the effect cannot be gauged, sometimes, even by a bare examination of the meaning of a clause giving power to impose restraints apart from other evidence of what its actual effects are or may be.
In some cases, the effect itself is given primarily by the clear meaning of the language used in the clause which is alleged to infringe the law We do not think that any "per se rule", if we may use this somewhat quaint expression is adopted whenever a Court determines the meaning and effects of the words of a rule or a clause in an agreement.
All that the Court does in such a case is simply to interpret the clause, the effect of which may become obvious on a bare determina tion of the meaning or may be seen from other evidence too.
Where that effect is not obvious, as we have already indi cated, evidence may be led to show how the language used is actually applied to the facts to which it was meant to apply.
That is also a recognised rule of interpretation.
It is the function Of Courts to indicate and explain the vary ing facts and circumstances to which different rules of interpretation may apply.
Where meaning and intent of lan guage used is given by the words used nothing more is needed.
469 Furthermore, the Commission held that, taking into account the nature of goods or the business to be regulated by the agreement under consideration, the clauses, as they stood, were not permissible.
It had applied the rule of reason in arriving at the conclusion that, upon the facts of a business in commonly used consumer goods of several varie ties, Which are not shown to be scarce, clauses under con sideration having the obvious meaning and effect which their language carried with them, are unreasonable and illegal.
We are unable to see how any law laid down in American deci sions, dealing with Anti trust laws, or in English cases, dealing with agreements in restraint of trade, lay down rules of reason at variance with the ones we are applying here.
The rules of reason applicable to a case like the one before us may be simply stated as follows: Firstly, the meaning of the impugned clause or clauses in an agreement said to offend the law must be determined according to law; secondly, the possible effects of such a clause upon compe tition in the trade to be regulated must be determined.
We think that the Commission had rightly applied these rules and found the clauses to be capable of misuse.
We think that this was enough to vitiate the impugned clauses.
We would like to make it clear that we are really con cerned only with the law as we find it in our own statute and can only examine evidence in the light of our own law of evidence.
We think that the confusion which may be created by using terms such as "per se" rule which could perhaps be more usefully applied to indicate doctrines or to de scribe practices developed under very different sets of circumstances in other countries with statutory provisions couched in language which differs from that before us, should be avoided so far as possible.
Secondly, it was submitted that we should look at evi dence of what takes place in the trade under consideration rather than clauses 5 and 9 of the agreement we have consid ered.
We have already indicated the correct procedure in 'such cases as the one before us.
Indeed, we think that a consideration of extraneous evidence is not required at all when the practice complained of is the introduction of clauses conferring wide powers which may be used to impose restrictions contrary to the Act.
In such a case, the introduction of clauses constitutes the restrictive prac tice.
Hence, their interpretation is all that we are really concerned with here in accordance with our law.
Evidence of what is actually practised could only be relevant 1or pur poses other than a determination of the meaning and the effect which follows logically or reasonably from such determination.
Thirdly, it was submitted that, in holding clause 9 to be invalid, the purpose of "equitable distribution", which imposes a limit on the powers of the company, was overlooked by the Commission.
For the reasons already given, we do not think that this supposed limitation reasonably restricts the company 's power to decide what to distribute.
The company is left entirely to itself to decide what is "equitable distri bution".
An interpretation of a document, according to well established rules, cannot be dispensed with by labelling it as an application of a "per se" doctrine.
We think that the clause, as it stands, 470 confers too wide a power and has to be struck down wholly as unreasonable on that ground.
Fourthly, our attention was sought to be drawn to the absence of evidence of distortion of competition and the presence of evidence that competition prevails in the market despite these clauses.
We have already held such oral evidence to to really unnecessary for judging the possible effects of the clauses.
The probability of the effect is only part of the rule of reason to be applied where extrane ous evidence is admissible.
In the instant case we are only, as already indicated above, concerned with a reasonable and natural interpretation of the clauses of the agreement and their reasonably possible effects.
Fifthly, it was submitted that there was clear evidence of public benefit from an equitable distribution in actual practice so that the requirements of a "gateway" under section 38 were satisfied.
We cannot assume public benefit from a mere declaration of intention to exercise a power so as to bene fit the public.
We are not satisfied, on the evidence actually adduced and placed before us, that this power was necessary so as to benefit the public.
Furtherfore, we cannot reassess evidence.
Actual benefit to the public is a question of fact on which find ings cannot be reopened unless some error of law is revealed.
No error of law in assessing evidence is disclosed.
This is an additional reason for not disturbing the findings of fact recorded by the Commission.
Sixthly, it was submitted that the Commission had ignored the last sentence of clause 9 in interpreting it.
We have, however, considered it and find that, far from making clause 9 more acceptable and reasonable, the last part of it makes it more objectionable and unreasonable inasmuch as it enhances the powers of the Company.
Learned counsel for the appellant company has pointed out that the order of the Commission was to come into force from 1 July 1976, ' so that the appellant company had nearly four months to rewrite the agreements which are over four thousands in number.
He prays for extension of time for six months from today for executing fresh agreements.
It is not really necessary for us to fix any particular time within which the company will print or get new agreements executed on freshly printed forms in accordance with law.
That is a matter for parties themselves to each agreement to decide and work out. ' All that we need make clear is that all agreements which are operative and binding between parties will be so interpreted now as if clause 9 was not there at all and clause 5 was there only in the ,modified form which omits the last sentence from clause 5 as it originally stood.
However, if the company wants, to complete any for malities for bringing each individual agreement into line with the law as declared by this Court it may do .so; and, it will file, within six months from today an affidavit showing that it has done this.
The requirement to file 471 such an affidavit showing compliance will ensure that the company has taken due steps to inform each stockist of the correct legal position.
The time given for doing this wilt not, however, authorise it to act under those parts of the agreement which this Court has declared to be illegal.
Subject to the observations made above we uphold the Commissions order and dismiss this appeal with costs.
P.B.R. Appeal dismissed.
| IN-Abs | According to section 2(0) of the Monopolies & Restric tive Trade Practices Act a "restrictive trade practice" means inter alia a trade practice which has, or may have, the effect of preventing, distorting or restricting competi tion in any manner.
The appellant, who was a manufacturer of consumer goods such as soaps and toilet preparations, entered into agreements with redistribution stockists for the wholesale distribution of its products.
Clause 5 of the agreement, inter alia, provides that a stockist shall keep and maintain adequate stocks and shall carry out instructions and direc tions given by the appellant.
He is prohibited from charg ing anything more than the stipulated maximum resale price.
The last part of the clause provides that "the redistribu tion stockist shall purchase and accept from the company such stock as the company shall, at its discretion, send to the redistribution stockist for fulfilling its obligations under this agreement".
Clause 9 prohibits the redistribution stockist from re booking or in any way conveying, transport ing or despatching parts of stocks of the products received by him outside the town except when he was so expressly directed in writing by the appellant.
He shall also, when ever so required by the appellant, make available from the stocks such part as the appellant directs him to do.
On a complaint made to the Monopolies & Restric tive Trade Practices Commission by one of the stockists the Commission, after examining cls.
5 and 9 of the impugned agreement, held that the practice of resale price mainte nance and full line forcing to which the original el.
5 related, shall be discontinued and shall not be repeated.
It directed deletion of the last sentence of cl. 5 and declared cl. 9 as void.
Dismissing the appeal to this Court.
HELD: The Commission was right in reframing cl. 5 in the way it did.
Deletion of the last sentence of cl. 5 was essential to prevent possible misuse of the appellant 's power so as to regulate the prices contrary to the express provisions in the clause.
(a) The last part of cl. 5 placed the redistri bution stockist at the mercy of the appellant which could dictate to him what amounts of various commodities he "shall purchase and accept from the company".
It also empowered the appellant to allocate send to the redistri bution stockist only what it "shall, at its discretion, send to the redistribution stockist for fulfilling its obliga tions" under the agreement.
[464 G] (b) The word "shall" used in the clause did not bind down the exercise of the appellant 's discretion by reference to any requirements of the consumers in a particu lar area in which the stockist might sell.
The stockist was bound to accept and carry out the appellant 's decisions.
[464 H] 2(a) The contention that though the clauses gave power to the appellant to regulate trade, in practice they did not operate as restrictions, is not well founded.
It is not possible to isolate the terms of a contract from the practice.
The appellant did not intend that the clauses in the agreement would be treated as 456 dead letter.
Although the practice of imposing restrictions under such clauses and the practice of introducing such clauses are separate practices, introduction of a clause like cl. 5 is itself a trade practice.
Moreover, even if the power given in such wide terms was not meant to be exercised unreasonably, its presence in the agreement was a needless surplusage which could be used to impede freedom of competition and trade and this made it objectionable.
[465 A] (b) Inasmuch as the introduction of clauses in an agree ment taken by itself, is a practice it would be specious reasoning to separate the clauses in the agreement from action under the agreement and then urge that the clauses are innocuous and should not be modified.
[460 H; 461 A] 3.
From the definition of "restrictive trade practice" it is clear that if the introduction of the clause in itself is a trade practice and could be used to prevent, distort or restrict competition "in any manner", it could be struck down.
The definition of "trade practice" is wide enough to include any "trade practice" if it is in relation to the carrying on of a trade.
If the result of introduc tion of a clause is to restrict trade it would be struck by the provisions of the Act.
[461 E G] 4(a) Each type of business has its peculiarities, its own mode of operation, the special features relating to the market for it and the requirements of distribution of par ticular goods, to secure a just and equitable distribution consistently with the maintenance of freedom of competition so that prices are not artificially pushed up.
[462 G] (b) The Telco case is distinguishable from the present on the ground that in that case the manufacturer who had the monopoly of special quality trucks, had to provide specially trained and skilled personnel with special equipment and tools for their maintenance and running.
Therefore, the agreements did not restrict trade or curtail competi tion.
[462 H] (c) In the instant case, the appellant could compel the stockist to buy the goods manufactured by it irrespective of whether the stockist wanted the goods or not.
The appel lant was under no obligation to render any service for the maintenance of the goods supplied.
Secondly, the present is not a case in which the terms of the agreement were required to be explained by the facts to which they were meant to be applied.
[463 C D] Tata Engineering & Locomotive Co., Ltd. vs The Registrar of Restrictive Trade Agreements ; distin guished.
If it was clear from the agreement that prices lower than the "maximum re sale price stipulated" might be charged by the stockist, then, there was no reason why it was necessary to clarify by circulars, what the stockist was free to do under the agreement.
Even if the appellant 's practice of issuing circulars was established, it did not justify retention of cl. 5 in a form which could be used to compel the stockist to act at the appellant 's behests.
The last part of cl. 5 made it necessary for the stockist to purchase such goods and in such combination as the appellant might decide.
Hence it would be struck by section 33(1)(b) of the Act.
[465 C] (b) Inasmuch as.
the original el. 5 gave the stockist the discretion to sell at lower than maximum resale prices the agreement was not struck by section 33 (1 ) (b).
But, the deletion of the sentence was essential to prevent possible misuse of the appellant 's power by resort to it.
[465 G] The Commission was justified in declaring cl. 9 as void and inoperative.
[465 H] 7(a) The power to impose restrictions falling under section 38 had to be justified by the appellant by actual proof of public interest which could not be better served without it [466 A].
(b) Clause 9 gave the appellant an unreasonably wide power of deciding what is actually fair and equitable distribution which is more a part of the duty of governmen tal authorities entrusted with powers of rationing such consumer goods in public interest.
Before any question of reasonableness of a power to 457 ration any goods is entrusted to any person or authority those goods must be shown to be scarce or in short supply and evidence establishing such a need has not been shown to exist in this case.
[466 F G] (c) The appellant was wrong in its contention that in holding cl. 9 to be invalid, the purpose of "equitable distribution" was overlooked by the Commission.
This sup posed limitation did not restrict the appellant 's power to decide what to distribute.
The appellant was left to itself to decide what is "equitable distribution".
The clause conferred too wide a power and is unreasonable.
[469 H] 9.
Under section 55 an appeal lies to the Supreme Court only on one of the grounds mentioned in section 100, C.P.C.
It is necessary for the parties to formulate questions of law that arise for decision.
[467 A] 10(a) The plea against use of "per se" rule referred to by the appellant means that on the assumption that a restriction is illegal in itself should not be made without examining its impact upon the particular trade involved.
On the other hand the "rule of reason" envisages consideration of facts of each case so as to determine the context in which the restraint was imposed.
[468 C] Board of Trade of the City of Chicago vs United States of America (b) In Telco case this Court accepted the correctness of the approach that no bald or simple test should be adopted in judging the legality of a restraint upon trade.
Such a view has nothing to do with rules _relating to inter pretation of documents used in finding out the effect and intent of words used in a document.
Whenever a court deter mines the meaning and effect of the words of a rule or a clause in an agreement it does not adopt what is termed as "per se" rule.
All that the court does in such a case is to interpret the clause, the effect of which may become obvious on a bare determination of the meaning or may be seen from other evidence.
Where that effect is not obvious, evidence may be led to show how the language used is actually applied to the facts to which it was meant to apply.
[468 D F] In the instant case, the Commission has correctly ar rived at the conclusion that the clauses were unreasonable and illegal after taking into account the relevant fac tors.
The rules of reason applicable to a case like the present are (i) the meaning of the impugned clause or clauses in an agreement must be determined according to law and (ii) the possible effects of such a clause upon competition in the trade to be regulated must be determined.
[469 B C] (c) Consideration of extraneous evidence is not required at all when the practice complained of is the introduction of clauses conferring wide powers, Which may be used to impose restrictions contrary to the Act.
In such a case the introduction of clauses constitute restrictive practice.
Evidence of what is actually practised could only be rele vant for purposes other than a determination of the meaning and the effect which follows logically or reasonably from such determination.
[469 F G] (d) No oral evidence could be led to adduce the meaning of the clauses in the agreement in view of sections 91 and 92 of the Evidence Act.
Section 92 proviso (6) is not applicable to the present case.
[464 C] (e) It is unnecessary to admit extraneous evidence as to the absence of distortion of competition.
The probability of the effect is only part of the rule of reason to be applied where extraneous evidence is admissible.
[470 B] (f) It is not possible to assume public benefit from a mere declaration of intention to exercise a power so as to benefit the public.
On the evidence adduced it was not shown that this power was necessary so as to benefit the public.
[470 D] (g) Actual benefit to the public is a question of fact on which findings cannot be reopened unless some error of law is revealed.
No error of law in assessing evidence was disclosed.
E] 458 (h) The confusion which may be created by using such terms as "per rule which could be applied to describe prac tices developed in other countries with different statutory provisions, should be avoided.
[469 D E] 10.
Proceedings before the Commission ' are maintainable at the instance of a complainant whose motives in making the complaint are quite irrelevant.
All that the Commission, and, on appeal, this Court, has to examine is whether a practice by a company of introducing clauses complained of in the agreements with the stockists, amounted to a restric tive trade practice.
[460 D]
|
ition No. 156 of 1972.
(Under article 32 of the Constitution of India).
S.S. Javali, A. K. Srivastava and B.P. Singh, for the petitioner.
G.L. Sanghi, S.P. Mital and Girish Chandra, for respond ents Nos.
land3.
B. Datta, for respondent No. 194.
The Judgment of the Court was delivered by BEG, C.J.
This is a petition under Article 32 of the Constitution praying for a writ of certiorari, or a writ of Mandamus or, any other appropriate, writ, order or direction for the enforcement of the fundamental rights of the peti tioners under Article 14 and 16 of the Constitution.
The petitioners have been working as Upper Division Clerks and pray for the quashing of a list, issued with Office Memoran dum dated 7.2.1972, for making promotions to the next grade of Assistants on which the names of respondents 4 to 203 appear but not those of the petitioners.
They claim that the principles of seniority, contained in the Ministry of Home Affairs O.M. dated 22.6.1949, as interpreted by this Court in UNION OF INDIA vs
M. RAVI VERMA & ORS.
ETC.(1) had not been applied to them.
The contention seems to be that the last mentioned decision contained an invariable mechani cal rule of seniority applicable to all classes of services so that nothing beyond length of service in a particular grade could determine seniority.
It was alleged that the impugned list was formulated in an arbitrary fashion.
Hence, the petitioners complain of violation of Articles 14 and 16 of the Constitution.
In paragraph 6 of the petition it was stated that even persons appointed nine or ten years after the petitioners had been promoted as long ago as 1969 to the grade of As sistants to which the petitioners put forward their own claims.
It was also stated that a large number of persons have superseded the petitioners but a few names only have been mentioned from amongst them.
The whole case of the petitioners thus rests on the submission that nothing beyond length of service must determine the place on the list for promotion to the grade of Assistants.
The petitioners allege a common cause of action inasmuch as the impugned list of 17.2.1972 affects all of them.
They claim that all of them should have been governed by the principles contained in (1) ; 666 the Memorandum of 22.6.1949.
This Memorandum (Annexure 'C ' to the petition) shows that it was only directory laying down a general rule of seniority which was presumably sub ject to other exceptional factors which could also be taken into account.
Hence, an alleged violation of the rule of seniority according to length of service was not decisive even according to this Memorandum.
The counter affidavit filed by Shri P.L. Gupta, Deputy Secretary to the Government of India, gives the long history of a scheme which culminated in the promulgation of the statutory rules framed under Article 309 of the Constitu tion of India called the Central Secretariat Clerical Serv ice Rules, 1962 by the President of India.
It shows that the scheme of 1949 was given a final shape by the Cabinet in 1954.
and became effective from 1.5.1954.
Under the scheme, as finally framed, it was provided that those offi cers who were otherwise eligible for confirmation in the. services at the initial constitution, should also pass a typewriting test to be held by the Union Public Service Comntission within a period of two years from 1 5 1956.
It appears that the confirmation of the initial constitution of the service was delayed until 1958.
Some of the rather ambitious assertions of the petition ers suggest that their case is that they had been appointed to an Upper Division grade on a regular basis so that their seniority must date back to their date of promotion.
This suggestion was controverted by the respondents who alleged that the petitioners had been only allowed to continue provisionally on a temporary basis in the grade of Upper Division of Clerks.
It was stated, in the counter affida vit, that as typing test had to be passed within two years of 1st of May 1958, those who did not come within this class came in the, class of the petitioners who, were serving on an ad hoc or temporary basis.
Hence, it was submitted that those who had passed the typewriting test within two years of the fixed date belong to another cate gory altogether.
The respondents,.
therefore, submit that there has been no contravention of Articles 14 and 15.
Serious grounds of objection to the petitioner 's case are three fold: firstly, that there was a reasonable crite rion for the difference made between the cases of the peti tioners and those placed on the impugned list of 7.2.1972 who are above the petitioners because they have passed the prescribed typing test so that Articles 14 and 16 of the Constitution could not be said to have been violated in this case whatever else may have been infringed; secondly, that the petitioners, not having assailed the order of confirma tion of the scheme on 1.5.1958.
prescribing a reasonable ground for distinction between the class of cases in which typing test had been passed, to which the contesting re spondents in the impugned list belong and the class of the petitioners, which had not passed this test, the petition ers ' could not challenge the impugned scheme of 1972 at all; thirdly, a member of persons had been promoted and put above the petitioners since 1962, acting under the scheme providing the typing test, so that there was inordinate delay in filing the petition under Article 32 of the Consti tution on 24.4.1972.
667 In their Writ Petition the petitioners have no doubt challenged the validity of rule 17 of the Central Secretariat Clerical Service rules for inconsistency with the Memoranda of 22.6.1949 and 22.12.1959 and alleged that this also constitutes a violation of Articles 14 and 16 of the Constitution.
This rule was among rules notified on 28 9 1962.
It lays down as follows : "17. Seniority(1) The relative seniority of members of Service appointed to any Grade before the appointed day shall be regulated by their relative seniority as determined before that day.
Provided that if the seniority of any such officer had not been specifically deter mined before the appointed day it shall be as determined by the Department of Personnel in the Cabinet Secretariat.
MHA No. 6/2/67 CS II dated 20.12.67.
Provided further that the seniorty of an officer referred to in the proviso to clause (a) of rule 2 shall be determined by the Department of Personnel in the Cabinet Secre tariat by taking into account the continuous length of regular service rendered before the appointment day by such officer in the grade of lower Division or in any higher grade in the offices of the Central Government.
(2) All permanent officers included in the initial constitution of a Grade under rule 7 shall rank senior to all persons substan tively appointed to that Grade with effect from a date after the appointed day, and all temporary officers included in the initial constitution of a Grade under that rule shall rank senior to all temporary officers appoint ed to that Grade after the appointed day.
(3) Except as provided in sub rules (4) and (5), the seniority of persons appointed to the two grades of the service after the ap pointed day shall be determined in the follow ing manner, namely : 1.
UPPER DIVISION GRADE (i) Permanent Officers.
The seniority inter se of officers substantively appointed to the Grade after the appointed day shall be regulated by the order in which they are so appointed to the Grade.
(ii) Temporary Officers.
The seniority inter se of temporary officers appointed to the Grade after the appointed day shall be regulated as follows, namely: (a) Persons included in the Select List for a Grade shall rank senior en bloc to those not included in the Select list.
668 (b) The seniority inter se of person includ ed in the Select List shall be in the order in which their names are included in the Select List.
(c) The seniority inter se of persons not included in the Select List shall be regulated by the order in which they are approved for long term appointment to the Grade.
Rule 7 provides as follows "7.
Initial Constitution of each cadre.
The permanent and temporary officers of each Grade in each cadre on the appointed day shall be as determined by the Deptt.
of Personnel in the Cabinet Secretariat.
" We find that, acting under Rule 7 set out above, the Government of India had issued an order on 12 11 1962 allot ting permanent and temporary officers of the Upper Division grade to the Central Secretariat Clerical Service.
Apparently, that allotment also determined the order of seniority.
In other words, the rule relating to the passing of a typing test had been followed for a long period and had actually been given effect to under the statutory rules in promotions made and lists drawn up.
This explains the petitioners ' challenge to the validity of Rule 17.
We are unable to see how a rule prescribing a typing test is unconnected with the duties of Clerks who desire a promotion to the next grade.
We do not find that a dis crimination made on such a ground could violate Articles 14 or 16 of the Constitution whatever also it may be said to violate.
It is not necessary for us to hold that a violation of a statutory or other kind of rule in a particu lar case cannot amount to a violation of Articles 14 and 16 of the Constitution.
There may also be cases in which a rule made is ultra vires for mreasonableness or on any other ground and should not be deemed to exist.
In such a case, if the rule is enforced, it may, on the facts of the partic ular case, amount to a violation of Articles 14 and 16 of the Constitution also.
The case before us does not appear to be such a case at all.
It seems to be covered by what this Court said in P.C. Sethi & Ors.
vs Union of India & Ors.
, (1) with regard to the Office Memorandum of 22.6.1949 (at pp.
207 208): " . the Office Memorandum of June 22, 1949, is no bar to the Government in making separate provisions for the mode of constitution and future maintenance of the service of Assistants.
There is, therefore, no obligation under the aforesaid Office Memorandum on the part of the Government to enforce a rule of bald length of continuous service irrespective of other considerations than the service was sought to be reorga nised and reinforced.
As noticed earlier the service had to be reconstituted and the tempo rary Assis (1) 669 tanks properly observed keeping in view the question of quality and efficiency as well as at the same where regard being had to accom modate as large number as possible to gradual absorption.
In doing so we are unable to hold that the Government has violated the provi sions of articles 14 or 16 of the Constitu tion.
The Classification under the instruc tion for the constitution of regular temporary establishment in the manner done cannot be characterised as unreasonable in view of the object for which these had to be introduced in reconstituting the service to ensure security of temporary employees assistant with effi ciency in the Service.
There is no discrimi nation whatsoever amongst the equals as such nor any arbitrary exercise of power by the Government.
" This Court has also explained in Joginder Nath & Ors.
vs Union of India & Ors.(1) and Amrit Lal Berry vs Collector of Central Excise, New 'Delhi & Ors.(2) the principles on which this Court will interfere under Article 32 of the Constitution for an alleged violation of Articles 14 and 16 of the Constitution.
It is also explained, there how delay in invoking the jurisdiction of the Court, which may create equitable rights of others, may give rational grounds for discrimination so that it would cease to be a case of any violation of Articles 14 and 16 at all.
We think that the principles laid down in the cases mentioned above apply here.
Consequently, we dismiss this Writ Petition, but, in the circumstances of the case, the parties will bear their own costs.
S.R Petition dismissed.
| IN-Abs | Under the scheme which culminated in the promulgation of the Central Secretariat Clerical Service Rules, 1962 (effective from 1 5 1954), it was provided that those offi cers who were otherwise eligible for confirmation in the services at the initial constitution should also pass a typewriting test to be held by the Union Public Service Commission within a period of two years from 1 5 1956.
The names of the petitioners who had not passed the typewriting test did not figure in the gradation list dated 7 2 1972 prepared for making promotions to the next grade of Assist ants.
The petitioners challenged the orders on several grounds, namely, (i) The principle of seniority contained in the Ministry of Home Affairs ' O.M. dated 22 6 1949 as inter preted by this Court in ; had not been ap plied to them; (ii) The impugned list was formulated in an arbitrary fashion; (iii) Their seniority must date back to their dates of promotion as Upper Division Clerks; and (iv) Rule 17 of Central Secretariat Clerical Service Rules, 1962 being inconsistent with O.M. dated 22 6 1949 and 22 2 1959 violates Articles 14 and 16 of the Constitution.
The re spondent raised three objections to the petitioners ' case in their returns, namely, (i) There was a reasonable criterion for the difference made between the case of the petitioners and those placed on the impugned list of 7 2 1972 who are above the petitioners because they have passed the pre scribed typewriting test so that Articles 14 and 16 of the Constitution could not be said to have been violated in this case whateverelse may have been infringed; (ii) The peti tioners not having assailed the order of confirmation of the scheme on 1 5 1958 prescribing a reasonable ground for distinction between the class of cases in which typewriting tests have been passed to which the contesting respond ents in the impugned list below and the class of the peti tioners which had not passed the test.
the petitioners could not challenge the impugned scheme of 1972 at all; (iii) A number of persons have been promoted and put above the petitioners since 1962 acting under the scheme providing the typewriting test so that there was inordinate delay in filing the petition under article 32 of the Constitution.
Dismissing the petition, the Court, HELD: (1) The alleged violation of the rule of seniority according to length of service was not decisive even ac cording to the Ministry of Home Affairs O.M. dated 22 6 1949.
This memorandum shows that it was only directory laying down a general rule of seniority which was presumably subject to other exceptional factors which could also be taken into account.
[666 A] P.C. Sethi & Ors.
vs Union of India & Ors.
[1975] 3 S.C.R. 21, followed.
(2) A rule prescribing a typing test cannot be said to be unconnected with the duties of clerks who desire a promo tion to the next grade.
A discrimination made on such a ground could not violate Articles 14 and 16 of the Constitu tion whateverelse it may be said to violate.
[668 E] (3) A violation of statutory or other kind of rule in a particular case cannot amount to a violation of Articles 14 and 16 of the Constitution.
There may also be cases in which a rule made is ultra vires for unreasonableness or 665 an any other ground and should not be deemed to exist.
In such_ a case, if the rule is enforced it may on the facts of the particular case amount to a violation of Articles 14 and 16 of the Constitution also.
The petitioners case is not such a case at all.
[668 E F] (4) The principles laid down by this Court in Joginder Nath and Ors.
vs Union of India & Ors.
and in Amrit Lal Berry vs Collector of Central Excise ; , apply to the petitioners case regarding laches on their part.
[669 C El
|
N: Crl. A. Nos. 437 & 438 of 1976.
(Appeals by Special Leave from the Judgment and Order dated the 8/9/10 3 1976 of the Bombay High Court in Crl.
Appeals Nos. 17 and 18 of 1976 and confirmation Case No. 3 of 1976) and Crl.
A. No. 441 of 1976.
639 (Appeal by Special Leave from the Judgment and Order dated the 8/9/10 3 1976 of the Bombay High Court in Criminal Appeal No. 18 of 1976).
P. Narayan, B.G. Kolse Patil, B.S. Bhonde and V.N. Ganpule, for the appellants in Crl.
A. Nos.
437 438 and for respondent in Crl.
A. 441/76.
V. section Desai, P.P. Hudlekar and M.N. Shroff for respond ents in Crl.
Appeal Nos.
437 438 and for the appellant in Crl.
A. No. 441/76.
The Judgment of Y.V. Chandrachud and P.N. Sitinghal, JJ. was delivered by Chandrachud, J. P.K. Goswami, J. gave a separate opinion.
CHANDRACHUD, J. Five small girls about ten years of age, a year, old infant and four women in their mid thirties were found murdered between November 14, 1972 and January 4, 1974 in a village called Manwar in Maharashtra.
The murders of these ten females show significant SimilaritieS in pat tern and conception.
The time and place chosen for the crimes, the preference for females as victims, the nature of injuries caused to them, the strange possibility that the private parts ' of some of the victims were cut in order to extract blood, the total absence of motive for killing these very girls and women, the clever attempt to dodge the police and then to put them on a false scent and the extreme bru tality surrounding the crimes give to the case an eerie appearance.
Such harrowing happenings make the task of discovering truth difficult and it is just as well to begin with Justice Vivian Bose 's reminder that the shocking nature of the crime ought not to induce an instinctive reaction against a dispassionate scrutiny of facts and law.
We have three appeals before us,.
all by special leave granted by this Court.
Criminal Appeal No. 437 of 1976 is flied by accused Nos.
9 to 12, Criminal Appeal No. 438 of 1976 by accused No. 3 while Criminal Appeal No. 441 of 1976 is flied by the State of Maharashtra against the acquittal of accused Nos. 1 and 2.
Eighteen persons were put up for trial before the learned Sessions judge, Parbhani for the ten murders.
Two out of these, Ganpat Bhagoji Salve and Shankar Gyanoba Kate were tendered pardon by the learned Judge and were examined in the case as approvers.
Accused Nos. 6 died during the trial leaving 15 persons for consideration of the question whether they had conspired to commit the murders and whether the murders were committed in pursuance of that conspiracy.
The learned Sessions Judge acquitted accused Nos. 4, 5, 7, 8 and 13 to 16.
Accused Nos. 1 and 2 were convicted under sec.
302 read with sec.
120 B and sec.
109 of the Penal Code.
Accused Nos. 3 and 9 to 12 were convicted under sec.
302 read with sec.
120 B and sec.
34 of the Penal Code.
Accused Nos. 1, 2 and 3 were sentenced to death while ac cused Nos. 9 to 12 were sentenced to life imprisonment.
The matter went to the Bombay High Court in various forms.
The seven accused who were convicted by the Trial Court filed an appeal challenging the order of conviction and sentence.
The Sessions Court 640 made a reference to the High Court for confirmation of.
the death.
sentence imposed on accused Nos. 1, 2 and 3.
The State Government flied an appeal against the acquittal of accused Nos. 4 and 5.
It also filed an appeal under section 377 of the Criminal Procedure Code, 1973 asking that the sentence of life imprisonment imposed on accused Nos. 9 to I2 be enhanced to death.
The State not having challenged the order of acquittal passed by the Sessions Court in regard to accused Nos,7, 8 and 13 to 16, that order has become final and was not in any form assailed before Us as erroneous.
The High court acquitted.
Nos.1 and 2 holding friar the offence of conspiracy which formed the gravamen of the charge against them was not proved.
The charge of conspira cy having failed and it being common ground that accused Nos. 1 and 2 had not taken any direct part in the commis sion of the murders, the High Court held that they Were entitled to acquittal on all the charges.
The High Court dismissed the appeal file flied by accused No. 3 holding that he was responsible for the first four murders and.con firmed his conviction under section 302 read with section 34 as also the sentence of death imposed upon him.
The conviction ,and sentence of accused No. 3 under section 302 read with s.120B was set aside by the ' High Court in view of its finding, that the prosecution had failed to establish the charge,of con spiracy.
High court dismissed the State 's appeal against the acquittal of accused Nos.4 and 5 but it allowed the appeal flied.by the State for enhancement of the sentence of life imprisonment imposed on accused Nos. 9 to 12.
High Court enhanced their sentence to death under section 302 read with 8. 34 but consistently, with its finding on the charge of conspiracy it set aside their conviction and sentence under section 302 read with section 120B. There were delay on the" part of the State Government in filing the appeal for en hancement of the sentence of accused Nos. 9 to 12 but the High Court condoned that delay.
We are thus called upon to consider the correctness of: (1)the order of the High Court acquitting accused Nos. 1 and 2; (2) the order of conviction of accused No. 3 under section 302 read with section 34 and the sentence of death imposed upon him by the Sessions Court and the High Court; and (3) the order of conviction of accused Nos. 9 to 12 under section 302 read with section 34.
Thus, we are concerned in these appeals with accused Nos. 1 to 3 and 9 to 12 only.
The hamlet of Manwat has a population of 15 thousand and is situated in.
Taluka Pathri, District Parbhani, Maharash tra.
Accused No. 1, Rukhmini, was about 32.
years of age at the relevant time and despite the pledge to secularism, it has to be mentioned that she is Pardhi by caste.
She was in the keeping of accused No. 2, Uttamrao Barshate, a non pardhi, who is a man of means and was at one time the Presi dent of the Manwat Municipality.
He purchased a house for accused No. 1 in which the two lived together and it is this house or wada.which became 'the focal point of the conspira cy.
Accused No. 2 purchased the house really in order to ensure the exclusiveness of mistress but it happened to blaze an altogether new trial.
641 In the house was a Pimpal tree which is believed to be the emblem of God Vishnu, the Preserver.
The Pimpal is also believed to be the haunt of Munjaba, who is supposed to be the spirit of an unmarried Brahmin boy.
The Parbhani Dis trict Gazetteer says at page 115 that "some childless per sons who trace their misfortune to the influence of some evil spirit cause the Brahminic thread ceremony performed for a pimpal tree and a masonry platform built round its trunk.
" The Man want village folk commonly believe that treasure troves are lying buried in the town ever since the sixteenth century when its inhabitants fled away after the troops of Murtazahad invaded the town, which was then under the Ni zamshahi of Ahmednagar.
Quite some quacks in the periphery of 'Manwat make their living by diagnosing where the treas ure trove lies and what means to adopt for diScovering it.
Accused No. 1, though in her thiries, had entered a period of premature menopause.
She was anxious to get a child which could only happen if her menstrual cycle was restored.
She used to consult quacks and mantriks who, she 'believed, could help her get a child.
Accused No. 2 's mother was ,credited with a sixth sense in the matter of discovering treasure troves. 'She had oracled that a ' treasure trove lay buried in accused No. 1 's house under neath the Pimpal tree.
The stage was thus set for the visits of mountebanks to the house of accused No. 1 for the display of their supernatural.
attainments.
The case of the prosecution is that accused Nos land 2 consulted quacks who prescribed that virgins should be offered as sacrifice to munjaba.
and blood from the irpri vate arts be sprinkled on the food offered by way of Naive dya to the God.
One of such quacks was Ganpat Salve, the approver, who was examined as: P.W. 1.
Accepting Ganpat 's advice, accused Nos. 1,, 2, 3,4 and 6 conspired to commit the murders of virgin girls.
Ganpat himself joined the conspiracy and so did Shankar Gyanoba Kate who was a servant of accused No. 2.
Shankar, also an approver, was examined in the case as P.W.2.
Accused Nos. 5 and 7 to 16 are alleged to have joined the conspiracy at a later point of time.
In pursuance of the conspiracy, ten murders were committed between November 14, 1972 and January 4, 1974.
The first four murders are alleged to have been commit ted by the approver Shankar and accused No. 3, Sopan, who was also in the employment of accused No. 2.
Gayabai, a girl of 11 was murdered on November 14, 1972; Shakila, a girl of 10, was murdered on December 9, 1972;.
Sugandhabai, a woman Of 35 was murdered on February 21, 1973 and Nasima a girl of lO was murdered on April 13, 1973.
It is said that the blood from the private parts of these victims was offered to Munjaba and yet there was no clue as to where the treasure trove lay.
Gayabai, Shakila and Sugandhabai had evidently died in vain and therefore Nasima, the fourth victim, was beheaded so that the severed head could be offered.
to propitiate the deity.
Even Nasima 's head failed to move Munjaba 's heart.
The treasure trove remained undisclosed.
642 The next two murders are alleged to have been committed by accused Nos. 5 and 6.
Kalavati, a woman of 30, was murdered on June 29, 1973 and Halires, a girl of 11, on July 12, 1973.
Accused No. 5 has been acquitted and the order of acquittal has become final.
Accused No. 6 died during the pendency of the trial in the Sessions Court.
The seventh murder is alleged to have been committed by accused Nos. 7 and 8 when Parvatibai, aged about 35, was murdered on October 8, 1973.
These two accused were ac quired by the Sessions Court and the acquittal was not challenged by the State.
The three last murders are alleged to have been commit ted by accused Nos.
9 to 12, all at the same time.
Haribai, aged 35, was going along with her daughter Taravati aged 9 and was carrying in her arms an infant daughter, Kamal, aged a year and half.
All of them were murdered on the afternoon of January 4, 1974.
Accused Nos. 1, 2, and 14 were arrested on June 18, 1973 in connection with the first four murders which had taken place between November 14, 1972 and April 13, 1973.
It is alleged that, while in custody, accused No. 2 sent a message to accused No. 5 to commit a few more murders so that no suspicion may fall on those who were arrested.
That is why accused Nos. 5 and 6, accused No. 6 being a servant of accused No. 1, are said to have committed the murders of Kalavati and Halires in June and July, 1973.
On July 30, 1973 accused Nos. 1, 2, 9 and 14 were released on bail on condition that they shall not enter the limits of Manwat.
This condition was relaxed on October 4, 1973 for investiga tional purposes.
Accused Nos. 1 and 2 were in Manwat from October 4 to October 21, 1973 during which period they are alleged to have procured the service.
of accused Nos. 7 and 8 for the commission of Parvatibai 's murder on October 8.
On December 18, 1973, an application was moved for cancella tion of the bail granted to accused Nos. 1 and 2.
That application was allowed and they were rearrested on January 4, 1974 when the murders of Haribai, Taramati and Kamal were committed.
Accused No. 3 was arrested on December 28, 1973, accused Nos. 9 to 11 on January 8, 1974 and accused No. 12 on January 11, 1974.
Accused Nos. 1 and 2 are the linch pin of the case and therefore, it would be appropriate to deal with their cases first.
Accused No. 1 is the mistress of accused No. 2 and whereas the former was anxious to get a child, they both were anxious to discover the treasure trove lying buried in their house.
The charge against them is that for the purpose of achieving these objects they consulted quacks who advised that the Munjaba should be propitiated by offering the blood of virgin girls.
Accepting that advice, accused Nos. 1 and 2 are alleged to have entered into a conspiracy with the other accused to commit the various murders.
The prosecution relied inter alia on the evidence of the two approvers, Ganpat, P.W. 1, and Shanku, P.W. 2, in order to prove the charge of conspiracy against accused Nos. 1 and 2 as also for proving that various murders were com mitted in pursuance of that 643 conspiracy.
The learned Sessions Judge accepted the evi dence, of both the approvers as against accused Nos. 1 and 2 but the High Court rejected the evidence of Ganpat and accepted that of Shankar only.
Before considering that evidence, it would be necessary to state the legal position in regard to the evidence of accomplices and approvers.
Section 133 of the Evidence Act lays down that an accomplice shall be a competent witness against an accused person; and a conviction is not illegal merely because it proceeds upon the uncorroborated testimony of an accomplice.
Section 114 of the Evidence Act provides that the Court may presume the existence of any fact which it thinks likely to have happened, regard being had to the common course of natural events, human conduct and public and private business, in their relation to the facts of the particular case.
Illustration (b) to section 114 says that the Court may presume that an accomplice is unworthy of credit unless he is corroborated in material particulars.
There is No. antithesis between section 133 and illustration (b) to s.114 of the Evidence Act, because the illustration only says that the Court 'may ' presume a certain state of affairs.
It does not seek to raise a conclusive and irre butable presumption.
Reading the two together the position which emerges is that though an accomplice is a competent witness and though a conviction may lawfully rest upon his uncorroborated testimony, yet the Court is entitled to presume and may indeed be justified in presuming in the generality of cases that no reliance can be placed on the evidence of an accomplice unless that evidence is corrobo rated in material particulars, by which is meant that there has to be some independent evidence tending to incriminate, the particular accused in the commission of the crime.
It is hazardous, as a matter of prudence, to proceed.
upon the evidence of a self confessed criminal, who, in so far as an approver is concerned, has to testify in terms of the pardon tendered to him.
The risk involved in convicting an accused on the testimony of an accomplice, unless it is corroborated in material particulars, is so real and potent that what during the early development of law was felt to be a matter of prudence has been elevated by judicial experience into a requirement or rule of law.
All the same, it is necessary to understand that what has hardened into a rule of law is not that the conviction is illegal if it proceeds upon the uncorroborated testimony of an accomplice but that the rule of corroboration must be present to the mind of the Judge and that corroboration may be dispensed with only it the peculiar circumstances of a case make it safe to dispense with it.
In King vs Baskerville(1) the accused was convicted for committing gross acts of indecency with two boys who were treated as accomplices since they were freely consenting parties.
Dealing with their evidence Lord Reading, the Lord Chief Justice of England, observed that though there was no doubt that the uncorroborated evidence of an accomplice was admissible in law it was for a long time a role of practice at common law for the Judge to warn the Jury of the danger of convicting a person on the uncorroborated testimo ny of an accomplice.
Therefore, though the Judge was enti tled, to point out (1) 2 7078CI/77 644 to the Jury that it was within their legal province to convict upon the unconfirmed evidence of an accomplice, the rule of practice had become virtually equivalent to a rule of law and therefore in the absence of a proper warning by the Judge the conviction could not be permitted to stand.
If after being properly cautioned by the Judge the Jury never theless convicted the prisoner, the Court would not quash the conviction merely upon the ground that the accomplice 's testimony was uncorroborated.
In Rameshwar vs State of Rajasthan(1) this Court ob served that the branch of law relating to accomplice evi dence was the same in India as in England and that it was difficult to better the lucid exposition of it given in Baskerville 's (supra) case by the Lord Chief Justice of England.
The only clarification made by this Court was that in cases tried by a Judge without the aid of a Jury it was necessary that the Judge should give some indication in his judgment that he had this rule of caution in mind and should proceed to give reasons for considering it unnecessary to require corroboration on the facts of the particular case before him and show why he considered it safe to convict without corroboration in the particular case.
In Bhuboni Sahu vs The King(a) the Privy Council after noticing section 133 and illustration (b) to section 114 of the Evi dence Act observed that whilst it is not illegal to act on the uncorroborated evidence of an accomplice, it is a rule of prudence so universally followed as to amount almost to a rule of law that it is unsafe to act on the evidence of an accomplice unless it is corroborated in material respects so as to implicate the accused; and further that the evi dence of one accomplice cannot be used to corroborate the evidence of another accomplice.
The rule of prudence was based on the interpretation of the phrase "corroborated in material particulars" in illustration (b).
Delivering the judgment of the Judicial Committee, Sir John Beaumont ob served that the danger of acting on accomplice evidence is not merely that the accomplice is on his own admission a man of bad character who took part in the offence and afterwards to save himself betrayed his former associates, and who has placed himself in a position in which he can hardly fail to have a strong bias in favour of the prosecution the real danger is that he is telling a story which in its general outline is true, and it is easy for him to work into the story matter which is untrue.
He may implicate ten people in an offence and the story may be true in all its details as to eight of them but untrue as to the other two whose names may have been introduced because they are enemies of the approver.
The only real safeguard therefore against the risk of condemning the innocent with the guilty lies in insisting on independent evidence which in some measure implicates each accused.
This Court has in a series of cases expressed the same view as regards accomplice evidence.
(see The State of Bihar vs Basawan (1) ; (2) 76 I.A. 147.
645 Singh(1); Hari Charan Kurmi vs State of Bihar;(2) Haroon Haji Abdulla vs State of Maharashtra;(a) and Ravinder Singh vs State of Haryana(4).
In Hari Charan(2) Gajendragadkar, C.J., speaking for a five Judge Bench observed that the testimony of an accomplice is evidence under section 3 of the Evidence Act and has to be dealt with as such.
The evidence is of a tainted character and as such is very weak; but, nevertheless, it is evidence and may be acted upon, subject to the requirement which has now become virtually a part of the law that it is corroborated in material particulars.
We will assess the evidence of the two approvers Ganpat and Shankar in the light of these principles.
Ganpat Bhagoji Salve, P.W. 1, fails to cross the initial hurdle of reliability and no amount of corroboration cure the infirmi ties which beset his evidence.
He is not a quack but a charlatan who traded on the credulous optimism of the ster ile village women.
He admits that he possessed no cure but made a pretence of it by carrying the confidence of lay, uninformed women.
He was sent for to prescribe a cure to enable accused No. 1 to bear a child but accused Nos. 1 and 2, taking advantage of his expert presence, consulted him on where the treasure trove lay.
Ganpat prescribed the facade of a procedure which was in the nature of a confidence trick.
Practising it deftly on his credulous audience, he passed on the errand of God that Munjaba has to be appeased by offering the blood of virgin girls.
That work was as signed by accused No. 2 to his servants, accused No. 3 and the other approver Shankar.
Accused No.3 and Shankar committed the murders of Gaya bai and Shakila and handed over the bowlful of blood from the private parts of the victims to accused Nos. 1 and 2 who performed the puja of Munjaba.
But the treasure trove did not come up.
Then Sugandhabai was murdered and her menstur al blood was offered to the God, again without a purpose.
The fourth to die was Nasima whose head and small finger were offered as sacrifice.
But even that heavy price yield ed no clue to the treasure trove Ganpat was paid a fee of Rs. 100 whereupon he made himself scarce and left for a place called Baramati from where he was traced by the po lice.
That is what Ganpat 's evidence comes to.
Ganpat is an utterly worthless witness whose evidence has been rightly discarded by the. High Court.
His entire story is incredible and abounds in contradictions of the gravest kind.
Accused No. 2 is a man of some means and was for some time the President of the Manwat Municipality.
It is hardly likely that a person in his position would readily gulp the fantastic process prescribed by Ganpat for discov ering the treasure trove Ganpat was interrogated by the police for nearly a month and a half after his arrest at Baramati and it was only at the end of that trying period that he trotted out some story (1) ; (2) ; (3) ; (4) ; 646 to save his skin.
It is common ground, and we see much more in that episode, that Ganpat struck his head against a wall while in police custody and sustained a head injury for which he was charge sheeted for attempting to commit sui cide.
He admits in his evidence that he was driven to break his head as a result of the torture inflicted upon him by the police.
Though he implicated both accused Nos. 1 and 2 in the search for treasure trove, he admitted later that.
accused No.1 had never talked to him.
in that behalf.
He made several significant statements for the first time in the Court and though we agree that an approver has real incentive to speak out his mind after tender of pardon, it is impossible to reconcile his earlier statements with his later assertions.
It is one thing to say as was said in Madan Mohan Lal vs State of Punjab(1) that an approver 's statement cannot be discarded for the mere reason that he did not disclose the entire story in his police statement and quite another to accept an approver in spite of contra dictions which cast a veil of doubt over his involvement of others.
Conceding the ratio.
of Tahsildar 's(2) case, on.
which Mr. Desai for the State Government relies, the conclu sion seems to us inescapable that Ganpat has mixed a ton of falsehood with an ounce of truth.
His evidence has there fore to be left out of consideration.
The other approver Shankar Gyanoba Kate, P.W. 2, has greater credibility than Ganpat.
Shankar was working with accused No. 2 as an agricultural servant along with accused No. 3.
He speaks of Ganpat 's visits, the performance of the 'shakun ' and of being commanded by accused Nos. 1 and 2 to commit murders of virgin girls.
He has unreservedly admitted having committed the murders of Gayabai, Shakila, Sngandha bai and Nasima with accused No. 3 's assistance.
He impli cates accused Nos. 1 and 2 by deposing that after each o[ the murders was committed, he and accused No. 3 used to go to accused No.1 's house for delivering the blood and that the accused used to perform the Puja thereafter.
Not only has Shankar tarred himself with the same brush as accused Nos. 1, 2 and 3 but he has confessed to having played the leading role in the commission of the first four murders.
Impressed by that circumstance, the Sessions Court and the High Court concluded that he is a reliable witness, but they took the view that the conviction of accused Nos. 1 and 2 cannot be permitted to rest on his uncorroborated testimony.
We unhesitatingly share that view.
Having played the role of the master killer in four ghastly murders, he is bound to know every little detail as to the manner of kill ing.
The vivid description given by him of the luring, the gagging and the throwing away of the dead bodies may there fore be true.
But it is easy enough for him to introduce nice falsities here and there by involving some others in the broadly true framework of his story.
It is therefore necessary to see whether the evidence of Shankar in regard to the implication of accused Nos.
I and 2 is corroborated by some independent evidence. (1) (2) [1959] Supp.
2 S.C.R. 875.
647 Before looking out for corroboration.
, we must point out that Shankar used to be interrogated by the police every night for about 9 or 10 days and it was at the end of that gruelling interrogation that his statement came to be re corded.
Though Shankar claims that he had seen the 'shakun ' being performed by Ganpat, he had not stated so before the police nor had he then described the elaborate ritual ob served during the performance of that ceremony.
He also did not say to the police that accused No. 1 had asked him to commit the murders.
Neither to the police nor in his state ment recorded under section 164 of the Code of Criminal Procedure did he say that he had gone to accused No.1 's house on the morning following the first murder and that She had told him that since the treasure trove was not found another murder should be committed.
The statement attributed by Shankar to accused No. 1 that menstrual blood was required for sacri fice is also conspicuous by its absence in his police state ment.
These significant omissions are in the nature of contradictions because not only do they pertain to a very vital aspect of the case against accused Nos. 1 and 2, but they are of such a nature that the story told by Shankar to the police and under section 164 of the Code of Criminal Proce dure, cannot sensibly stand along with what he told the Court in regard to the part played by accused Nos. 1 and 2.
It is true that Shanker was under a higher obligation while deposing in the Court because as a condition of the pardon tendered to him he had to disclose the whole truth to the Court.
But while assessing the value of Shankar 'section evidence in so far as he implicates accused Nos. 1 and 2 we find it impossible to overlook the studied improvements which he made to involve them.
Such gross departure from the earliest versions makes the story of conspiracy suspect and uninspir ing.
All the same, we may examine the argument advanced before us by the learned counsel for the State that Shan kar 's evidence against accused Nos. 1 and 2 is corroborated in material particulars and should therefore be accepted.
For affording corroboration to Shankar 's evidence reli ance is placed on the evidence of four witnesses Laxman (P.W. 19), Sakharam (P.W. 29), Ramchandra (P.W. 30) and Kachru (P.W. 34).
We see nothing in the evidence of these witnesses which can lend corroboration to the approver 's story, that accused Nos. 1 and 2 conspired to commit the murders or that they asked Shankar and accused No. 3 to do so or that the blood of victims was handed over to either of them, or that any Puja was performed after the commission of murders.
Laxman says nothing about the treasure trove, Sakharam merely carried the errand to Ganpat, Ramchandra was mauled by the police who pulled out Iris pig tail and the quack called Kachru only prescribed a medicine for accused, No.1 's meno pause.
Nor indeed is the evidence of P.Ws. 20, 21 and 51 of any assistance in the matter of corroboration.
They merely say that Ganpat was eking his livelihood by prescribing Mantras and medicines, which takes one nowhere near corroborative factors for implicating accused Nos. 1 and 2. 648 The recovery of Ganpat 's satchel.
containing charms and herbs, trader the Panchnama exhibit 130A, also proves nothing beyond showing that Ganpat was equipped with a quack 's repertoire.
One of the strongest arguments made by Mr. Desai on behalf of the State was that accused Nos. 1 and 2 stood to gain by the commission of the murders and that would afford corroboration to their participation in the conspiracy.
Motive may conceivably furnish the necessary corroboration, but we are unable to see any independent evidence on the record regarding the treasure trove theory.
Scrapings were taken from Munjaba 's image and samples of earth were also taken from the place where Munjaba is alleged to have been propitiated with the blood of the victims.
If Puja was really performed in the manner described by Shankar, it is strange that no blood stains should have been found anywhere near the Pimpal tree.
There is also no evidence at all to show that any attempt was made by accused Nos. 1 and 2 to discover the treasure, as for example, by digging.
These circumstances cast a serious doubt on the theory that ac cused Nos. 1 and 2 were trying to locate the treasure trove.
The fact that accused No. 3 is a servant of accused No. 2 cannot by itself be sufficient to connect accused No. 2 with the crime charged.
The last circumstance on which prosecution relies to.
connect accused Nos. 1 and 2 with the crime is the confes sion, exhibit 108, made by accused No. 1 Rukhmam.
That confes sion was recorded by a Sub Divisional Magistrate, Devidas Sakharam Pawar, P.W. 23.
Later, we will have a great deal to say about the various confessions recorded by this learned Magistrate but in so far as the confession of ac cused No. 1 is concerned it is enough to point out that it is entirely exculpatory and can, therefore, serve no useful purpose.
Besides, the confession was retracted by accused No. 1.
Along with these considerations is the circumstance that the High Court has acquitted accused Nos. 1 and 2 after a fair examination of the material relied upon by the prosecu tion as against them.
The various reasons given by us would so that there is no justification for interfering with the conclusion to which the High Court has come.
The acquittal of accused Nos. 1 and 2 has, therefore, to be confirmed.
It would now be convenient to take up the ease of ac cused No. 3, Sopan Rambhau Salve.
The allegation against him is that he and the approver Shankar committed the murder of Gayabai on November 14, 1972, of Shakila on December 9, 1972, of Sugandhabai on February 21, 1973 and of Nasima on April 13, 1973.
There is no eyewitness to any of these four murders but for establishing the charge against accused No. 3, the prosecution relies on the evidence of the two approv ers Ganpat (P.W. 1) and Shankar (P.W.2), the discovery of article 17 by accused No. 3, the discovery of articles 18 and 19 by approver Shankar, the seizure of articles 20 and 21 from the house of accused No. 1 and lastly the retracted confession of accused No. 3 himself.
We have already dealt with the evidence of the approvers while considering the case against accused Nos. 1 and 2 and we have given our reasons for discarding Ganpat 's evidence outright.
In regard to Shankar 's evidence we have taken the view that though he is 649 a reliable witness, his evidence cannot be acted upon unless it is corroborated in material particulars.
Shankar and accused No. 3 were in the employment of accused No. 2.
After describing the 'Shakun ' ceremony which was performed for ascertaining the desire of the deity, Shankar deposes that he and accused No. 3 were commissioned to commit the murders of virgin girls.
Shankar, after some hesitation, agreed to do so on the promise that accused Nos. 1 and 2 will,give to him and accused No.3 a share in the treasure trove.
Accused No. 3, according to Shankar, lured Gayabai, Shakila and Nasima to secluded spots.
, where upon Shankar gagged and throttled them.
Accused No. 3 facilitated the murders by holding the legs of victims which also helped Shankar to collect blood from their private parts after causing cuts thereon.
Accused No. 3 played a more signifi cant role in the murder of Sugandabhai by axing her to death.
Shankar 's evidence is amply corroborated as regards the broad outlines of the story narrated by him.
But that is not enough.
We must see whether his evidence receives corrobo ration from an independent source and in material particu lars, so as to fasten the guilt on accused No. 3.
The first circumstance which is said to corroborate the evidence of the approver is the discovery of 27 pieces of shirt, which are collectively marked as article 17.
The panchanama of discovery (exhibit 127) is dated January 2, 1974 and is proved by the Pancha Vithalrai Takankhar (P.W. 27).
The report of the serologist which is at exhibit 312 shows that there were several blood stains on the shirt pieces ranging from 0.1 cm.
to 0.5 cm.
in diameter, all of 'A ' group.
Gayabai 's blood also belonged to 'A ' group.
Mr. Bhonde who appears for accused No. 3 has, subjected the evidence of discovery to a searching criticism which at first blush seems plausible but which does not bear close scrutiny.
The argument that the panchanama of discovery does not attribute to accused No,. 3 the authorship of concealment has the simple answer that the English transla tion of the Marathi panchanama is incorrect.
The original document expressly states that accused No. 3 agreed to point out the place where.
he had kept the shirt pieces.
The evidence of the Panch (P.W. 27) and of Dy.
S.P. Waghmare (P. W. 96) is.
the same effect.
In the absence of any effective cross examination of these witnesses, we see no substance in the contention that accused NO.
3 's father, who was standing near the hut, should have been examined as a witness.
It is urged that it is highly unlikely that accused No. 3 will preserve the tell tale evidence of the crimes in the manner alleged by the prosecution.
Why the accused chose to do this is difficult to know but we are not examining the evidence in the case as a Court of first instance.
The evidence in regard to the discovery is accepted as unexcep tionable by the Sessions Court as well as the High Court 650 and we are unable to characterise that view of the matter as preverse or against the weight of evidence.
The recovery of article 17 thus afford material corroboration to the part played by accused No. 3, at least in Gayabal, s murder.
The discovery of the blade (article 18) and the undervest (article 19) at the instance of the approver affords no cor roboration as against accused No. 3.
Nor indeed can the recovery of the bowl (article 20) and the bottle (article 21) from the house of accused No. 1 connect accused No. 3 with the crime.
These are articles of common use and no blood was detected thereon.
What remains to be considered is the retracted con fession accused No. 3, which is exhibit 106.
While on this question, we would like to deal with all the confessional statements recorded in the case so that it will not be necessary to revert to.
the question time and again.
As many as eight confessions were recorded in the case, the confessing accused, apart from the two approvers, being accused Nos. 1, 3, 4, 5, 6, and 12.
The approvers, Ganpat and Shankar, stuck to their confessions while all others retracted theirs.
Section 24 of the Evidence Act makes a confessional statement irrelevant in a criminal proceeding if the making thereof appears to have been caused by any inducement, threat or promise, having reference to the charge against the accused, proceeding from a person in authority and sufficient to give the accused grounds which would appear to him reasonable for supposing that by making the confes sion he would gain any advantage or avoid any evil of a temporal nature in reference to the proceedings against him.
Section 163 of the Criminal Procedure Code bars a Police Officer or any person in authority from offering or causing to be offered any inducement, threat or promise as is referred to in section 24 of the Indian Evidence Act.
Section 164 of the Code prescribes the mode of recording confession al statements.
Acting under section 554 of the Criminal Proce dure Code, 1898, the High Court of Bombay had framed in structions for the guidance of Magistrates while recording confessional statements.
Those instructions are contained in Chapter I, Paragraph 18, of the Criminal Manual 1960, of the Bombay High Court.
The instructions require the Magistrate recording a confession to ascertain from the accused whether the accused is making the confessional statement voluntarily and to find whether what the accused desires to state appears to be true.
The instructions prescribe a form in.
which the.
confessional statement has to be recorded.
Similar circulars or instructions have been issued by the various High Courts in India and their impor tance has been recognised by this Court in Sarwan Singh vs State of Punjab(1) in which it was said that the instruc tions issued by the High Courts must be followed by the Magistrates while recording confessional statements.
; 651 All of the eight confessions were recorded in this case by a Sub Divisional Magistrate, Devidas Sakharam Pawar (P. W. 23), whose evidence leaves no room for doubt that he was blissfully unaware of the stringent responsibilities east by law on Magistrates.
who. are called upon to record confes sions.
He made no effort to ascertain from any of the accused whether he or she was making the confession volun tarily.
He did not ask any of the accused whether the police had offered or promised any incentive for making the confessional statement nor did he ascertain for how long the confessing accused was in police custody prior to.
his production for recording the confession nor indeed did he maintain any record to show where the accused were sent after they were given time for reflection.
One of the glaring infirmities from which the confessional statements of the various accused suffer is that none of those state ments contain a memorandum as required by section 164 of the Code that the Magistrate believed that the "confession was volun tarily made".
It is also clear that when the various ac cused were produced before the Magistrate after the time for reflection was over, he asked no further questions and recorded the confessions.
mechanically for the mere reason that the accused expressed their willingness to confess.
The Magistrate was either overcome by the sensation which the case had aroused in Maharashtra or perhaps he blindly trusted the high police officers who were frantically look ing out for a clue to these mysterious murders.
They pro duced the accused for recording the confessions and the Magistrate thought that the mere production of the accused was guarantee enough of their willingness to confess.
Learned counsel appearing for the State is right that the failure to comply with section 164(3), Criminal Procedure Code, or with the High Court Circulars will not render the confessions inadmissible in evidence.
Relevancy and admis sibility of evidence have to be determined in accordance with the provisions of the Evidence Act.
Section 29 of that Act lays down that if a confession is otherwise.
relevant it does not become irrelevant merely because, inter alia, the accused was not warned that he was not bound to make it and the evidence of it might be given against him.
If, there fore, a confession does not violate any one of the condi tions operative under sections 24 to 28 of the Evidence Act, it will be admissible in evidence.
But as in respect of any other admissible evidence, oral or documentary, so in the case of confessional statements which are otherwise admissi ble, the Court has still to consider whether they can be accepted as true.
If the facts and circumstances surround ing the making of a confession appear to.
cast a doubt on the veracity or voluntariness of the confession, the Court may refuse to act upon the confess;on even if it is admissible in evidence.
That shows how important it is for the Magistrate who.
records the confession to satisfy him self by appropriate questioning of the confessing accused, that the confession is true and voluntary.
A strict and faithful compliance with section 164 of the Code and with the instructions issued by the High Court affords in a Large measure the guarantee that the confession is voluntary.
The failure to observe the safeguards prescribed therein are in practice calculated to impair the evidentiary value of the confessional statements.
652 Considering the circumstances leading to the procession al recording of the eight confessions and the abject disre gard, by the Magistrate, of the provisions contained in section 164 of the Code and of the instructions issued by the High Court, we are of the opinion that no reliance can be placed on any of the confessions.
Apart from the confessions of the two approvers, all others were retracted, which further cripples their evidentiary value.
Since the evidence of the approver Shankar is corrobo rated in material particulars by the discovery of article 17, there is no valid reason for departing from the concur rent view of the High Court and the Sessions Court that the complicity of accused No. 3.
in the four murders is proved beyond a reasonable doubt.
As the charge of conspir acy fails, the High Court was right in convicting accused No. 3 under section 302 read with section 34 of the Penal Code only.
That leaves the case of accused Nos.
9 to 12 for consid eration,.
being the subject matter of Criminal Appeal No. 437 of 1976 filed by them.
The charge against these accused is that in furtherance of conspiracy and in pursuance of their common intention they, on January 4, 1974, committed the murders of Haribai, aged 35 years, her daughter Taramati aged 9 years, and her infant child Kamal aged 1 1/2 years.
The Sessions Court convicted these accused under section 302 read with sections 120B and 34 of the Penal Code and sentenced them to life imprisonment.
The charge of conspiracy having failed before the High Court and the main co conspirators, accused Nos. 1 and 2, having been acquitted, the High Court convict ed these accused under section 302 read with section 34 only.
But, accepting the appeal flied by the State, the High Court enhanced their sentence from life imprisonment to death.
The evidence against accused Nos. 9 to 12 consists of : (1) The: eye witness account of Umaji Limbaji, Pitale (P.W. 31); (2) Discoveries effected in pursuance of statements made by the accused; (3) Injuries on accused No. 10; (4) The evidence in regard to the movements of the accused at or about the time when the murders were committed and (5) the confession of accused N6.
Umaji was working as.
an agricultural servant with one Balabhau Lad on a daily wage of Rs. 3/ .
On January 4, 1974 while he was on his way to one of the lands of his master, he first met accused No. 10 and then accused Nos. 9 and 11, and had some conversation with accused No. 10.
At about the same time, he saw Haribai carrying her infant child in her arms, and a basket of food on her head.
Her other daughter Taramati was walking behind her.
Umaji climbed the Mala, which is a raised platform from which crops are generally watched, and soon thereafter he heard the shrieks of a child.
Turning in the direction from which the shrieks came, he saw accused No. 10 holding Haribai from behind by her waist and accused No.9 giving an axe blow on her head.
Almost simultaneously, Umaji saw accused No. 12 holding Taramati from behind and accused No. 11 giving an axe blow on her head.
Feeling nervous and fearful, jumped down from the Maid, tethered his horse in his master 's land, went by 653 a bus to the Manwat Road Railway Station, took a train to Ranjani and from there proceeded to the village of Iregaon where his maternal uncle Mathaji lived.
After staying at Iregaon for about four days, Umaji went back to his master 's house at Manwar when a police constable took him to.
the Police Station, where a Police Officer recorded his state ment.
Umaji 's evidence having been concurrently accepted by the Sessions Court and the High Court, we do.
not propose to undertake a fresh reappraisal of that evidence except to the extent to which the view of the Courts below is contrary to the weight of the record or is otherwise such as is impossi ble in the context to sustain.
On a careful consideration of Mr. Narayan 's closely reasoned submissions, we have formed the conclusion, which does not materially differ from that of the two Courts, that Umaji 's evidence cannot be accepted without adequate corroboration.
Our reasons for taking this view are briefly these: Fear and pame may account for the fact that the witness did not raise an alarm.
But there is no reasonable explanation why, having had the presence mind to tether back the horse, he did not see his master.
Then again, he sojourned from the scene of offence to Iregaon but spoke to none.
At Iregaon, which was far removed from the scene of Manwat murders, he holidayed with his uncle for four days but even on being questioned as to the purpose of his visit, he made no an swer.
After returning to Manwat he saw his master but told him nothing.
His statement was recorded by the police after two days of close interrogation.
In regard to accused No. 9, there are two circumstances which afford reliable corroboration to Umaji 's evidence.
On January 11, 1974 accused No. 9 made a statement leading to the discovery of an axe blade, article 160, from his house.
The panchnama of recovery is exhibit 91 A which is proved by the Panch Sheikh Imam (P.W. 11 ).
It shows that accused No. 9 took out an axe blade from below a piece of wood lying behind a cupboard in his house.
The report of the Serolo gist, exhibit 267, shows that the axe blade was stained with human blood of 'A ' group.
The blood of the deceased Haribai belonged to the same group.
Accused No. 9 admitted in his examination that he had produced the axe blade and that it was stained with blood but he sought to explain the blood stains by saying that his wife had sustained an injury while hewing wood with the axe.
That is a flimsy explanation because were it true, it is difficult to understand why such great care was taken to conceal the axe blade.
On January 21.1974 a burnt shirt piece, article 170, was recovered in consequence of information given by accused No. 9.
The Panchnama, exhibit 87 A, and the evidence of the Panch Munjaba (P.W. 25) show that the accused dug out the shirt piece from under a heap of earth lying inside his house.
Article 170 was found by the Sessions Judge to fit squarely with the shirt sleeve, article 112, which was found at the place of occurrence near Haribai 's dead body.
The report of the Chemical Analyser at Ex.271 shows that arti cles 112 and 170 bore ' identical textile and physiochemical characteristics.
654 In our opinion, the courts below were justified in relying upon these corroborative circumstances to connect accused No. 9 with the murder of Haribai.
Turning to accused No. 10, an axe handle, article 169, was recovered at his instance on January 17, 1974.
The Panchanama, exhibit 86 A, and the evidence of the Panch Mohd. Yusuf Bade Khan (P.W. 10) show that the axe handle was.
recovered from below a thorny fence in the Pardhi Wada locality.
The report of the serologist, Ex.267, shows that there was human blood on the axe but the group of, the blood could not be determined.
It is not possible to accept the submission of Mr. Narayan that the axe handle was recov ered from a place which was easily accessible to the public because the handle was taken out after making quite some efforts to locate it.
Accused No. 10 was the author of its concealment.
On January 8, 1974 when accused No. 10 was arrested a turban, bush shirt and dhoti (articles 150 to 1.52) were seized from his person.
The serologist 's report, Ex.267, shows that human blood was detected on the bush shirt and the dhoti.
The blood stain.
on the shirt was 0.5 cm in diameter and the blood detected on the bush shirt and the dhoti belonged to 'A ' group.
Accused No. 10 admitted in his examination that the shirt and the dhoti were blood stained but he offered an unconvincing explanation that a child of his had bled from the nose, The evidence of Dr. Salunke (P.W. 48) who examined accused No. 10 on the date of his arrest shows that he had four injuries on his person, the certificate in regard to, which is exhibit 174.
Injuries Nos. 1 and 2 were interrupted abrasions which in the opinion of Dr. Salunke could be caused by teeth bite.
That fits in with 'the part played by accused No. 10, who according to Umaji 's evidence, had held Haribai from behind by her waist.
Evidently, Haribai strug gled to release herself in a frantic attempt to save her life she caused the injuries to accused No. 10.
We agree with the view taken by both the Courts that the discovery of the blood stained axe handle, the seizure of clothes stained with 'A ' group blood and the teeth bite injuries afford adequate corroboration to Umaji 's evidence regarding the part played by accused No. 10, in the murder of Haribai.
As regards accused No. 11, an axe blade (article.
167) was recovered in consequence of information supplied by him.
The Panchanama, exhibit 84 A, and the evidence of the Panch Mohd. Yusuf Bade Khan.
(P.W. 10) show that accused No.11 led the police party and the panchas to a water tap in the Pardhi Wada locality and dug out the axe blade which was lying buried under a stone.
The report of the Serologist, exhibit 269, shows that human blood of 'A ' group ' was detected on the axe blade.
Taramati, according to Umaji 's evidence, was assaulted with an axe by accused No. 11.
Her clothes, articles 142 and 143, were found to be stained with human blood of 'A ' group.
We see no infirmity in the Pancha 's evidence and no substance in the counsel 's contention that the discovery of the axe blade was foisted on the accused.
655 The discovery of the axe blade stained with human blood of 'A ' group sufficiently corroborates the evidence of Umaji as regards the part played by accused No. 11 in Taramati 's murder.
Before considering the case of accused No. 12, we would like to point out that there is satisfactory evidence to show the presence of accused Nos. 9 to 11 at or near the scene of offence some time before the incident.
Dagdu (P.W. 5), Bhanudas (P.W. 14), Sitaram (P.W. 16), Narayan (P.W. 17), Baliram (P.W. 18) and Santram (P.W. 24) have deposed about the same either in regard to all of these accused or some of them.
Their evidence has been examined with gear care by the learned Sessions Judge and we agree with his assessment that except for Sant Ram, the other witnesses can be relied up.on for affording corroboration to Umaji 's evidence.
That leaves the case of accused No. 12 for considera tion.
It is alleged that he held Taramati from behind whereupon accused No. 11 gave axe blows on her head.
Tara mati was just a girl of 9 and the allegation that accused No. 12 had to hold her from behind to enable accused No. 11 to assault her with an axe sounds inherently incredible.
1t is significant that some time before the occurrence, Umaji met accused Nos.
9,10 and 11 near the scene of offence but not accused No. 12.
The importance of this circumstance is twofold: Firstly that accused No. 12 was not in the company of the other three at or about the time of the incident and secondly that Umaji 's identification of the person who held Taramati, namely accused No. 12, becomes somewhat infirm.
There was standing crop about five feet high between the Mala where Umaji was standing and the place where Taramati was held.
Besides, the spot where Taramati was done to death was in a depression, which would further affect the witness 's ability to.
identify the person who.
had held Taramati.
After all, Umaji had but a fleeting glimpse of the incident and the chance of an error in identifying accused No. 12, who w.as not seen earlier in the company of accused Nos. 9 to 11, cannot fairly be excluded.
All the same, since Umaji has no particular reason to implicate accused No. 12 falsely and since the Courts below have concurrently accepted his evidence in regard to accused No. 12 also, we must examine carefully the strenuous submission made by Mr. Desai for the State that even as regards accused No. 12, Umaji 's evidence is sufficiently corroborated.
That corroboration consists of the discovery of.
an axe handle, article 168, from the house of accused No. 12 on January 17 1974.
The Panchanama of recovery is exhibit 85 A which is proved by the Panch Mohd. Yusuf Bade Khan, P.W. 10.
It is alleged that the axe handle was produced by accused No. 12 from below the tin sheet roof of his house in Pardhi Wada.
The report of the serologist, exhibit 269, says that there was human blood of 'A ' group on the axehandle.
We find it impossible to place any.
reliance on the discovery of the axe handle for the following reasons: Though accused No. 12 was 656 arrested on January 11, 1974 his house was searched on January 7, 1974 in connection with the murders of Haribai and her daughters which had taken place on January 4, 1974.
That search is borne out by the Panchanama, exhibit 221.
On January 6, 1974 accused No. 12 figured in an identifica tion parade which was arranged in order to ascertain if the Dog squad could afford assistance in fixing the identity of the culprits.
The evidence of the Senior Dog Master, Ram chandra (P.W. 52), shows that a female dog called Mala sniffed her suspicion at accused No. 12.
With the clue provided by the Dog Squad on the 6th, the house of accused No. 12 was searched on the 7th.
That house consists of one room only.
The Panchanama shows that the axe handle was not in any manner concealed under the tin sheet.
It was lying openly, visible to the naked eye, so that he who cared could easily see it.
It is then strange that it was not found on the 7th itself.
There is also a serious dis crepancy in the evidence of the two Panehas, Mohd. Yusuf, P.W. 10, and Sheikh Imam, P.W. 11, regarding the discovery.
Whereas according to the former, accused No. 12 said that he had concealed the axe,handle below the tin sheet of the roof, according to the latter the information which accused No. 12 gave was that he had kept the handle below a stone inside his house.
Coupled with the circumstance which emerges from the evidence of Panch Sheikh Imam that there is no door to the room from which the axe handle was pro duced, the evidence in regard to.
the recovery of the axe handle becomes manifestly suspect.
These infirmities in the recovery of the axe handle failed to evoke the attention of the High Court.
The Sessions Court too missed their impact on the point at issue.
The seizure of a blood stained ' Dhoti from the person of accused No. 12 at the time of h,is arrest, even if the blood belonged to 'A ' group, is not of a kind which, in the context of the various circumstances referred to above, can be accepted as safely of sufficiently corroborative of Umaji 's evidence.
This is particularly so because, at the very threshold, it is doubtful if Umaji could identify accused No. 12.
The evidence regarding the presence of accused No. 12 in the fields roundabout the scene of offence on the after noon of the day of incident cannot connect him with the crime.
And the retracted confession of the accused, like its counterparts, has to be excluded from consideration altogether because of the cavalier fashion in which the Sub Divisional Magistrate recorded the various confessions.
Accused No. 12 is thus entitled to an acquittal for the reason that the prosecution has failed to prove its case against him beyond a reasonable doubt.
Learned counsel for accused Nos. 3, 9, 10 and 11 whose conviction under section 302 read with section 34 has been affirmed by us and who stand sentenced to death, contend that the ac cused were not heard on the question of sentence and there fore the sentence is not according to law.
It is urged that we should remand the appeal of accused Nos. 9, 10 and 11 to the High Court which sentenced them to death, 657 and accused No. 3 's appeal to the Sessions Court which sentenced him to death, in order to enable these accused to make their contentions as to why they should not be sen tenced to death even though they have been convicted under section 302 of the Penal Code.
In support of this argument reliance is placed on a decision of this Court in Santa Singh vs State of Punjab(1).
In Santa Singh(1), the Sessions Judge, after pronouncing the judgment convicting the appellant for a double murder, did not give him opportunity to be heard on the question of sentence.
He pronounced the appellant guilty of murder and, as a part of a single judgment, imposed the sentence of death.
The High Court confirmed the conviction and the sentence of death.
In appeal, it was held by this Court (Bhagwati and Fazal Ali, JJ) that the provisions of section 235 of the Code of Criminal Procedure, 1973, which are clear and explicit, require that the Court must in the first instance deliver a judgment of acquitting the accused and if the accused be convicted, he must be given an opportunity to be heard in regard to the sentence.
Holding that the provi sions of section 235 are mandatory in character, the Court set aside the sentence of death and remanded the case to.
the Sessions Court with the direction that it should pass an appropriate sentence after giving to the appellant an oppor tunity to be heard on the question of sentence.
Section 235 of the Criminal Procedure Code, 1973 reads thus: "235(1) After heating arguments and points of law (if any), the Judge shall give a judgment in the case.
If the accused is convicted, the Judge shall, unless he proceeds in accordance with the provisions of Section 360, hear the accused on the question of sentence, and then pass sentence on him according to law.
" The imperative language of sub section (2) leaves No. room for doubt that after recording the finding of guilt and the order of conviction, the Court is under an obligation to hear the accused on the question of sentence unless it releases him on probation of good conduct or after admo nition under section 360.
The right to be heard on the question of sentence has a beneficial purpose, for a variety of facts and considerations bearing on the sentence can, in the exercise of that right, be placed before the Court which the accused, prior to the enactment of the Code of 1973, had No. opportunity to do.
The social compulsions, the pressure of poverty, the retributive instinct to seek an extra legal remedy to a sense of being wronged, the lack of means to be educated in the difficult art of an honest living, the parentage, the heredity all these and similar other con siderations can, hopefully and legitimately, tilt the scales on the propriety of sentence.
The mandate of section 235(2) must, therefore, be obeyed in its letter and spirit.
(1) 658 But we are unable to read the judgment in Santa Singh (supra) as laying down that the failure on the part of the Court, which convicts an accused, to 'hear him on the ques tion of sentence must necessarily entail a remand to that Court in order to afford to the accused an opportunity to.
be heard on the question of sentence.
The Court, on con victing an accused, must unquestionably hear him on the question of sentence.
But if, for any reason, it omits to do so and the accused makes a grievance of it in the higher court, it would be open to that Court to remedy the breach by giving a hearing to the accused on the question of sen tence.
That opportunity has to be real and effective, which means that the accused must be permitted to adduce before the Court all the data which he desires to adduce on the question of sentence.
The accused may exercise that right either by instructing his counsel to make oral submissions to the Court or he may, on affidavit or otherwise, place in writing before the Court whatever he desires to place before it on the question of sentence.
The Court may, in appropri ate cases, have to adjourn the matter in order to give to the accused sufficient time to produce the necessary data and to make his contentions on the question of sentence.
That, perhaps, must inevitably happen where the conviction is recorded for the first time by a higher court.
Bhagwati J. has observed in his judgment that care ought to be taken to ensure that the opportunity of a hearing on the question of sentence is not abused and turned into an instrument for unduly protracting the proceedings.
The material on which the accused proposes to rely may there fore, according to the learned Judge, be placed before the Court by means of an affidavit.
Fazal Ali, J., also ob serves that the courts must be vigilant to exercise proper control over their proceedings, that the accused must not be permitted to adopt dilatory tactics under the cover of the new right and that what section 235(2) contemplates is a short and simple opportunity to place the necessary material before the Court.
These observations show that for a proper and effective implementation of the provision contained in section 235(2), it is not always necessary to remand the matter to the court which has recorded the conviction.
The fact that in Santa Singh (supra) this Court remanded the matter to the Sessions Court does not spell out ratio of the judgment to be that in every such case there has to be a remand.
Remand is an exception, not the rule, and ought therefore to be avoided as far as possible in the interests of expeditious, though fair disposal of cases.
After counsel for accused Nos. 3, 9, 10 and 11 raised an objection before us that the sentence of death was imposed upon the accused without hearing them as required by section 235(2) of the code, we granted to them liberty to produce before us such material as they desired and to make such contentions as they thought necessary on the question of sentence.
Accordingly, counsel made their oral submissions before us on the question of sentence and they also flied the relevant material before us showing why we should not uphold the death sentence imposed on the accused.
659 That takes us to the question of sentence.
For the offence under section 302, it is no longer obligatory to impose the sentence of death.
Prior to the amendment of section 367(5) of the Code of Criminal Procedure, 1898 by Act 26 of 1955, the normal sentence for murder was death and the Court had to record its reasons for imposing the lesser sentence of life imprisonment.
The obligation to record reasons for imposing the lesser penalty was deleted by Act 26 of 1955, so that Courts became free to award either the sentence of life imprisonment or the sentence of death, depending on the circumstances of each individual case.
Section 354(3) of the Code of 1973 provides that when the conviction is for an offence punishable with death or, in the alternative, with imprisonment for life or imprisonment for a term of years, the judgment shall state the reasons for the sentence award ed, and in the case of sentence of death, the special rea sons for awarding that sentence.
The legislative history of the sentencing provisions and the explicit language of section 354(3) show that capital punishment can be awarded for the offence of murder, only if there are special reasons for doing so.
All murders are inhuman, some only more so than others.
Having considered the matter in all its aspects penal, juristic and sociological and having given our most anxious consideration to the problem, we are of the opinion that accused Nos. 3, 9, 10 and 11 deserve the extreme penalty of law and that there is no justification for interfering with the sentence of death imposed upon them.
Accused No. 3 put an end to four innocent lives, three small girls ten years of age and a woman in her thirties.
Accused Nos. 10 and 11 committed the murders of Haribai, her nine year old daughter and her infant child.
The victims had given no cause for the ' atrocities perpetrated on them.
They were killed as a child kills flies.
And the brutality accompanying the manner of killing defies an adequate description.
The luring of small girls, the gagging, the cutting of their private parts, the ruthless defiling in order to prevent identification of the victims and the mysterious motive for the murders call for but one sentence.
Nothing short of the death sentence can atone for such callous and calculated transgression of law.
Morbid pity can have no place in the assessment of murders which, in many respects.
will remain unparalleled in the annals of crime.
Accordingly, we confirm the death sentence imposed on accused Nos. 3, 9, 10 and 11.
The overall result is as follows: (1 ) We uphold the acquittal of accused Nos. 1 and 2 and dismiss Criminal Appeal No. 441 of 1976 filed by the State of Maharashtra.
Both the two Accused who are in jail shall be released.
(2) We uphold the conviction of ac cused No. 3 under section 302 read with section 34 of the Penal Code and the sentence Of death imposed upon him.
Criminal Appeal No. 1438 of 1976 filed by him is accordingly dismissed (3) We uphold the conviction of accused Nos. 9, 10 and 11 under section 302 read with section 34 of the Penal Code and 3 707SCI/77 660 the sentence of death imposed upon them.
We acquit accused No 12 by giving him the benefit of doubt and direct that he shall be released.
Criminal Appeal No.437 of 1976 filed by ac cused Nos.
9 to 12 thus succeeds partly in so far as accused No. 12 is concerned and fails in so far as accused Nos. 9, 10 and 11 are concerned.
Before concluding, we would like to make a few observa tions concerning the detection and investigation of these crimes.
It is a matter of grave concern that the police were not able to obtain any clue whatsoever to the numerous murders which were committed so systematically in the small village of Manwat.
The spate of those atrocities commenced with the murder of Gayabai on November 14, 1972 and ended with the murders of Haribai and her two daughters on January 4,, 1974.
All along, a strong patrol of policemen was keep ing vigil in the very locality in which most of the murders were committed.
The evidence of Dy.
S.P. Waghmare shows that apart from the mobile police, fixed post patrols were deputed to keep a close watch on the activities of all and sundry in the area which was chosen by the murderers for their criminal activities.
Haribai and her daughters were murdered under the very nose of the policemen.
Quite a few of them were on duty a few hundred yards away from the scene of occurrence and yet the culprits could escape with impuni ty.
And it is astonishing that when the three dead bodies were lying in close proximity, the police with their trained hawk sight could see only one.
All this hardly does any credit to the efficiency and watchfulness of a system which in Maharashtra has won many encomiums.
Eventually Provi dence, and perhaps the police, persuaded Samindrabhai Pawar, accused No. 4, to make a confessional statement on December 28, 1973 and the wheels of a baffled machine started moving fast.
It would perhaps have been more conducive to greater efficiency if an unduly large number of senior police offi cers were not commissioned for the investigational work.
No one seems to have assumed an overall responsibility for investigation and so many of them working together spoiled the broth like so many cooks.
It is plain common sense that suspects are seldom will ing to furnish a quick and correct clue to the crimes for which they are arrested.
A certain amount of coaxing and promising has inevitably to be done in order to persuade the accused to disclose at least the outlines of the crime.
But the use of strong methods of investigation, apart from raising problems concerning the observance of decency in public affairs and of human dignity, is fraught with the danger that the very process by which evidence is collected may become suspect and fail to inspire confidence.
Ganpat, the approver, was driven to admit that he was tortured while in the lock up and we have serious doubts whether the injury caused on his head was, as alleged by the police, self inflicted.
A witness called Ramchandra also admitted that while under interrotation the police pulled out his pig tail We have resisted the failing which tempts even judicially trained minds to revolt against such methods and throw the entire case out of hand.
But we must with hopes for the future, utter a word of warning that just as crime does not pay 661 so shall it not pay to resort to torture of suspects and witnesses during the course of investigation.
History shows that misuse of authority is a common human failing and, therefore, Courts must guard against all excesses.
The police, with their wide powers, are apt to overstep their zeal to detect crimes and are tempted to use the strong arm against those who happen to fall under their secluded juris diction.
That tendency and that temptation must, in the larger interests of justice, be nipped in the bud.
GOSWAMI, J. I am in agreement with the judgment proposed by my brother Chandrachud which is a piece of conspicuous clarity after marshalling and compressing a mass of evi dence.
I also agree with the views expressed therein on the legal questions raised in these appeals.
Even so I feel obliged to add a few lines.
I would particularly emphasise that there is no mandatory direction for remanding any case in Santa Singh vs The State of Punjab(1) nor is remand the inevitable recipe of section 235(2) Code of Criminal Procedure, 1973.
Whenever an appeal court finds that the mandate of section 235(2) Cr. P.C. for a heating on sentence had not been complied with, it, at once, becomes the duty of the appeal court to offer to the accused an adequate opportunity to produce before it whatev er materials he chooses in whatever reasonable way possible.
Courts should avoid laws ' delay and necessarily inconsequen tial remands when the accused can secure full benefit of section 235(2) Cr.
P.C. even in the appeal court, in the High Court or even in this Court.
We have unanimously adopted this very course in these appeals.
Treasure trove legend survives generations.
There had been many casualties in honest exploits to the peaks of gold bars.
Gold was not found So was treasure trove not located in spite of the notorious Manwat murders.
The gruesome story revealed in these cases beggars description of the limit of human credulity, horrid avarice and unconcerned and heartless execution of evil ends.
I am not on that.
The final curtain, so far as legal process goes is drawn.
Conviction in these cases does no credit to the police, nor to the hoodwinking demonstration of flashy 'dog squad '.
Murders committed.
one 'after the other in series, under the very nose of a publicised ring of a camping platoon of police personnel widely cordoning the entire scene of occur rence for months with check posts, for recording names of passers by, may secure banner in newspapers, but no laurels for the police.
But for the blazing lust for life of the confessing approvers supplying the infrastructure for the prosecution case which, we find, is corroborated in material particulars by independent testimony so far as some of the appellants are concerned, there is much more to be.
desired in an investigation of such awe inspiring cases.
The archaic attempt to.
secure confessions by hook or by crook seems to be the be all and end all of the (1) 662 police investigation.
The investigation does not reflect any imaginative drive on the part of the police in a crime of this magnitude.
To mention one item only, even Balabhau Lad, a close neighbouring relative of the deceased Haribai and master of Umaji, the star witness against accused 9 to 12, has not been produced in this case to corroborate the sudden and instant disappearance of Umaji for four days from the very scene of murder, being his master 's field, by leaving his horse tethered therein.
Next having got blood stains in the articles produced by the accused there was no attempt to ascertain the blood group of the accused 's family members.
In fact accused No. 9 did tell the court that the blood stains in the exhibit were from his wife 's injury from the axe.
Again, accused No. 10 said that the blood stains on the exhibited clothes were from his child 's bleeding nose.
We have disbelieved the pleas of the accused but that does not redound to the credit of the quality of the investiga tion of these dastardly crimes.
It is distressing that when three murders took place on the 4th of January, 1974, and all the dead bodies were lying at the same field, only one dead body was located and the other two.
were not traced until next morning.
If the murderers could escape from the barricaded area in broad day light by throwing dust in the eyes of the police, what would have happened if the other two dead bodies were removed during the night beyond trace; ? Is this investigation with a 'dog squad ' at command ? A dog is its master 's voice.
Did the police play the true master ? The police.
should remember that confession may not always be a short cut to solution.
Instead of trying to "start" from a confession they should strive to "arrive" at it.
Else, when they are busy on this short route to suc cess, good evidence may disappear due to inattention to the real clues.
Once a confession is obtained, there is often flagging of zeal for a full and thorough investigation with a view to establish the case de hors the confession.
It is often a sad experience to find that on the confession, later, being inadmissible for one reason or other the case founders in court.
It is an irony that a Sub Divisional Magistrate holding executive charge of a Sub Division was completely ignorant of the duties imposed on him under section 164, Code of Criminal Procedure and we had to reject the confessions.
Under the new Code such powers are exercised by a Metropoli tan or Judicial Magistrate.
The pitfalls in recording confession may be so.
disastrous that it may be of immense value for the Magistrates to have some practical guidance from superior officers for properly discharging their func tion under section 164, Cr.
Even after conclusion of the trial in a heinous case of this magnitude, the police should be well advised to pursue clues and for missing links to unearth 'the yet undiscovered guilty ones and should not rest satisfied with 'the result of these cases.
There is yet room for a wider probe into men and matters in connection with these ghastly crimes.
663 Counsel drew our attention to a very disquieting fea ture in the attempt of the police to see that the accused did not get the assistance of the local Bar.
The suggestion has of course been denied by the police officer.
If there is any truth in this unholy move for denying proper defence to the accused, no matter how heinous the offence, it is highly obnoxious to the notions of fair play and all that justice stands for.
Such ideas should be banished.
I hasten to add that the accused before us could not have been better defended as has been done by the three conscientious young counsel who impressed us with their industry and ability.
| IN-Abs | Accused, No. 1 though in her thirties had entered a period of premature menopause.
She was anxious to get a child which could only happen if her menstrual cycle was restored.
She used to consult quacks and Mantriks in order to help.get a child.
Accused No.1 's mother was accredited with sixth sense in the matter of discovery of treasure trove.
She had oracled that a treasure trove lay buried I in accused No. 1 's house underneath the Pimpal tree.
The Pimpal tree is believed to be the haunt of Munjaba, who is supposed to be the spirit of an unmarried Brahmin boy.
Accused NOs.
1 and 2 consulted quacks who prescribed that virgins should be offered as sacrifice to Munjaba and to propitiato the deity, blood from their private parts be sprinkled on the food offered by way of 'Naivedya '.
Five small girls about 10 years of age, a year old infant and.
4 women in their mid thirties were found murdered between 14 11 1972 and 4 1 1974 in a village called Manawat.
The. murders of these 10 females showed significant similarities in pattern and conception.
The time and place chosen for crime, preference for females as victims, the nature of injuries caused to them, the strange possibility that the private parts of some of the victims were cut in order to extract blood, the total absence of motive for killing these very girls and women, the clever attempt to dodge the police and then to put them on a false scent and the extreme bru tality surroundings the crimes gone to the case an eerie appearance.
Eighteen persons were put up for trial before the Ses sion Judge for the 10 murders.
Two out of these persons were tendered pardon and were examined in the case as ap provers.
Accused No. 6 died during the trial.
The Sessions Judge acquitted accused 4, 5, 7, 8 and 13 to 16.
Accused No. 1 and 2 were convicted under section 302 read with section 120 B and section 34 of the Penal Code.
Accused No. 1, 2 and 3 were sentenced to death while accused No. 9 to 12 were sentenced to life imprisonment.
The matter went to the High Court in the form of various proceedings.
The High Court acquitted accused No. 1 and 2 holding that the offence of conspiracy which formed the gravamen of the charge against them was not proved.
Since the charge of conspiracy failed and since it was a common ground that accused No. 1 and 2 had not taken any direct part in the commission of the murders, the High Court held that they were entitled to acquittal on all the charges.
The High Court dismissed the appeal filed by accused No. 3 holding that he was responsi ble for the first 4 murders and confirmed his conviction under section 302 read with section 34 as also the sentence of death imposed upon him.
The High Court dismissed the State 's appeal against acquittal of accused No. 4 and 5 but allowed the State 's appeal and enhanced the sentence of accused No. 9 to 12 to death.
Criminal Appeal No. 437 of 1976 was filed by accused Nos.
9 to 12.
Criminal Appeal No. 438 of 1976 was filed by accused No. 3 and Criminal Appeal No. 441 of 1976 was filed by the State of Maharashtra against acquittal of accused 1%s. 1 and 2.
The Court acquitted accused No. 12 by giving him the benefit of doubt and while dismissing the three appeals.
637 HELD: (1) There is no antithesis between section 133 and illustration (b) to section 114 'of the Evidence Act because the illustration only says that the Gourt may presume a certain state of affairs under section 114 of the Evidence Act The Court may presume the existence of any fact which it thinks likely to have happened regard ' being had to the common course of natural events, human conduct and public and private business in their relation to the facts of theparticular casee.
Under section 133 of the Evidence Act, an accomplice shall be acompetent wireess against an accused person and a conviction is not illegal merely because it proceeds upon the uncorroborated testimony of an accomplice: [643 B C] (2) Though an accomplice is,a competent witness and though a conviction may lawfully rest upon his uncorroborat ed testimony yet the court is entitled to presume and may be justified in presuming in the generality of cases that no reliance can be placed on the evidence of an accomplice unless that evidence is corroborated in material particu lars, by which is meant that there has to be some independ ent evidence tending to incriminate the particular accused in the commission of the crime.
1643 C D] (3) It is hazardous as a matter of prudence to proceed on the evidence a self confessed criminal.
The risk involved in convicting accused on the testimony of an accomplice unless it is corroborated in material particulars is so real and potent that what during the early development of law was felt to be a matter of prudence has been elevated by judi cial experience into a requirement or rule of lave.
What has hardened into a rule of law is not that the conviction is illegal if it proceeds upon the uncorroborated testimony of an accomplice but that the rule of corroboration must be present to the mind an the Judge and that corroboration may be dispensed with only if the peculiar circumstances of the case make it safe to dispense with it.
[643 ,E F] King vs Baskerville [19161 2 K.B. 653; Rameshwar vs State of Rajasthan ; , Bhuboni Saku vs The King 76 I.A. 147; The State of Bihar vs Basawan Singh ; and Ravinder Singh vs State of Haryana ; relied on.
(4) It is true that an approver has real incentive to speak out his mind after tender of pardon but where it is impossible to reconcile his earlier statements with his later assertions his evidence has to be left out of consid eration.
It is one thing to say that an approvers statement cannot be discarded for the mere reason that he did not disclose the entire story in his police statement and quite another to accept an approver in spite of contradictions which cast a veil of doubt over his involvement of others.
[646 B C] Madan Mohan Lal vs State of Punjab [1970] 2 S.C.C. 733 relied on.
Tahsildar 's case [1959] Supp.
2 S.C.R. 875, distin guished.
(5) The failure to comply with section 164(3) Cr.
P.C. with the High Court circulars will not render the confessions inadmissible in evidence.
Relevancy and admissibility of evidence have to be determined in accordance with the provi sions of the Evidence Act.
[651 E] (6) Under section 29 of the Evidence Act, if a confession is otherwise relevant, it does not become irrelevant merely because, inter alia, the accused was not warned that he was not bound to make it and the evidence of it might be given against him.
If, therefore a confession does not violate any one of the conditions operative under sections 24 to 28 of the Evidence Act, it will be admissible in evidence.
But as in respect of any other admissible evidence oral or documen tary, so in the case of confessional statements which are otherwise admissible.
the Court has still to consider wheth er they can be accepted as true.
If the facts and circum stances surrounding the making of a confession appear to cast a doubt on the veracity or voluntariness of the confes sion, the Court may refuse to act upon the confession even if it is admissible in evidence.
[651 E G] (7) A strict and faithful compliance with section 164 of the Code and with the instructions issued by the High Court affords in a large measure the guarantee 638 that the confession is voluntary.
The failure to observe the safeguards prescribed therein are in practice calculated to impair the evidentiary value of the confessional state ments.
In the instant case no reliance can be placed on any of the contesstons.
Apart from the cofessions of the two ap provers, all others were retracted, which further cripples their evidentiary value.
[657 H] (8) The imperative language of sub section (2) leaves no room for doubt that after recording the finding of guilt and the order of conviction, the.
Court is under an obligation to hear the accused on the question of sentence unless it releases him on probation of good conduct or after admoni tion under section 360.
The social compulsions, the pressure of poverty, the retributive instinct to seek an extra legal remedy to a sense of being wronged, the lack of means to be educated in the difficult art of an honest firing the par entage, the heredity all these and similar other consider ations can, hopefully and legitimately, tilt the scales on the property of sentence.
The mandate of section 235 (2) must, therefore, be obeyed in its letter and spirit.
[657 F H] (9) The failure on the part of the Court, which convicts an accused, to hear him on the question of sentence does not necessarily entail a remand to that Court in order to afford to the accused an opportunity to be heard on the question of sentence.
[658 A B] Santa Singh vs State of Punjab , ex plained.
(10) The Court, on convicting an accused, must unques tionably hear him on the question of sentence.
But if, for any reason, it omits to do so and the accused makes a griev ance of it in the higher court, it would be open to that Court to remedy the breach by giving a hearing to the ac cused on the question of sentence.
That opportunity has to be real and effective, which means that the accused must be permitted to adduce before the Court all the data which he desires to adduce on the question of sentence.
The accused may exercise that right either by instructing his counsel to make oral submissions to the Court or he may, on affidavit or otherwise, place in writing before the Court whatever he desires to place before it on the question of sentence.
The Court may, in appropriate cases, have to adjourn the matter order to give to the accused sufficient time to produce the necessary data and to make his contention on the question of sentence.
For a proper and effective implementation of the provision contained in section 235(2) it is not always necessary to remand the matter to the Court which has recorded the conviction.
Remand is an exception, not the rule, and ought, therefore, be avoided as far as possible in the interests of expeditious, though fair disposal of cases.
[658 B D, F] Santa Singh vs State of Punjab , distinguished.
GOSWAMI, I. (Concurring) : Whenever an appeal court finds that the mandate of section 235(2) Cr. P.C. for a hearing on sentence has not been complied with it becomes the duty of the Court to offer to the accused an adequate opportunity to produce before it whatever material he chooses in whatever reasonable way possible.
Courts should as far us possible avoid remands when the accused can secure a full benefit of section 235 (2) Cr.
P.C. in the appeal court.
[661 C D]
|
Appeal (Criminal Appeal No. 15 of 1950) from a judgment and order of the High Court of Madras dated 19th August, 1947, in Criminal Revision Petitions Nos. 1017 and 1018 of 1946 rejecting an applica tion to set aside the conviction and sentence of the appel lant by the Sessions Judge of Guntur under clauses 22 and 27 of the Motor Spirit Rationing Order, 1941.
Special leave was 323 granted by the Privy Council and the, appeal was originally registered as Privy Council Appeal No. 14 of 1949.
The case was subsequently transferred to the Supreme Court.
K. Bhimasankaran (Durga Bai, with him) for the appel lant.
R. Ganapathi Iyer, for the respondent.
March 19.
The judgment of the Court was deliv ered by FAZL ALI J.
This appeal, which has been preferred after obtaining special leave to appeal from the Privy Council, is confined to the single question whether mens rea is neces sary to constitute an offence under section 81 of the De fence of India Rules.
The facts of the case are briefly these.
The appellant is the licensee of two petrol filling stations Nos. 552 and 276 at Guntur but is a resident of Chirala, 40 miles away.
He is a Presidency First Class Bench Magistrate at Chirala and manages what has been described as a vast business at several places.
Venkatarayudu and Dadda Pichayya, his employees, were respectively in charge of the aforesaid filling stations.
In 1946, the appellant and his two employ ees were tried before the Sub Divisional Magistrate of Guntur in respect of offences under the Motor Spirit Ration ing Order, 1941, and were convicted in each of the cases on the 18th July, 1946.
In the first case, the charges against the appellant and the employee in charge of the pump in question therein were that they on the 27th June, 1945, at Guntur, supplied petrol to a cars without taking coupons, in contravention of clause 22 read with clause 5 of the said Order promulgated under rule 81 (2) of the Defence of India Rules and that they, on the same day and at the same place, accepted coupons relating to two other cars in advance without supplying petrol, in contravention of clause 27 of the Order.
The charges in the second case were that the appellant and the employee in the second pump similarly supplied during the period of 24 hours from 6 a.m. of the 28th June, 1945, petrol to 4 motor vehicles 324 without taking coupons, in contravention of clause 22 read with clause 5, accepted coupons of three other vehicles in advance without issuing petrol, in contravention of clause 27, and supplied petrol to two other vehicles against cou pons but without making necessary endorsements and particu lars on the reverse of the coupons infringing thereby clause 27A of the said Order.
The Sub Divisional Magistrate, Guntur, found the appellant and the employee concerned in each case guilty of the charges brought against them and sentenced the appellant (with whose case alone we are now concerned) to a fine of Rs. 30 on the first count an d Rs. 20 on the second in the first case with simple imprisonment for one week in default, and to a fine of Rs. 20 on each of the three counts in the second case with one week 's impris onment in default.
The plea of the appellant before the Magistrate was that he was the presiding 1st Class Bench Magistrate at Chirala, that he was carrying on business in petrol at various centres through servants and he had issued instructions to them not to deviate from the rules under any circumstances and that he could not be made liable for transgression of the rules committed by his employees.
The Magistrate however overruled the plea and convicted the appellant as stated above.
The appellant thereafter pre ferred an appeal to the Sessions Judge at Guntur, who, while setting aside the conviction of the appellant on the second count in each case, confirmed the conviction and sentence in respect of the other charges, on the 9th September, 1946.
This was confirmed in revision by the High Court at Madras on the 19th August, 1947.
Thereupon, the appellant applied to the Privy Council for special leave which was granted on the 9th July, 1948, limited to the single question whether mens rea is necessary to constitute an offence under rule 81 of the Defence of India Rules.
The question to be decided in this appeal arises upon the plea taken by the appellant.
, which has been already referred to, and the assumption on which the courts below have proceeded in dealing with the case.
The plea of the appellant that he was not present at 325 Guntur when the alleged offences were committed has not been negatived by the lower courts, but they have held that he was nevertheless liable, as the question of mens rea was not relevant to the offences with which the appellant was charged.
This view is set out very clearly in the following passage which may be quoted from the judgment of the trial Magistrate: "It is argued on behalf of accused 1 that he is not a resident of Guntur and that he has no knowledge of any infringement committed by accused 2.
If any breach of the rules is committed by either proprietor or his servant, both are guilty whether they had the knowledge of the breach or not.
The question of mens rea will, of course, affect the measure of punishment but it cannot affect the conviction (vide .
" Before deciding the question as to how far mens rea is material to conviction for the offences with which the appellant is charged, it is necessary to refer to the rele vant provisions of the Defence of India Rules and the Motor Spirit Rationing Order, 1941.
Rule 81(2) of the Defence of India Rules empowers the Central or the Provincial Govern ment to provide by order, in certain circumstances, for regulating amongst other matters, distribution, disposal, use or consumption of articles or things and for requiring articles or things kept for sale to be sold either generally or to specified persons or classes of persons or in speci fied circumstances.
The Central Government in pursuance of the authority thus conferred made the Motor Spirit Ration ing Order, 1941, for "securing the defence of British India, the efficient prosecution of the war and for maintaining supplies and services essential to the life of the communi ty.
" Clause 2(d) of the Order defines "dealer" as meaning a supplier carrying on the business of supplying motor spirit as a retail business and includes a person having charge of a supply of motor spirit controlled by Government from which any person is furnished with motor spirit for private use.
Sub clause (m) defines "supplier" as meaning a person carry ing on the business of supplying motor 326 spirit.
Clause 5, which is the next relevant provision, runs thus : "Motor spirit required for any vehicle not covered by clause 3 or clause 4 shall be furnished or acquired only against the surrender to a supplier at the time of supply of valid ordinary coupons or of a valid supplementary coupon and only in accordance with any conditions or instructions appearing on or attached to the coupons.
" Clause 22 lays down: "No person shall furnish or acquire a supply of motor spirit otherwise than in accordance with the provisions contained in this order.
"Clause 27 is to the following effect:" No person shall surrender to a supplier and no supplier shall accept special receipts or coupons at a time other than the time at which the supply of motor spirit authorised by the special receipts or coupons or acknowl edged by the receipts is furnished." Clause 27A runs as follows : "When motor spirit is furnished against the surrender of one or more coupons, the supplier shall immediately endorse, or cause to be endorsed, on each coupon so surren dered the registration or other identifying mark of the vehicle to which the motor spirit is furnished.
" Rule 81(4)of the Defence of India Rules, which provides for the imposition of a penalty, says that "if any person contravenes any order made under this rule, he shall be punishable with imprisonment for a term which may extend to three years or with fine or both.
" It is contended on behalf of the respondent that though ordinarily a person should not be held liable for the crimi nal acts of another and no person can be charged with the commission of an offence unless a particular.
intent or knowledge is found to be.
present, mens tea is not of the essence of the offences with which we are concerned in this case and the appellant must be held liable for the acts of his employees.
The question raised in this appeal was con sidered by the Privy 327 Council in Srinivas Mall Bairolia vs King Emperor(1).
In that case, the appellants before the Privy Council were convicted under the Defence of India Rules relating to the control of prices and were sentenced to terms of imprison ment.
The 1st appellant was acting as Salt Agent for part of the district of Darbhanga.
He had been appointed to this office by the District Magistrate, and it was his duty to sell to licensed retail dealers the supplies of salt which were allocated by the Central Government to his part of Dharbanga district.
The second appellant was employed by the first appellant and had been entrusted with the duty of allotting the appropriate quantity of salt to each retail dealer, and noting on the buyer 's licence the quantity which he had bought and received.
By rule 81 (2) of the Defence of India Rules, the Provincial Governments were empowered to make orders to provide for controlling the prices at which articles or things of any description whatsoever might be sold.
The Defence of India Act, 1939, under which the rules were framed, empowered the Provincial Governments to dele gate the exercise of their powers to certain officers, and the power to provide by order for controlling the prices at which various articles (among them salt) might be sold, had been delegated to the District Magistrates.
Rule 81 (4) of the Rules provided for the punishment of persons guilty of contravening any such orders.
Both the appellants were jointly charged with having sold salt on 3 days in July, 1943, to three named traders, in each case at a price ex ceeding the maximum price which had been fixed by order of the District Magistrate.
The 1st appellant was also sepa rately charged, in respect of the same sales, with having abetted the 2nd appellant 's contravention of the order.
The trial Magistrate acquitted the 1st appellant of the substan tive offences but convicted him on the 3 charges of abet ting.
The Sessions Judge and the High Court in revision confirmed the convictions.
The Privy Council ultimately upheld the conviction of the appellants on the merits but with regard to the view taken by the High Court that even if the first appellant was (1) I.L.R. 26 Pat.
46. 328 not proved to have known of the unlawful acts of the second appellant, he was still liable on the ground that ' 'where there is an absolute prohibition and no question of mens rea arises, the master is criminally liable for the acts of the servant", their Lordships observed as follows: "With due respect to the High Court, their Lordships think it necessary to express their dissent from this view.
They see no ground for saying that offences against those of the Defence of India Rules here in question are within the limited and exceptional class of offences which can be held to be committed without a guilty mind.
See the judgment of Wright J. in Sherras vs De Rutzen(1).
Offences which are within that class are usually of a comparatively minor character, and it would be a surprising result of this delegated legislation if a person who was morally inno cent of blame could be held vicariously liable for a serv ant 's crime and so punishable ' with imprisonment for a term which may extend to three years. ' Their Lordships agree with the view which was recently expressed by the Lord Chief Justice of England, when he said: ' It is in my opinion of the utmost importance for the protection of the liberty of the subject that a court should always bear in mind that, unless the statute, either clearly or by necessary implica tion rules out mens rea as a constituent part of a crime, a defendant should not be found guilty of an offence against the criminal law unless he has got a guilty mind: Brend vs Wood(2) '" In our opinion, the view of the law as propounded by the Privy Council is the correct view, and, applying it to the present case, it is difficult to hold the appellant guilty of the offence under clause 22 read with clause 5 of the Motor Spirit Rationing Order, 1941.
The language of clause 22 does not lend support to the contention that even an innocent master will be criminally liable for an act of his servant.
This clause has already been quoted, but, to make the point clear, it may be stated that it provides that no person shall furnish . motor spirit otherwise than in accordance (1) , 921.
(2) (1946) 110 J.P. 317, 318 329 with the provisions contained in the Order.
The clause is not aimed specifically against a supplier, but is general in its language, and will hit the individual person, whether he be the supplier or not, who contravenes the provision.
The language of the clause also suggests that only the person who furnishes motor spirit contrary to the provisions of the Order will be affected by the contravention.
In the course of the arguments, reference was made on behalf of the appellant to the decision of the Bombay High Court in Isak Solomon Macmull vs Emperor(1) which is a case relating to the contravention of clause 22 of the Motor Spirit Rationing Order.
In that case, the learned Chief Justice, who delivered the judgment, referred to the well established rule that unless a statute either clearly or by necessary implication rules out mens rea as a constituent part of a crime, the defendant should not be held guilty of an offence under the criminal law unless he has a guilty mind.
Relying upon this rule, he held that where a servant sells petrol to a bogus customer in the absence of coupons m contravention of the Motor Spirit Rationing Order, and the master is not present at the time nor has he any knowledge of the supply of petrol by the servants to the bogus custom er, the master cannot be held to be vicariously liable for the act of the servant.
In our opinion, this decision is correct and is directly applicable to the present case.
We have yet to deal with the third charge in the second case, which relates to the infringement of clause 27A of the Motor Spirit Rationing Order.
That clause, as already stat ed, makes it incumbent upon the supplier to endorse, or cause to be endorsed, the registration or other identifying mark of the vehicle to which the motor spirit is furnished.
The substance of the charge on which the appellant has been convicted is that these particulars were not endorsed on several coupons against which petrol had been supplied.
Here again, the main contention put forward on behalf of the (1) A.I.R. 1948 Bom.
43 330 appellant was that the appellant cannot be held guilty inasmuch as the default in question was committed not by him personally, but by his servants.
Having regard to the language of the clause, however, this contention cannot be accepted.
Clause 27A, as we have already seen, throws the responsibility for making the necessary endorsement on the supplier.
The definition of the word 'supplier ' in the Act has already been quoted, and there can be no doubt that if clause 27A is contravened, a person who comes within the definition of the word 'supplier ' must be held guilty of the contravention.
The object of this clause clearly is that the supplier of petrol should set up a complete machinery to ensure that the necessary endorsements are made on the coupons against which petrol is supplied.
It is conceivable that in many cases the default will be committed by the servants of the supplier, who are in charge of the petrol pump, but that fact by itself will not exonerate the suppli er from liability.
In Mousell Brothers vs London and North Western Railway( '), Viscount Reading C.J., dealing with a case under the Railways Clauses Consolidation Act, 1845, observed as follows : "Prima facie, then, a master is not to be made criminal ly responsible for the acts of his servant to which the master is not a party.
But it may be the intention of the Legislature, in order to guard against the happening of the forbidden thing, to impose a liability upon a principal even though he does not know of, and is not party to, the forbid den act done by his servant.
Many statutes are passed with this object.
Acts done by the servant of the licensed holder of licensed premises render the licensed holder in some instances liable, even though the act was done by his serv ant without the knowledge of the master.
Under the Food and Drugs Acts there are again instances well known in these Courts where the master is made responsible, even though he knows nothing of the act done by his servant, and he may be fined or rendered amenable to the penalty enjoined by the law.
In those [1) [1917] 2 K.B.D. 836 at 844.
331 cases the Legislature absolutely forbids the act and makes the principal liable without a mens rea.
" In the same case, Atkin J. expressed the same view in these words : "I think that the authorities cited by my Lord make it plain that while prima facie a principal is not to be made criminally responsible for the acts of his servants, yet the Legislature may prohibit an act or enforce a duty in such words as to make the prohibition or the duty absolute; in which case the principal is liable if the act is in fact done by his servants.
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 upon whom it is imposed, the person by whom it would in ordinary circumstances be per formed, and the person upon whom the penalty is imposed.
If authority for this is necessary it will be found in the judgment of Bowen L.J. in Reg.
vs Tylor(1). ' ' In Mullins vs Collins(2), the servant of a licensed victualler having knowingly supplied liquor to a constable on duty without the authority of his superior officer, it was held that the licensed victualler was liable to be convicted although he had no knowledge of the act of his servant.
In dealing with the case, Blackburn J. observed thus: "If we hold that there must be a personal knowledge in the licensed person, we should make the enactment of no effect.
" There are many other cases in England in which the same view has been enunciated, and some of them have been col lected and classified in the judgment of Wright J. in Sher ras vs De Rutzen(3), The principle laid down in these cases has been followed in several cases in this country also.
In this view, the appeal is allowed in part, and while the conviction and sentence imposed on the (1) (3)[1895] IQB.
918,922.
(2) [1874] L.,R. 9 Q. B. 292 332 appellant on the first charge in both the cases are quashed, the conviction and sentence on the third charge in the second case are affirmed.
Appeal allowed in part.
| IN-Abs | Unless a statute either clearly or by necessary implica tion rules out mens rea as a constituent part of the crime, a person should not be found guilty of an offence against the criminal law unless he has got a guilty mind.
Clauses 22 and 25 of the Motor Spirit Rationing Order, 1941, read with the Defence of India Rules, 1939, do not rule out the necessity of mens rea.
Therefore, where the employees of the licensee of a petrol filling station supply petrol to a car owner without taking coupons and thus act in contravention of the provisions of the said clauses, the licensee, who was not present when the wrongful act was done and had no knowledge of it, could not be convicted for contravention of the said clauses under r. 81 (4) of the Defence of India Rules, 1939.
Clause 27 of the said Order is however differently worded and imposes a duty on the supplier to endorse or cause to be endorsed the registration or other identifying mark of the vehicle to which petrol is furnished and if these particulars are not endorsed by his employees on the petrol coupons against which petrol is supplied the supplier would be liable even if he had no knowledge of the wrongful act of his employees.
Srinivas Mall Bairolia vs King Emperor (I.L.R. 26 Pat.
46, P.C.) and Isak Solomon Macmull vs Emperor (A.I.R. referred to.
|
Civil Appeal No. 903 of 1976.
Appeal from the Judgment and Order dated the 15 7 1976 of the Orissa High Court in OJ.C No. 698 of 1976.
G. Rath, Advocate General, Orissa, R.K. Mehta for the Appellants.
Vepa Parthasarthy and C.S. Rao for Respondents.
The Judgment of the Court was delivered by KAILASAM, J.
This appeal is by the State of Orissa represented by the Secretary, Revenue Department, against the judgment of a Bench of the Orissa High Court on a cer tificate of fitness granted by it.
The respondent herein is a land holder whose ceiling surplus was determined by the Revenue Officer under section 43 of the Orissa Land Reforms Act, 1960, as amended by Act 13 of 1965 and subsequently by Act 29 of 1976.
The Revenue Officer rejected the plea of the respondent that there was a partition between him and his sons and determined the surplus extent as 12.08 standard acres.
The respondent preferred an appeal before the Sub Divisional Officer and the Sub Divisional Officer confirmed the order of the Revenue Officer and dismissed the appeal Against the order of the appellate authority the respondent filed a revision before the Additional District Magistrate, Gan jam.
The Additional District Magistrate held that the appellate orders trader section 44 were final and that no revision lay to him.
The respondent thereupon filed a petition under Articles 226 and 227 of the Constitution challenging the order of the Additional District Magistrate rejecting the. revision petition.
A Bench of the Orissa High Court by an order dated 15th July, 1976, allowed the writ petition holding that the Additional District Magis trate had powers to revise the order of the appellate au thority passed under section 44 by virtue of the powers conferred on him under section 59 of the Act.
The High Court came to this conclusion that a revision was entertain able tinder section 59 by the Additional District Magistrate even before the amendment introduced by Orissa Act 29 of 1976, the details of which will be referred to later.
The only question that arises in this appeal is whether an order passed by the appellate authority under section 44 which has become 9 502 SCI/77 558 final under section 44(2) is capable of revision by the Collector under section 59 before the amendment of the Act in 1976.
Section 44 runs as follows : "44.
(1) On the termination of the proceedings under Section 43, the Revenue Officer shall by order confirm the draft statement with such alterations or amendments as may have been made therein under the said Section.
(2) An appeal against the order of the Revenue Officer under 'sub section (1 ) con firming the statement if presented within thirty days from the date of the order shall lie to the prescribed authority and subject to the results of such appeal, if any, the orders of the Revenue Officer shall be final." Under section 44(1) the Revenue Officer confirms the draft statement and under section 44(2) an appeal lies to the prescribed authority against the order under sub section (1) and subject to results of such appeal, if any, order of the Revenue Officer shall be final.
Section 58 provides a right of appeal to any person aggrieved by an order passed under any of the sections enumerated in sub section.
As the decision in this case will depend upon the construction that is put upon section 59 we extract section 59(1) and (2) in full.
Revision: (1 ) The Collector may revise any order passed in appeal by any officer below the rank of a Collector under this Act and the Board of Revenue may revise any order passed by the Collector under this Act and the period of limitation for such revision shall be as may be prescribed.
(2) For the purposes of sub section (1) the Collector or the Board of Revenue as the case may be may suo motu or on application of either party or any interested person call for and examine the record of any matter in respect of any proceedings under this Act as to the regularity of such proceedings or the correctness, legality or propriety of any decision or order passed thereon and if in any case if appears that any such decision or order shall be modified, annulled, reversed or remitted for reconsideration, the Collector or Board of Revenue as the case may be, may consider accordingly.
" Sub section ( 1 ) provides that the Collector may revise any order passed in appeal by any officer below the rank of a Collector under this Act.
It also empowers the Board of Revenue to revise an order passed by the Collector under the Act.
Sub section (2) enables the collector or the Board of Revenue suo motu or on the application of the party con cerned call for and examine the record in respect of any proceedings under the Act and modify, annual, reverse or remit for reconsideration such a decision to the lower authority.
The section as if stands does not put any re striction on the power of revision by the Collector or the Board of Revenue for it states that the Collector or the Board of Revenue may revise any order passed under this Act which would 559 include an order passed under section 44(2).
Again sub section (2) of section 59 provides that the Collector or the Board of Revenue may examine the record of any matter in respect of any proceedings under the Act which would include the proceedings under section 44(2).
The submission of the learned counsel for the appellant is that the power of revision under section 59 is restricted to an appeal that is disposed of under section 58 and is not available against an order passed under section 44(2).
The learned counsel very strongly relied on the wording of section 44(2) which provides that the order of the Revenue Officer shall be final subject to the result of an appeal provided under section 44(2) and therefore submits that no other relief is available to the aggrieved party.
The learned counsel in contrast referred us to section 58 where the order of the lower authority is not stated to be final subject to the result of the appeal, As no finality is provided for orders passed on appeal under section 58, the submission was that a revision under section 59 is available for those orders but orders passed under section 44(2) are final and they are not subject to revision under section 59.
There is no doubt that section 44(1) provides that the order of the Revenue Officer shall be final subject to the result of an appeal under section 44(2) while no such final ity is mentioned in the case of an appeal under section 58.
But this cannot conclude the matter for the powers of revi sion conferred under section 59 are very wide and empowers the Collector or the Board of Revenue to revise any order passed under this Act and sub section (2) empowers the Collector and the Board of Revenue to set aside any irregu larity in respect of any proceedings under this Act.
As the power of revision is not restricted we are unable to accept the contention of the learned counsel that because of the wording of section 44(2) providing.
that the order of the Revenue Officer subject to the result of the appeal would .be final, bars the revisionary jurisdiction of the Collector and the Board of Revenue as provided under section 59.
We do not find any conflict between the two sections and the provision as to finality under section 44(2) is provided for so that in the absence of the aggrieved party proceeding further in the matter the consequences of the vesting of surplus lands under section 45, the preparation of the Compensation Assessment Roll, the settlement of surplus lands etc. can be proceeded with.
The learned counsel drew our attention to the amendment to the Orissa Act by Act 29 of 1976.
The Orissa Land Reforms (2nd Amendment) Act ', 1975, and submitted that the amendments introduced to section 44, 45 and 59 would make it dear that the legislature understood that the sections as they stood before the amendment did not enable the Collector to exercise revisional jurisdiction over orders passed by the appellate authority under section 44(2) of the Act.
By the amending Act.
section 44, sub sections (2) and (3) are amended.
Sub section (2) of section 44 as it originally stood provided that subject to the result of such appeal, if any, the orders of the Revenue Officer shall be final and sub section (3) provided that the draft statement as con firmed or as modified in appeal shall be final and con 560 clusive.
By the amendment sub section (2) is recast and sub section (3) provides that the draft statement as con firmed or as modified in appeal on revision shall be final and conclusive.
The amendment specifically provides for a revision.
The amended sub section (1) of section 59 pro vides that on an application by party aggrieved by any order passed in an appeal under any provision of this Act filed within the prescribed period, the prescribed authority may revise such order.
Though the amendment to section 44(3) makes it clear that a right to revision is provided for orders passed under section 44(2), we do not think that this could mean that section 44(2) as it originally stood did not provide for power of revision to the Collector under section 59.
In our opinion, amendment does not make any difference.
The learned counsel for the appellant submitted that section 44(3) is in the nature of a special provision and should be construed as an exception to section 59 on the principle of harmonious construction.
In support of this plea the learned counsel referred to the decision in The J.K. Cotton Spinning & Weaving Mills Co. Ltd. vs State of U.P. & Ors.
In construing the provisions of clause 5(a) and clause 23 of the G.O. concerned, this Court held that the rule of harmonious construction should be applied and in applying the rule the court will have to remember that to harmonise is not to destroy and that in interpreting the statutes the court always presumes that the legislature inserted every part thereof for a purpose and the legisla tive intention is that every part of the statute should have effect, and a construction which defeats the intention of the rule making authority must be avoided.
This decision does not help the appellant for in our view in applying the rule of harmonious construction with a view to give effect to the intention o(the legislature the court will not be justified in putting a construction which would restrict the revisionary jurisdiction of the Collector and the Board of Revenue.
It may be noted that the Act is of exproprietory nature and the determination of the excess lands is done by the Revenue Officer and on appeal by the Revenue Divisional Officer.
In such circumstances, it is only 13roper to presume that the legislature i,tended that any error or irregularity should.
be rectified by higher authorities like the Collector and the Board of Revenue.
In our view it will be in conformity with the intention of the legislature to hold that section 59 confers a power of revision of an order passed under section 44(2) of the Act.
The learned counsel next referred to a decision of this Court in The Bengal Immunity Company Limited vs The State of Bihar and Others.(2) The rule of construction is stated at p. 791 in the following terms by Venkatarama Ayyar ,J. speaking for the Court : "It is a cardinal rule of construction that when there are in a Statute two provi sions which are in conflict with each other such that both of them cannot 'stand, they should, if possible.
be so interpreted that effect can be given to both, and that a con struction which renders either of them inoper ative and useless should not be adopted except in the last resort.
This is what is known as the rule of harmonious construction.
One application of this rule is that when there 561 is a law generally dealing with a subject and another dealing particularly with one of the topics comprised therein, the general law is to be construed as yielding to the special in respect of the matters comprised therein.
" Construing section 59 as conferring a power of revision against an order passed under section 44(2) is not in any way contrary to the principle laid down in the above deci sion.
We agree with the view taken by the Orissa High Court that the language of section 59(1) is wide enough to enable the Collector to revise any order including an appellate order under section 44 of the Act.
In the result the appeal is dismissed with costs.
S.R. Appeal dismissed.
| IN-Abs | Under Section 43 of the Orissa Land Reforms Act, the Revenue Officer determines the ceiling surplus and on the termination of the proceedings thereunder, the Revenue Officer u/s 44(1) confirms the draft statement; u/s 44(2) an appeal lies to the prescribed authority against the order under sub section (1) and subject to results of such appeal, if any, order of the Revenue Officer shall be final.
Sec tion 58 provides a right of appeal to any person aggrieved by an order passed under any of the Sections enumerated in subsection (1).
Sub section (1) of section 59 provides that the Collector may revise any order passed in appeal by any officer below the rank of a Collector under this Act.
Section 59(1) also empowers the Board of Revenue to revise any order passed by the Collector.
Sub section (2) enables the Collector or the Board of Revenue sue motu or on the application of the party concerned call for and examine the record in respect of any proceedings under the Act and modify, annual reverse or remit for reconsideration.
In the proceedings u/s 38 of the Act the plea of the respondent landlord that there was a partition between him and his sons was rejected by the Revenue Officer who deter mined the surplus extent as 12.08 standard acres.
The appeal preferred before the Sub Divisional Officer having failed, the respondent filed a revision before the Additional District Magistrate.
The Additional Magistrate held that the appellate orders u/s 44 are final and that no revision lay to him.
The writ petition filed against this order filed by the respondent was allowed by the Orissa High Court by its order dated 15 7 1976 holding that the Additional Magistrate had powers to revise an order of the appellate authority passed u/s 44 by virtue of the powers conferred on him under section 59of the Act.
Dismissing the appeal by certificate, the Court, HELD: (i) The language of section 59(1) of the Orissa Land Reforms Act is wide enough to enable the Collector to revise any order including an appellate order under section 44 of the Act.
[561 B] (ii) In applying the rule of harmonious construction with a view to give effect to the intention of the legisla ture the court will not be justified in putting a construc tion which would restrict the revisionary jurisdiction of the Collector and the Board of Revenue.
[560E] In the instant case, the Act is of expropratory nature and the determination of the excess lands is done by the Revenue Officer.
The legislature intended that any error or irregularity should be rectified by higher authorities like the Collector and the Board of Revenue.
[560E] J. K. Cotton Spinning & Weaving Mills Co. Ltd. vs State of U.P. & Ors. ; held not applicable.
The Bengal Immunity Company Ltd. vs The State of Bihar & Ors.
[1955] 2 S.C R. 603 referred to.
(iii) It cannot be said that there is any conflict between section 44(1) and 8.
58 inasmuch as section 44(1) provides that the order of the Revenue Officer shall be final, sub ject to the result of appeal u/s 44(2), while no such final ity 557 is mentioned in the case of an appeal u/s 58.
The provision as to finality u/s 44(2) is provided for so that in the absence of the aggrieved party proceeding further in the matter, the consequences of the vesting of surplus lands u/s 45, the preparation of the Compensation Assessment Roll, the settlement of surplus lands etc. can be proceeded with.
[559 D F] (iv) The amendment to 8.
44(3) by the Amendment Act of 1975 making it clear that a right to revision is provided for orders passed u/s 44(2) does not make any difference.
The amendment could not mean that section 44(2) as it originally stood did not provide for power of revision to the Collec tor ' u/s 59.
[560 A B]
|
ivil Appeal No. 796 of 1977.
V. Ramana Reddy and M.L. Varma for the Appellant.
P.P. Rao and G.N. Rao for Respondent 1 3.
P. Ramachandra Reddy, Advocate General and A.P.B. Par thasarathi for Respondent No. 4.
The Judgment of the Court was delivered by KIRSHANA IYER, J.
Nationalisation of road transport service is of strategic significance to the country 's devel opment and new legal issues arise as private operators, threatened with elimination, battle against such schemes.
One such obstacle to the proposed nationalisation of the route Nellore Ramapuram by the Andhra Pradesh Government is the subject matter of this appeal by certificate, the High Court having considered it substantial and novel enough to qualify under Article 133 of the Constitution.
The point raised is short, the order under appeal brief, but the problem is thorny, with extra territorial overtones and anomies in application.
Can a route, whose termini lie within .the same State but which traverses in its course one or more other States, be designated as inter state route ? If yes, then the exercise in nationalisation proposed by the respondent State cannot materialise into an 'approved scheme ' unless as desiderated by the proviso to Section 68D(3) of the (hereinafter re ferred to as 'M. V. Act '), the previous approval of the Central Government is secured.
Here, admittedly, no such approval has been obtained and the notified route does pass over a short distance of about 564 8 km.
through Tamil Nadu.
The route Nellore Ramapuram was, according to counsel for the existing private operator, an inter state route and non compliance with Section 68D(3) of M.V. Act aborted the nationalisation.
The counter submis sion by the State which appealed to the.
High Court was that the decisive test turned on whether both the termini fell within the same State and it did in this case, and so no question of inter state route arose.
At the first flush, an inter state route may be of two categories, either connecting two states or traversing two or more states.
Black 's Legal Dictionary considers inter state to mean 'Between two or more states; between places or persons in different states; concerning or affecting two or more states politically or territorially.
And that accords with commonsense.
The 'termini test ' as presented by coun sel for the State, may lead to strange results, fatal to federal ideas.
A route which originates in Srinagar, runs down South to Kanya Kumari and rises North to end again in Kashmir, completing a Bharat darshan, cannot sensibly be called an intrastate one, without doing gross violence to language, geography and federalism.
And in the absence of a statutory definition of inter state route, non violence to English and conformance to commensense dictate the adoption of the conventional meaning that if a route traverses more than one state it is inter state.
The statutory sensitivity to one State permitting stage carriages from within its territory into another is reflect ed in Section 63(1) and (4).
68D(3) proviso and Section 20 of the Road Transport Corporation Act, 1950.
We are skirt ing the constitutional question of extraterritorial powers but are confining ourselves to a mere interpretation of the provisions of the Act.
'Route ' is defined in Section 2(28A) to mean a line of travel which specifies the highway which may be traversed by a motor vehicle between one terminus and another.
The point is that it is not a notional line 'as the crow flies ' but the actual 'highway as a motor vehicle travels from one terminus to another.
The inference is inevitable that a route is transformed into an interstate one, if the highway it covers passes through more than one State.
This easy breakthrough is seemingly obstructed by two rulings of this Court relied on by counsel for the State, although the High Court while granting the certificate, felt that these decisions did not really cover the case on hand.
Khazan Singh(1) dealt with a case where the termini of the concerned routes were located in different states and so, by any test, were inter state routes.
There, in passing and not as ratio of the case, an observation fell from the Court: "An inter state route is one of which one of the termini falls in one State and the other in another State.
" Undoubtedly, where the termini fall in different states the route is inter state.
But that does not exclude other categories of inter state routes such as where it crosses a State other than the originating State (1) [1974] (2)S.C.R. 562 565 although gets back into it later.
If the territory of more than one State is covered, even if both the termini eventu ally fail within the same state, the route is inter, not intra state.
Ordinarily not invariably the 'two termini ' test is a working solution, not an inflexible formula.
Aswathanarayan vs State (1) had something to say on inter state route: "An inter State route is one in 'which one of the termini is in one State and the other in another State.
In the present case both the termini are in one State.
So it does not deal with inter State routes at all.
It is urged that part of the, scheme covers roads which continue beyond the State and connect various points in the State of Mysore with other States.
Even if that is so that does not make the scheme one connected with inter State,routes, for a road is different from a route.
For example, the Grand Trunk Road runs from Calcutta to Amritsar and passes through many States.
But any portion of it within a State or even within a District or a sub division can be a route for purposes of stage carriages or goods vehicles.
That would not make such a route a part of an inter State route even though it lies on a road which runs through many States.
The criterion is to see whether the two termini of the route are in the same state or not.
If they are in the same State, the route is not an interState route and the proviso to section 68 D(3) would not be applicable.
The termini in the present case being within the State of Mysore, the scheme does not deal with inter State routes at all, and the contention on this head must be rejectcd." (emphasis supplied).
The facts and discussion bear out abundantly that there is nothing in the ruling to suggest that even if a route traverses territory of another State it is none the less an intra State route if the points of beginning and ending fall within one State.
It is a fallacy so to construe that decision.
What is repelled in that case is the contention that if a high way run through many States, any portion of that high way which is picked out for running a bus service as a route, should also be deemed to be inter state for the only reason that such a route (though its entire length falls within a single State) overlaps a road which crosses many States.
The very definition of route in Section 2(28 A) is sufficient to extinguish that argument and this Court rightly, if we may so with respect, rejected it.
We cannot confuse between road and route.
If the whole of the route lies within a single State it is intra state and not inter state, even though the road over which the route lies runs beyond the borders of that single State as national highways do.
In Abdul Khader Saheb(2) a totally untenable submission was put forward and unhesitatingly turned down that if the nationalised route fell within a single State it should nevertheless be regarded as interState route for some mysti cal reason, viz., that it overlaps a longer route which is admittedly an inter State route.
It is elementary that (1) [1955] (I) S.C.R. 87 at pp.
100 1Ol.
(2) ; 566 there can be inter state routes which run into or through more than one State.
A part of that long route may itself be a separate route and may fall wholly within a single State in which case the former may be inter state while the latter will be an intra state route.
In Abdulkhader 's (1) case the Court observed: ".
The Bellary scheme provides for nationalisation of an intra State route and not an inter State route and the aforesaid provision can have no applicability.
If part of the scheme covers routes which continue beyond the State and connect various points in the State of Mysore with those in the other State it does not make the scheme one connected with inter State Route.
It is sought to be argued from this that even if Bellary Chintakunta route which is shown as item 34 in Bellary Scheme has been nationalised it does not make the scheme one connected with inter State route.
Stress has been laid on the example given that the Grand Trunk Road runs from Calcutta to Amrit sar and passes through many Sates and any portion of it within a State can be a route for purposes of stage carriage but that would not make such a route part of an inter State route even though it lies on the road which runs through many States.
The above argument can possibly have no validity so far as the present case is con cerned.
The scheme which was under considera tion in the decision relied upon was in re spect of an intra state route.
It appears to have been argued that as the scheme was con cerned with an inter state route the approval of the Central Government was necessary as required under the proviso to Section 63D(3) of the Act.
This Court held that since the termini were within the State of Mysore the scheme did not deal with an inter state route at all and no question arose of the applica bility of the proviso to section 68D(3).
In the present case there is no scheme of national isation relating to the inter state route from Bellary to Manthralaya.
The Bellary Scheme is confined to the intra state routes, one of those being the Bellary Chintakunta route.
It may be that that portion overlaps the inter state route from Bellary to Manthralaya but so long as it is an intra state route it could be nationalised by the State of Mysore under the provisions of section 68D." No further comment is necessary.
We are inclined to the view that the route, passing, as it does through part of Tamil Nadu, is inter state ' What is the effect of this finding over the scheme of nationali sation ? Wholly invalidatory ? or else, what ? The proviso to Section 68D(3) i.e. Central Government approval has not been complied with and so qua inter state route the nation alisation does not become effective.
Even so, two factors can together salvage this nationalisation scheme.
(1) ; 567 There can be no doubt that the scheme notified by one State will, even in the case of an inter state route, oper ate to the extent it lies within that State.
Its extra territorial effect depends on securing of prior Central approval under the proviso to Section 68D(3).
That being absent, the permit granted in one State may still be valid in another State if the condition specified in the 2nd proviso to Section 63(1) is fulfilled, We may as well ex tract Section 63 (1 ) to that extent relevant.
Validation of permits for use outside region in which granted (1) Except as may be otherwise prescribed, a permit granted by the Regional Transport Authority of any one region shall not be valid in any other region, unless the permit has been counter signed by the Regional Transport Authority of that other region and a permit granted in any one State shall not be valid in any other State unless countersigned by the State Transport Authority of that other State or by the Regional Trans port Authority concerned: x x x . .
Provided further that where both the starting point and the terminal point of a route are situate within the same State, but part of such route lies in any other State and the length of such part does not exceed six teen kilometres, the permit shall be valid in other State in respect of that part of the route which is in that other State notwith standing that such permit has not been coun ter signed by the State Transport Authority or the Regional Transport Authority of that other State.
" The portion of the route falling outside Andhra Pradesh (both termini being within that State) is admittedly less than 16 kin.
and so no question of counter signature by the State Transport Authority or the Regional Transport Authori ty of Tamil Nadu State arises.
The conclusion follows that the portions of the inter state route which fall within Andhra Pradesh stand nationalised, and consequently excludes private operators.
But that strip of the inter state route which falls within Tamil Nadu cannot be taken to have been nationalised to the exclusion of private operators although the Andhra Pradesh State Transport buses could ply on that strip also in view of the 2nd proviso to Section 63 (1) of the M.V. Act.
We may point out that section 20 of the Road Transport Corporations Act (a Central Act) provides for extension of the operation of the road transport service of a corporation of one State to areas within another State.
We are not directly concerned with such a scheme as is contemplated by that provision since passage over a neighbouring State if the length of such intersection does not exceed 16 km.
is saved by the 2nd proviso to Section 63(1) of the M.V. Act.
We, therefore, reach the conclusion that (a) the route Nellore Ramapuram is an interstate route; (b) the scheme of nationalisation is operative even in the absence of the previous approval of the Central Government, so 568 far as the portions which fall within Andhra Pradesh are concerned; and (c) the nationalisation cannot become effec tive over the tiny strip in Tamil Nadu and private operators may still be permitted to ply their services over that strip by the concerned authority within Tamil Nadu State; but (d) the Andhra Pradesh Sate Transport Corporation may ply its buses over the Tamil Nadu enclave even without counter signature exemption having been granted in that behalf by the 2nd proviso to Section 63(1) of the M.V. Act.
In this view, the appeal must substantially fail except to the extent of the little modification we have indicated, which does not profit the appellant.
In the circumstances, while dismissing the appeal, we direct the parties to suffer their costs throughout.
S.R. Appeal dismissed.
| IN-Abs | The Nellore Ramapuram route passing over a short dis tance of 8 K.m.
through Tamil Nadu was proposed to be natio nalised by the Andhra, Pradesh Government.
The appellant an existing private operator on the route challenged the scheme on the ground that the route being an inter state route, noncompliance with section 68 D(3) of the aborted the Nationalisation.
The High Court held that the decisive test turned on whether both the termini fall within the same state and it did in this case and so on question of inter state route arose.
On appeal by Certifi cate the court HELD: (1) (a) The route Nellore Ramapuram is an inter state route; (b) the Scheme of Nationalisation is operative even in the absence of the previous approval of the Central Government so far as the portions which fall within Andhra Pradesh are concerned and (c) the nationalisation cannot become effective over the strip in Tamil Nadu and ,private operators may still be permitted to ply their services over that strip by the concerned authority within Tamil Nadu State, but (d) The Andhra Pradesh State Transport Corpora tion may ply its buses over the Tamil Nadu enclave even without counter signature, exemption having been granted in that behalf by the 2nd proviso to section 63(1 ) of the .
[567H, 568 A B] (2) The definition of 'Route ' in section 2(28A) of the Act is not a notional line "as the crow flies" but the actual highway as a motor vehicle traverses from one terminus to another.
A route is transformed into an inter state one, if the highway it covers passes through more than one state.
An inter state route may be of the categories either con necting two states or traversing two or more states.
[564 D E] (3) Ordinarily not invariably the two termini test is a, working solution and not an inflexible formation.
The termini test may lead to strange results, fatal to federal ideas.
A route which originates in Srinagar, runs down South to Kanyakumari and rises North to end again in Kashmir, completing a Bharat Darshan, cannot sensibly be called an interstate one, without doing violence to lan guage, geography and federalism.
And in the absence of a statutory definition of inter state route non violence to English and conformance to commonsense dictate the adoption of the conventional meaning that if a route traverses more than one state it is inter state.
[564 B C, D] (4) Undoubtedly, where the termini fall in different states the route is inter state.
But that does not ex clude other categories of inter state route such as where it crosses a state other than the originating state although gets back into it later.
If the territory of more than one state is covered even if both the termini eventually fall within the same state, the route is inter not intra state.
[564H, 565A] 563 Kazan Singh ; ; Ahwathanarayan vs State ; pp.
100 101.
explained.
(5) If the whole of the route lies within a single state it is intra state and not inter state, even though the road over which the route lies runs beyond the borders of that single state as national highways do.
It is elementary that there can be inter state routes which run into or through more than one state.
A part of that long route may itself be a separate route and may fall wholly within a single state in which case the former may be inter state while the latter will be an intra state route.
[565G H, 566A] (6) There can be no doubt that the scheme notified by one State will, even in the case of an inter state route, operate to the extent it lies within that State.
Its extra territorial effect depends on securing of prior Cen tral Government approval under the proviso to Section 680(3).
However, the permit granted in one state may still be valid in.
another state, if the condition specified in the 2nd proviso to section 63(1) is fulfilled.
The portion of the route, in the instant case, falling outside Andhra Pradesh (both termini being within that state) is admittedly less than 16 k.m.
and so no question of countersignature by the State Transport Authority or the Regional Transport Authority of Tamil Nadu arises.
The portion of the inter state route which fell within Andhra Pradesh stand nationa lised and consequently exclude private operators.
But that strip of the inter state route which falls within Tamil Nadu cannot be taken to have been nationalised to the exclusion of private operators although the Andhra Pradesh State Transport Buses could ply on that strip also in view of the 2nd proviso to section 63(1) of the .
[567 A B, E F]
|
Appeal No. 1792 of 1971.
Appeal from the Judgment and Order dated the 31st March, 1970 of the Gujarat High Court in Special Civil Application No. 545/66.
R.H. Dhebar, S.K. Dholakia and A.C. Bhatia for the appel lant.
R.M. Mehta and Girish Chandra, for Respondent.
94 The Judgment of the Court was delivered by KHANNA, J.
This appeal on certificate is against the judgment of Gujarat High Court dismissing petition under article 226 of the Constitution of India filed by the appel lant for a writ of certiorari or other appropriate writ to quash two notices issued by the respondent to the appellant under section 148 of the Income tax Act, 1961 (hereinafter referred to as the Act of 1961).
The matter relates to the assessment years 1957 58 and 1959 60.
The appellant is a public limited company which carries on the business of manufacture of pottery and sani tary wares at Morvi and other places in the State of Guja rat.
In respect of the assessment year 1957 58, the corre sponding accounting year for which ended on July 31, 1966, the appellant filed its return under the Indian Income tax Act, 1922 (hereinafter referred to as the Act of 1922).
The predecessor in interest of the responded by assessment order dated April 16, 1959 assessed the total income of the appel lant at Rs. 4,60,372.
In computing the said income the Income tax Officer allowed depreciations amounting to Rs. 5,05,487.
For the assessment year 1959 60 the appellant like wise filed return.
Assessment order in respect of that year was made on March 30, 1961 and the income of the appel lant was assessed at Rs. 11,04,650 after allowing depreciation of Rs. 3,57,926.
On October 5, 1965 a letter was addressed on behalf of the respondent to the appellant stating that there had been a mistake in the calculation of the depreciation allowance in respect of certain items of the capital assets of the appellant for the period covered by the assessment years 1955 56 to 1962 63.
As a result of the mistake, it was stated, a sum of Rs. 2,39,723 had been allowed as deprecia tion allowance in excess of the permissible limit.
Enclosed with the letter was a chart showing excess depreciation allegedly allowed during the above mentioned period.
The excess amounts of depreciation for the years 1957 58 and 1959 60 were mentioned in the chart to be Rs. 37,869 and Rs. 26,945 respectively.
The appellant company was asked if it had any objection to the rectification of the mistake, the above letter was followed by another letter wherein the respondent wrote to the appellant that "the mistake in depriciation arose because the initial depriciation was not taken into account in finding out whether the total depreciation allowed exceeded the original cost".
On Febru ary 2, 1966 the Income tax Officer addressed 'another letter to the appellant stating that for the assessment years 1957 58 and 1959 60 the income of the appellant had escaped assessment for failure of the appellant to disclose all material facts within the meaning of section 147(a) of the Act of 1961.
The appellant in reply stated that depre ciation calculation sheets had been worked by the income tax authorities and there was no failure on the part of the appellant to disclose all facts.
The impugned notices were thereafter issued on March 4, 1966 by the Incometax Officer to the appellant stating that he had reason to believe that income of the appellant chargeable to tax for the assessment years in question had escaped assessment within the meaning of section 147 of the Act of 1961.
The Income tax Officer accordingly stated that he proposed to recompute and reas sess the income/loss/depreciation 95 allowance for the aforesaid years.
The appellant was called upon to furnish returns in the prescribed form within 30 days from the date of the service of the notices.
It was also mentioned that the notices were being issued after obtaining the necessary satisfaction of the Commissioner of Income tax.
The appellant thereafter filed writ petition in the High Court on April 29, 1966.
According to the case of the appellant, there was no omission or failure on its part to disclose fully and truly all material facts necessary for the assessment.
All material facts, it was stated, regard ing the acquisition of various capital assets from time to time were on the record of the department.
The fact that initial depreciation on the new assets had been allowed was also on the record of the department.
If there was any oversight on the part of the Income tax Officer, the appel lant, it was claimed, could not be held responsible for that.
The petition was resisted by the respondent and the affidavit of Shri N.M. Baxi, Income tax Officer was filed in opposition to the petition.
According to that affidavit, the appellant did not disclose in the return that initial depreciation in respect of certain items of capital assets had been allowed in the past and that the same should be taken into account while calculating the depriciation allow able for the assessment years in question.
The High Court found that the first requirement of section 147(a) of the Act of 1961 was satisfied inasmuch as the Income tax Officer had reason to believe that the income of the appellant for the two assessment years in question had escaped assessment.
The mistake arose because of the fact that the initial depreciation allowance which had been allowed to the appellant in respect of some of the items of the capital assets was not taken into account while comput ing the depreciation allowance during the relevant years.
As a result of that, it was found that the depreciation allowance during the various years, including the initial depreciation, exceeded the original cost of those items of the capital assets to the appellant.
Dealing with the question as to whether there was omission or failure on the part of the appellant to disclose truly and fully all mate rial facts, it was observed that the appellant was bound to disclose the fact that initial depreciation had been allowed in respect of the items of capital assets in question during the previous years.
The appellant as such .was held to have failed to disclose all material facts.
The plea of the appellant that all the material facts were already on the record of the department, in the opinion of the High Court, did not make material difference.
In result, the petition was dismissed.
Before dealing with the contentions advanced in appeal, it may be apposite to refer to the relevant provisions.
According to section 10 of the Act of 1922, 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.
Such profits or gains shall be computed after making a number of allowances.
Those allowances include those 96 allowed in respect of depreciation, as mentioned in clauses (vi) and (vi a) of sub section (2), the material part of which at the relevant time read as under: (vi) in respect of depreciation of such buildings, machinery plant or furniture being the property of the assessee, a sum equivalent . to such percentage on the written down value thereof as may in any case or class of cases be prescribed, and where the buildings have been newly erected or the machinery or plant being new, not being machinery or plant entitled to the development rebate under clause (vi b), has been installed, after the 31st day of March, 1945, and before the 1st day of April, 1956, a fur ther sum (which shall however not be deductible in determining the written down value for the purposes of this clause) in respect of the year of erection or installation equivalent, (a) in the case of buildings the erection of which is begun and completed between the st day of April 1946 and the 31st day of March 1956 (both dates inclusive), to fifteen per cent, of the cost thereof to the assessee; (b) in the case of other buildings, to ten per cent of the cost thereof to the assessee; (c) in the case of machinery or plant, to twenty per cent, of the cost thereof to the assessee; Provided that (a). . . . (b). . . . (c) the aggregate of all allowances in respect of depreciation made under this clause and clause (vi a) or under any Act repealed hereby, or under the Indian Income tax Act, 1886 (II of 1886), shall, in no case, exceed the original cost to the assessee of the buildings, machinery, plant or furniture, as the case may be; (vi a) in respect of depreciation of buildings newly erected, or of machinery or plant being new which has been installed, after the 31st day of March, 1948, a further sum (which shall be deductible in determining the written down value) equal to the amount admissible under clause (vi) (exclusive of the extra allowance for double or multiple shift working of the machinery or plant and the initial depreciation allowance admissible under that clause for the first year of erection of the building or the installation of the machinery or plant) in not more than five successive assessments for the financial years next following the previous year in which such buildings are erected and such machinery and plant installed and falling within the period commencing on the 1st day of April, 1949, and ending on the 31st day of March, 1959," 97 It is apparent from the above provisions that depreciation of three distinct kinds could be allowed in respect of buildings, machinery and plant.
The first category was of ordinary depreciation equivalent to such percentage on the written down value thereof as may be prescribed.
The second category was of depreciation of buildings, newly erected, or new machinery or plant not being machinery or plant entitled to development rebate under clause (vi b) which has been installed after the 31st day of March 1945 and before the st day of April 1956 equivalent to such percentage if the cost thereof as is prescribed.
Such initial depreciation was granted in the first year of the construction of the build ing or installation of the plant or machinery.
This cate gory of depreciation was not deduction in determining the written down value for the purpose of clause (vi).
The third category of depreciation was additional depreciation which was claimable for a period of five years in respect of buildings, newly erected, or new machinery or plant in stalled after the 31st day of March 1948 in terms of clause (via).
The depreciation permissible under this category was deduction in determining the written down value.
Clause (c) of the proviso to clause (vi) of sub section (2) of section 10, however, makes it clear that the aggre gate of all three categories of depreciation allowance was in no case to exceed the original cost to the assessee of the building, machinery or plant, as the case may be.
The case of the respondent is that the amount of depre ciation allowed to the appellant in respect of certain items of capital assets for the two assessment years in question was so much that the aggregate of all allowances in respect of depreciation made under clauses (vi) and (vi a) of sub section (2) of section 10 of the Act of 1922 exceeded the original cost to the appellant of those items of the capital assets.
There was thus a violation of the provisions of clause (c) of the proviso to section 10 (2)(vi) of the Act.
The above mistake, it is stated, occurred because the initial depreciation which had been allowed in respect of those items of the capital assets was not taken into account in computing the depreciation regarding those items in the two assessment years in question.
The present is, therefore, a case, according to the respondent, of income escaping assessment under section 147 of the Act of 1961.
Reliance in this connection is placed upon clause (d) of Explanation (1) to section 147 of the Act of 1961, according to which it would be a case of income escaping assessment where excessive depreciation allowance is comput ed.
The material part of section 147 of the Act of 1961 reads as under: 147.
Income escaping assessment.
If (a) the Income tax Officer has reason to believe that, by reason of the omission or failure on the part of an assessee to make a return under section 139 for any 8 1458SCI/76 98 assessment year to the Income tax Officer or to disclose fully and truly all material facts necessary for his assessment for that year, income chargeable to tax has escaped assessment for that year, or (b) Notwithstanding that there has been no omission or failure as mentioned in clause (a) on the part of the assessee, the Income tax Officer has in consequence of information in his possession reason to believe that income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income or recompute the loss or the depreciation allowance, as the case may be, for the assess ment year concerned (hereafter in section 148 to 153 referred to as the relevant assessment year) .
" According to section 148 of the Act of 1961, before making the assessment, reassessment or recomputation under ' section 147, the Income tax Officer shall serve on the assessee a notice containing all or any of the requirements which may be included in a notice under sub section (2) of section 139; and the provisions of the Act shall, so for as may be, apply accordingly as if the notice were a notice issued under that sub section.
The Income tax Officer has also, before issuing such notice, to record his reasons for doing so.
Section 149 prescribes the time limit for the notice.
The time limit in a case not falling under clause (ii) of sub section (1) of section 149, with which we are not concerned, shall be eight years from the end of the relevant assessment year.
In case falling under clause (b) of section 147, however, the time limit for the notice is four years from the end of the relevant assessment year.
Clause (a) of section 147 of the Act of 1961 corresponds to clause (a) of sub section (1) of section 34 of the Act of 1922.
The language of clause (a) of section 147 read with sections 148 and 149 of the Act of 1961 as also the corre sponding provisions of the Act of 1922 makes it plain that two conditions have to be satisfied before an Income tax Officer acquires jurisdiction to issue notice under section 148 in respect of an assessment beyond the period of four years but within a period of eight years from the end of the relevant year, viz., (i) the Income tax Officer must have reason to believe that income chargeable to tax has escaped assessment, and (ii) he must have reason to believe that such income has escaped assessment by reason of the omission or failure on the part of the assessee (a) to make a return under section 139 for the assessment year to the Income tax Officer, or (b) to disclose fully and truly material facts necessary for his assessment for that year.
Both these conditions must co exist to confer jurisdiction on the Income tax Officer.
It is also imperative for the Income tax Officer to record his reasons before initiating pro ceedings as required by section 148(2).
Another require ment is that before notice is issued after the expiry of four years from the end of the relevant assessment years, the Commissioner should be satisfied on the reasons recorded by the Income tax Officer that it is a fit case for the issue of such notice.
The duty which is cast upon the asses see is to make a true and full disclosure of the primary facts at the time of the original assessment.
, 99 Production before the Income tax Officer, of the account books or other evidence from which material evidence could with due diligence have been discovered by the Income tax Officer will not necessarily amount to disclosure contem plated by law.
The duty of the assessee in any case does not extend beyond making a true and full disclosure of primary facts.
Once he has done that axis duty ends.
It is for the Income tax Officer to draw the correct inference from the primary facts.
It is no responsibility of the assessee to advise the Income tax Officer with regard to the inference which he should draw from the primary facts.
If an Income tax Officer draws an inference which appears subsequently to be erroneous, mere change of opinion with regard to that inference would not justify initiation of action for re opening assessment [see Income tax Officer vs Lakhmani Mewal Das(1)].
The words "omission or failure to disclose fully and truly all material facts necessary for his assessment for that year" postulate a duty on the assessee to disclose fully and truly all material facts necessary for his assess ment.
What facts are material and necessary for assessment will differ from case to case.
In every assessment proceed ing, the assessing authority will, for the purpose of com puting or determining the proper tax due from an assessee, require to know all the facts which help him coming to the correct conclusion.
From the primary facts in his posses sion, whether on disclosure by the assessee,or discovered by him on the basis of the facts disclosed, or otherwise the assessing authority has to draw inference 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 see Calcutta Discount Co. vs Income tax Offi cer(2)] as further observed in that case: "Does the duty, however, extend beyond the full and truthful disclosure of all primary facts ? In our opinion, the answer to this question must be in the negative.
Once all the primary facts are before the assessing authority, he requires no further assistance by way of disclosure.
It is for him to decide what inferences of facts can be reasonably drawn and what legal inferences have ultimately to be drawn.
It is not for somebody else far less the assessee to tell the assessing authority what inferences, whether of facts or law, should be drawn.
Indeed, when it is remem bered that people differ as regards what inferences should be drawn from given facts, it will be meaningless to demand that the assessee must disclose what inferences whether of facts or law he would draw from the ' primary facts.
" Keeping in view the principles enunciated above, we may deal with the contention advanced on behalf of the appel lant that the present is not a case in which action could be taken under section 147(a) of the Act of 1961.
This contention has been controverted (1) (2) 100 by the learned counsel for the respondent, who has canvassed for the correctness of the view taken by the High Court in the judgment under appeal.
It would appear from what has been ' discussed above that one of the essential requisites for proceeding under clause (a) of section 147of the Act of 1961 is that the income chargeable to tax should escape assessment because of the omission or failure on the part of the assessee to dis close fully and truly all material facts necessary for his assessment.
The present is not a case where the assessee had omitted or failed to file the return.
Question then arises as to what has been omission or failure on the part of the assessee to make a full and true disclosure.
There is nothing before us to show that in the return filed by the assessee appellant, the particulars given were not cor rect.
Form C under rule 19 of the Indian Income tax Rules, 1922 at the relevant time gives the form of return which had to be filed by the companies.
Part V of that form deals with depreciation.
The said part requires a number of columns to be filled in by the. assessee.
It has not been suggested that any of the information furnished of any of the particulars given in those columns by the appellant company were factually incorrect.
Nor is it the case of the revenue that the appellant failed to.
furnish the particu lars required to be inserted in those columns.
Indeed, the copy of the return has not been filed and consequently no argument on that score could be or has been addressed before us.
Part V of the form no doubt requires the assessee to state the written down value in column No. (2).
Such writ ten down value had to be specified without taking into account the initial depreciation because such depreciation in terms of clause (vi) of section 10(2) of the Act of 1922 could not be deducted in determining the written down value for the purpose of that clause.
The case of the appellant is that in determining the amount of depreciation at the time of the original assessment for the two assessment years in question, the Income tax Officer relied upon the written down value of the various capital assets as obtaining in the records of the department.
This stand has not been contro verted.
When an income tax officer relies upon his own records for determining the amount of depreciation and makes a mistake in doing so, we fail to understand as to how responsibility for that mistake can be ascribed to an omission or failure on the part of the assessee.
It also cannot be disputed that initial depreciation in respect of items of capital assets in the shape of new machinery, plant and building installed or erected after the 31st day of March 1945 and before the 1st day of April 1956 is normally claimed and allowed.
It seems that the Income tax Officer in working 'the figures of depreciation for certain items of capital assets lost sight of the fact that the aggregate of the depreciation, including the initial depreciation, al lowed under different heads could not exceed the original cost to the assessee of those items of capital assets.
The appellant cannot be held liable because of this remissness on the part of the Income tax officer in not applying the law contained in clause (c) of the proviso to section 10(2)(vi) of the Act of 1922.
As observed by Shah J. in Commissioner of Income tax vs Bhanji Lavji,(1) section 34(1)(a) of the Act of 1922 (corresponding to section 147 '(a) (1)79 I,T.R. 582.
S.C. 101 of the Act of 1961) does not cast a duty upon the assessee to instruct the Income tax Officer on questions of law.
It may also be mentioned that so far as the assessment for the assessment year 1957 58 is concerned, the assess ment order was once rectified and at another time revised.
Despite such rectification and revision, the above mistake in the calculation of the depreciation remained undetected.
It was only in October 1965 that the Income tax Officer realised that higher.
amount of depreciation had been al lowed to the appellant than was actually due.
A letter to that effect was consequently sent to the assessee on Octo ber 5, 1965.
It was, however, nowhere mentioned in that letter that the higher amount of depreciation had been allowed and the income as such had escaped assessment because of the omission or failure on the part of the asses see to disclose truly and fully all material facts.
Refer ence to such omission or failure came only in a subsequent communication.
The submission made on behalf of the appel lant is not without force that reference was made to asses see 's omission or failure to disclose truly and fully all material facts because it was realised that after the expiry of four years from the end of the relevant assessment year, no action for reopening of assessment could be taken on the basis of detection of mistake alone unless there was also an allegation that the income had escaped assessment because of the omission or failure of the appellant to disclose fully and truly material facts.
Looking to a11 the facts, we are of the opinion that it cannot be said that the excess depre ciation was allowed to the appellant company and its income as such escaped assessment because of its omission or fail ure to disclose fully and truly all material facts.
It has been said that the taxes are the price that we pay for civilization.
If so, it is essential that those who are entrusted with the task of calculating and realising that price should familiarise themselves with the relevant provisions and become well versed with the law on the sub ject.
Any remissness on their part can only be at the cost of the national exchequer and must necessarily result in loss of revenue.
At the same time, we have to bear in mind that the policy of law is that there must be a point of finality in all legal proceedings, that state issues should not be reactivated beyond a particular stage and that lapse of time must induce repose in and set at rest judicial and quasi judicial controversies as it must in other spheres of human activity.
So far as income tax assessment orders are concerned, they cannot be reopened on the scope of income escaping assessment under section 147 of the Act of 1961 after the expiry of four years from the end of the assess ment year unless there be omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment.
As already mentioned, 'this cannot be said in the present case.
The appeal is conse quently allowed; the judgment of the High Court is set aside and the impugned notices are quashed.
The parties in the circumstances shall bear their own costs throughout.
P.H.P. Appeal aIlowed.
| IN-Abs | The appellant a Public Limited Company filed its Income Tax Return relating to the assessment years 1957 58 and 1959 60 under the Income Tax Act, 1922.
The Income Tax Officer passed assessment orders on 16 4 1959 and on 30 3 1961 respectively in respect of the two years.
Certain depreciation was allowed by the Income Tax Officer for both the years.
On 5 10 1965.
the Income Tax Officer addressed a letter to the appellant stating that there had been a mistake in the calculation of the depreciation allowance.
The appellant was asked by that letter if it had any objec tion to.
the rectification of the mistake in the calculation of the depreciation amounts.
for the above mentioned two years.
On 2nd February, 1966, the Income Tax Officer ad dressed a letter under section 147(a) of the Income Tax Act, 1961 alleging that the income of the appellant had escaped assessment for failure of the appellant to disclose all materials facts.
The appellant in his reply stated that the depreciation was calculated by the Income Tax authorities and there was no failure on the part of the appellant in disclosing all the facts.
Thereafter, the Income Tax Offi cer issued the notices on 4 3 1966 stating that he had reasons to believe that the income of the appellant charge able to tax for the assessment years in question had escaped assessment within the to meaning of section 147 of the 1961 Act.
The appellant was called upon to furnish fresh return.
The appellant challenged the said notices by filing a Writ Petition in the High Court.
According to the appellant there was no omission or failure on its part to disclose fully and truly all material facts necessary for the assess ment; that all material facts were placed before the assess ing authority; and that the fact that initial depreciation on the new assets had been allowed was also on the record of the department.
It was further contended that if there was any oversight on the part of the Income Tax Officer the appellant could not be held responsible.
The respondent filed an affidavit in the High Court contending that the appellant did not disclose in the return that initially depreciation in respect of certain items of capital assets had been allowed in the past and that the same should be taken into account while calculating the depreciation allow able for the assessment years in question.
The High Court dismissed the Writ Petition on the ground that there was an omission or failure on the part of the appellant to disclose truly and fully the fact that the initial depreciation had been allowed in respect of items of capital assets in ques tion during the previous years.
Under section 10 of the 1922 Act an assessee is liable to pay tax under the head "Profits and Gains of Business, Profession or Vocation, carried on by him".
Such profits or gains shall be computed after making a number of allowances.
Those allowances included the allowances provided by section 10(2)(vi) which deals with depreciation under section 147(a) of the Income Tax Act, 1961.
if the Income Tax Officer has reason to believe that the reason of the omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment, income charge able to tax has escaped assessment for that year he may subject to the provisions of sections 148 to 151 assess or reassess such income or recompute the loss or the deprecia tion allow 93 ance as the case may be.
According to section 148 of 1961 Act before making the assessment, reassessment, or recompu tation under section 147, the income Tax Officer shall serve on the assessee a notice containing all or any of the re quirements which may be included in a notice under section 149(1).
The Income Tax Officer has also before issuing such notice to record his reasons for doing so.
Section 149 prescribes a time limit for the notice.
The time limit in respect of section 147(a) is 8 years.
Allowing the appeal, HELD: 1.
Two conditions have to be satisfied before an Income Tax Officer acquires jurisdiction to issue notice under section 148 beyond the period of 4 years but within the period of 8 years: (i) The Income Tax Officer must have reason to believe that income chargeable to tax has escaped assessment; (ii) He must have reason to believe that such income has escaped assessment by reason of the omission or failure on the part of the assessee to disclose fully and truly material facts necessary for his assessment for that year.
The duty which is cast upon the assessee is to make a true and full disclosure of the primary facts at the time of the original assessment.
The duty of the assessee in any ease does not extend beyond making a true and full disclosure of primary facts.
Once he has done that his duty ends.
It is for the Income Tax Officer to draw the correct inference from the primary facts.
It is no responsibility of the assessee to advise the Income Tax Officer with regard to the inference which he should draw from the primary facts.
If an Income Tax Officer draws an inference which appears subsequently to be erroneous mere change of opinion with regard to that inference would not justify initiation of action for reopening assessment.
[98 E G, H, 99 A B] Income Tax Officer vs Lakhmani Mewal Dass, followed.
What facts are material and necessary for assessment will differ from case to case.
Calcutta Discount Co. vs Income Tax Officer, , followed.
The Income Tax return has to be filled in form, No. C under rule 19 of the Income Tax Rules, 1922.
Part V of that form deals with depreciation.
The said part requires a number of columns to be filled in by the assessee.
It has not been suggested that any of the information furnished or any of the particulars given in those columns by the appellant Company were factually incorrect.
When Income Tax Officer relies upon his own records for determining the amount of depreciation 'and makes.
a mistake in doing so, the respon sibility for the mistake cannot be ascribed to an omission or failure on the part of the assessee.
[99 D 100 B D, E F] Commission of Income Tax vs Bhanji Lavli, fol lowed.
(Taxes are the price that is paid for civilisation.
It is essential that those who are entrusted with the task of calculating and realising that price should familiarise themselves with the relevant provisions and become well versed with the law on the subject.
Any remissness on their part can only be at the cost of the national exchequer and must necessarily result in loss of revenue.
At the same time, it has to be borne in mind that the policy of law is that there must be a point of finality in all legal proceed ings).
|
As Nos.
1172, 1354, 1355 and 1751 of 1972.
(Appeals by Special Leave from the Judgment and Order dated the 27.9.1971 of the Kerala High Court in O.P. No. 1339/70 W.A.No. 8/70, W.A. No. 420/69 and O.P. No. 862 of 1969 respectively.) AND Civil Appeal No. 2275 of 1972 679 (Appeal by Special Leave from the Judgment and Order dated the 18.11.1971 of the Andhra Pradesh High Court in Writ Petition No. 5662/70).
AND Civil Appeals Nos.
1015/73, 1865/74 and CA No. 506/76.
(From the Judgments and Orders dated the 7 9 72, 22 7 74, and 30 10.1975 of the Andhra Pradesh High Court in Writ Petitions Nos.
4717/71, 3914/74 and 4213/75 respectively).
AND CA No. 1866 of 1973 and 1867/73.
(Appeals by Special Leave from the Judgment and Order dt.
the 15.2.1972 of the Andhra Pradesh High Court in Writ Petition No. 2933 and 3385/71 respectively.) AND Civil Appeal No. 1234 of 1974.
(Appeal by Special Leave from the Judgment and Order dated the 18.10.1973 of the Andhra Pradesh High Court in S.A. No. 360 of 1972).
AND Civil Appeal Nos.
1300 and 1393 of 1976.
(From the Judgment and Order dated the 5 12 1975 of the.
Kerala High Court in Writ Appeals Nos. 414 & 415 of 1975).
AND Civil Appeal No. 1313 of 1976.
(Appeal by Special Leave from the Judgment and Order dated the 10.3.1976 of the Orissa High Court in O.J.C. No. 531/74).
Niren De, Attorney General of India in CAs 1171, 1354 1355; V.P. Raman, Addl.
General in CAs 2275 and 1313 with B. Datta in CAs 1172, 1355 and 2275 and Girish Chandra, for the appellants in all the appeals.
Vepa Sarathi, N. Sudhakaran and P.K. Pillai for respond ents in CA 1172/72.
Vepa Sarathi (1354) K.M.K. Nair and Mrs. B. Krishnan for respondents in CAs 1354, 1751/72 and 1300 and 1393 of 1976.
Mrs. section Gopalakrishnan, for respondent in CA 1355.
K. Jayaram and K. Ram Kumar for respondents in CAs 1866 67, 1015/73 and 1865 of 1974 and 506/76.
Mrs. Veena Devi Khanna, for respondent in CA 2275/72.
C.S. S Rao, for respondent in CA 1313/76.
The respondents in all these fourteen ap peals, some of which are on certificate and some by special leave, are extra departmental agents connected with the postal department.
Six of these.
appeals are from the Kerala High Court, seven from the Andhra Pradesh High Court and one from.
the Orissa High Court.
These respondents were either dismissed or removed from service during the period between January 1, 1966 and June 18, 1974, and admit tedly the order of dismissal or removal was passed without complying with the provisions of Article 311(2) of the Constitution.
The question in each case is whether the respondent held a civil post as contemplated in Article 311 of the Constitution; if he did the dismissal or removal, as the case may be, would be unquestionably invalid for non compliance with Article 311(2).
The conditions of service of the respondents are gov erned by a body of rules called the Posts and Telegraphs Extra Departmental Agents (Conduct and Service) Rules, 1964 (hereinafter called the rules) issued under the authority of the Government of India.
Rule 2(b) of the rules defining "Extra Departmental Agent" includes within the category, among others, Extra Departmental Sub Postmaster 's, Extra Departmental Branch postmasters, Extra Departmental Delivery Agents, and several sections of class IV employees.
Eleven of the respondents arc extra departmental branch postmas ters, one is an extra departmental delivery agent, and two are class IV extra departmental employees.
In all these cases the High Courts have found that the respondents held civil posts under the Union of India and the orders termi nating their services in violation of Article 311 (2) of the Constitution were invalid.
This Court in State of Assam and others vs Kanak Chandra Dutta(1) has explained what a civil post is.
In that case the respondent who was a Mauzadar in the Assam Valley was dismissed from service in disregard of the provi sions of Article 311 (2).
It was held that "having regard to the existing system of his recruitment, employment and functions", he was "a servant and a holder of a civil post under the State", and therefore entitled to the protection of Article 311(2).
This Court observed: " . a civil post means a post not connected with defence and outside the regu lar civil services.
A post is a service or employment . .
There is a relationship of master and servant between the State and a person holding a post under it.
The exist ence of this relationship is indicated by the State 's right to select and appoint the holder of the post, its right to suspend and dismiss him, its right to control the manner and method of his doing the work and the payment by it of his wages or remuneration.
" (1) [1967]1 S.C,R. 679 (682).
681 A post, it was explained, exists apart from the holder of the post.
"A post may be created before the appointment or simultaneously with it.
A post is an employment, but every employment is not a post.
A casual labourer is not the holder of a post.
A post under the State means a post under the administrative control of the State.
The State may create or abolish the post and may regulate the conditions of service of persons appointed to the post.
" Turning now to the rules by which the respondents were admittedly gov erned, it appears that they contain elaborate provisions controlling the appointment, leave, termination of services, nature of penalties, procedure for imposing penalties and other matters relating to the conduct and service of these extra departmental agents.
There is a schedule annexed to the rules naming the appointing authorities in respect of each category of employees.
Rule 5 states that the employ ees governed by these rules shall be entitled to such leave as may be determined by the Government from time to time and provides that if an employee fails to resume duty on the expiry of the maximum period of leave admissible and granted to him or if an employee who is granted leave is absent from duty for any period exceeding the limit upto which he could have been granted leave he shall be removed from the service unless the Government decides otherwise in the exceptional circumstances of any particular case.
The services of employees who had not put in more than three years ' continu ous service are liable to be terminated at any time under rule 6 for unsatisfactory work or for any administrative reason.
The rules also indicate the nature of penalties which may be imposed on an employee and the procedure for imposing them.
A right of appeal is provided against an order imposing any of the penalties on the employee.
Various other conditions of service are also provided in these rules.
It is thus clear that an extra departmental agent is not a casual worker but he holds a post under the administrative control of the State.
It is apparent from the rules that the employment of an extra departmental agent is in a post which exists "apart from" the person who happens to fill it at any particular ' time.
Though such a post is outside the regular civil services, there is no doubt it is a post under the State.
The tests of a civil post laid down by this Court in Kanak Chandra Dutta 's case (supra) are clearly satisfied in the case of the extra departmental agents.
For the appellants it is contended that the relationship between the postal authorities and the extra departmental agents is not of master and servant, but really of principal and agent.
The difference between the relations of master and servant and principal and agent was pointed out by this Court in Lakshminarayan Ram Gopal and Son Ltd. vs The Gov ernment of Hyderabad.
(1) On page 401 of the report the following lines from Halsbury 's Laws of England (Hailsham edition) Volume 1, at page 193, article 345, were quoted with approval in explaining the difference: (1) ; 682 "An agent is to be distinguished on the one hand from a servant, and on the other from an independent contractor.
A servant acts under the direct control and supervision of his master, and is bound to conform to all reasonable orders given him in the course of his work, an independent contractor, on the other hand, is entirely independent of any control or interference and merely undertakes to produce a specified result, employing his own means to produce that result.
An agent, though bound to exercise his authority in accordance with all lawful instructions which may be given to him from time to time by his principal, is not subject in its exercise to the direct control or supervision of the principal.
An agent, as such is not a servant, but a servant is generally for some purposes his master 's implied agent, the extent of the agency depending upon the duties or position of the servant.
" The rules make it clear that these extra departmental agents work ' under the direct control and supervision of the authorities who obviously have the right to control the manner in which they must carry out theft duties.
There can be no doubt therefore that the relationship between the postal authorities and the extra departmental agents is one of master and servant.
Reliance was placed on behalf of the appellants on two decisions, one of the Orissa High Court Venkata Swamy vs Superintendent, Post Offices(1) and the other of the Madras High Court V. Subbaravalu vs Superin tendent of Post Offices.(2) The judgment in these cases were rendered before the elaborate rules governing the conduct and service of these extra departmental agents were brought into operation in 1964.
We do not therefore think an examination of these two decisions will be relevant or useful for disposing of the appeals before us.
The appeals are accordingly dismissed with costs: one set o[ hearing fee in respect of all the appeals except C.A. 1172 of of 1972 and C.A. 2275 of 1972 in which separate orders as to costs was made earlier.
S.R. Appeals dismissed (1) AIR 1957 Orissa 112.
(2) AIR 1961 Madras 166.
| IN-Abs | The respondents in all these appeals are "extra depart mental agents" within the meaning of Rule 2(b) of the Posts and Telegraphs Extra Departmental Agents (Conduct of Service) Rules, 1964 issued under the authority of the Government of India.
They were either dismissed or removed from service during the period between January 1, 1966 and June 18, 1974, admittedly without complying with the provi sions of article 311(2) of the Constitution.
The question in each case is whether the respondent held a "civil post" as contemplated in article 311(2) of the Constitution.
The High Court of Kerala, Andhra Pradesh & Orissa held that the respondents held a civil post under the Union of India and the orders terminating their services in violation of article 31.1(2) of the Constitution were invalid.
Dismissing the appeals the Court, HELD: (1) An "extra departmental agent" held a "civil post" and his dismissal or removal would be invalid, if there was non compliance with article 311 (2) of the Constitu tion.
[680 B C. 682 E] (2) An extra departmental agent is not a casual worker, but he holds a post under the administrative control of the State.
It is apparent from the 1964 Rules that the em ployment of an extra departmental agent is in a post which exists "apart from" the person who happens to fill it at any particular time.
Though such a post is outside the regular civil service, there is no doubt it is a post under the State.
[681 E F] State of Assam & Ors.
vs Kanak Chandra Dutta ; @ 682 applied.
(3) The 1964 rules make it clear that these extra departmental agents work under the direct control and super vision of the authority who obviously have the right to control the manner in which they must carry out their du ties.
There can be no doubt, therefore, that the relation ship between the Postal Authorities and the extra departmen tal agents are of master and servant.
[662 C E] Venkataswamy vs Superintendent, Post Offices, AIR 1957 Orissa 112; V. Subbaravalu vs Superintendent of Post Offices, AIR 1961 Madras 166, held inapplicable.
|
No. 1547 of 1975.
(Appeal by Special Leave from the Judgment and Order dated the 24 1 1974 of the Kerala High Court in O.P. No. 5566/72) Y.S. Chitale, A. section Nambiar, for the appellant.
K, T. Harindranath, K.R. Nambiar, for respondents Nos.
1 3 and 4.
T.S. Krishnamoorthy Iyer, N. Sudhakaran, for respond ents Nos. 5 & 6.
The Judgment of the Court was delivered by KAILASAM, J.
This appeal is by special leave granted by this Court against the judgment of the High Court of Kerala in O.P. No. 5566 of 1972 by respondents 4 to 8 and 13 before the High Court.
The respondents herein filed the writ petition for the issue of the Writ of Certiorari calling for records relating to exhibit P 10, GO Rt.
No. 3386/69/DD dated 23rd October, and exhibit P15 and quash the same and to issue a writ of mandamus directing the respondents 1 and 2 who are the State of Kerala represented by the Chief Secretary, Government of Kerala, and the Director of Panchayats to forbear the implementation of exhibit P12 and further direct them to implement exhibit P 8 grading 3 list or in the, alterna tive to issue a writ of mandamus directing the State of Kerala to consider and dispose of exhibit P13 and similar repre sentations by respondents 3 and 4 on merits.
It was also prayed that a writ of certiorari quashing exhibit P17 in so far as it related to the petitioners and respondents 3 to 18 in the writ petition be issued and also to issue a writ of mandamus compelling the respondents 1 and 2, State of Kerala and the Director of Panchayats, to assign the writ petition ers the appropriate ranks in the cadre of Executive Officers in the Panchayat Services.
The High Court allowed the writ petition and set aside the list exhibit P17, the order exhibit P12 and the order exhibit P15 dismissing the appeal petition exhibit P14and directed that a fresh list be prepared in accordance with the principles laid down in exhibit P16 in the light of the judgment of the High Court.
Aggrieved by the decision of the High Court the appellants have preferred this appeal.
The writ petition was contested by 18 respondents.
Respondents 3 to 10 were Panchayat executive officers of the Malabar area functioning under the Madras Village Panchayat Act, 1951, on 31st December, 1961.
Respondents 11 to 18 were Panchayat Officers functioning as such on 31st Decem ber, 1961 under the Travancore Cochin Panchayats Act, 1950.
The Kerala Panchayats Act, of 1960 received the assent of the Governor on 8th December, 1960, and was pub lished in Kerala Gazette Extraordinary No. 119 dated 9th December, 1960.
It is common ground that the respondents became Government servants on and from 1st January, 1962.
689 On 15th May, 1961, under exhibit P1 the Government passed an order that all Panchayat Officers/executive officers who continue to hold their appointments at the time when the Act came into force will De absorbed as Panchayat executive officers in the new Panchayats.
The same order provided that the staff of the Malabar District Board shall be ab sorbed as Panchayat executive officers in suitable grades according to their qualifications, grades and suitability.
In December, 1961, 17 Panchayat officers were to be appointed on a scale of pay higher than the scale applicable to the Panchayat executive officers.
The Public Service Commission selected 17 Panchayat executive officers who were on the scale of pay Rs. 80 150 and drew up a list on 27th December, 1961.
They were appointed as Panchayat Inspectors under exhibit P8 on 28th December, 1961.
To fill up these vacancies 17 of the Panchayat executive officers who were in Grade H on the scale of pay Rs. 40 120, the respond ents 3 to 18 were appointed.
The 5 appellants before us were appointed as executive officers on the grade I Rs. 80 250 as and from 1st January, 1962.
The respondents who were the petitioners in the writ petition were integrated in the service.
The Government passed orders laying down the principles of integration of the District Board employees and the Panchayat executive officers and Panchayat Officers.
The impugned orders under the writ petition are exhibit P10, exhibit PI2 and exhibit P15.
It is also prayed that exhibit P17 may be quashed.
The Government in exhibit P10 came to the conclusion that the vacancies on the advice of the Public Service Commission and the appointment of those that had been advised on 28th December.
1961, arose only on the dates enumerated in the order exhibit P10 com mencing from 30th December, 1961, and ending with 2nd Janu ary, 1962 and that the appointment can only be on occurrence of the vacancies.
We do not see on what basis exhibit P10 could be challenged.
exhibit P10 refers to G.O. MS No. 93/62 dated 13th February, 1962.
By the G.O. of 1962, 16 respond ents in the writ petition were promoted as executive offi cers Grade I on the advice of the Public Service Commission.
The promotion of the respondents in the writ petition having been ordered as early as 13th February, 1962, without chal lenging that order a subsequent order which determined the date of their commencement service cannot be challenged.
In fact, the respondents were appointed to the higher posts on 28th December, 1961, and they took charge on 30th December, 1961, 31st December, 1961, 1st January, 1962 and 2nd Janu ary, 1962.
The respondents in this petition were integrated into the service only on 1st January, 1962.
Their position in the service was to be determined by the Government later.
If the respondents were aggrieved at the posting to the higher post of the present appellants and others they ought to have even challenged promotion which was made on 1st January, 1962.
Not having questioned the legality of the promotion or the G.O. of 1962 it is 'too late for them to question the validity of the G.O. of 1969 filing a writ petition in the year 1972.
Apart from this insurmountable objection even on merits the respondents have no claim.
The Government passed exhibit R1 dated 31st January, 1965, laying down the principles of integration of the District 690 Board employees and the Panchayat executing officers and Panchayat Officers.
It provided that the integration must be based on functional parity.
exhibit P12 is a G.O. dated 5th May, 1970 The G.O. refers to the earlier G. O. dated 13th February, 1962, and 24th June, 1969, and states that the names of the 17 executive officers, the appellants and others, are given rank under executive officers Grade I as on 6th January, 1962.
The gradation list is P 17 dated 22nd July, 1972.
After referring to the earlier G. O. the Director of Panchayats approved a final gradation list of Executive Officers of Panchayats as on 6th January, 1962.
The appellants are ranked as 58, 59, 60, 61, 62 etc.
The respondents made representations against exhibit P12 but these representations were not accepted and a list exhibit P8 was drawn up.
The respondents again objected to the list and subsequently exhibit P12 was prepared.
Objections(P14) were raised to exhibit P12 but they were rejected by order exhibit P15 and final list exhibit P17 was published in accordance with the suggestions made in exhibit P12.
The contention on behalf of the respondents is that the order under exhibit P12 is against the position taken by the Government in exhibit P10) and Pl0(a) and the Director had no authority to prepare a list in contravention of Exs.
P10 and Pl0(a).
exhibit P12 was challenged on the ground that it is not in accordance with exhibit P 16 which settled the principles to govern the integration.
It was therefore submitted that exhibit P12 and P17 must be quashed.
Strong reliance was placed on the order of the Government dated 15th May, 1961, which while it provided that Panchayat Officers Executive Officers who continue to hold their appointments at the time when the Act comes into force will be absorbed as Panchayat Executive Officers in the new Panchayats, secured the right of the staff of the District Board by providing that the staff of the Malabar District Board shall be absorbed as Panchayat Executive Officers in suitable Grades according to their qualifications, grades and suitability.
On the basis of the principle of integration above cited it was submitted that if the vacancies in which the appellants and other Panchayat Executive Officers were absorbed arose after 1st January, 1962, the respondents would be entitled to be integrated along with the Panchayat Executive Officers and as they were drawing the same pay they ought to have been given an equal ranking.
We have already pointed out that these appoint ments were made before 31st December, 1961, and as such the respondents cannot have any claim.
The appointments of the appellants and other Panchayat Executive Officers were made before 31st December, 1961, and as the integration was to take effect from 1st January, 1962, they cannot have any grievance.
Further, it will be seen from 6.0.
MS.97/67/A & RDD dated 18th March, 1967, which refers to absorption of various categories of staff of the defunct Malabar District Board in the Department of Local Bodies, it is stated in Paragraph 3 that while 9 U.D. Clerks will be equated to the posts of Panchayat Executive Officers, 2nd Grade, 21 Lower Division Clerks and 8 Revenue Inspectors and 4 clerical attenders will be equated to the posts of the Panchayat Executive Officers 3rd grade.
It is stated that respond ents 1 to 4 come under this category and are only 3rd Grade Executive Officers.
It will thus be seen that the respond ents were not equated with the appellants and other Pan chayat Executive Officers when they were integrated from the District Board service.
691 The persons similarly situated as the respondents herein who were integrated from the District Board services filed writ petitions before the High Court impleading the present appellants challenging the gradation and failed in their attempt.
The earliest petition is in O.P. No. 1431 of 19 '70.
Justice Isaac who heard the petition observed that the petitioners came in the integrated service as 3rd Grade Executive Officers and were promoted to 2nd Grade with effect from 6th February, 1968, while respondents 3 to 10 (some of whom are appellants before us) have been promoted as early as 16th February, 1962, as 1st grade officers.
The learned Judge further observed, "Even ignoring this, respondents 3 to 10 were I Grade Executive Officers from 16 2 1962, while the Petitioner has become even II Grade Executive Officer only with effect from 6 2 1966.
" As the petitioner before the learned Judge was holding a post much inferior to the posts held by respond ents 3 to 10 from 1st February, 1962, onwards, he dismissed the petition being devoid of any merit on 24th May, 1972.
Another writ petition No. O.P. No. 6423 filed by one of the persons integrated from the District Board Services, against the present appellants and others was also dismissed by Justice Isaac on 27th June, 1973.
A writ appeal filed against the order of Justice Isaac in O.P. No 1431 of 1970 was summarily dismissed by the Bench of the Kerala High Court.
While the earlier judgments were all decided against the respondents, the Kerala High Court in the judgment under appeal took a different view.
The decision under appeal proceeds on the basis that a regrettable mistake crept into the judgment in O.P. No. 1431 of 1970 and the earlier deci sion proceeded on the basis that there was a III Grade mentioned in G.O. 814 dated 17th November, 1962.
The High Court was of the view that there was a III Grade under the G.O. above referred to the earlier decision missed the fact that these Grades were not applicable on 1st January, 1962.
Though G.O. 814 of 1962 was ,not placed before us we are not sure whether there was any mistake in the earlier judgment for the G.O. MS 97/67 dated 18th March, 1967, refers to persons being transferred from the Malabar District Board as Panchayat Executive Officers III Grade.
Be that as it may we are satisfied that the respondents are not entitled to the reliefs prayed for by them in the writ petitions.
As the appellants were promoted to a higher post before the respondents were integrated into the Government service on 1st January, 1962.
Further throughout the appellants have been treated as occupying a higher post and respondents much lower post.
Though the promotion of the appellants was before 1st January, 1962, and was confirmed by various orders of the Government the respondents herein did not choose to challenge the orders till the year, 1974.
In the circumstances, we are satisfied that the order of the Kerala High Court has to be set aside and the appeal is allowed with costs.
P.B.R. Appeal allowed.
| IN-Abs | On May 15, 1961 the State Government passed orders (exhibit PI) that all Panchayat Officers functioning under the Travancore Cochin Panchayats Act, 1950 and Panchayat Execu tive Officers functioning under the Madras Village Pan chayats Act, 1951 as on December 31, 1961 who continue to hold their appointments when the Kerala Panchayat Act, 1960 came into force would be absorbed as Panchayat Executive Officers under the new Panchayats.
The order also provided that the staff of the Malabar District Board shall be ab sorbed as Panchayat Executive Officers in suitable grades.
On the recommendation of the State Public Service Com mission the State Government appointed 17 Panchayat Officers in a higher grade by an order dated December 28, 1961 (exhibit P8) and the officer joined their posts between Decem ber 30, 1961 and January 2, 1962.
To fill up the resulting vacancies 17 of this Panchayat Executive Officers who were in Grade II (respondents 3 to 18) were appointed.
The appellants were appointed as Executive Officers on the Grade I, as and from January 1, 1962.
The respondents ' representation to the Government that they should be appointed with effect from December 28, 1961, that is, the date on which the public Service Commission communi cated their appointment was rejected by the State Government (exhibit P10) on the ground that the vacancies arose only on the dates stated in that order commencing from December 30, 1961 and ending with January 2, 1962 and that the appointments can only be on the occurrence of the vacancies.
In a petition under article 226 of the Constitution the High Court directed that fresh lists be prepared.
Allowing the appeal, HELD: The respondents are not entitled to the reliefs prayed for by them in the writ petitions.
[691 F] The appellants were promoted to a higher post before the respondents were integrated into the Government service.on January 1, 1962.
Throughout, the appellants have been treated as occupying a higher post and respondents much lower post.
Though the promotion of the appellants was before January 1, 1962 and was confirmed by various orders of the Government the respondents did not choose to chal lenge the orders till 1972.
[689 G] There is no ground for challenging exhibit P10 order.
It refers to the G.O. of February 13, 1962 by which 16 respond ents in the writ petition were promoted as Executive Offi cers Grade I on the advice of the State Public Service Commission.
Their promotion having been ordered on February 13, 1962, without challenging that order a subsequent order which determined the date of their commencement of service cannot be challenged.
[689 E F] There is no merit in the respondents ' contention that if the vacancies in which the appellants and other Panchayat Executive Officers were absorbed arose after January 1, 1962 the respondents would be entitled to be integrated along with the Panchayat Executive Officers and since they were drawing the same pay they ought to have been given an equal ranking.
The appointments of the appellants and other Panchayat Executive Officers were made before December 31, 1961 and as the integration was to take effect from January 1 688 1962 they cannot have any grievance.
Further, the respond ents were not equated with the appellants and other Pan chayat Executive Officers when they were integrated from the District Board Service.
[690 F G]
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No. 2381 of 1968.
(From the Judgment and Order dated the 30th March 1965 of the Andhra Pradesh High Court in Appeal against Order No. 443 of 1963) P. Ram Reddy, K. Jayaram and K. Ram Kumar, for the appellant.
B.R. Agarwala, for respondents.
The Judgment of the Court was delivered by FAZAL ALI, J.
This appeal by certificate arises out of execution proceedings in respect of a decree obtained by the respondents/decreeholders.
It appears that the 5th re spondent/decree holder Siddam Pedda Rami Reddi hereinafter referred to as "SP" Reddi obtained a decree in O.S. No. 15 of 1949 from the Court of Sub Judge Kurnool against the judgment debtor Pujari Subbarayudu hereinafter referred to as "Pujari" or "judgment debtor".
The 5th respondent had also obtained another money decree against Pujari in another suit being O.S. No. 19 of 1953.
The 5th respondent/decree holder filed Execution Proceedings No. 24 of 1953 in the Trial Court for selling the properties be longing to the judgment debtor in order to satisfy the decree in O.S. No. 15 of 1949 and he also applied for per mission to bid at the auction sale.
The first sale was held on October 12, 1954 at which the lands situated in villages Devanoor and Gudipadu were put to sale.
But this sale was set aside as there was some delay in payment of the sale price.
Consequently a second sale was held on March 2, 1955 at which the 5th respondent SPR Reddi purchased the lands situated in village Davanoor and the appellant/auc tion purchaser T.P.S. Reddy purchased the lands in village Gudipadu.
It is also not disputed that in the warrant of sale as also the sale proclamation, the decretal amount for which the properties were to be sold was mentioned as Rs. 16,715 8 0.
The sale of lands in village 694 Devanoor alone fetched a sum of Rs. 16,880/ at which the sale was knocked down.
Thus it would appear that the sale proceeds of the lands in village Devanoor were sufficient to satisfy the decretal amount mentioned in the proclamation of sale.
Despite this fact, the Court proceeded to sell the properties of the judgment debtor in village Gudipadu which fetched Rs. 12,500/ and which were purchased by the appellant/auction purchaser.
On April 20, 1955 the decree holder obtained an order from the Court for rateable distribution of the sale pro ceeds.
In other words, this order was passed by the Court not before the sale so that the entire decretal amount could have been mentioned in the sale proclamation but a few days after the sale had already taken place.
This is rather an important aspect of the matter which appears to have been completely overlooked by the Trial Court.
On March 31, 1955 the judgment debtor Pujari filed an application to set aside the sale on various grounds, namely, that the sale was vitiated by material irregularities which caused serious prejudice to the judgment debtor and that the properties sold by the Court were valuable properties and the same were grossly undervalued in the sale proclamation.
Finally it was contended by the judgment debtor that once the sale of the properties in village Devanoor was sufficient to satisfy the amount mentioned in the sale proclamation, the Court should have stopped the sale as required by the mandatory provisions of 0.21 r. 64 of the Code of Civil Procedure hereinafter referred to as the Code instead of continuing the sale of the properties in village Gudipadu.
The Trial Court, however, after heating the objections of the decree holder rejected the application of the judgment debtor.
Thereafter the judgment debtor preferred an appeal before the High Court which, while negativing the grounds taken by the judgment debtor regarding the material irregularities in the conduct of sale or the under valuation of the properties, accepted the plea of the judgment debtor regarding the non compliance with the provisions of 0.21 r. 64 of the Code.
The High Court held, and in our opinion rightly, that as the sale of the properties in village Devanoor fetched an amount which was sufficient to satisfy the amount mentioned in the sale warrant, the Executing Court was not justified in proceeding with the sale of the properties in village Gudipadu and should have stopped the sale.
The High Court accordingly accepted the plea of the judgment debtor and set aside the sale with respect to the properties situated in village Gudipadu, but granted a certificate to the appellant to file an appeal in this Court and hence this appeal before us.
In this appeal the facts are more or less undisputed and the only serious point argued by the appellant is that the High Court was in error in setting aside the sale because even if the entire decretal amount was not mentioned in the sale proclamation, that was at best an irregularity which did not cause any prejudice to the judgment debtor.
It was also argued by learned counsel for the appellant that the judgment debtor did not raise any objection before the Executing Court against continuing the sale of other proper ties situated in village Gudipadu.
It was next submitted that the 5th respondent/decreeholder had obtained another decree in O.S 19 of 1953 and the total 695 amount under the two decrees fully justified the selling of the properties in village Gudipadu also, particularly when the decree holder had taken an order from the Executing Court for rateable distribution of the sale proceeds.
It is true that the High Court has not considered this aspect of the matter, but in our opinion the contentions raised by the appellant are wholly untenable.
It is not disputed that the warrant of sale was prepared long after the 5th respondent/decreeholder had obtained the second decree in O.S. 19 of 1953 and yet no attempt was made by the decree holder to approach the Court for amending the decretal amount mentioned in the sale proclamation, so as to include the decretal amount not only of the decree in the first suit No. O.S. 15 of 1949 but also of the decree in the second suit in O.S. 19 of 1953.
In these circumstances, therefore, under the provisions of 0.21 r. 64 of the Code when the amount as specified in the sale proclamation was fully satisfied by the sale of the properties in village Devanoor, the Court should have stopped the sale of further items of the properties.
It is manifest that where the amount specified in the proclamation of sale for the recov ery of which the sale was ordered is realised by sale of certain items, the sale of further items should be stopped.
This, in our opinion, is the logical corollary which flows from O.21 r. 64.of the Code which may be extracted thus: "Any Court executing a decree may order that any property attached by it and liable to sale, or such portion thereof as may seem necessary to satisfy the decree, shah be sold, and that the proceeds of such sale, or a sufficient portion thereof, shall be paid to the party entitled under the decree to receive the same.
" Under this provision the Executing Court derives jurisdic tion to sell properties attached only to the point at which the decree is fully satisfied.
The words "necessary to satisfy the decree" clearly indicate that no sale can be allowed beyond the decretal amount mentioned in the sale proclamation.
In other words, where the sale fetches a price equal to or higher than the amount mentioned in the sale proclamation and is sufficient to satisfy the decree, no further sale should be held and the Court should stop at that stage.
In the instant case, we have already indicated that the sale of lands in village Devanoor alone fetched a sum of Rs. 16880 which was more than sufficient to satis fy the amount of Rs, 16,715 8 0 mentioned in the sate proclamation.
It is true that the decree holder had ob tained another decree in O.S. No. 19 of 1953, but there is nothing to show that the decree holder had approached the Court for including the second decretal amount in the proc lamation of sale.
In these circumstances, therefore, we are clearly of the opinion that the Executing Court was not justified, in the facts and circumstances of the present case, in selling the properties situated in village Gudipa du.
The fact that the judgment debtor did not raise an objection on this ground before the Executing Court is not sufficient to put him out of Court because this was a matter which went to the very root of the jurisdiction of the Executing Court to sell the properties and the non compliance with the provisions of O. 21 r. 64 of the Code was sufficient to vitiate the same so far as the 696 properties situated in village Gudipadu were concerned.
For these reasons the contentions raised by counsel for the appellant must be overruled.
This, however, does not put an end to the issue, be cause the High Court, while setting aside the sale, has passed no order for adjusting the equities between the parties.
According to the appellant he had taken possession of the properties purchased by him at the auction sale and had made substantial improvements.
If the sale of these properties is to be set aside, the appellant will have to return these properties to the judgment debtor, but he will be entitled to receive the value of improvement 's made by him during the time he was in possession of those properties in addition to the return of the sum of Rs. 12,500/ .
The Executing Court will have to hold an inquiry into the matter and determine the value of the improvements made by the appellant which will have to be paid to him.
The appellant will not be entitled to any interest on the value of the improvements if he is found to be in possession of the properties.
If, however, the Executing Court finds that the auction purchaser was not in possession of the properties and the properties continued to be in possession of the judgment debtor, then the question of the value of improve ments will naturally not arise.
In that event the judg ment debtor will have to refund the amount of Rs. 12,500/ to the appellant with interest at the rate of 12% per annum from the date of sale upto the date of refund.
For these reasons, therefore, the appeal is dismissed with the modification indicated above and the case is sent back to the Executing Court to hold an inquiry into the matter.
In the special and peculiar circumstances of the present case, we make no order as to costs.
S.R. Appeal dismissed.
| IN-Abs | Order XXI Rule 64 of the C.P.C. lays down that "any court executing a decree may order that any property attached by it and liable to sale or such portion thereof as may seem necessary to satisfy the decree, shall be sold and that the proceeds of such sale, or a sufficient portion thereof shall be paid to the party entitled under the decree to receive the same.
" The 5th respondent/decree holder, S.P.R. Reddy obtained two decrees against the Judgment debtor Pujari Subbarayudu in two suits viz.; U.S. 15 of 1949 and O.S. 19 of 1953.
He filed execution proceedings No. 24 of 1953 in the trial Court for selling the properties belonging to the judgment debtor in Devanoor and Gudipadu villages in order to satis fy the decree in U.S. 15 of 1949.
He also applied for permission to bid at the auction sale.
In the auction sale held on March 2, 1955, the 5th respondent purchased the lands situated in village Devanoor for a sum of Rs. 16,880/ .
Despite the fact that the sale proceeds of the lands in village Devanoor alone was sufficient to satisfy the decretal amount mentioned in the warrant of sale and the proclamation of sale viz.; Rs. 16,715.50, The Court proceed ed to sell the properties of the judgment debtor in village Gudipadu which fetched Rs. 12,500/ and which were purchased by the appellant auction purchaser.
The judg ment debtor filed an application on March 31, 1955 to set aside the sale contending, inter alia, that once the sale of the properties in village Devanoor was sufficient to satis fy the amount mentioned in the sale proclamation, the Court should have stopped the sale as required by the mandatory provisions of Order XXI Rule 64 of the C.P.C.
The Trial Court rejected the said application; whereupon the decree holder on April 20, 1955 obtained an order from the court for rateable distribution of the sale proceeds.
In appeal the High Court accepted the plea of the judgment debtor regarding non compliance with the provisions of O.XXI Rule 64 C.P.C. and set aside the sale with respect to the proper ties situated in village Gudipadu.
Dismissing the appeal by certificate the Court, HELD: (1) The High Court rightly held that as the sale of the properties in village Devanoor fetched an amount mentioned in the sale warrant.
the Executing Court was not justified in proceeding with the sale of the properties in village Gudipadu and should have stopped the sale.
[694 F] (2) The logical corollary which flows from O.XXI Rule 64 of the Code is that where the amount specified in the proc lamation of sale for the recovery of which the sale was ordered is realised by sale of certain items, the sale of further items should be stopped.
[695 C D] (3) Under Order XXI Rule 64, the Executing Court derives jurisdiction to sell properties attached only to the point at which the decree is fully satisfied.
The words "necessary to satisfy the decree" clearly indicate that no s,de can be mentioned in the sale proclamation and is sufficient to satisfy the decree, no allowed beyond the decretal amount mentioned in the sale proclamation.
In other words.
where the sale fetches a price equal to or higher than the amount further sale should be held and the court should stop at that stage.
[695 E F] (4) In the facts and circumstances of the present case, there being nothing to show that the decree holder had approached the court for including the second decretal amount obtained in O.S. 19 of 1953 in the proclamation of sale, the 693 Executing Court was not justified in selling the properties situated in village Gudipadu.
The fact that the Judgment debtor did not raise an objection on this ground before the Executing Court rs not sufficient to put him out of court because this was a matter which went to the very root of the jurisdiction of the Executing Court to sell the properties and the non compliance with the provisions of O.XXI, Rule 64 of the Code was sufficient to vitiate the same so far as properties situated in village Gudapadu were concerned.
[695 G H, 696 A] (5) The Court remitted the matter to the Executing Court for an inquiry with the following directions: (i) The appellant will have to return the properties in village Gudipadu to the judgment debtor and he will be entitled to receive the value of improvements made by him during the time he was in possession of these properties, as determined by the Executing Court in addition to Rs. 12,500/ .
(ii) He will not he entitled to any interest on the value of the improvements, if he is found to be in posses sion of the property.
(iii) If the Executing Court finds that the auction purchaser was not in possession of the properties, the judgment debtor will have to refund the amount of Rs. 12,500/ to the appellant with interest at the rate of 12 per cent per annum from the date of sale upto the date of refund.
[696 B E]
|
Appeal No. 325/1976.
(From the Judgment and Order dated the 3.12.1975 of the Karnataka High Court in Writ Appeal No. 284/74).
V.S. Desai, Sanjev Aggarwal and R.B. Datar, for the appellant.
S.S. Javali, Jagannath Shetty and B.P. Singh for resp.
No. 1.
S.N. Prasad and Girish Chandra, for the Intervener Union of India.
Nemo for respondent No. 2.
The Judgment of the Court was delivered by FAZAL ALI, J.
Whether hoardings containing adver tisements fixed in the premises of a railway station front ing a ,public street are exigible to tax under the provi sions of section 136 of the City of Bangalore Municipal Corpora tion Act, 1949 (Act No. LXIX of 1949) hereinafter referred to as 'the Act ' is the substantial question of law involved in this appeal by certificate.
The facts of the case lie within a narrow compass and the point raised by counsel for the appellant is one of first impression and undoubtedly requires serious consid eration.
The appellant is a firm of advertising commer cial goods and other items by putting up hoardings contain ing advertisements on properties taken on lease licence from various owners.
The appellant also has been putting up hoardings on railway lands in the compound of the Bangalore Railway Station.
In the instant case, we are only con cerned with the hoardings containing advertisements put up adjacent to.
the railway compound fencing but within the railway premises by being placed on girders affixed to.
the earth.
The fencing of the railway compound is adjacent to and faces a public street.
It is also not disputed by the parties that the advertisements are put up at sufficient height so.
as to be clearly visible to and attract the attention of the members of the general public passing through the public street.
The appellant has produced photographs of some of the hoardings which demonstrate these facts.
The Municipal Corporation of the City of Bangalore being of the opinion that the hoardings containing advertisements put up by the appellant were exigible to tax issued a demand notice dated March 7, 1973 calling upon the.
appellant to pay a sum o.f Rs. 5871 83 as the advertisement tax including arrears.
The appellant represented to the Municipal authorities that as the hoardings containing advertisements were situate within the railway premises they squarely fell within clause (e) of the third proviso to section 136 of the Act.
The Municipal Corporation did not accept the contention of the appellants and pressed for paying up the tax.
The appellant then filed a writ petition before the High Court of Karnataka praying that the order of the Corporation demanding payment of tax be quashed, because the advertise ments were clearly 672 exempt from tax by virtue of the aforesaid proviso.
The writ petition was in the first instance heard by a single Judge who by his order dated April 4, 19.74 overruled the contention of 'the appellant and dismissed the petition.
Thereupon the appellant filed an appeal under the Letters Patent before a Division Bench which also affirmed the order of the single Judge, though on different grounds.
The Division Bench later on being approached under article 133 of the Constitution granted a certificate of fitness and hence this appeal before us.
The only point that has been raised before us is that the hoardings containing advertisements squarely fall within the exemption contained in the third proviso to section 136 of the Act and, therefore, they are not belong to The High Court found that as the advertisements did not exigible to the Railway nor for the purpose of the Railway, the proviso in question did not apply and the Single Judge was right in holding that the advertisements were exigible to tax.
The single Judge had, however, found that as the advertisements were much above the railings which faced the public street, the proviso had no application.
Before examining the view of the High Court, it may be necessary to extract the relevant portions of the statute which we are called upon to interpret.
The relevant part of section 136 of the Act runs thus: "Every person who ' erects, exhibits, fixes or retains upon or over any land, building, wail, hoarding or structure any advertise ment or who displays any advertisement to public view in any manner whatsoever, in any place whether public or private, shall pay on every advertisement which is so erected, exhibited, fixed, retained or displayed to public view a tax calculated at such rates and in such manner and subject to such exemptions, as the corporation may, with the approval of the Government, by resolution determine: x x x x "Provided further that no such tax shall be levied on any advertisement which is not a sky sign and which x x x x (e) is exhibited within any railway station of upon any wall or other property of a railway except any portion of the surface of such wall or property fronting any street.
Explanation 1.
The word 'structure ' in this 'section shall include any movable board on wheels used as an advertisementor an adver tisement medium." (Emphasis supplied) Section 136 of the Act which is the charging section clearly shows that the intention of the statute was to tax certain types of advertisements.
The pith and substance of the entire section, therefore, is the taxation of advertisements fixed, erected or exhibited on any land, building wall, hoarding, structure etc.
Thus it is manifest, that section 136 contemplates tax on advertisements and not tax on prem ises or 673 buildings.
This clear distinction has to be kept in mind in construing the third proviso to section 136 of the Act which falls for determination in this case, particularly in view of some of the authorities relied upon by the appellant which deal with tax on premises rather than tax on adver tisements.
The essential conditions necessary for the application of section 136 of the Act are (i) that a person should erect, exhibit, fix or retain any advertisement upon any land.
building, wall, hoarding or structure or display any advertisement in any manner; (ii) that erection, exhibition, fixation or retention or display of that advertisement must be exposed to public view; and (iii) that the advertisement must be exhibited in any place public or private.
The sine qua non for the application of this section is, therefore, that the advertisements displayed by any person must be to public view in any manner whatsoever.
Once these conditions are satisfied, the person who exhibits the advertisements is liable to pay tax on such advertisements As, however, the Act was merely to regulate the premises falling within the Bangalore Municipal Corporation, it is obvious that the premises which did not fall within the Corporation or which belonged to other autonomous authori ties could not be exigible to tax unless expressly so pro vided.
Furthermore, it appears that the object of the Municipal Corporation in charging tax was to keep the public premises clean and water tight and protect advertisements which may amount to nuisance, because the ,Act lays down a procedure which has to be followed before the advertisements could be exhibited.
Consistent with this object, there fore, the third proviso to section 136 of the Act grants an exemption from tax on any advertisement which is exhibited in any railway station or upon any wail or other property of a railway.
Here also an exception is carved out which is that if such an advertisement, even though on any portion of the railway property, faces any street it will not earn the exemption.
The central argument put forward before us by Mr. V. 8.
Desai counsel for the appellant is that the expression "fronting any street" appearing in cl.
(e) of the third proviso to section 136 qualifies the railway property and not the advertisement so that the fact that the advertisement fronting the street or which is exposed to public view or is visible to the public from the public street will not make the advertisement exigible to tax, if the advertise ment is within the railway premises or is adjacent to the compound wall or any other property which itself is fronting the street.
In other words, the contention was that having regard to the terminology of the word "fronting" it is not possible to conceive that two portions of the property can front a street at one and the same time unless they are in the same 674 line.
From the photographs produced before us, as also before the High Court, it appears that the hoardings con taining the advertisements are no doubt fixed just 2 or 3 feet behind the compound fencing of the railway station premises.
Mr. Desai, therefore, contended that once the compound wall which is in front of the girders on which the advertisements are fixed faces the street, there is No. question of the advertisement facing the street.
Secondly, it was contended that the test of fronting the street as contained in the third proviso is that what is fronting the street is not the advertisement but the property of the railway.
In other words, it was argued that as in the instant case the compound wall already fronted the street, the hoardings containing the advertisements being behind the compound wall, though adjacent to it, cannot be said to front the street, because two properties cannot front the street at the same time.
We have given anxious considera tion to the arguments advanced by the learned counsel for the appellant, but on a proper interpretation of the proviso we are unable to accept the same.
begin with, if the proviso is read with reference to the context, then it is absolutely clear that the verb "fronting" qualifies not the wall or the property but the advertisement.
The central subject matter of section 136 as also of the proviso is not a place or building but advertisement which alone attracted tax.
If we read the third proviso in the following man ner, then the intention of the statute becomes absolutely clear: "Provided further that no such tax shall be levied on any advertisement (e) which is exhibited within any railway station or upon any wall of other property of a railway except any portion of the surface of such wall or property/fronting any street." (Emphasis supplied) The verb "fronting", ' therefore, does not qualify wall or property mentioned in the latter part of the.
proviso.
but the noun advertisement.
The test, therefore, laid down by this proviso is that the Court has to see whether the adver tisement affixed whether inside the compound of the railway or not fronts the street.
If the advertisement fronts the street or faces the street even if it is within the railway premises, it will be exigible to tax.
For instance if the; hoardings containing the advertisements were affixed just behind the compound wall and the advertisements did not face the street at all but faced the other side of the railway station their back being to the street, then the advertise ments will certainly be exempt from tax and the proviso would clearly apply.
This seems to us to be the natural interpretation of the proviso having regard to the context in which it is placed.
Mr. Desai learned counsel for the appellant relied on the definition of the word "fronting" as used in Stroud 's Judicial Dictionary, 4th End., at p. 1121, where the learned author while defining "fronting" observed thus: "Fronting.
(1) Premises "fronting, adjoining, or abutting" on a STREET, and as such chargeable with expense 675 of road making under Public Health Act 1875 (c. 55), section 150, did not need to be absolutely contiguous.
" In the first, place the author defines the word "fronting" within the meaning of the Public Health Act, 1875, which levied tax on premises.
The author was not at all con cerned with tax on advertisement as in the instant case.
In the case referred to in the book, the Court was called upon to judge the expenses on road making under the Public Health Act.
It is, therefore, manifest that these consider ations would not apply to the facts of the present case.
On the other hand in Webster 's Third New International Dictionary Vol.
I, the word "front" used as a verb is defined thus: "something that confronts or faces forward: as (1): a face of a building; esp.
the face that contains the principal entrance . . . . . put a facing upon (e.g. the building with brick) 5: to face or look forward have the front toward, opposite, or over against the houses the street)." According to the aforesaid dictionary meaning "fronting" merely means that the article should face or have its front toward, opposite or over against the house or the street.
In our opinion the word "fronting" has been used in the proviso not in any legal or technical sense but as used in ordinary parlance.
It is not a term of art but one that signifies its meaning according to common notions.
For these reasons, therefore, we are clearly of the opinion that as the advertisements upon the hoardings in the instant case were undoubtedly facing or fronting the street they were exigible to tax and the fact that they were a f[axed on the earth which formed the compound of the railway premises would make no difference in view of the plain and unambigu ous language of the proviso.
Learned counsel for the appellants relied on a decision of the Madras High Court in The Corporation of Madras vs Messrs The Oriental Mercantile Company Ltd., Madras.
C) This authority, however, can have no application to the facts of the present case, because to begin with, there is nothing to show that the hoardings containing the advertise ments were in any way fronting or facing the street.
On the other hand, the advertisements were merely on the out side wall within the railway compound.
In these circum stances, therefore, this case does not appear to be of any assistance to the appellant.
Reliance was then placed on a decision of the Queen 's Bench Division in Ware Urban District Council vs Gaunt and Others(2) and particularly on the observations of Ashworth, J., where the Judge observed as follows: "The remaining issue is, in a sense, the most troublesome of all, namely, whether it is open to the appellants to apportion part of the expense on premises situate on the wester ly (1) , (2) , 787. 4 707SCI/77 676 side of Walton Road but separated from it b,y the public footpath.
This issue involves as an ancillary problem the question whether part of the expense should in any event be appor tioned on ' the public footpath.
Section 6 of the Act of 1892 provides, inter alia, that ".:. the expenses incurred by the urban authority in executing private street works shall be apportioned (subject as in this Act mentioned) on the premises fronting, adjoin ing, or abutting on such street or pan of a street." " The observations extracted above will show that there also.
the Court was dealing not with a tax on advertisements but a tax on premises, and the question of the frontage was inter preted having regard to the place where the premises were situate.
In the same judgment, the learned Judge observed as follows: "In each case, as it seems to me, regard must be paid to the context in which the words appear and, quite apart front any decided cases, I am inclined to think that the context in the present case points to an enlarged rather than a restricted meaning of the word "adjoin"." (Emphasis ours) It is, therefore, clear that the meaning of the words used in a particular statute has to be construed with reference to the context and not in isolation, not is it possible to lay down any rule of universal application in a matter like this.
For these reasons, therefore, this authority also does not appear to be apposite so far as the present case is concerned.
The Single Judge of the High Court, while interpreting the proviso, observed as follows: "These advertisements in question are displayed on the hoardings standing close to the cement fencing at the outer mark of the railway property.
The cement railings are hardly about 3 feet in height and the adver tisement boards are very much above the rail ings.
The Public street to which the adver tisements are facing runs along the cement railings, with no other obstacle between the advertisement boards and the public view.
Therefore, it can reasonably, be said that they are fronting the Public Street.
" We find ourselves in complete agreement with the view taken by the Single Judge.
The Division Bench of the High Court, however, while upholding the judgment of the Single Judge, observed as follows: "In the instant case, we are not faced with any situation as the one envisaged in the second part of the exemption clause relative to advertisement on a wall or other property 677 of the railway 'frontage by street '.
We are concerned herein with the case of a hoard ing put up by and belonging to the appellant and not the railway.
Hence, it is plain that no exemption on that score could be claimed on behalf of the appellant.
" The High Court does not appear to have interpreted the proviso correctly.
The view of the High Court that the proviso would only apply to advertisements of such hoardings whose ownership lies with the Railway or which belong to the Railway is not borne out by cl.
(e) of the third proviso to section 236.
In other words the question of exigibility to tax is relatable not to the ownership of the hoarding but its situs.
Even if the hoarding does not belong to the Railway but to some private party, if it does not front the street and is situated within the Railway premises or within the compound of the railway premises it is clearly exempt.
We, therefore, do not approve of the line of reasoning adopted by the Division Bench.
On a close and careful interpretation, therefore, of cl.
(e) of the third proviso to section 136 of the Act we are clearly of the opinion that on the facts proved in the present case as the hoardings,containing the advertisements were front ing the public street and were clearly exposed to public view and the members of the public passing through the street, they are not covered by the exemption contemplated by the proviso and are, therefore, exigible to tax.
The demand notice, therefore, served on the appellant by the Municipal Corporation for payment of tax is not legally erroneous.
The result is that the appeal is dismissed with costs.
| IN-Abs | Section 136 of the City of Bangalore Municipal Corpora tion Act, 1949 provides that every person who erects, exhib its etc., over any land or structure any advertisement or who displays any advertisement to public view in any place whether public or private, shall pay on every advertisement a tax levied by the Corporation.
Clause (e) of the third proviso to the section enacts that no such tax shall be levied on any advertisement which is exhibited within any railway station or upon any wall or other property of a railway, except any portion of the surface of such wall or property fronting any street.
An advertisement facing a public street was put up by the appellant adjacent to the compound fencing of a railway station but within the railway premises.
The Municipal authorities levied tax on the advertisement.
The appel lant 's writ petition challenging the levy was dismissed by a single judge of the High Court and this decision was upheld by a division bench.
On appeal to this Court it was contended that the ex pression "fronting any street" occurring in the proviso qualified the railway property and not the advertisement.
Dismissing the appeal, HELD: 1. (a) Since the advertisements were fronting public street and were exposed to public view.
were not covered by the exemption contemplated by the proviso and were, therefore exigible to tax.
[677 D] (b) The word "fronting" qualifies not the wall or property mentioned in the latter part of the proviso but "advertisement".
The test laid down by the proviso is that the Court has to see if the advertisement affixed whether inside the compound of the railway or not fronts the street.
If it fronts the street or faces the street, even if it is within the railway premises it will be exigible to tax.
[674 D & F] (c) The word "fronting" has been used in the proviso not in any legal technical sense but it ordinary parlance.
It is not a term of art but one that signifies its meaning according to common notions.
[675 D] The Corporation of Madras vs Messrs The Oriental Mercan tile Company Ltd., Madras, and Ware Urban District Council vs Gaunt & Others.
[1960] 3 All E.R. 778, 787 distinguished.
The view of the single Judge that since the public street to which the advertisements were facing, ran along the railings with no other obstacle between the advertise ment and the public view, it could reasonably be said that they were fronting public street is correct.
On the other hand, the view of the Division Bench that the proviso would only apply to advertisements of such hoardings whose owner ship lay with the railway or which belonged to the rail way is not borne out by el.
The question of exigibili ty to tax is relatable not to the ownership of the hoardings but their situs.
[676 G H] 671
|
No. 147 of 1972.
(Appeal by Special Leave from the Judgment and Order dated 19.2.1971 of the Calcutta High Court in Income Tax Ref.
No. 98/67) G.C. Sharma, D.N. Mukherjee, A. K. Ganguly and G.S. Chatterjee, for the appellants.
B.B. Ahuja and R.N. Sachthey, for respondent.
G.C. Sharma, D.K. Jain, Anup Sharma, S.P. Nayar and Miss K. Jaiswal for the Intervener.
The Judgment of the Court was delivered by SARKARIA J.
Whether any payment by a Company, not being a Company in which the public are subsantially interested within the meaning of section 23A, of any sum by way of advance or loan to a shareholder, not exceeding the accumulated profits possessed by the Company, is to be deemed as his dividend under Section 2(6A) (e) read with Section 12(lB) of the Income tax Act, 1922, even if that advance or loan is subsequently repaid in its entirely during the relevant previous year in which it was taken, is the only question that falls to be determined in this appeal by special leave.
The assessment year is 1957 58, and the corresponding previous year is the calendar year 1956.
The assessee is a shareholder and the Managing Director of M/s. Dolaguri Tea Co. (P) Ltd. The Company is admittedly one in which the public are not substantially interested within the meaning of section 23A of the Indian Income tax Act, 1922 (for short, the Act).
At the commencement of the previous year, there was in the books of the Company a credit balance of Rs. 65,246/ in the assessee 's account, which had been brought ' forward from the earlier year.
Between the 11th January and the 12th November, 1956, the assessee withdrew in cash from time to time from the Company, amounts, aggregating Rs. 4,97,442/ .
The first two cash amounts of Rs. 3,50,000/ and Rs. 40,400/ , were taken by the assessee on 11.1.1966.
Deducting therefrom the opening balance of Rs. 65,246/ and two more item, namely, Rs. 1,40,000/ being outstand ing dividends declared on 31.12.1955 of his major son, and transferred to his account, and a further dividend of Rs. 19,493/ credited to his account from Kathoni Tea Estate, there remained a sum of Rs. 2,72,703/ to the debit of the assessee 700 in the books of the Company as on the 12th November, 1956.
On December 29, 1956, the assessee paid back to the Company a sum of Rs. 1,90,000/ .
On December 31, 1956, his account was credited with another sum of Rs. 80,000/ in respect of the dividend due to him and his wife, and with a further sum of Rs. 29,326/ for hypotecation.
In this manner before the end of the previous year, the assessee 's account was credited with an aggregated amount of Rs. 2,99,326/ which exceeded the debit balance of Rs. 2,72,70,3/ as on November 12, 1956.
Thus at the end of the relevant previous year, no advance or loan was due to the Company by the assessee.
The Income tax Officer found that the accumulated prof its of the Company as on January 1, 1956, amounted to Rs. 6,83,005.
He, therefore, deducted the two aforesaid items of Rs. 1,40,000/ and Rs. 19,493/ , aggregating Rs. 1,59,493/ , from the amount paid in cash to the assessee and treated the balance of Rs. 2,72,703/ as the net 'dividend ' income in the hands of the assessee within the meaning of Section 2 (6A)(e).
The/income tax Officer grossed up that amount under Section 16(2) and gave credit for tax in ac cordance with that Section to the assessee.
The assessee 's appeal to the Appellate Assistant Commissioner having failed, he preferred a further appeal to the Income tax Appellate Tribunal.
There was a divergence of opinion between the Members of the Tribunal.
The Ac countant Member took the view that the moment a payment is made as envisaged in Section 2(6A)(c) it becomes clothed with the character of a dividend and has to be treated as such income of the assessee, and no subsequent action or repayment by the share holder can take it out of the mis chief of this provision.
He therefore held that the sum of Rs. 2,72,703/ was taxable dividend under Section 2(6A)(e).
The Judicial Member expressed a contrary opinion.
In his view, the total income of the assessee during the rele vant previous year could be computed and assessed only at the end of that year; it could not be computed at interim periods during the previous year.
"If it is found that although the shareholder had taken by way of advance or loan an amount from the Company during the course of a previous year but had returned the same to the Company before the close of that previous year, it can only be said while computing the shareholder 's total income at the end of that previous year that no advance or loan from the 23A Company of which he was a shareholder stood for his benefit at the time relevant for computation of his total income.
The advances or loans taken during the interim periods of the previous year would just have to be ignored.
" On these premises, the Judicial Member came to the conclusion that the sum of Rs. 2,72,703/ grossed up to Rs. 3,19,245/ , was not a dividend within the fiction under Section 2(6A) (e) of the Act.
On account of this difference of opinion, the following question was referred to the President of the Tribunal: "Whether on the facts and in the circum stances of the case, the sum of Rs. 2,72,703/ net (Rs. 3,19,245/ gross) 701 is to be treated as dividend income in the hands of the assessee within the meaning of Section 2(6A) (e) ?" The President agreed with the Accountant Member and held that an "advance or loan received by the shareholder of a Private Company forthwith assumes the character of a divi dend and becomes his income by virtue of the fiction created by Section 2(6A) (e) and it ceases to be a liability for the purpose of taxation, although the assessee may, in fact or in law, remain liable to the Company to repay it.
If the assessee repays the loan subsequently, such repayment would not liquidate or reduce the quantum of the income which had already accrued as such repayment is not be al lowed as a permissible deduction under Section 12(2).
On these premises he answered the question in the affirma tive.
In accordance with the majority opinion, the Tribunal dismissed the assessee 's appeal, but, at his instance, referred the same question for opinion to the High Court under Section 66(1) of the Act.
The High Court held that the tax was attracted at the point of time when the said loan was borrowed by the share holder and it was immaterial whether the loan was repaid before the end of the accounting year or not.
On this reasoning it answered the question in favour of the Revenue and against the assessee.
Hence this appeal by the assessee.
Before dealing with the contentions canvassed, it is necessary to have a look at the general scheme and the relevant provisions of the Act, Section 2 (6A)(e) of the Act reads as follows: (6A) "dividend" includes (a) to (d) . (e) any payment by a company, not being a company in which the public are substantially interested within the meaning of section 23A of any sum (whether as representing a part of the assets of the company or otherwise) by way of advance or loan to a shareholder or any payment by any such company on behalf or for the individual benefit of a shareholder, to the extent to which the company in either case possesses accumulated profits; but "dividend" does not include (i) a distribution made in accordance with sub clause (c) or sub clause (d) in respect of any share issued for full cash consideration where the holder of the share is not entitled in the event of liquidation to participate in the surplus assets; (ii) any advance or loan made to a share holder by a company in the ordinary course of its business where the lending of money is a substantial part of the business of the compa ny; 702 (iii) any dividend paid by a company which is set off by the company against the whole or any part of any sum previously paid by it and treated as a dividend within the meaning of clause (e), to the extent to which it is so set off; Explanation.
The expression "accumulated profits", wherever it occurs in this clause, shall not include capital gains arising before the 1st day of April, 1946, or after the 31st day of March, 1948, and be fore the 1st day of April, 1956; Sub section (15) defines 'total income ' as meaning "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 is the charging section.
Two of the princi ples deducible from the Section are: (1 ) That the tax is levied on the total income of the assessable entity; (2) That each previous year is a distinct unit of time for the purpose of assessment, and the profits made or liabilities or losses incurred before or after the relevant previous year are wholly immaterial in assessing the profits of that year unless there is a statu tory provision to the contrary.
Section 4 (1 ) so far as it is material reads as follows: "Section 4(1): Subject to the provisions of this Act, the total ' income of any previous year of any person includes all income, prof its and gains from whatever source derived which (a) are received or are deemed to be re ceived in the taxable territories in such year by or on behalf of such person, or (b) if such person is resident in the taxa ble territories during such year, (i) accrue or arise or any deemed to accrue or arise to him in the taxable territories during such year, or (ii) accrue or arise to him without the taxable territories during such year, or (iii) . . (c) if such person is not resident in the taxable territories during such year, accrue or arise or are deemed to accrue or arise to him in the taxable territories during such year: (emphasis supplied) "Provided that . . " The principles deducible from Sec.
4(1) are: (1 ) The charge is on accrual or receipt basis.
Such receipt or accrual may be actual or statutory, i.e. the result of any statutory fiction created by the Act.
703 (2) If a particular amount of income is taxed under any of the clauses (a), (b) or (c) of the sub section the same amount cannot be taxed under any other clause either in the same year or in a different year.
That is to say, income which is taxed on accrual under clause (b) (ii) cannot be taxed again on receipt under clause (a) or on remittance under clause (b)(iii) (see Kanga and Palkhiwa la, Vol.
I, 1959 Edition, page 153).
(3) The receipt spoken of in this clause is the first receipt after the accrual of the income See the decision of this Court in Keshav Mills vs Commissioner of Income tax(1)].
Sub section (1) of Sec. 4 also highlights the basic principle embodied in the charging section 3, that the accrual or receipt of income (actual or deemed) is taxed with regard to the relevant previous year.
Section 12 deals with the residuary head: "Income from other sources".
Its sub section (1A) says that: "Income from other sources shah include 'dividends '.
Sub section (lB) in crucial.
It provides: "Any payment by a company to a share holder by way of advance or loan which would have been treated as a dividend within the meaning of clause (e) of sub section (6A) of section 2 in any previous year relevant to any assessment year prior to the assessment year ending on the 31st day of March, 1956 had that clause been in force in that year, shall be treated as a dividend received by him in the previous year relevant to the assessment year ending on the 31st day of March, 1956, if such loan or advance remained outstanding on the first day of such previous year".
Sub section (2), inter alia lays down that in computing any income by way of dividend, allowance shah be given for any reasonable sum paid by way of commission or remuneration to a banker or any other person realising such dividend on behalf of the assessee.
It is to be noted that sub section (6A) of section 2 and subsections (1A) and (lB) u/s 12 were inserted in the Act by the Finance Act, 1955, with effect from the 1 st April, 1956.
In the relevant assessment year, Section 16(2) of the Act was operative and ran as follows: "16(2) For the purpose of inclusion in the total income of an assessee any dividend shall be deemed to be income of the previous year in which it is paid, credited or distributed or deemed to have been paid, credited or (1) 704 distributed to him, and shall be increased to such amount as would, if income tax (but not super tax) at the rate applicable to the total income of the company . . for the finan cial year in which the dividend is paid, credited or distributed or deemed to have been paid, credited or distributed were deducted therefrom, be equal to the amount of the dividend.
" Mr. G.C. Sharma, Counsel for the appellants contends that the scope of the fiction created by Sec.
2(6A)(e) should be confined to those advances and loans only, which are not repaid but remain subsisting at the end of the previous year in which they were taken.
It is argued that the sole object of this provision is to curb the evil of distributing profits under the guise of loans or advances; that if an advance or loan is repaid in the same accounting year, it cannot be said that it was a device for distribu tion of profits.
It is submitted that only in the case of an advance or loan which remains outstanding at the end of the accounting year, Sec. 2(6A) (e) raises an irrebutable presumption that it was a payment of dividend under the cloak of a loan.
It is maintained that if this construc tion of Sec.
2(6A)(e) is not adopted, it will lead to ex tremely oppressive, unreasonable and anamolous results, including double taxation.
To illustrate his point Counsel compares and contrasts the position of a shareholder who promptly, after a short period, repays the loan in the same year, with one who does not do so but allows it to remain outstanding and be carried over to the next year, and there after a dividend is declared.
If the interpretation adopted by the High Court is correct says Mr. Sharma the share holder in the prior case who had promptly repaid the loan would not be entitled under sub clause (iii) of Clause (e) of section 2(6A) to set off any part of the subsequently declared dividend against the loan which he had repaid earlier, but will have to pay double tax on the same item, once on it as deemed dividend and then on it as declared dividend.
His liability cannot be reduced to the extent of the dividend; because at the date on which the dividend was declared, no loan was outstanding against which.
it could be set off.
As against the former, the latter shareholder who makes full use of the loan and does not repay any part of the loan in the same year, but leaves it unpaid till a dividend is declared next year, will get relief by set off of the subse quently declared dividend, in whole or in part against the loan outstanding against him.
Another example cited by Mr. Sharma is of a case where the accumulated profit, say is Rs. 9,000/ and the share holder takes an advance or loan of Rs. 3,000/ and he repays it after a week, and again gets the same amount (Rs. 3,000/ ) back as a loan, and again repays it after a week, and again retakes the same amount as loan all the three loans being taken and repaid, in the same year.
If the unrestricted interpretation of the provision, sought by the Revenue were to be adopted, the same amount of loan in all the three transactions of loan would be subjected to triple taxation.
Such an absurd and oppressive result, says the Counsel, would be against the intendment of the provi sion and inconsistent with the scheme of the Act which generally aims avoids double taxation.
The upshot of the arguments of Mr. 705 Sharma is that under the Act, only that item or entity is taxable which is rationally capable of being considered as the income of the assessee; that an advance or loan which is genuine and not a subterfuge for payment of dividend and is not subsisting or outstanding at the end of the previous year on account of its repayment by the shareholder cannot reasonably be deemed to be his dividend income within the contemplation of section 2(6A)(e) read with section 12 of the Act.
Mr. Sharma has taken us through various decisions having a bearing on the problem.
The cases referred to, discussed or sought to be distinguished by him are: K.M.S. Lakshman Aiyar vs Assistant Income tax Officer,(1) Navnit Lal C. Javeri vs
K.K. Sen, Appellate Assistant Commissioner, Income tax, Bombay;(2) Commissioner of Income tax, Madras vs
K. Srini vasan; (3) Walchand & Co. Ltd. vs Commissioner of Income tax, Bombay;(4) Commissioner, Income tax Bombay vs
R.K. Badiani.
(5) Mr. Sharma also has referred to Sec.
108 of the Commonwealth income tax Act as in force in Australia, and submitted that since the substance of Sec.
2(6A)(e) and section 12(lB) has been borrowed from s.108 of the said Act and the object of these provisions in the two enactments is the same, it will not be illegitimate to determine and circum scribe the scope of the fiction created by the provision in question in the light of the principles indicated in Sec.
108 of the Commonwealth Act.
On the other hand, Mr. Ahuja appearing for the Revenue, submits that sub clause (iii) which permits a set off against a loan deemed as dividend, does not apply in cases where the dividend is not declared in the same accounting year because to hold otherwise would be against the basic scheme ingrained in sections 3 and 4 of the Act, according to which the unit of time for the purpose of assessment is the previous year of the assessee.
Mr. Ahuja further maintains that even if during the same accounting year after repayment of the loan, a dividend is declared, sub clause (iii) will apply, and the Income tax Officer will not be debarred from reducing, in an appropriate case, the amount treated by him as 'dividend ' under clause (e) of section 2(6A) to the extent of the subsequently declared dividend, on the principle of notional set off underlying sub clause (iii).
The point sought to be made out is that since the treatment of the loan to the assessee shareholder as his dividend rests on a legal fiction, it will not be an illegitimate use of sub clause (iii) to allow a notional set off to meet such a situation.
Thus construed, says the Counsel, there would be no anomaly.
Mr. Ahuja further submitted that section 2(6A)(e) was enact ed to suppress the evil of receiving profits or dividends under the guise of loans by the shareholders of a controlled Company, as such a malpractice resulted in evasion of tax.
This provision, it is urged should be construed in a manner which suppresses the mischief and advances the remedy.
It is maintained that the language of the provisions in question (1) [1959] XL I.T.R.469 (Mad.) (2) [19651 1, SCR 909 56 I.T.R. 198.
(3) (4) (5) 706 is plain and unambiguous and no question of seeking external aid for its interpretation arises; the Court must give effect to it regardless of the hardship, if any, resulting therefrom.
The sum and substance of his arguments is, that since all the factual ingredients necessary for raising the fiction contemplated by section 2(6A) (e) and section 12(lB) have been found to exist by the Income tax authorities and the Tribu nal, the loan had to be treated as the assessee 's dividend income, the moment it was received, and the subsequent repayment of the loan could not neutralise or take it out of that category of 'income '.
Counsel has drawn our attention to the observations of this Court in Navnit Lal C. Javeri vs K.K. Sen, Appellate Assistant Commissioner of Income tax (supra).
He has further adopted the reasoning of the Bombay High Court in Walchand & Co. vs Commissioner of Income tax, Bombay (supra) Section 2(6A)(e) and section 12(lB) were inserted in the Act by.
the Finance Act 1955 which came into operation on 1 4 1955.
These provisions seem to have been adapted, and borrowed with alterations, from section 108 of the Commonwealth Income tax Assessment Act in force in Australia.
Section 108 reads as follows: "Loans to shareholders, (1 ) If amounts are paid or assets distributed by a private company to any of its shareholders by way of advances or loans, or payments are made by the company on behalf of or for the individual benefit of, any of its shareholders, so much, if any, of the amount or value of those ad vances, loans or payments, as, in the opinion of the Commissioner, represents distributions of income shall, for the proposes of this Act other than the purposes of Division 11A of Part III and Division 4 of Part VI be deemed to be dividends paid by the company on the last day of the year of income of the company in which the payment or distribution is made.
(2) Where the amount or value of an advance, loan or payment is deemed, under the last preceding sub section, to be a dividend paid by a company to a shareholder, and the company subsequently sets off the whole or a part of a dividend distributed by it in satis faction in whole or in part of that advance, loan or payment, that dividend shall, to the extent to which it is so set off, be deemed, not to be a dividend for any purpose of this Act.
" It will be seen that under section 108( 1 ) formation of "the opinion of the Commissioner" is the sine qua non for bring ing this provision into provision into operation.
It has been held be the Australian Board of Review that the mere fact that a shareholder in a private Company has become indebted to it, does not justify the formation of the opin ion by the Commissioner such as is indicated in sub section (1) of section 108.
"There must be something that goes beyond a mere debt automatically arising upon a taking of accounts and which points to a subterfuge whereby a payment which, upon examination, is found to relate to the income of the Company and to represent the distribution thereof, is made to appear to be a loan or advance" (I.C.T.B.R. (N.S.) Case No.80.) 707 It is noteworthy that at least in one material aspect the Indian law is different from that under section 108(1) of the Commonwealth Act as explained and interpreted by the Board in the case mentioned above.
Under section 108, the raising of the fiction is dependent upon a positive finding recorded by the Commissioner of Income tax that the payment represents distribution of the Company 'section income.
But section 2 (6A) (e) and section 12 of the Act do not leave this question to the adjudica tion of the income tax authorities.
Parliament has itself, in the exercise of its legislative judgment, raised a con clusive presumption, that in all cases where loans are advanced to a shareholder in a Private Ltd. Company ' having accumulated profits, the advances should be deemed to be the dividend income of the shareholder.
It is this presumption juris et de jure which is the foundation of the statutory fiction incorporated in section 2(6A)(e).
Thus section 108 of the Commonwealth Act appears to be more reasonable and less harsh than its Indian counterpart.
From the above discussion it emerges clear that the fiction created 2(6A) (e) read with section 12(lB) of the Act is inexora bly attracted as soon as all the conditions necessary for its application exist in a case.
In Navnit Lags case (supra), this Court, after an analysis of these provisions, listed these conditions, as follows: ". the combined effect of these two provisions is that three kinds of payments made to the.
shareholder of a company to which the said provisions apply, are treated as taxable dividend to the extent of the accumu lated profits held by the :company.
These three kinds of payments are: (1 ) payments made to the shareholder by way of advance or loan, (2) payments made on his behalf and (3) payments made for his individual benefit.
There are five conditions which must be satis fied before section 12(lB) can be invoked against a shareholder.
The first condition is that the company in question must be one in which the public are not 'substantially interested within the meaning of section 23A as it stood in the year in which the loan was advanced.
The second condition is that the borrower must be a shareholder at the date 'when the loan was advanced; it is immaterial what the extent of his shareholding is.
The third condition is that the loan advanced to a shareholder by such a company can be deemed to be dividend only to the extent to which it is shown that the company possessed accumulated profit at the date of the loan.
This is an important limit prescribed by the relevant section.
The fourth condition is that the loan must not have been advanced by ' the company in the ordinary course of its busi ness.
In other word 's, this provision would not apply to cases where the company which advances a loan to its shareholder earnes on the business of money lending itself; and the last condition is that the loan must have remained outstanding at the commencement of the shareholders previous year in relation to the assessment year 1955 56." (emphasis supplied) The first four conditions factually exist in the instant case.
The last condition is not applicable because it was a transitory provision 6 707 SCI 77 708 applicable to the assessment year 1955 56 only, while we are concerned with the assessment year 1957 58 and the previous year is the calendar year 1956.
There is no dispute that the company is a controlled (Private Ltd.) company in which the public are not substantially interested within the meaning of section 23A.
Further the assessee is admittedly a shareholder and Managing Director of that Company.
It is also beyond controversy that at all material times, the company possessed "accumulated profits" in excess of the amount which the assessee shareholder was paid during the previous year.
The Income tax Officer found that on January 1, 1956, the accumulated profits of the Company amounted to Rs. 6,83,005/ while from, 11.1.1956 to 12.11.1956, the assessee received in cash from time to time from the Company payments aggregating Rs. 4,97,449/ .
After deducting the opening credit balance and some other items credited to his account, the Income tax Officer found that in the previous year the assessee share holder had received a net payment of Rs. 2,72,703/ by way of loan or advance from the Compa ny.
The Company 's ' business is not money lending and it could not be said that the loans had been advanced by the company in the ordinary course of its business.
Thus all the factual conditions for raising statutory fiction created by ss.2(6A)(e) and 12(IB) appeared to have been satisfied in the instant case.
Mr. Sharma, however, contends that in order to attract the statutory fiction one other essential condition is, that the loan or advance must be outstanding at the end of the previous year, and if the loan had ceased to exist owing to repayment or otherwise before the end of the year as in the present case the fiction cannot be invoked.
In this connec tion, Counsel has again referred to the last limb of section 108 (1) of the Commonwealth Income tax Act, according to which, the payment to a shareholder by way of advance or loan is to be treated as a dividend paid by the Company on the last day of the year of income of the Company in which the payment is made.
It is urged that the principle in the last limb of sub section (1) of section 108 of the Commonwealth Act should also be read into.
the Indian statute, It is maintained that the omission of such words from sections 2(6A) (e) and 12(lB) does not show that the intendment of the Indian Legislature was different.
According to the Counsel what is implicit in section 108(1) of the Commonwealth Act, is implicit in sections 2(6A)(e) and 12(1B) and the general scheme of the Act which re quires that the assessment is to be made on the basis of total income of the whole previous year.
Such a view concludes Mr. Sharma, would also be in consonance with reason and justice.
We have given anxious thought to the persuasive argu ments of Mr. Sharma.
His arguments, if accepted, will certainly soften the rigour of this extremely drastic provi sion and bring it more in conformity with logic and equity.
But the language of sections 2(6A) (e) and 12(1B) is clear and unambiguous.
There is no scope for importing into the statute words which are not there.
Such importation would be, not to construe, but to amend the statute.
Even if there be a casus omissus, the defect can be remedied only by legislation and not by judicial interpretation.
709 To us, there appears no justification to depart from the normal rule of construction according to which the intention of the legislature is primarily to be gathered from the words used in the statute.
It will be well to recall the words of Rowlatt J. in Cape Brandy Syndicase vs I.R.C.(1) at p. 71, that "in a taxing Act one has to look merely at 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".
Once it is shown that the case of the assessee comes within the letter of the law, he must be taxed, however great the hardship may appear to.
the judicial mind to be.
In our opinion, the Indian Legislature has deliberately omitted to use in sections 2(6A)(e) and 12(lB) words analogous to those in the last limb of sub section (1) of section 108 of the Commonwealth Act.
When Sections 2(6A) (e) and 12(lB) were inserted by the Finance Act, 1955, Parliament must have been aware of the provision contained in section 108 of the Common wealth Act.
In spite of such awareness, Parliament has not thought it fit to borrow whole hog what is said in section 108 (1 ) of the Commonwealth Act.
So far as the last limb of section 108(1) is concerned, our Parliament imported only a very restricted version and incorporated the same as the 'fifth condition ' in sub section
(lB) of section 12 to the effect, that the "payment deemed as dividend shall be treat ed as a dividend received by him in the previous year relevant to the assessment year ending on the 31st day of March, 1956 if such loan or advance remains outstanding on the last day of such previous year".
The word "such" pre fixed to the "previous year" shows that the application of this clause is confined to the assessment year ending on 31 3 1956.
In the instant case we are not concerned with the assessment year ending on 31 3 56.
This highlights the fact that the Legislature has deliberately not made the subsist ence of the loan or advance, or its being outstanding on the last date of the previous year relevant to the assessment year, a prerequisite for raising the statutory fiction.
In other words, even if the loan or advance ceases to be outstanding at the end of the previous year, it can still be deemed as a 'dividend ' if the other four conditions factual ly exist, to the extent of the accumulated profits possessed by the Company.
At the commencement of this judgment we have noticed some general principles, one of which is, that the previous year is the unit of time on which the assessment is based (section 3).
As the taxability of an income is related to its receipt or accrual in the previous year, the moment a dividend is received whether it is actual dividend declared by the company or is a deemed dividend, income taxable under the residuary head, "income from other sources", arises.
The charge being on accrual or receipt the statutory fiction created by section 2(6A)(e) and s.12(IB) would come into opera tion at the time of the payment by way of advance or loan, provided the other conditions are satisfied.
(1) (1921)1,K.B. 64 atp.
710 We do not propose to examine the soundness or otherwise of the illustrations given by Mr. Sharma since they are founded on assumed facts which do not exist in the present case.
For the foregoing reasons we would answer the question posed in favour of the Revenue and dismiss this appeal with costs.
P.B.R. Appeal dismissed.
| IN-Abs | Under section 2(6A)(e).of the Indian Income tax Act, 1922, the term dividend includes any payment by a company not being a company in which the public are substantially interested within the meaning of section 23A of any sum (whether as representing a part of the assets of the company or otherwise) by way of advance or loan to a shareholder or any payment by any such company on behalf or for the individual benefit of a shareholder to the extent to which the company in either case possesses accumulated profits.
According to section 12(1A) of the Act, income from other sources includes dividends.
Sub section (lB) of section 12 provides any payment by a company to a shareholder by way of advance or loan which would have been treated as dividend within the meaning of section 2(6A)(e) in any previous year relevant to any assess ment year prior to the assessment year ending on the 31st day of March, 1956 had that clause been in force in that year, shall be treated as a dividend received by him in the previous year relevant to the assessment year ending on the 31st day of March, 1956, if such loan or advance remained outstanding on the first day of such previous year.
The provisions of section 2(6A)(e) and section 12(lB) had been borrowed and adopted with certain alterations from section 108(2) of the Commonwealth Income Tax Assessment Act of Australia the last limb of which provided that payment to a shareholder by way of advance or loan was to be treated as dividend paid by the company on the last day of the year of income of the company in which payment was made.
The appellant assessee was a shareholder and Managing Director of a Private Ltd. Company.
In the calendar year 1956 (assessment year 195758), the assessee withdrew in cash from the company a sum of Rs. 4.97 lakhs, which was less than the accumulated profits of the company.
Before the end of the year, the assessee repaid the whole amount.
Deduct ing a sum of Rs. 1.59 lakhs which was credited to the asses see 's account by way of dividend in the company 's books, the Income tax Officer treated the balance of Rs. 2.72 lakhs as dividend income in the ,assessee 's hands and grossed up the amount under section 16(2).
appeal, the Accountant Member of the Appellate Tribunal held that any payment made as envisaged in section 2(6A)(e) became dividend and must be treated as the assessee 's income and no subsequent repayment could take it out of the mischief of the provision.
The Judicial Member on the other band held that since total income of the asses see during the relevant previous year could be computed and assessed only at the end of that year any advance or loan taken during the interim periods of the previous year would have to.
be ignored.
On reference the President agreed with the Accountant Member.
The High Court answered the reference in favour of the Revenue.
698 were taken and (ii) the last limb of section 108(1) of the Aus tralian Act should be read into the Indian Act because what was explicit in.
section 108(1) of the Australian Act is implicit in section 2(6A),(e) and section 12(lB) of the Indian Act.
Dismissing the appeal, HELD: The fiction created by section 2(6A)(e) read with section 12(lB) of the Act is attracted as soon as all the conditions necessary for its application exist in a case.
[707 C] 1.
In Navnit Lal C. Javeri vs
K.K. Sen, Appellate Assist ant Commissioner Income tax ; , this Court held that the combined effect of these two provisions is that three kinds of payments made to a shareholder of a company are treated as taxable dividend to the extent of the accumulated profits held by the company, namely, payments made to the shareholder by way of advance or loan, pay ments made on his behalf and payments made for his individu al benefit.
The five conditions to be satisfied are: (i) The company must be one in which the public are not substan tially interested within the meaning of section 23A; (ii) The borrower must be a shareholder at the date when the loan was advanced; (iii) The loan advanced can be deemed to be divi dend only to the extent of the accumulated profit on the date of the loan; (iv) The loan must not have been advanced by the company is the ordinary course of its business and (v) The loan must have remained outstanding at the com mencement of the shareholder 's previous year in relation to the assessment year 1955 56.
[707 D G] In the instant case the company was a controlled company within the meaning of section 23A; the assessee was its share holder; the company possessed "accumulated profits" in excess of the amount paid to the assessee during the previ ous years; and the company 's business was not money lending.
The last condition was not applicable because it was a transitory provision applicable to the assessment year 1955 56 only while the assessment year in this case was 1957 58.
[708 A] 2.
(a) The language of sections 2(6A)(e) and 12(lB) is clear and unambiguous.
There is no scope for importing into the statute words which are not there.
Such importation would be not to construe it but to amend the statute.
Even if there be a casus omissus, the defect can be remedied only by legislation and not by judicial interpretation.
[708 H] (b) No justification to depart from the normal rule of construction according to which the intention of the legislature is primarily to be gathered from the words used in the statute has been made out.
(c) The Indian Legislature has deliberately omitted to use in sections 2(6A)(e) and 12(lB) words analogous to those in the last limb of section 108(1) of the Australian Act.
When sections 2(6A)(e) and 12(lB) were inserted by Finance Act, 1955, Parliament must have been aware of the provision contained in section 108 of the Australian Act.
In spite of such aware ness, Parliament has not thought it fit to borrow the whole hog what is said in section 108(1) no far as the last limb of that section is concerned.
Our Parliament imported only a very restricted version, and incorporated the same as the 5th condition in section 12(lB) to the effect, that the payment deemed as dividend shall be treated as dividend received by him in the previous year relevant to the assessment year ending on the 31st March, 1956 if such loan or advance remained outstanding on the last day of such previous year The word "such" prefixed to the previous year shows that the application of this clause is confined to the assessment year ending on 31st March, 1956.
[709 C D] In the instant case the assessment year did not end on 31st March, 1956 which showed that the Legislature has deliberately not made the subsistence of the loan or advance or its being outstanding on the last date of the previous year relevant to the assessment year, a prerequisite for raising the statutory fiction.
In other words, even if the loan or advance ceased to, be 699 outstanding at the end of the previous year, it could still be deemed as dividend if the other four conditions factually existed to the extent of the accumulated profits possessed by the company.
[709 E F] (d) Under section 3 which is the charging section, the previ ous year is the unit of time on which the assessment is based.
As the taxability of income is related to its re ceipt or accrual in the previous year, the moment dividend is received whether, actual or deemed, income taxable under the residuary head, "income from other sources", arises.
The charge being on accrual or receipt, the statutory fic tion created by sections 2(6A)(e) and section 12(lB) would come into operation at the time of payment by way of advance or loan provided the other conditions are satisfied.
[709 G H]
|
Appeal No. 991/76.
(Appeal by Special Leave from the Judgment and Order dated the 21.1.1976 of the Madhya Pradesh High Court in Second Appeal No. 415 of 1971) section Choudhury, D.N. Mishra, O.C. Mathur and Shri Narain for the appellant.
G.L. Sanghi, V.K. Sanghi, R.K. Sanghi and S.N. Khanduja for the respondent.
The Judgment of the Court was delivered by KRISHNA IYER, J.
A suit for eviction of an accommodation from the tenant to whom it had been let for residential and non residential 768 purposes resulted in dismissal by the trial Judge.
But in an appeal, the final court of fact took the view that the landlord (respondent) was entitled to eviction.
The tenant challenged the appellate decree before the High Court in Second Appeal without success and has therefore come up to this Court with this appeal by special leave.
A short point has been raised which deserves only a short answer.
Since we agree with the High Court which in turn has agreed with the first appellate court, our judgment can afford to be brief.
A statement of necessary facts may now be given.
The landlord had let out the premises, which is a storeyed building, to be tenant as per exhibit P 1 of 1955.
The signif icant clause in the lease deed runs thus: "1 XXX 2.
I take your house for my own use i.e. for opening a cloth shop and for residential purposes and I will not sublet your house to anybody.
XXX XXX XXX XXX.
" The tenant has thus put the building to busi ness and residential purposes.
The landlord, who is an M. Sc., claimed the building back on the score that he wanted to run a medical store on the ground floor a non residential purpose and stay on the first floor with his wife a residential purpose.
Thus the acommo dation was let out for dual purposes, was being used presumably for these requirements and was being claimed back by the landlord for the twin purposes mentioned above.
The final court of fact has held that the landlord needs the building for his chemist 's shop and for his residential use.
The High Court in Second Appeal has upheld this finding and added that "the finding as to his bonafide requirement was rightly not challenged before me .
The conclusion that the courts have reached is the only conclusion possible on the evidence on record in the light of the circumstances appearing.
" This statement by the High Court that the bonafide requirement of the landlord was not challenged before it has not been questioned in the memorandum of appeal to this Court.
It must therefore be taken that the bonafide need of the landlord is validly made out.
The short point that survives is as to whether the composite purposes of the lease would put it out of the ground set out for eviction under section 2 of the Madhya Pradesh Accommodation Control Act, 1961.
The said Act defines 'accommodation ' thus: " 'accommodation ' means any building or part of a building, whether residential or non residential and includes, XX XXX XXX.
" 769 It follows that an accommodation can be resi dential, non residential or both.
section 12 bars an action of eviction of a tenant from any accommodation except on one or more of the grounds set out therein.
section 12(1) (e) and (f), bearing on the present case, may be appropriately extracted here: "12.
Restriction on eviction of tenents (1) (a) to (d) x x x x x (e) that the accommodation let for residential purposes is required bona fide by the landlord for occupation as a residence for himself or for any member of his family, if he is the owner thereof, or for any person for whose benefit the accommodation is held.
and that the landlord or such person has no other reasonably suitable residential accommoda tion of his own in the occupation in the city or town concerned; (f) that the accommodation let for non residential purposes is required bona fide by the landlord for the purpose of continuing or starting his business or that of any of his major sons or unmarried daughters if he is the owner thereof or for any person for whose benefit the accommodation is held and that the landlord or such person has no other reasona bly suitable non residential accommodation of his own in his occupation in the city or town concerned;.
XXX XXX XXX.
" The residential portion is a part of the building and is an accommodation by defini tion.
The non residential portion is also a part of the building and is an accommoda tion by definition.
The lease has been given for residential as well as non residential purposes.
The landlord is entitled to evic tion of the residential portion if he makes out a bonafide residential requirement.
Likewise he is entitled to eviction of the non residential portion which is an accommoda tion if he makes out a non residential requirement.
We have already found that the final court of fact, affirmed by the High Court, has found in favour of the landlord regarding his residential as well as non residential requirements.
Therefore, nothing more can be done in defence of the tenant in the light of the present law.
Counsel contended that in a decision of this Court, viz, section Sanyal vs Gian Chand,(1) it has been held that it is not permissible for the court to split up a contract in an eviction proceeding.
We agree.
There is no question of splitting up of the contract in the present case, as is abundantly plain from what we: have stated.
The contract was integral but had dual purposes.
The landlord has put forward dual requirements which neatly fit into section 12(1)(e) and (f).
The conse quence is inevitable that the eviction order has to be upheld.
(1) ; 770 It is seep, that the tenant has been doing a thriving cloth business, with goodwill attached to it, for well knigh 30 years.
It is therefore but fair that the.
tenant is given sometime to rehabilitate himself by securing an alter native but suitable accommodation.
In our towns where scarcity of accommodation is the rule it is not that easy to secure alternative premises.
Taking due note of this reali ty, we direct that while dismissing the appeal the eviction order shall not be put into execution before 1st January, 1978.
Parties will bear their respective costs.
S.R. Appeal dismissed.
| IN-Abs | Under sub clauses (e) and (f) of section 12(1) of the Madhya Pradesh Accommodation Control Act, 1961, a landlord can evict a tenant, if the residential and the non residential accommodation respectively let out to the latter is required bona fide by him for occupation as a residence and for the purpose of continuing or starting his business.
Accommoda tion under the Act means any building or part of a building, whether residential or non residential.
The appellant tenant was inducted in by the respondent in 1955 for the dual purposes of residential and non resi dential purpose of running a cloth shop.
The landlord, bona fide required the building for his residence and also for starting his business of running a Chemist shop.
The Evic tion Suit filed by him was dismissed by the trial court, but the appellant and the High Court ,,ranted him the eviction decree.
Discussing the appeal by special leave, the Court.
HELD: The residential portion as well as a non residen tial portion are parts of the building and each is an accom modation by definition.
The landlord is entitled to evic tion of the "accommodation" if he makes out a bona fide residential and non residential requirement of the portions.
In the instant case the contract was integral but had dual purpose.
The landlord has put forward dual requirements which neatly fit into section 12(1)(e) and (f) of the Madhya Pradesh Accommodation Control Act, 1961.
The findings of the appellate Court regarding the bona fide requirement of the landlord, not having been challenged in the High Court and in this Court in the memorandum of Appeal, the conse quence viz. eviction is inevitable.
[769 E G] section Sanyal vs Gianchand ; , distinguished.
[The Court, however granted time to the appellants for vacating the building till 1 1 1978, in terms of equity].
|
l. A. 337 & 367/1976 (Appeals by Special Leave from the Judgment and Order dated 24.3.1976 of the Punjab and Haryana High Court in Srl.
A No. 757 712 75 and Murder Reference No. 27/75 and in Crl.
Appeal No. 759 of 1975) A. K. Sen and Harjinder Singh, for the appellant.
N.S. Das Behl, for the respondent.
The Judgment of the court was delivered by KRISHNA IYER, J.
In Crl.
Appeal No. 337/1976 by special leave Shri A.K. Sen has confined his challenge indeed, leave itself was limited to the question of sentence.
The case of murder was proved and the conviction by the Sessions Court was confirmed by the High Court.
The Sessions Judge awarded life imprisonment to two accused and death sentence to the appellant.
The High Court confirmed the death sen tence and hence this appeal.
Section makes a departure from the previous Code on account of humanist considerations to personalise the sentence to be awarded.
The object of the provision is to give a fresh such circumstances as may help the court in awarding an appropriate sentence having regard to the personal, social and other circumstances of the case.
Of course, when it is a case of conviction under section 302, I.P.C. if the minimum sentence is imposed the question of providing an opportunity under Sec. 235 would not arise.
, In this case it is admitted that no opportunity was given under section 235(2) Cr.
P.C. to the appellant to.
show cause as to why the lesser sentence of life imprisonment should not be inflicted.
We may make it absolutely clear that such a failure will not affect the conviction under any circumstances.
The only point is relevant to sentence.
Even there in a murder ease where the charge of murder is made out, the limited question is as between the two sen tences prescribed under the Penal Code.
In Santa Singh vs State of Punjab(1) this Court considering section 235 (2) Cr.
P.C. held that the hearing contemplated by that sub section is not confined merely to hearing oral submissions but extends to giving an opportunity to the prosecution and the accused to place before the court facts and materials relating to the various factors bearing on the question of sentence and, if they are contested by either side, then to produce evidence for the purpose of establish ing the same.
Of course, in that particular case this Court sent the case back to the sessions court for complying with section 235(2) Cr.
It may well be that in many cases send ing the case back to the Sessions Court may lead to more expense, delay and prejudice to the cause of justice.
In such cases it may be more appropriate for the appellate court to give an opportunity to the parties in terms off section 235(2) to produce the (1) A.I.R. 1976 S.C. 2386 713 materials they wish to adduce instead of going through the exercise of sending the case back to the trial court.
This may in many cases save time and help produce prompt justice.
In the present case we propose to adopt that course and counsel for the parties agree that they will rely upon the materials available of record and they have nothing more to offer to the court bearing on the question of sentence.
It will be an idle formality in a situation like that to remit the case to reconsider the question of sentence to the Sessions Court.
Coming, to the facts of the present case, having heard both sides we are impressed by Shri Sen 's submission that the death sentence has been inflicted nearly two years ago and the agony of such a sentence has been an excruciating experience suffered by the convict for a long period.
This, by itself, may not be a circumstance to bring down the death sentence, if otherwise the act is took brutal, depraved or meriting the highest penalty.
It has been now established in many decisions of this Court that death sentence must be awarded where there are aggravating factors (vide E. Annami na vs State of Andhra Pradesh(1).
The appellant had two other assailants with him who have been awarded life impris onment.
Moreover, it is evident from the records that there was an exchange of abuse between the parties, viz., Shiv Singh and the accused party.
It is also apparent that there was no motive for the appellant to kill the innocent child who died, a circumstance which has influenced the courts below in awarding the capital sentence.
The other circumstances present also indicate that there is no partic ular reason why the appellant should have been given the severer sentence and we are satisfied that the ends of justice would be met be awarding life imprisonment.
We accordingly direct that the sentence of life imprisonment should be substituted in place of death sentence awarded by the trial court and confirmed by the High Court.
We allow the appeal to this extent.
Appeal No. 367 of 1976 is dismissed as not pressed.
Cr. A. 337 allowed in part and sentence modified.
Cr. A. 367/76 dismissed.
| IN-Abs | The appellant was convicted along with two other accused under section 302 I.P.C. and sentenced to death while the other two were sentenced to life imprisonment.
In appeal to this Court against the orders of the High Court confirming the death sentence imposed, the special leave was granted limit ed to sentence.
Allowing the Criminal Appeal No. 337 of 1976 in part and modifying the death sentence to one of life imprisonment, the Court, HELD: (1) The object of section is to give a fresh opportunity to the convicted person to bring to the notice of the court such circumstances as may help the court in awarding an appropriate sentence have regard to the per sonal, social and other circumstances of the case.[712 D] (2) Failure to give an opportunity under s" 235(2) Cr.
P.C. will not affect the conviction under any circum stance.
In a murder case where the charge is made out the limited question is as between the two sentences prescribed under the Penal Code.
If the minimum sentence is imposed.
question of providing an opportunity under section 235 would not arise.
[712 F] (3) The hearing contemplated by section 235(2) is not con fined merely to hearing oral submissions but extend giving an opportunity to the prosecution and the accused to place before the court facts and materials of sentence and;if they are contested by either side then to produce evidence for the purpose of establishing the same.
[712 G] Santa Singh vs State of Punjab A.I.R. 1976 S C 2386, reiter ated.
(4) To save time and expense and help produce prompt justice, it may be more appropriate for the appellate court to give an opportunity to the parties in terms of section 235(2) to produce the materials they wish to adduce instead of going through the exercise of sending the case back to the trial court.
1713 A] In the instant case, the Court modified the death sen tence to one of life imprisonment in view of the facts: (i) The death sentence has been inflicted nearly two years ago, and the agony of such a sentence has been an exCruciating experience suffered by the convict for a long period; (ii) The appellant had two other assailants with him who have been awarded life imprisonment; (iii) There was no motive for the appellant to kill the innocent child; and (iv) The other circumstances present indicate that the ends of justice would be met by awarding life imprisonment.
[713 G E] E. Annamma vs State of Andhra Pradesh ; , referred to
|
Parties will hear their own costs, V.P.S. Appeals dismissed.
Appeal by special leave from the judgment and order dated the 3rd November, 1953 of the High Court of Judicature at Nagpur in Criminal Appeal 1144 No. 220 of 1953 arising out of the judgment and order dated the 21st July 1953 of the Court of Sessions Judge at Jabalpur in Sessions Trial No. 32 of 1953.
H.J. Umrigar and Rajinder Narain, for the appellant.
The courts below were wrong in convicting the appellant of murder under section 302 of the Indian Penal Code in the absence of a charge framed for the offence.
The charge framed against the appellant was different and he was never charged individually of having committed murder.
When the other person was acquitted the charge of an offence under section 302 read with section 34 of the Indian Penal Code falls and the appellant is bound to be acquitted.
It is a fundamental principle of criminal law as administered in India that there should be a separate charge for every distinct offence as the accused person must have notice of the charge which he has to meet.
The only exceptions are contained in sections 236, 237 and 238 of the Code of Criminal Procedure.
The offence of murder under section 302 of the Indian Penal Code being separate, distinct and different from an offence under section 302 read with 34 or an offence under section 302 read with 149 which creates a distinct head of criminal liability known as constructive liability a conviction under section 302 simpliciter without a charge being framed therefor is an illegality in the mode of trial.
Where a person has been convicted of an offence with which he has not been charged (unless allowed by exceptions) the prejudice is inherent in the absence of the charge itself and it is unnecessary to look any further.
Where there is an illegality in the mode of trial as contemplated in sections 233 to 239 it is an illegality, which is not cured by the provisions of sections 535 and 537.
There is no difference in principle between a charge under section 302 read with 34 and a charge under section 302 read with 149 [See: Nanak Chand vs State of Punjab ([1955] 1 S.C.R.1201), Suraj Pal vs State of U. P. ; It is incorrect to say that the decision of the Privy Council in Subramania Iyer 's case as to what is an illegality has been modified by the subse 1145 quent decisions of the Privy Council, and, in fact, in Babulal Chowkhani 's case Lord Wright in delivering the judgment of the Board actually stated that it was taken as settled law by both sides that the breach of the provisions of section 239 of the Code of Criminal Procedure would be an 'illegality ' which would vitiate the trial as opposed to a mere 'irregularity ' which would not vitiate the trial.
Section 535 appears in Chapter XLV of the Code and is headed "Of irregular proceedings" and cannot possibly apply to breaches of the mandatory provisions of sections 233 to 239 of the Code; it may relate to those cases where it is optional to frame a charge.
See sections 263, 362(4).
Assuming that actual prejudice is necessary, then as the only charge against the appellant being one under section 302 read with section 34, and that having failed due to the acquittal of the co accused, and the appellant having successfully shown that there was no "common intention" as contemplated by section 34 of the Indian Penal Code prejudice is bound to occur due to his conviction under section 302 simpliciter, with which he was never charged.
In any event, the 1146 offence committed in the case, even though the blow was struck on the head, could never be murder, as even the medical evidence showed that the bead injury "was likely" to result in fatal consequences.
The offence committed would either be one of grievous hurt under section 325, or alternatively, it is covered by exception 4 to section 300, and punishable under the second part of section 304.
B.Sen and I. N. Shroff, for the respondent.
The word 'illegality ' which is frequently used in the judgments is nowhere defined in the Code of Criminal.
Procedure.
This word had been used by the judges to convey that the trial has been irregular and the irregularity is not curable under the provisions of the Code.
The word has been used in three senses, namely: (a) In cases where the trial and conviction are ab initio void due to some inherent defect, which goes to the root and is by itself enough to vitiate the trial, as in cases of lack of jurisdiction, e.g., where section 197 of the Code has not been complied with; (b) In cases where a mandatory prohibition of the Code has been disregarded and it is apparent from the provision itself that, having regard to its objects and purposes, such disregard is bound to lead to prejudice; (c) In a more popular sense, that is, in respect of a particular case or cases where having regard to the facts and circumstances, whether it be due to prejudice or otherwise, the conviction cannot be sustained.
Proceeding on the basis that an offence under section 302 read with section 149 is a distinct and separate offence from an offence under section 302, the question is whether in the absence of actual prejudice the conviction of a person of the latter offence, when he is only charged with the former, is illegal.
The answer depends on the determination as to whether the failure to frame a charge is such a disregard of the mandatory Provisions of the Code so as to lead to the conclusion that prejudice must have been caused.
In N. A. Subramania Iyer vs King Emperor ([1901] 28 I.A. 257) the decision was based on the facts of the case in which actual prejudice was caused.
In any event, that decision stands modified by the 1141 decisions of the Privy Council in the later cases: [See, Abdul Rahman vs The King Emperor ([1926] 54 I.A. 96) and Pulukuri Kotayya and Others vs King Emperor ([1946] 74 I.A. 65).
It is clear from those decisions that every breach of a mandatory provision is not such as would ipso facto vitiate a trial.
If one looks at the relevant sections, the object behind the enactment of those provisions and the intention of the legislature, it is clear that the framing of a charge though mandatory is not of a vital nature.
See sections 210, 254,271, 221, 222, 223, 225, 226, 227, 232 and 535.
All that the Code contemplates is that an accused person must in fact receive notice of what be is being tried for.
When a person is charged with an offence under section 302 read with section 149 of the Indian Penal Code there is no objection to his being convicted under section 302 without a charge being framed, if it appears from the evidence that he has committed the actual murder and it appears from the record that either by the trend of cross examination or by reason of questions being put to him under section 342 he understood that he was actually being tried for murder: [See Karnail Singh and Another vs The State of Punjab ([1954].
8 C.R. 904) and Lachman Singh and Others vs The State ([1952] S.C.R. 839)].
A case of this nature may even be covered by the provisions of section 237 of the Code of Criminal Procedure.
The cases of Nanak Chand vs State of Punjab ([1955] 1 S.C.R. 1201) and Suraj Pal vs State of U.P. ([1955] 1 S.C.R. 1332), do not lay down the proposition that even in the absence of prejudice conviction of a person under section 302 who is charged with an offence under section 302 read with section 149, would be ipso facto illegal.
Whatever view the Court takes in respect of a conviction under section 302 when a person is charged with section 302 read with section 149, it is quite clear that a person can be validly convicted of murder when he is charged with section 302 read with section 34.
Section 34 does not create a specific offence and a person who is charged under section 302 read with section 34 is really being charged for his act in the murder itself.
It is therefore not necessary to frame a separate charge under section 302.
The Privy Council as well as the High 1148 Courts in India have always taken this view.
See ' The King Emperor vs Barendra Kumar Ghose (A.I.R. , Emperor vs Destrali ([1930] , Debiprasad Kalowar vs Emperor ([1932] , Devki Nandan and Others vs Emperor (A.I.R. 1941 Lah. 423) and Bhondu Das vs King Emperor ([1928] 7 Patna 758).
In this case there was no actual prejudice as the accused knew that he was being charged with murder which is clear from the trend of cross examinations of witnesses and his examination under section 342 of the Code of Criminal Procedure.
The facts clearly show that the offence committed by the accused is one of murder as the deceased died as a result of injuries and the injury was sufficient to cause death according to the doctor 's evidence.
Umrigar in reply.
If section 535 is given its literal meaning it would mean that a trial for any offence could be held and terminated without the framing of any charge whatsoever.
It would also mean that a person could be charged with a minor offence and convicted of a major offence, whereas section 238(2) only allows conviction of a minor offence without a charge, if the major offence with which the person is charged is not made out.
Such a wide meaning which would lead to absurdities should not be given to section 535.
October 31.
The judgment of section R. Das, Acting C.J. and Bose J. was delivered by Bose J.
The judgment of Jagannadhadas and Chandrasekhara Aiyar JJ.
was delivered by Chandrasekhara Aiyar J. Jafer Imam J. delivered a separate judgment.
This appeal was referred to a Bench of five Judges in order to determine whether there was a conflict of view between Nanak Chand vs The State of Punjab(1) and Suraj Pal vs The State of U.P.(2) and (1) [1955] I S.C.R. 1201.
(2) ; 1149 if so, to determine it.
The appeal is against a conviction for murder in which the lesser sentence was given.
The main ground is that the appellant was charged under section 302 of the Indian Penal Code read with section 34.
But the Courts below hold that the appellant inflicted the fatal blow and have made him directly liable for the murder.
He contends that as he was not charged with having murdered the man personally be cannot be convicted under section 302.
He relies on certain observations in Nanak Chand vs The State of Punjab(1) and contends that the conviction is an illegality which cannot be cured and claims that he must either be acquitted or, at the most, be retried, though be adds further that in the circumstances of this case the Court should not in the exercise of its discretion order a retrial.
As against this it is contended for the State that an omission to frame a separate charge in the alternative under section 302 simpliciter is a curable irregularity provided there is no prejudice to the accused.
Therefore, the only matter for determination is a question of fact whether there was prejudice in this case.
The charge was as follows: "That you, on or about the 12th day of February 1953, at Civil Lines, Jabalpur, went with your brother Ronnie Slaney to the house of Mrs. Waters (P.W. 20) at about 7 p.m. and in furtherance of the common intention did commit murder by intentionally or knowingly causing the death of her brother D. Smythe and thereby committed an offence punishable under section 302 of the Indian Penal Code read with section 34 of the Indian Penal Code. . .".
An exactly similar charge with the necessary change of name was framed against the co accused Ronnie Slaney.
It was contended on behalf of the State that this is really a charge under section 302 of the Indian (1) ; , 1150 Penal Code and that the references to common intention and to section 34 are mere surplusage.
There is much to be said for this but we will assume in this case (without so deciding) that the charge is ambiguous and that it means what the appellant says it means, namely a charge under section 302 read with section 34 and not one under section 302 simpliciter.
On that assumption the question for our decision is whether the omission to frame an alternative charge under section 302 of the Indian Penal Code is an illegality that cuts at the root of the conviction and makes not invalid or whether it is a curable irregularity in which all that we are concerned to see is whether there was prejudice.
What it narrows down to is this: Is the charge to be regarded as a ritualistic formula so sacred and fundamental that a total absence of one, or any departure in it from the strict and technical requirements of the Code, is so vital as to cut at the root of the trial and vitiate it from the start, or is it one of many regulations designed to ensure a fair and proper trial so that substantial, as opposed to purely technical, compliance with the spirit and requirements of the Code in this behalf is enough to cure departures from the strict letter of the law? Before we proceed to set out our answer and examine the provisions of the Code, we will pause to observe that the Code is a code of procedure and, like all procedural laws, is designed to further the ends of justice and not to frustrate them by the introduction of endless technicalities.
The object of the Code is to ensure that an accused person gets a full and fair trial along certain well established and well understood lines that accord with our notions of natural justice.
If he does, if he is tried by a competent court, if be is told and clearly understands the nature of the offence for which he is being tried, if the case against him is fully and fairly explained to him and he is afforded a full and fair opportunity of defending himself, then, provided there is substantial compliance with the outward forms of the law, mere mistakes in procedure, mere in consequential errors and omissions 1151 in the trial are regarded as venal by the Code and the trial is not vitiated unless the accused can show substantial prejudice.
That, broadly speaking, is the basic principle on which the Code is based.
Now here, as in all procedural laws, certain things are regarded as vital.
Disregard of a provision of that nature is fatal to the trial and at once invalidates the conviction.
Others are not vital and whatever the irregularity they can be cured; and in that event the conviction must stand unless the Court is satisfied that there was prejudice.
Some of these matters are dealt with by the Code and wherever that is the case full effect must be given to its provisions.
The question here is, does the Code deal with the absence of a charge and irregularities in it, and if so, into which of the two categories does it place them? But before looking into the Code, we deem it desirable to refer to certain decisions of the Privy Council because much of the judicial thinking in this country has been moulded by their observations.
In our opinion, the general effect of those decisions can be summarised as follows.
First comes a class of case in which the Code deals with the matter expressly.
In that event, full effect must be given to the plain meaning of the words used.
"The language of that Code is conclusive, and must be construed according to ordinary principles, so as to give effect to the plain meaning of the language used.
No doubt, in the case of an ambiguity, that meaning must be preferred which is more in accord with justice and convenience, but in general the words used read in their context must prevail".
And at page 177 "But, even so, that can be no ground why the Court should misconstrue the section".
and at page 178 ,"Their Lordships decide the question on what they regard as the plain meaning of the language used".
(1) [1938] L.R. 65 I.A. 158, 175.
1152 Next comes a class of case for which there is no express provision in the Code, or where there is ambiguity.
In that event, the question is whether the trial has been conducted in substantial compliance with the Code or in a manner substantially different from that prescribed.
"When a trial is conducted in a manner different from that prescribed by the Code (as in N. A. Subramania Iyer 's case(1)), the trial is bad and no question of curing an irregularity arises; but if the trial is conducted substantially in the manner prescribed by the Code, but some irregularity occurs in the course of such conduct, the irregularity can be cured under section 537, and none the less so because the irregularity involves, as must nearly always be the case, a breach of one or more of the very comprehensive provisions of the Code".
Pulukuri Kotayya vs King Emperor(2).
The question in such cases is whether the departure is so violent as to strike at the root of the trial and make it no trial at all or is of a less vital character.
It is impossible to lay down any hard and fast rule but taken by and large the question usually narrows down to one of prejudice.
In any case, the courts must be guided by the plain provisions of the Code without straining at its language wherever there is an express provision.
For a time it was thought that all provisions of the Code about the mode of trial were so vital as to make any departure therefrom an illegality that could not be cured.
That was due to the language of the Judicial Committee in N.A. Subramania Iyer vs KingEmperor(1).
Later this was construed to mean that that only applies when there is an express prohibition and there is prejudice.
(2) [1917] L.R. 74 I.A. 66, 75.
1153 in most systems of jurisprudence, but it would be an extraordinary extension of such a branch of administering the criminal law to say that when the Code positively enacts that such a trial as that which has taken place here shall not be permitted that this contravention of the Code comes within the description of error, omission or irregularity".
This was examined and explained in Abdul Rahman vs King Emperor(1) as follows: "The procedure adopted was one which the Code positively prohibited, and it was possible that it might have worked actual injustice to the accused".
In our opinion, the key to the problem lies in the words underlined.
Except where there is something so vital as to cut at the root of jurisdiction or so abhorrent to what one might term natural justice, the matter resolves itself to a question of prejudice.
Some violations of the Code will be so obvious that they will speak for themselves as, for example, a refusal to give the accused a hearing, a refusal to allow him to defend himself, a refusal to explain the nature of the charge to him and so forth.
These go to the foundations of natural justice and would be struck down as illegal forthwith.
It hardly matters whether this is be cause prejudice is then patent or because it is so abhorrent to well establisbed notions of natural justice that a trial of that kind is only a mockery of a trial and not of the kind envisaged by the laws of our land, because either way they would be struck down at once.
Other violations will not be so obvious and it may be possible to show that having regard to all that occurred no prejudice was occasioned or that there was no reasonable probability of prejudice.
In still another class of case, the matter may be so near the border line that very slight evidence of a reasonable possi bility of prejudice would swing the balance in favour of the accused.
This, in our opinion, has been the trend of the more recent decisions of the Privy Council and indeed of latter day criminal jurisprudence in England as well as in India.
The swing of the pendulum has been (1) [1926] L.R. 54 I.A. 96, 109. 1154 away from technicality, and a greater endeavour has been made to regard the substance rather than the shadow and to administer Justice fairly and impartially as it should be administered; fair to the accused, fair to the State and fair to the vast mass of the people for whose protection penal laws are made and administered.
The more recent attitude of the Judicial Committee is summed up by Sir John Beaumont in Pulukuri Kotayya vs King Emperor(1) where he says that "The distinction drawn in many of the cases in India between an illegality and an irregularity is one of degree rather than of kind" and by Viscount Sumner in Atta Mohammad vs King Emperor(2) "In the complete absence of any substantial injustice, in the complete absence of anything that outrages what is due to natural justice in criminal cases, their Lordships find it impossible to advise His Majesty to interfere".
We prefer this way of stating the law, for the distinction that was once sought to be drawn between an express prohibition and an equally express provision positively stated strikes us as unreal.
The real question is not whether a matter is expressed positively or is stated in negative terms but whether disregard of a particular provision amounts to substantial denial of a trial as contemplated by the Code and understood by the comprehensive expression "Natural justice".
It will be observed that disregard of ail express Prohibition was regarded as curable in Zahiruddin vs King Emperor(3), so the question whether a particular provision is stated in positive or in negative terms is not the true criterion.
(2) [1929] L.R. 57 I.A. 71, 76.
(3) [1947] L.R. 74 I.A. 80, 1155 controversy that has raged around the true meaning of N. A. Subramania Iyer vs King Emperor(1).
In any case, our opinion is that the real object of the Code is to leave these matters to the discretion and vigilance of the courts.
Slightly to alter the language of the Privy Council in Babulal Choukhani vs The KingEmperor(2) we would say "It must be hoped, and indeed assumed, that magistrates and judges will exercise their jurisdiction fairly and honestly.
Such is the implied condition of the exercise of judicial power.
If they do not, or if they go wrong in fact or in law, the accused has prima facie a right of recourse to the superior courts by way of appeal or revision; and the cases show bow vigilant and resolute the High Courts are in seeing that the accused is not prejudiced or embarrassed by unsubstantial departures from the Code and bow closely and jealously the Supreme Court guards the position of the accused.
These safeguards may well have appeared to the Legislature to be sufficient when they enacted the remedial provisions of the Code and have now left them substantially unaltered in the new Code recently introduced".
This, we feel, is the true intent and purpose of section 537(a) which covers every proceeding taken with jurisdiction in the general phrase "or other proceedings under this Code".
It is for the Court in all these cases to determine whether there has been prejudice to the accused; and in doing so to bear in mind that some violations are so obviously opposed to natural justice and the true intendment of the Code that on the face of them and without anything else they must be struck, down, while in other cases a closer examination of all the circumstances will be called for in order to discover whether the accused has been pre judiced.
We now proceed to examine the relevant sections of the Code.
Chapter XLV deals generally with irregular proceedings.
There are certain irregularities which do not vitiate the proceedings.
They are set out in section 529.
No question of prejudice arises, (1) [1901] L.R. 28 I.A. 257.
146 (2) [1938] L.R. 5 I.A. 158,177.
1156 in this class of case because the section states cate gorically that they shall not vitiate the proceedings.
Certain other irregularities are treated as vital and there the proceedings are void irrespective of prejudice.
These are set out in section 530.
A third class is dealt with in sections 531, 532, 533, 535, 536 (2) and 537.
There, broadly speaking, the question is whether the error has caused prejudice to the accused or, as some of the sections put it, has occasioned a failure of justice.
The examples we have given are illustrative and not exhaustive.
What we are seeking to demonstrate is that the Code has carefully classified certain kinds of error and expressly indicates bow they are to be dealt with.
In every such case the Court is bound to give effect to the express commands of the legislature: there is no scope for further speculation.
The only class of case in which the Courts are free to reach a decision is that for which no express provision is made.
The present case is concerned with the nature of the charge and we find that the Code expressly deals with this in several of its sections.
Our only task therefore is to interpret them and, having propounded their meaning, to give effect to whatever they say.
Now there is no doubt that a charge forms the foundation of a sessions trial and is a most important step in it.
The accused must know and understand what he is being tried for and must be told in clear and unambiguous terms: section 271 (1).
There can be no shirking that or slurring over it, and this must appear on the face of the record.
It cannot be established by evidence taken after the trial.
But there is, in our opinion, equally no doubt that the Code expressly deals with this and expressly provides that no error, omission or irregularity in the charge, or even total absence of a charge, shall vitiate a trial unless prejudice to the accused is shown.
This is repeatedly reiterated in a number of sections.
The whole question therefore is whether the "charge" must be formally reduced to writing and expressed as a ritualistic formula in order to save the trial from the ' fundamental defect.
of an incurable illegality or 1157 whether the information that is the substance of the matter can be conveyed in other ways.
The question is whether we are to grasp at the substance or play hide and seek among the shadows of procedure.
A perusal of them reveals the reasons why a charge is required.
It must set out the offence with which the accused is charged and if the law which creates the offence does not give it any specific name, so much of the definition of the offence must be stated "as to give the accused notice of the matter with which he is charged".
The charge must also contain such particulars of date, time, place and person "as are reasonably sufficient to give the accused notice of the matter with which he is charged"; and section 223 says "When.the nature of the case is such that the particulars mentioned in sections 221 and 222 do not give the accused sufficient notice of the matter with which he is charged, the charge shall also contain such particulars of the manner in which the alleged offence was committed as will be sufficient for that purpose".
It is clear to us that the object of the charge is not to introduce a provision that goes to the root of jurisdiction as, for example, the requirement of previous sanction under section 197, but to enable the accused to have a clear idea of what he is being tried for and of the essential facts that he has to meet.
But there are other ways of conveying this information.
For example, in summons cases no formal charge is required: all that is necessary is to tell the accused the substance of the accusation made against him (section 242).
The whole question is whether, in warrant cases and in sessions trials, the necessary information must be conveyed in one way and one way only, namely in a formal charge in order that the entire trial may not be ipso facto vitiated because of an incurable illegality, or whether that can be done in other and less formal ways, provided always that it is in fact conveyed in a clear and unambiguous man ner and in circumstances that the court will regard '1158 as fair and in substantial, as opposed to purely technical, compliance with the requirements of the Code.
The law could have provided one way as easily as another, but what it has chosen to do is set out in the following sections.
The marginal note to section 225 is headed "Effect of errors." and the section states that "No error in stating either the offence or the particulars required to be stated in the charge, and no omission to state the offence or those particulars, shall be regarded at any stage of the case as material, unless the accused was in fact misled by such error or omission, and it has occasioned a failure of justice".
Therefore, when there is a charge and there is either error or omission in it or both, and whatever its nature, it is not to be regarded as material unless two conditions are fulfilled both of which are matters of fact: (1) the accused has in fact been misled by it and (2) it has occasioned a failure of justice.
That, in our opinion, is reasonably plain language.
Next, sections 226 and 227 show that errors in a charge, and even the total absence of a charge, do not vitiate a trial from the start so as to render it no trial at all as would the absence of sanction under section 197.
This is evident because these errors and omissions can be remedied at any time during the course of the trial in the sessions Court (section 226) or even at the very end of the trial (section 227), and when this is done the trial need not proceed de novo but can go on from the stage at which the alteration was made provided neither side is prejudiced (section 228).
The proceedings up to the stage of the alteration, which, as ,we have seen, can be at the very end of the trial, are not vitiated unless there is prejudice; they are good despite these imperfections.
That is impossible when the error is so vital as to cut at the root of the trial.
It follows that errors in the charge, and even a total absence of a charge, are not placed in the non curable class.
1159 Next, we have a case in which the error is not observed and corrected during the trial and the accused is convicted.
It is to be observed that this is so whether there was a total absence of a charge or merely an error in it.
It is evident that a conviction cannot stand if the defect cuts at the root of the trial, therefore defects even of this nature are not regarded as fatal.
From there we proceed to section 535.
The marginal note is "Effect of omission to prepare charge", and the section says "No finding or sentence pronounced or passed shall be deemed invalid merely on the ground that no charge was framed, unless, in the opinion of the Court of appeal or revision, a failure of justice has in fact been occasioned thereby".
Here again the language is clear and wide and emphatic.
The section summarises what was already indicated in sections 226, 227, 228 and 232.
Next, there is section 537: "Subject to etc no finding, sentence or order passed by a Court of competent jurisdiction shall be reversed or altered under Chapter XXVLI or on appeal or revision on account (a) of any error, omission or irregularity in the . . charge. or other proceedings before or during trial. . . . . . . . . unless such error, omission, irregularity has in fact occasioned a failure of justice".
The Explanation is also important: "In determining whether any error, omission or irregularity in any proceeding under this Code has occasioned a failure of justice, the Court shall have regard to the fact whether the objection could and should have been raised at an earlier stage in the proceedings".
This repeats what was set out in greater detail in section 225 and is all the more impressive because 1160 even when a death sentence is under review in confirmation proceedings under Chapter XXVII the Court is expressly directed not to regard any error, omission or irregularity in the charge as fatal unless it has in fact occasioned a failure of justice.
Reading these provisions as a whole, there is, in our opinion, no room left for doubt about what was intended.
It was argued on behalf of the appellant that these sections must be read along with sections 236, 237 and 238.
Counsel conceded that there are occasions when an accused person can be convicted in the absence of a charge but he said that they are expressly set out in sections 237 and 238 and he contended that no further departure is permissible.
He put his argument as follows.
He said that sections 237 and 238 deal with cases in which there is a charge to start with but none to support a conviction for an offence which the Court feels is made out by the evidence.
When section 535 is read along with these two sections it is seen that it cannot apply to a case in which there is no charge at all, nor can it apply to any case that is not covered by these two sections.
It is limited to cases in which sections 237 and 238 permit a conviction without a charge.
In answer to this the following argument was put to counsel and be was asked to meet it.
The point was put this way.
Section 535 cures convictions that would be invalid but for its provisions.
This, it was said, follows from the words "shall be deemed invalid".
It was suggested that these words show that a conviction without a charge is in truth and in fact invalid but that it can be cured in certain cases, and when that is done, that which in truth is invalid is deemed not to be invalid because of this section.
But as sections 237 and 238 expressly permit convictions in certain cases without a charge for those offences, provided there is a charge in the case to start with, the convictions so permitted cannot be invalid or even irregular because it would be wrong to say that that which the Code expressly allows is, or can be, 1161 irregular.
Therefore, section 535 cannot apply to cases covered by sections 237 and 238.
Counsel replied that even if that is so, section 535 is still governed by section 233 and so cannot apply to cases in which there is no charge at all.
We do not agree with either view.
In our opinion, the cases contemplated by section 237 are just as much a departure from section 233 as are those envisaged in sections 225, 226, 227, 228, 535 and 537 Sections 236, 237 and 238 deal with joinder of charges and so does section 233.
The first condition is that there shall be a separate charge for each offence and the second is that each charge must be tried separately except in the cases mentioned in sections 234, 235 and 236.
It is to be observed that the exceptions are confined to the rule about joinder of charges and that no exception is made to that part of the rule that requires separate charges for each offence.
It will be seen that though sections 234, 235 and 236 are expressly mentioned, section 237 is not referred to, nor is section 238.
Therefore, so far as section 233 is concerned, there can be no doubt that it requires a separate charge for each offence and does not envisage a situation in which there is either no charge at all or where, there being a charge for some other offence of which the accused is acquitted, he can be convicted instead of something else for which be was not charged.
What then is the position if there is some departure from the normal procedure? In our opinion, sections 225, 226) 227, 228, 535 and 537 furnish the answer and they apply with equal force to every kind of departure from that part of section 233 that requires a separate charge for each offence.
Section 237 is only a corollary to section 236 and is there to emphasise that even when a number of charges could be joined together in the cases set out in section 236 and one or more are not put in, oven then, there can be convictions in respect of those offences despite the 1162 absence of a charge or charges.
But all these sections are governed by the overriding rule about prejudice mentioned in one form or another in sections 225, 226, 227, 228, 535 and 537.
We can envisage cases where there would be grave prejudice under that section just as clearly as we can see cases where there would be none under the others.
The sort of problem that we are now examining can only arise when an express provision of the Code is violated and then the root of the matter is not whether there is violation of an express provision, for the problem postulates that there must be, nor is it whether the provision is expressed in positive or in negative terms, but what are the consequences of such disregard.
Does it result in an illegality that strikes at the root of the trial and cannot be cured or is it an irregularity that is curable? We have used the terms "illegality" and "irregularity" because they have acquired a technical significance and are convenient to demarcate a distinction between two classes of case.
They were first used by the Privy Council in N. A. Subramania Iyer vs KingEmperor(1) and repeated in Babulal Choukhani vs King Emperor(2 ) and in Pulukuri Kotayya vs King Emperor(3), but it is to be observed that the Code does not use the term "illegality".
It refers to both classes as "irregularities"; some vitiate the proceedings (section 530) and others do not (section 529).
Proceedings that come under the former head are "void".
Section 535 uses the words "shall be deemed invalid" which indicate that a total omission to frame a charge would render the conviction invalid but for section 535 which serves to validate it when that sort of "irregularity" has not occasioned a "failure of justice".
Section 537 does not use any of these expressions but merely says that no conviction or (1) [1901] L.R. 28 I.A. 257.
(2) [1938] L.R. 65 I.A. 158, 174.
(3) [1947] L.R. 74 I.A. 65,75.
1163 sentence "shall be reversed or altered" unless there has in fact been a failure of justice.
We do not attach any special significance to these terms.
They are convenient expressions to convey a thought and that is all.
The essence of the matter does not lie there.
It is embedded in broader considerations of justice that cannot be reduced to a set formula of words or rules.
It is a feeling, a way of thinking and of living that has been crystallized into judicial thought and is summed up in the admittedly vague and indefinite expression "natural justice": something that is incapable of being reduced to a set formula of words and yet which is easily recognisable by those steeped in judicial thought and tradition.
In the end, it all narrows down to this: some things are "illegal", that is to say, not curable, because the Code expressly makes them so; others are struck down by the good sense of judges who, whatever expressions they may use, do so because those things occasion prejudice and offend their sense of fair play and justice.
When so struck down, the conviction is "invalid"; when not, it is good whatever the "irregu larity".
It matters little whether this is called an "illegality", an "irregularity that cannot be cured" or an "invalidity", so long as the terms are used in a clearly defined sense.
Turning next to the second branch of the argument about section 535.
We cannot agree that because sections 237 and 238 expressly permit convictions without a charge in the cases contemplated by them, therefore they lift them out of the Chapter on Irregularities, because, if they do, then so does section 232 (1) in the cases with which it deals.
Between them, these sections cover every kind of case in which there is an error, omission or irregularity in a charge and an omission to frame a charge, so, if sections 232(1) and 237 and 238 save departures from section 233 from being irregularities, then there is nothing left for sections 535 and 537 to operate on.
In our opinion, the truth is that the Code deals with the same subject matter under different heads, so there is some overlapping.
147 1164 Sections 222 to 224 deal with the form of a charge and explain what a charge should contain.
Section, 225 deals with the effect of errors relating to a charge.
Sections 233 to 240 deal with the joinder of charges.
Sections 535 and 537 are in the Chapter that deals with irregularities generally and these two sections deal specifically with the charge and make it clear that an omission to frame a charge as well as irregularities, errors and omission in a charge are all irregularities that do not vitiate or invalidate a conviction unless there is prejudice.
But, apart from that, if we examine the learned counsel 's contention more closely the fallacy in his argument becomes clear.
Sections 237 and 238 deal with cases in which there is a charge to start with and then they go on to say that in certain cases the trial can proceed beyond the matter actually charged and a conviction for an offence disclosed in the evidence in that type of case will be good despite the absence of a charge in respect of it.
But what are those cases? Only those in which the additional charge or charges could have been framed from the start; and that is controlled by sections 234, 235 and 239 which set out the rules about joinder of charges and persons.
It is evident that if charges A and B cannot be tried together because of the prohibition in section 233 read with sections 234, 235 and 239, then no conviction could be sustained on either A or B, and if that is the case when specific charges are drawn up it is all the more so when though there is a charge in respect of A there is none in respect of B, for clearly you cannot do indirectly that which you are prohibited from doing directly.
In our opinion sections 233 to 240 deal with joinder of charges and they must be read together and not in isolation.
They all deal with the same subject matter and set out different aspects of it.
When they are read as a whole, it becomes clear that sections 237 and 238 cover every type of case in which a conviction can be sustained when there is no charge for that offence provided there is a charge to start with.
1165 They do not deal with a case in which there is no charge at all, and anything travelling beyond that when there is a charge would be hit by sections 233,234, 235 and 239 read as a whole, for the reasons we have just given.
But if that is so, and if section 535 is excluded where sections 237 and 238 apply, then what is there left for it to operate on except cases in which there is a total omission to frame a charge? We do not think these sections should be regarded disjunctively.
In our opinion, they between them (including sections 535 and 537) cover every possible case that relates to the charge and they place all failures to observe the rules about the charge in the category of curable irregularities.
Chapter XIX deals comprehensively with charges and sections 535 and 537 cover every case in which there is a departure from the rules set out in that Chapter.
Such departures range from errors, omissions and irregularities ' in charges that are framed, down to charges that might have been framed and were not and include a total omission to frame a charge at all at any stage of the trial.
In all these cases the only question is about prejudice.
We say this because the Code repeatedly says so in express and emphatic terms and because that is the foundation on which rules of procedure are based.
We say it because that accords with logic and principle and reason and because it touches the deep verities on which the structure of justice is erected and maintained.
That would necessitate reading into the section words that are not there.
We see no reason for straining at the mean ing of these plain and emphatic provisions unless ritual and form are to be regarded as of the essence in criminal trials.
We are unable to find any magic or charm in the ritual of a charge.
It is the substance of these provisions that count and not their outward 1166 form.
To hold otherwise is only to provide avenues of escape for the guilty and afford no protection to the innocent.
We agree that a man must know what offence he is being tried for and that he must be told in clear and unambiguous terms and that it must all be "explained to him " so that he really understands (section 271(1) in sessions trials, section 255(1) in warrant cases) but to say that a technical jargon of words whose significance no man not trained to the law can grasp or follow affords him greater protection or assistance than the informing and the explain ing that are the substance of the matter, is to base on fanciful theory wholly divorced from practical reality; and the same applies to the vast bulk of jurors who attend our courts.
They are none the wiser because of a formal charge except in a vague and general way that is of no practical account.
The essence of the matter is not a technical formula of words but the reality.
Was he told? Was it explained to him? Did he understand? Was it done in a fair way? We attach equal importance to other sections of the Code that are just as emphatic as section 233, namely, sections 342 and 364; and yet no one doubts that irregularities there are curable.
It is the spirit of section 271 that must be observed in a sessions trial rather than its letter and the essence of that lies in the words "and explained to him".
We do not mean to imply that laxness of procedure should be encouraged in the matter of the charge any more than this Court encourages it in matters relating to section 342; nor do we mean to suggest that a trial can be regarded as good when the accused does not know what be is being tried for and is not told and the matter is not explained to him as section 271 requires.
Of course, the rules should and ought to be punctually observed.
But judges and magistrates are fallible and make mistakes and the question is what is to be done in the exceptional class of case in which there has been a disregard of some express provision.
As an illustration, we give a case in which a Sessions Judge in a sessions trial having no charge 1167 before him from the committal court omits to frame one himself but instead, carefully and painstakingly, explains the particulars and the substance of the offence as in section 242 and complies with the spirit and object of section 271 but omits to observe its technical form.
Then, when the witnesses are examined, the accused shows by his cross examination that he knows just what he is being tried for.
He is examined fully and fairly under section 342 and his answers show that he is under no delusion.
He calls witnesses in defence to meet the very point or points the prosecution seek to make out against him.
He puts in a written statement and is defended by an able lawyer who raises no objection from start to finish.
Will a technical defect in a case like that vitiate the trial? If the Code says Yes, then there is an end of the matter.
We have put a case in which there neither is, nor can be, prejudice.
Surely it would be a travesty of justice to brand a conviction in a case like that as illegal.
And yet that must be done if these words that are otherwise plain are construed in a strained and unnatural manner.
On the other hand, there is nothing in the view we take to imperil or harass an accused however innocent he may be.
How does the technical formula of a charge afford greater protection than the "explaining" under section 271 (1) and the examination under section 342? And yet, on the argument before us, an omission to observe these other rules that are of the substance is curable when there is no prejudice but not the sacred ritual of the framing of the charge; once that is there, the accused cannot be heard to say that be did not understand however much that may be the fact.
Surely, this cannot be right.
Now, as we have said, sections 225, 232, 535 and 537(a) between them, cover every conceivable typo, of error and irregularity referable to a charge that 1168 can possibly arise, ranging from cases in which there is a conviction with no charge at all from start to finish down to cases in which there is a charge but with errors, irregularities and omissions in it.
The Code is emphatic that whatever the irregularity it is not to be regarded as fatal unless there is prejudice.
It is the substance that we must seek.
Courts have to administer justice and justice includes the punishment of guilt just as much as the protection of innocence.
Neither can be done if the shadow is mistaken for the substance and the goal is lost in a labyrinth of unsubstantial technicalities.
Broad vision is required, a nice balancing of the rights of the State and the protection of society in general against protection from harassment to the individual and the risks of unjust conviction.
Every reasonable presumption must be made infavour of an accused person; he must be given the benefit of every reasonable doubt.
The same broad principles of justice and fair play must be brought to bear when determining a matter of prejudice as in adjudging guilt.
But when all is said and done, what we are concerned to see is whether the accused bad a fair trial, whether he knew what be was being tried for, whether the main facts sought to be established against him were explained to him fairly and clearly and whether he was given a full and fair chance to defend himself.
If all these elements are there and no prejudice is shown the conviction must stand whatever the irregularities whether traceable to the charge or to a want of one.
If it was not, and particularly where the accused is defended by counsel [Atta Mohammad vs King Emperor(1)], it may in a given case be proper to conclude that the accused was satisfied and knew just what he was being tried for and knew what was being alleged against him and wanted no further particulars, provided it is always borne in mind that "no serious defect in the mode of conducting a criminal trial can be justified or cured by the consent of the advocate of the accused" [Abdul Rahman vs King Emperor(2)].
But these are matters of fact which will be special to each different case and no conclusion on these questions of fact in any one case can ever be regarded as a precedent or a guide for a conclusion of fact in another, because the facts can never be alike in any two cases however alike they may seem.
There is no such thing as a judicial precedent on facts though counsel, and even judges, are sometimes prone to argue and to act as if there were.
Endeavour was made in the argument to draw a distinction between cases falling under section 34 of the Indian Penal Code and those under section 149 of the Indian Penal Code.
This is not a case under section 149 of the Indian Penal Code so the question does not really arise but it is necessary to advert to the argument because, on the view we take of sections 225, 535 and 537, it is immaterial what the offence is and whether there is a charge at all.
The only question is whether the irregularity occasioned prejudice.
We now turn to an examination of the cases of this Court that are said to give rise to a conflict of view.
In our opinion, there is in reality no conflict and (1) [1929] L.R. 57 I.A. 71, 74.
(2) [1926] L.R. 54 I.A. 96,104, 110.
1170 though the language used in one case might suggest that, a close consideration of its reasons will disclose that there was in fact no difference of view in the type of case where there is a charge to start with.
None of the cases deals with the position where there is no charge at all.
The following cases afford no difficulty because they directly accord with the view we have set out at length above.
In Lachman Singh vs The State(1) it was held that when there is a charge under section 302 of the Indian Penal Code read with section 149 and the charge under section 149 disappears because of the acquittal of some of the accused, a conviction under section 302 of the Indian Penal Code read with section 34 is good even though there is no separate charge under section 302 read with section 34, provided the accused could have been so charged on the facts of the case.
The decision in Karnail Singh vs The State of Punjab(2) is to the same effect and the question about prejudice was also considered.
Pandurang, Tukia and Bhillia vs State of Hyderabad(3) also presents no difficulty because though the point was taken in that case it was expressly left open at page 1093.
From there we come to Suraj Pal vs The, State of U.P. (4).
That was a case in which a number of accused were charged under sections 307/149 and sections 302/149 of the Indian Penal Code.
It was found that there was no common object to kill, so all the accused were acquitted under section 149.
But the evidence disclosed that the appellant had himself made an attempt on the life of one man and had himself shot another dead.
Accordingly the High Court convicted him under sections 307 and 302 of the Indian Penal Code respectively, though there was no separate charge under either of those sections.
Those convictions were challenged here.
The learned Judges then (1)[1952] S.C.R. 839, 848.
(2)[1954] S.C.R. 904,911 (3) ; (4)[1955] I.S.C.R, 1332 1171 proceeded to determine the question of prejudice on the facts of that case.
The conclusion reached on the facts was that prejudice was disclosed, so an acquittal was ordered.
It was argued before us that the ground of the decision there was that the absence of charges under sections 307 and 302 simpliciter was in itself conclusive to establish prejudice and that therefore one need go no further.
It is enough to say that that was not the decision and though that was one of the matters taken into consideration, the conclusion was based on a careful and lengthy investigation of all the facts in the case including the way in which it was conducted, the evidence of several witnesses, the medical evidence, the first information report and certain documents including two filed by the accused.
Next comes Nanak Chand vs The, State of Punjab(1).
That was also a case in which the charge was under section 302/149 of the Indian Penal Code with the conviction under section 302 simpliciter without any separate charge under that section.
The Sessions Judge had convicted under section 302/34 of the Indian Penal Code holding that the charge of rioting was not proved.
The High Court held that no common intention was proved either but as the evidence indicated that the appellant had done the actual killing he was convicted under section 302.
It was found that the appellant there was in fact misled in his defence and one of the factors taken into consideration, as indeed must always be the case, was that when he was told that he was to be tried under section 302 read with section 149 of the Indian Penal Code that indicated to him that he was not being tried for a murder committed by him personally but that he was only being (1) [1955] I S.C.R. 1201.
148 1172 made vicariously liable for an act that another had done in prosecution of the common object of an unlawful assembly of which he was a member.
But that was only one of the matters considered and it does not follow that every accused will be so misled.
It all depends on the circumstances.
The entire evidence and facts on which the learned Judges founded are not set out in the judgment but there is enough to indicate that had the appellant 's attention been drawn to his own part in the actual killing he would probably have cross examined the doctor with more care and there was enough in the medical evidence to show that had that been done the appellant might well have been exonerated.
As judges of fact they were entitled, and indeed bound, to give the accused the benefit of every reasonable doubt and so were justified in reaching their conclusion on the facts of that case.
Illustrations (c) and (e) to section 225 of the Criminal Procedure Code show that what the accused did or omitted to do in defence are relevant on the question of prejudice.
That, however, was, and remains, a pure conclusion of fact resting on the evidence and circumstances of that particular case.
The decision was special to the facts of that case and no decision on facts can ever be used as a guide for a conclusion on facts in another case.
Now having reached the conclusion that there was prejudice, the learned Judges were of the opinion that the irregularity, if it can be so called when prejudice is disclosed was incurable and from that they concluded that an incurable irregularity is nothing but an illegality: a perfectly possible and logical conclusion when the words "irregularity" and "illegality" are not defined.
and it can well be argued from this that this indicates 1173 that an omission to follow the provisions of the Code does in truth and in fact render the decision invalid but because of section 535 that which is in truth and in fact invalid must be deemed to be valid unless prejudice is disclosed.
As there was prejudice in that case, the decision was invalid and being invalid it was illegal.
We do not say that that is necessarily so but it is a reasonably plausible conclusion and was what the learned Judges had in mind.
It is to be.
observed that section 535 of the Code is mandatory in its terms, just as mandatory as section 233.
If it be accepted that an absence of a charge would, but for its provisions, render a conviction invalid, this section cures such an invalidity when there is in fact, not in theory but in fact, no failure of justice.
The section is just as mandatory as section 233 and we can see no justification for giving it less weight than section 237.
If section 237 validates a departure from section 233 and saves it from the stigma of an irregularity, then so does section 535, for it says very expressly that no conviction shall be deemed invalid merely on the ground that no charge was framed unless that in fact occasioned a failure of justice; and if section 535 is held not to apply to cases covered by sections 237 and 238, then it must apply to cases that lie outside the scope of those ' sections and the only kind of case left is a case in which there is a total absence of a charge, for any other type of case would be excluded because of misjoinder.
If section 233 is mandatory, that part of it which prohibits misjoinder except in the cases mentioned in sections 234, 235) 236 and 239 is just as mandatory as the portion that requires a separate charge for each offence.
It is unfortunate that we have no definition of the terms "illegality", "irregularity" and "in .
validity" because they can be used in differing senses, but however that may be, the decision we are now examining and the remarks made in that case must be read in the light of this background.
We agree that some of the expressions used in the judgment appear to travel wider than this but in order to dispel misconception we would now hold that the 1174 true view is the one we have propounded at length in the, present judgment.
We now turn to the question of fact: is there material in this case to justify a finding of prejudice? that will turn largely on the differences between section 302 of the Indian Penal Code and section 302 read with section 34 of the Indian Penal Code and on the measure of criminal liability to which the appellant would be exposed in those two cases; and here again, the matter must be viewed broadly and not in any technical or pettifogging way.
Now what is an accused person entitled to know from the charge and in what way does the charge in this case fall short of that? All he is entitled to get from the charge is (1) the offence with which he is charged, section 221(1),Criminal Procedure Code, (2) the law and, section of the law against which the offence is said to have been committed, section 221(4), (3) particulars of the time, section 222(1) and (4) of the place, section 222(1), and (5) of the person against whom the offence is said to have been committed, section 222(1), and (6) when the nature of the case is such that those particulars do not give him sufficient notice of the matter with which he is charged, such particulars of the manner in which the alleged offence was committed as will be sufficient for that purpose, section 223.
He is not entitled to any further information in the charge: see Illustration (e) to section 223 of the Code: "A is accused of the murder of B at a given time and place.
The charge need not state the manner in which A murdered B".
It is clear from this that when the case is one of murder, the accused is not entitled to be told in the charge how it was committed, whether with a pistol or a lathi or a sword.
He is not entitled to know from the charge simpliciter any further circumstance.
How then is he expected to defend himself? He has the police challan, he has the evidence recorded in the 1175 Committal Court, he hears the prosecution witnesses and he is examined under section 342 of the Code.
It is these proceedings that furnish him with all the necessary, and indeed vital, information, and it is his duty to look into them and defend himself.
Now when several persons join in the commission of a crime and share a common intention, it means that each has the requisite intention in himself; the fact that others share it does not absolve any one of them individually, and when the crime is actually committed in pursuance of the common intention and the accused is present at its commission, the crime becomes the offence actually committed because of section 114 of the Indian Penal Code.
Section 114 does not create the offence nor does section 34.
These sections enunciate a principle of criminal liability.
Therefore, in such cases all that the charge need set out is the offence of murder punishable under section 302 of the Indian Penal Code committed by the accused with another and the accused is left to gather the details of the occurrence as alleged by the prosecution from other sources.
The fact that be is told that he is charged with murder committed by himself with another imports that every legal condition required by law to constitute the offence of murder committed in this way was fulfilled: section 221(5) of the Criminal Procedure Code.
Now what are those legal conditions? What is the effect of charging two persons with a murder committed in pursuance of a common intention? It means that the accused is unmistakably told that be participated in the crime; exactly how is no more a matter for the charge than it is to set out the circumstances in which the murder was committed.
It also means that he is informed that it is immaterial who struck the fatal blow.
The charges here against the appel 1176 lant and his brother Ronnie are identical. 'As there was only one fatal blow and as only one person could have inflicted it and as both are charged in this way, it can only mean that each is put on his guard and made to realise that the prosecution allege that one of the two was responsible for that and which must be discovered from the evidence and not from the charge, just as surely as it must when the question turns on who possessed or used a pistol and who a sword.
It is true that if it cannot be ascertained who struck the fatal blow, then the accused cannot be convicted unless the common intention is proved and in that type of case an acquittal of the co accused may be fatal to the prosecution.
But the converse does not hold good, and if the part that the accused played can be clearly brought home to him and if it is sufficient to convict him of murder simpliciter he cannot escape liability because of the charge unless he can show prejudice.
Put at its highest, all that the appellant can urge is that a charge in the alternative ought to have been framed, which in itself imports that it could have been so framed.
That is what happened here.
They were not charged with that formally, but they were tried on evidence which brings the case under section 237"(1).
The variation between murder and concealing evidence after the crime is no more than the variation between killing a man jointly with another, sharing his intention, or allowing the other to do the actual killing with the same common intention.
Now what do the proceedings in this case show? The police charge sheet states that the appellant hit the deceased with a hockey stick while his brother (1) Lah. 226, 231.
(2) ; , 848.
1177 only threw stones.
From there we go to his examination under section 342 of the Criminal Procedure Code in the Committal Court.
He is specifically told that the only eye witness in the case accuses him and not his brother of having hit the deceased over the head with a hockey stick.
No one could misunderstand that.
In the Sessions Court we find the same evidence repeated.
No witness suggests that anyone else hit the deceased on the head.
There was no pos sibility of misunderstanding or mistake.
The fact that the appellant did not attempt to confront any of the witnesses with their statements before either the Committing Magistrate or the police on this point shows that the witnesses told a consistent story from the start.
Next, the appellant was examined under section 342 in the Sessions Court and was asked the same questions and was confronted in his examination with the same eye witness.
He was told clearly and unambiguously that the evidence was that he hit the deceased over the head.
Now what was his defence? A curious procedure was adopted, a procedure that has been condemned by the Nagpur High Court in other cases and which we regret to see still persists.
Instead of the accused speaking for himself he made a statement through his advocate.
However, the defence was this: (1) an alibi: "I wasn 't there".
(2) It was dark and the deceased rushed at the appellant (who is now said to have been there despite the alibi), fell down the stairs and broke his head; (3) The deceased was the aggressor and the appellant struck him in self defence.
There is no suggestion here that the other accused hit the deceased or that anyone other than the appellant did.
The appellant places it beyond doubt that he knew that the case against him was that he is said to have struck the fatal blow.
Next, what was the cross examination of the only eye witness? There was no suggestion that she was mistaken in her identity, whereas she was crossexamined about this very matter of self defence and questions were put to show that the deceased 1178 and not his brother had threatened the appellant with his fist.
In the High Court the plea of alibi was dropped and the only argument advanced was self defence.
There was no hint of prejudice even in the grounds of appeal.
There was no pretence in the arguments that the appellant did not know he was being accused of having hit the deceased.
On the contrary, there was a clear admission in the High Court that he did hit the man but that he acted in self defence.
As the appellant knew that the case against him was that he is the one who is said to have struck the fatal blow, and as he was told in the charge that the offence he is said to have committed was that of murder and was informed of the date and place and person, we find it impossible to infer prejudice.
As the Privy Council said in Atta Mohammad vs Emperor(1) I "He appeared by an advocate on the appeal and had been legally defended at the trial, and it is as clear as possible that, with full knowledge of the course which the trial had taken, neither the appellant himself nor those who represented him bad any sense whatever of the injustice that is now urged or any idea of his having been deprived of the opportunity of knowing the charge on which he was tried or of raising defences appropriate to that charge".
We would hold that there was no prejudice and that the conviction is not invalid because of the nature of the charge.
We now come to the merits, and the question is whether this is a case under section 302 or under the second part of section 304 of the Indian Penal Code.
The injury was inflicted with a hockey stick.
The head was fractured but the deceased lived for ten days.
Therefore, the doctor in whose care the patient was (1) [1929] L.R. 57 I.A. 71, 74. 1179 till he died places the injury no higher than "likely" to cause death.
The learned Sessions Judge exonerated the appellant of any intention to kill and the learned High Court Judges say that they agree with his findings.
If there was no intention to kill, then it can be murder only if (1) the accused knew that the injury inflicted would be likely to cause death or (2) that it would be sufficient in the ordinary course of nature to cause death or (3) that the accused knew that the act must in all probability cause death.
If the case cannot be placed as high as that and the act is only likely to cause death and there is no special knowledge, the offence comes under the second part of section 304 of the Indian Penal Code.
The doctor thought that it was only likely to cause death.
All blows on the head do not necessarily cause death, and as the deceased lived for ten days, we are unable to deduce from the nature of the injury and from the mere fact of death that the appellant had, or should have had, the special knowledge that section 300 of the Indian Penal Code requires.
Admittedly, there was no premeditation and there was a sudden fight, so we are unable to ascribe the necessary knowledge to the appellant; nor was the injury sufficient in the ordinary course of nature to cause death.
So the offence falls under the second part of section 304 of the Indian Penal Code.
On the question of sentence.
There was no enmity according to the finding of the learned Sessions Judge.
The appellant did not go there armed with a stick.
He was in love with the deceased 's sister who reciprocated his affection but could not marry him be cause her husband had turned her out in England ,and she had no divorce.
The deceased, who was the girl 's brother, resented this.
The appellant went to the house and asked the sister to come down.
The 1180 brother came instead and there was a quarrel.
The appellant slapped the deceased across the face.
The deceased, who was a big and strong man, shook his fist in the appellant 's face and the appellant snatched a hockey stick from his younger brother Ronnie and hit the deceased one blow over the bead and two blows on the hips.
In the circumstances, we think five years ' rigorous imprisonment will suffice.
This appeal comes before us on a reference owing to a conflict between two decisions of this Court, Nanak Chand vs The State of Punjab(1) and Suraj Pal vs The State of U. P. (2).
Where there is a charge against an accused under section 302, read with section 149, if section 149 of the Indian Penal Code is inapplicable to the facts, can the accused be convicted under section 302 without a separate charge?
In the first case, it was held that the omission to have a specific charge under section 302 amounted to an illegality.
Section 149 creates a specific offence and without applying its provisions a member of an unlawful assembly could not be made liable for the offence committed not by him but by another member of that assembly.
Therefore the case is not similar to the one where there is a charge under section 302, read with section 34 of the Indian Penal Code.
When section 149 is ruled out, the liability for murder ceases to be constructive; it becomes direct and there must be a separate charge therefor under section 302 of the Indian Penal Code.
This was the line of reasoning in Nanak Chand 's case.
In Suraj Pal 's case, the same line is taken but the absence of a specific charge (1) ; (2) ; 1181 is treated as a serious lacuna merely; and not regarded as an illegality.
This conflict does not arise in the case before us where the offence charged against two brothers, William and Ronnie for the murder of Donald was under section 302, read with section 34 of the Indian Penal Code.
Ronnie was acquitted.
But William was found guilty and sentenced to transportation for life.
As pointed out by Lord Sumner in his classic judgment in Barendra Kumar Ghosh vs The King Emperor(1), there is much difference in the scope and applicability of sections 34 and 149, though they have some resemblance and are to some extent overlapping.
The two sections are again compared and contrasted in Karnail Singh and another vs The State of Punjab(2).
Section 34 does not by itself create any offence, whereas it has been held that section 149 does.
In a charge under section 34, there is active participation in the commission of the criminal act; under section 149, the liability arises by reason of 'the membership of the unlawful assembly with a common object, and there may be no active participation at all in the perpetration or commission of the crime.
The overlapping arises in those cases where two or more persons commit a murder in furtherance of the common intention, but it is not possible to say which of them was responsible for the fatal injury, or whether any one injury by itself was responsible for the death.
There may also be a case where it is known that out of the assailants one in particular was responsible for the fatal injury and the others are sought to be made liable for the result owing to the common intention involved.
It is, however, necessary having regard to the (1) [1924] L.R. 52 I.A. 40.
(2) 1182 lengthy arguments addressed to us, to consider the main question arising on the reference.
Though the two cases which gave rise to this reference were cases relating to section 149 of the Indian Penal Code and not to section 34 of the Indian Penal Code, as the Present case is, the order of reference was occasioned by the fact that in Nanak Chand 's case it was stated specifically that the parallel case under section 34 also stood on the same footing.
In our attempt to resolve the conflict, we covered a wide area of sections and decisions.
A detailed discussion of all the decisions cited at the Bar is not of much use as it is not possible to gather from a study of those cases anything very decisive by way of any guiding principle.
But a few of them, more important than the rest, must be noticed.
The Criminal Procedure Code does not use the word "illegality".
Even defects or violations that vitiate the proceedings and render them void are spoken of only as irregularities in section 530.
The word illegality was used almost for the first time in the judgment of the Privy Council, L.R. 28 Indian Appeals 257 (familiarly known as Subramania Aiyar 's case), where they speak of a contravention of section 234 of the Code, resulting in a misjoinder of charges, as an illegality.
The idea that it was a mere irregularity was repelled in these words: "Their Lordships are unable to regard the disobedience to an express provision as to a mode of trial as a mere irregularity.
Such a phrase as irregularity is not appropriate to the illegality of trying an accused person for many different offences at the same time, and those offences being spread over a longer period than by law could have been joined together in one indictment.
The illustration of the section itself sufficiently shows what was meant".
Again, they say: ". . it would be an extraordinary extension of such a branch of administering the criminal law to say that when the Code positively enacts that such a trial as that which has taken place here shall not be permitted that this contravention of the Code comes 1183 within the description of error, omission, or irregu larity".
Subsequently, however, there have been systematic attempts to explain away the said decision and restrict its scope to narrow limits.
This was possibly because it was realised even by the Judicial Committee itself that the view taken by them to the effect that a violation of the mandatory provisions of the Code would be an illegality was rather an extreme one.
It may be pointed out that even in that case the question of prejudice was not entirely absent from their Lordships ' minds.
Both sides referred to it in the course of the arguments, and the Lord Chancellor alludes to the prejudice inherent in the trial on a multitude of charges.
The exact effect of this inclusion may require consideration in an appropriate case.
Before dealing with the other relevant sections of the Code, let us examine some of the later decisions of the Privy Council which seem to indicate a swing of the pendulum to the other side.
In Abdul Rahman vs The King Emperor(1), there was a violation of section 360 of the Code which provides that the deposition of each witness shall be read over to him in the presence of the accused or his pleader.
The High Court held that this was a mere irregularity, and confirmed the conviction as no failure of justice had resulted.
It was contended on appeal before the Privy Council that the section was obligatory, and that non compliance with such a mandatory provision was illegal, on the principle laid down in Subramania Aiyar 's case(2).
But their Lordships rejected this contention pointing out that in the earlier case the procedure adopted was one which the Code positively prohibited, and it was possible that it might have worked actual injustice to the accused; and they confirmed the conviction.
The question was again raised in Babulal Choukhani vs The King Emperor(3) (1) [1926] L.R. 54 I.A. 96.
(2) [1901] L.R. 28 I.A. 257.
(3) [1938] 65 I.A. 158.
1184 as to what would be an illegality as distinguished from an irregularity.
Lord Wright who delivered the judgment of the Board assumed that an infringement of section 239(b) of the Code would be an illegality, and proceeded to state that the question did not, however, arise, and it was hence unnecessary to discuss the precise scope of what was decided in Subramania Aiyar 's case(1).
The matter cropped up once again in Pulukuri Kotayya and others vs KingEmperor (2) where there was a breach of the statutory requirement found in section 162 of the Code, inasmuch as the accused were not supplied with copies of the statements first recorded by a police officer for cross examining the prosecution witnesses.
The defect was recognized to be a matter of gravity, and if the statements bad been completely destroyed, or if there had been a total refusal to supply copies to the accused, the convictions were liable to be quashed.
But in the case before them, as the statements were made available, though too late to be effective, and the Circle Inspector 's notes of the examination of witnesses were put into the hands of the accused, it was taken to be an irregularity merely.
Referring to the contention that the breach of a direct and important provision of the Code cannot be cured but must lead to the quashing of the conviction, Sir John Beaumont observed: ". .
In their Lordships ' opinion, this argument is based on too narrow a view of the operation of section 537.
When a trial is conducted in a manner different from that prescribed by the Code (as in N. A. Subramania Iyer 's case(1)), the trial is bad, and no question of curing an irregularity arises; but if the trial is conducted substantially in the manner prescribed by the Code, but some irregularity occurs in the course of such conduct, the irregularity can be cured under section 537, and nonetheless so because the irregularity involves, as must nearly always be the case, a breach of one or more of the very comprehen sive provisions of the Code.
The distinction drawn in many of the cases in India between an illegality and (1) [1901] L. R. 28 I.A. 257.
(2) [1947] L.R. 74 I.A. 65. 1185 ail irregularity is one of degree rather than of kind.
This view finds support in the decision of their Lordships ' Board in Abdul Rahman vs The King Emperor (1) where failure to comply with section 360 of the Code of Criminal Procedure was held to be cured by sections 535 and 537.
The present case falls under section 537, and their Lordships hold the trial valid notwithstanding the breach of section 162".
Of course, lack of competency of jurisdiction, absence of a complaint by the proper person or authority specified, want of sanction prescribed as a condition precedent for a prosecution, in short, defects that strike at the very root of jurisdiction stand on a separate footing, and the proceedings taken in disregard or disobedience would be illegal.
The difficulty arises only when we have to consider the other provisions in the Code Which regulate procedure and which are found in a mendatory form, positive or negative.
It is in this class of cases that the distinction becomes important and material.
The scope of the decision in Subramania Aiyar 's case(2) has ' become so circumscribed that it is dobutful if it applies to the generality of cases of omissions and defects that come before the courts, excepting where they bring about the result that the trial was conducted in a manner different from that prescribed by the Code.
Let us now turn our attention to the relevant sections of the Code bearing on the requirement of a charge, the omission of a charge and the effect thereof.
Section 233 provides as follows: "For every distinct offence of which any person is accused there shall be a separate charge, and every such charge shall be tried separately, except in the cases mentioned in sections 234, 235, 236 and 239".
A power to alter or add to a charge, at any time before judgment is pronounced, is conferred on a court under section 227.
Sections 228 to 231 provide for the steps to be taken consequent on such alteration.
Section 225 shows what would be the effect of any errors in the framing of a charge.
It runs as follows: (1) [1926] L.R. 51 I.A. 96.
(2) [1901] L.R. 28 I.A. 257.
1186 "No error in stating either the offence or the particulars required to be stated in the charge, and no omission to state the offence or those particulars, shall be regarded at any stage of the case as material, unless the accused was in fact misled by such error or omission, and it has occasioned a failure of justice".
Section 232(1) of the Code of Criminal Procedure refers more specifically to the effect of such error where an appellate Court or the High Court in revision or in confirmation proceedings, notices such an error and is in the following terms: "If any Appellate Court, or the High Court in the exercise of its powers of revision or of its powers under Chapter XXVII, is of opinion that any person convicted of an offence was misled in defence by the absence of a charge or by an error in the charge, it shall direct a new trial to be had upon a charge framed in whatever manner it thinks fit".
Then we have section 237, dealing with a case where an accused charged with one offence for which he might have been charged under the provisions of section 236 could be convicted of a different offence.
This applies only to cases where it is doubtful which of several offences the facts which can be proved will constitute.
Begu 's case(1) is an example; the conviction was under section 201 of the Indian Penal Code for causing the disappearance of evidence relating to a murder, though the charge was under section 302 of the Indian Penal Code.
Viscount Haldane observes: ".
A man may be convicted of an offence, although there has been no charge in respect of it, if the evidence is such as to establish a charge that might have been made.
That is what happened here.
The three men who were sentenced to rigorous imprisonment were convicted of making away with the evidence of the crime by assisting in taking away the body.
They were not charged with that formally, but they were tried on evidence which brings the case under section 237".
(1) 11925] L.R. 52 I.A. 191.
1187 Finally, we come to sections 535 and 537 of the Code.
The former is in these terms: " (1) No finding or sentence pronounced or passed shall be deemed invalid merely on the ground that no charge was framed, unless, in the opinion of the Court of appeal or revision, a failure of justice has in fact been occasioned thereby.
(2) If the Court of appeal or revision thinks that a failure of justice has been occasioned by an omission to frame a charge, it shall order that a charge be framed, and that the trial be recommenced from the point immediately after the framing of the charge".
The latter runs thus: "Subject to the provisions hereinbefore contained, no finding, sentence or order passed by a Court of competent Jurisdiction shall be reversed or altered under Chapter XXVII or on appeal or revision on account (a) of any error, omission or irregularity in the complaint, summons, warrant, charge, proclamation, order, judgment or other proceedings before or during trial or in any inquiry or other proceedings under this Code, or (b). . . . . . (c) of the omission to revise any list of jurors or assessors in accordance with section 324, or (d) of any misdirection in any charge to a jury, unless such error, omission, irregularity or misdirection has in fact occasioned a failure of justice".
A case of complete absence of a charge is covered by section 535, whereas an error or omission in a charge is dealt with by section 537.
The consequences seem to be slightly different.
Where there is no charge, it is for the court to determine whether there is any failure of justice.
But in the latter, where there is mere error or omission in the charge, the court is also bound to have regard to the fact whether the objection could and should have been raised at an earlier stage in the proceedings.
The sections referred to indicate that in the generality of cases the omission to frame a charge is 150 1188 not per se fatal.
We are unable, therefore, to accept as sound the very broad proposition advanced for the appellants by Mr. Umrigar that where there is no charge, the conviction would be illegal, prejudice or no prejudice.
On the other hand, it is suggested that the wording of section 535 of the Code of Criminal Procedure is sufficiently wide to cover every case of 'no charge '.
It is said that it applies also to the case of a trial in which there has been no charge of any kind even from the very outset.
We are unable to agree that section 535 of the Code of Criminal Procedure is to be construed in such an unlimited sense.
It may be noticed that this group of sections relating to absence of a charge, namely, sections 225, 226 and 232 and the powers exercisable thereunder ' are with reference to a trial which has already commenced or taken place.
They would, therefore, normally relate to errors or omissions which occur in a trial that has validly commenced.
There may be cases where, a trial which proceeds without any kind of charge at the outset can be said to be a trial wholly contrary to what is prescribed by the Code.
By way of illustration the following classes of cases may be mentioned: (a) Where there is no charge at all as required by the Code from start to finish from the Committing Magistrate 's court to the end of the Sessions trial; the Code contemplates in section 226 the possibility of a committal without any charge and it is not impossible to conceive of an extreme case where the Sessions trial also proceeds without any formal charge which has to be in writing and read out and explained to the accused (section 210(2) and section 251 (A) (4) and section 227).
The Code requires that there should be a charge and it should be in writing.
A deliberate breach of this basic requirement cannot be cured by the assertion that everything was orally explained to the accused and the assessors or jurors, and there was 1189 no possible or probable prejudice.
(b) Where the conviction is for a totally different offence from the one charged and not covered by sections 236 and 237 of the Code.
On a charge for a minor offence, there can be no conviction for a major offence, e.g., grievous hurt or rioting and murder.
The omission to frame a separate and specific charge in such cases will be an incurable irregularity amounting to an illegality.
Sections 34, 114 and 149 of the Indian Penal Code provide for criminal liability viewed from different angles as regards actual participants, accessories and men actuated by a common object or a common intention; and the charge is a rolled up one, involving the direct liability and the constructive liability without specifying who are directly liable and who are sought to be made constructively liable.
In most of the cases of this kind, evidence is normally given from the outset as to who was primarily responsible for the act which brought about the offence and such evidence is of course relevant.
After all, in our considering whether the defect is illegal or merely irregular, we shall have to take into account several factors, such as the form and the language of the mandatory provisions, the scheme and the object to be achieved, the nature of the violation, etc.
Dealing with the question whether a provision in a statute is mandatory or directory, Lord Penzance observed in Howard vs Bodington(1).
"There may be many provisions in Acts of Parliament which, although they are not strictly obeyed, yet do not appear to the court to be of that material importance to the subject matter to which they refer, as that the legislature could have intended that the non observance of them should be followed by a total failure of the whole proceedings.
On the other hand, there are (1) 1190 some provisions in respect of which the court would take an opposite view, and would feel that they are matters which must be strictly obeyed, otherwise the whole proceedings that subsequently follow must come to an end".
These words can be applied mutatis mutandis to cases where there is no charge at all.
The gravity of the defect will have to be considered to determine if it falls within one class or the other.
Is it a mere unimportant mistake in procedure or is it substantial and vital? The answer will depend largely on the facts and circumstances of each case.
If it is so grave that prejudice will necessarily be implied or imported, it may be described as an illegality.
If the seriousness of the omission is of a lesser degree, it will be an irregularity and prejudice by way of failure of justice will have to be established.
This judgment should not be understood by the subordinate courts as sanctioning a deliberate disobedience to the mandatory requirements of the Code, or as giving any license to proceed with trials without an appropriate charge.
The omission to frame a charge is a grave defect and should be vigilantly guarded against.
In some cases, it may be so serious that by itself it would vitiate a trial and render it illegal, prejudice to the accused being taken for granted.
Coming now to the facts of the present case; William was on terms of intimacy with Beryl P.W. 13.
She was the sister of Donald Smythe.
The accused was practically living with her in her house.
The brother did not like their intimacy and was making attempts to separate Beryl from the accused.
On the evening of the day of the occurrence, Donald and his mother went to Beryl 's house, There was a quarrel 1191 between them and the accused was asked to get away.
She did not come but Donald came down into the courtyard.
There was a heated exchange of words.
The accused slapped Donald on the cheek.
Donald lifted his fist.
The accused gave one blow on his head with a hockey stick with the result that his skull was fractured.
Donald died in the hospital ten days later.
A plea of alibi was given up in the High Court.
The suggestion that Donald fell down and sustained the head injury while descending the stairs was ruled out by the evidence of the eye witnesses.
Nothing was established to justify any exercise of the right of private defence.
On these facts, which have been proved, the only question that arises is whether the appellant is guilty of murder under section 302 of the Indian Penal Code, or guilty only of culpable homicide, not amounting to murder, under the second part of section 304.
The High Court did not address itself to the nature of the offence.
It is obvious that the appellant did not intend to kill the deceased.
The evidence of the doctor is that the injury was likely to result in fatal consequences.
This by itself is not enough to bring the case within the scope of section 300.
There is nothing to warrant us to attribute to the appellant knowledge that the injury was liable to cause death or that it was so imminently dangerous that it must in all probability cause death.
The elements specified in section 300 of the Indian Penal Code are thus wanting.
We take the view, considering all the circumstances that the offence is the lesser one.
The appellant is acquitted of the charge of murder but is convicted under the second part of section 304, and sentenced to five years ' rigorous imprisonment.
IMAM J.
The appellant was charged with murder and nothing short of it, although it was stated in the charge that the offence was committed by him in furtherance of a common intention.
If the evidence failed to prove that the offence committed by him was in furtherance of a common intention, it would be nonetheless his offence, namely, murder, if his act in law amounted to murder.
The law does not require in such a case that a separate charge for murder should be framed, because the charge of murder was already on the record.
Strictly speaking, on the facts of the present case, the question raised by the reference does not arise.
Since it has been raised, it must be considered.
In Nanak Chand '8 case the view taken was that when an accused is charged under section 302 read with section 149 of the Indian Penal Code, it is illegal to convict him under section 302 of the Indian Penal Code without a charge having been framed against him under that section.
It was also held that if this was only an irregularity then on the facts of the case, the accused was misled in his defence.
In Suraj Pal 's case, in similar circumstances, it was held that failure to frame a charge under section 302 was a serious lacuna and the conviction was set aside on the ground that the accused had been prejudiced.
A careful examination of these two cases does not reveal any substantial conflict between them.
As I understand the provisions of the Code of Criminal Procedure, a separate procedure is set out for various class of cases triable by a court exercising powers under the Code.
So far as the framing of a charge is concerned, the Code expressly states the kind of cases in which no charge is to be framed.
In trial of warrant cases, cases before a Court of Sessions and a High Court, a charge must be framed.
Failure to frame a charge in such cases would be a contravention of the mandatory provisions of the Code.
Would such contravention amount to an illegality? Prima 1193 facie a conviction of an accused person for an offence with which he had not been charged but for which he ought to have been charged, is invalid.
It is said that by virtue of the provisions of sections 535 and 537 of the Code failure to frame a charge or an omission or irregularity in a charge, which is framed, does not by itself invalidate the conviction, unless the Court is satisfied that in fact a failure of justice has resulted.
It is, therefore, necessary to examine how far these provisions of the Code override its provisions relating to the framing of charges.
Section 233 of the Code expressly states that for every distinct offence of which any person is accused there shall be a separate charge and every such charge shall be tried separately, except in the cases mentioned in sections 234, 235, 236 and 239.
There is no ambiguity in the language of this section.
While it insists upon a separate charge for every distinct offence it permits a single trial on several charges in the cases mentioned in sections 234, 235, 236 and 239.
Section 233 is a mandatory provision and the force of its direction is not weakened by the fact that another provision of the Code does permit a conviction of an accused for an offence with which he had not been charged.
In such a case no question of illegality or irregularity arises, as the conviction is expressly authorized by the Code.
The conviction is valid because of the statute itself and not because of section 535.
On the charge framed, after it has been explained to the accused, the plea of guilty or not guilty is recorded.
If the accused pleads guilty, certain consequences follow.
If he pleads not guilty, the trial must proceed according to law.
Is the framing of a charge and the recording of the plea of the accused merely a ritual or a fundamental provision of the Code concerning procedure 1194 in a criminal trial? I think it is the latter.
Are the express provisions of the Code as to the manner in which a trial is to proceed to be ignored, or considered as satisfied, merely because the Court explained to the accused as to what he was being tried for?
I a prehend not.
For to do so is to replace the provisions of the Code by a procedure unwarranted by the statute itself.
In my opinion, a total absence of a charge from start to finish in a case where the law requires a charge to be framed, is a contravention of the provisions of the Code as to the mode of trial and a conviction of the accused of an offence in such a case is invalid and the question of prejudice does Dot arise.
None of the decisions of the Privy Council suggest that in such a case the conviction will be deemed to be valid by virtue of the provisions of section 535, unless the Court is satisfied that there has been a failure of justice.
In any event, the Code expressly provides that in such cases the conviction need not be set aside, unless, in fact, a failure of justice has resulted.
Under the provisions of section 232 of the Code an appellate Court or a High Court exercising its powers of revision or its powers under Chapter XXVII, must direct a new trial of a case in which an accused person has been convicted of an offence with which he had not been charged, if it is satisfied that he had been misled in his defence by the absence of a charge.
In such a case a court is bound to act according to its provisions.
It is the provision of section 535 to which reference must be made in order to ascertain whether that which was invalid shall be deemed to be valid, unless the court was satisfied that there had been a failure of justice.
I regard with concern, if not with dismay, a too liberal application of its provisions to all cases in which there is an absence of a charge, 1195 although a charge ought to have been framed.
It is difficult to lay down any hard and fast rule as to when the provisions of section 535 will or will not be applicable.
The facts of each case, as they arise, will have to be carefully considered in order to decide that that which was prima facie invalid is deemed to be valid by virtue of its provisions.
There may be cases where the omission to frame a charge was merely a technical defect in which case section 535 would apply.
On the other band, there may be cases where failure to frame a charge affects the mode of trial or it is such a substantial contravention of the provisions of the Code relating to the framing of charges that prejudice may be inferred at once and the conviction which was prima facie invalid continued to be so.
In a criminal trial innocence of an accused is presumed,unless there is a statutory presumption against him, and the prosecution must prove that the accused is guilty of the offence for which he is being tried.
The prosecution is in possession of all the evidence upon which it relies to establish its case against the accused.
It has the privilege to ask the Court to frame charges with respect to the offences which it wishes to establish against the accused.
On the Court itself a duty is cast to frame charges for offences which, on the evidence, appear to it prima facie to have been committed.
If in spite of this a charge under section 302 read with 149 of the Indian Penal Code only is framed against an accused person and not under section 302 of the Indian Penal Code, it will be reasonable to suppose that neither the prosecu tion nor the Court considered the evidence sufficient to prove that murder was committed by the accused and the omission to frame a charge under section 302 must be regarded as a deliberate act of the Court by way of notice to the accused that he was not being tried for that offence.
It would not be a case of mere omission to frame a charge.
If, therefore, the accused is convicted under section 302, I would consider his conviction as invalid, as he was misled in his defence.
In conclusion I would point out that the provisions of the Code of Criminal Procedure are meant to be 151 1196 obeyed.
Contravention of its provisions are unnecessary and neither the prosecution nor the Courts of trial should ignore its provisions in the hope that they might find shelter under sections 535 and 537 of the Code.
Where the contravention is substantial and a retrial becomes necessary, public time is wasted and the accused is put to unnecessary harassment and expense.
| IN-Abs | The appellant and his brother were put up for trial on charges under section 302 read with section 34 of the Indian Penal Code.
The appellant was specifically charged with murder in prosecution of the common intention.
There was evidence to show that he and not his brother had struck the fatal blow.
The brother was acquitted and the appellant was convicted under section 302 and sentenced to transportation for life.
The High Court upheld the conviction and sentence and dismissed the appeal.
The question was whether the omission to frame an alternative charge under section 302 simpliciter was an illegality that vitiated the trial and invalidated the conviction and whether there was a conflict of decisions of this Court on the matter in controversy.
Held per curiam, that the omission to frame an alternative charge under section 302 in the facts and circumstances of the case was not an illegality that vitiated the trial but was a curable irregularity as it had not occasioned any prejudice to the appellant and the conviction was not liable to be set aside.
That section 34 of the Indian Penal Code by itself does not create any offence and where, as in the present case, it is possible to ascertain who struck the fatal blow, the fact that another was also sought to be made liable does not invalidate a conviction for murder unless there was prejudice.
That the expression 'illegality ' used in Nanak Chand 's case must be read with reference to the facts of that case where the court 1141 found prejudice, and the apparent conflict of view between the judgment in that case and that in Suraj Pal 's case had really no bearing on the present one.
Nanak Chand vs The State of Punjab ([1955] 1 S.C.R. 1201), and SurajPal vs The State of U.P. ([1955] 1 S.C.R. 1332), explained.
That the Code does not use the word 'illegality ' nor define 'irregularity ' and 'illegality ' can only mean an incurable irregularity, incurable because of prejudice leading to a failure of justice.
The question of prejudice is a question of fact to be decided by the court in each particular case.
That the offence committed by the appellant fell under the second part of section 304 of the Indian Penal Code and not section 302 and the conviction must be altered to one under that section.
N. A. Subramania Iyer vs King Emperor ([1901] L.R. 28 I. A. 257), explained.
Babulal Choukhani vs The King Emperor ([1938] L.R. 65 I. A. 158), Pulukuri Kotayya vs King Emperor ([1947] L.R. 74 I.A. 65), Abdul Rahman vs King Emperor ([1926] L.R. 54 I. A. 96), Atta Mohammad vs King Emperor ([1929] L.R. 57 I.A. 71), Karnail Singh vs The State of Punjab ([1954] S.C.R. 904) and Begu vs KingEmperor ([1925] I.L.R. , referred to.
Per section R. DAS, ACTING C.J. and BOSE J.
Like all procedural laws the Code of Criminal Procedure is designed to subserve the ends of justice and not to frustrate them by more technicalities.
It regards some of its provisions as vital but others not, and a breach of the latter is a curable irregularity unless the accused is prejudiced thereby.
It places errors in the charge, or even a total absence of a charge in the curable class.
This is made clear by sections 535 and 537 of the Code.
The object of the charge is to give the accused notice of the matter he is charged with and does not touch jurisdiction.
If, therefore, the necessary information is conveyed to him in other ways and there is no prejudice, the trial is not invalidated by the mere fact that the charge was not formally reduced to writing.
The essential part of this part of the law is not any technical formula of words but the reality, whether the matter was explained to the accused and whether he understood what he was being tried for.
It is not correct to say that section 535 of the Code has no application to a case in which there is no charge at all or that it cannot apply except where sections 237 and 238 apply or that it is governed by section 233.
Sections 237, 238, 535 and 537 should not be read disjunctively.
They cover every possible case that relates to the charge and they place all failures to observe the rules about the charge in the category of curable irregularities.
Sections 535 and 537 apply to every case in which there is a 1142 departure from the rules set out in Chapter XIX ranging from error, omissions and irregularities in charges that are framed, down to charges that might have been framed and were not and include a total omission to frame a charge at all at any stage of the trial.
In judging a question of prejudice, as of guilt, courts must act with a broad vision and look to the substance and not to technicalities; and their main concern should be to see whether the accused had a fair trial, whether he knew what he was being tried for, whether the main facts sought to be established against him were explained to him fairly and clearly and whether he was given a full and fair chance to defend himself.
There is no conflict of view between Nanak Chand vs The State of Punjab and Suraj Pal vs The State of U.P. and a close consideration of the reasons given in Nanak Chand 's case show that there was in fact no difference of opinion as regards cases where there is a charge to start with.
Neither case, however, deals with the position where there is no charge at all.
The remarks made in Nanak Chand 's case must be read in the perspective indicated and expressions which appear to travel wider do not give a correct exposition of the law.
The effect of charging two persons with murder committed in pursuance of a common intention under section 34 of the Indian Penal Code is that the accused is unmistakably told that he participated in the crime.
Where it cannot be ascertained who struck the fatal blow no conviction can follow unless a common intention is proved.
But the converse does not hold good.
Per JAGANNADHADAS and CHANDRASEKHARA AIYAR JJ.
(IMAM J. agreeing).
Sections 226, 227, 232(1), 237, 535 and 537 indicate that in the generality of cases the omission to frame a charge is not per se fatal.
It is not, therefore, correct to say that where there is no charge the conviction must be illegal, prejudice or no prejudice.
Nor is it correct to say that section 535 is sufficiently wide to apply to every case where there is no charge of any kind from the outset.
The section cannot be construed in such an unlimited sense and must normally be read in the same context as sections 225,226 and 232, that is, with reference to a trial that validly commenced, for there may be cases where a trial without any kind of charge from the outset will be wholly contrary to the provisions of the Code and as such illegal without the necessity of a positive finding of pre judice.
The provisions of section 535 mainly apply to cases of inadvertence to frame a charge induced by the belief that the matter on record is sufficient to warrant the conviction for a particular offence without express specification and where the facts proved constitute a separate and distinct offence but closely relevant to and springing out of the same set of facts connected with the one charged.
The Code requires that in a sessions trial there should be a 1143 charge in writing.
A deliberate breach of this basic requirement cannot be covered by the assertion that every thing was orally explained to the accused, the assessors or jurors and there was no prejudice.
So also where the conviction is for a totally different offence from the one charged and not covered by sections 236 and 237 of the Code, the omission to frame a separate charge would be an incurable irregularity amounting to illegality.
In cases coming under sections 34, 114 and 149 of the Indian Penal Code the charge against persons actuated by a common intention is a rolled up one.
It involves direct liability and constructive liability without distinct specification.
The absence of a charge under one or other of the various heads of criminal Liability for the offence in such cases is not fatal and a conviction for the substantive offence, without a charge, can be set aside only where there is prejudice.
In considering whether a defect is illegal or merely irregular, several facts will have to be considered, including its gravity to determine if it falls within one class or the other.
The answer must depend on the facts and circumstances of each case.
If the defect is so grave that prejudice would necessarily be implied, it is an illegality.
If less serious, it will be an irregularity and prejudice by way of failure of justice must be established.
Howard vs Bodington ([1877] , referred to.
Per IMAM J. On the facts of the present case the question raised by the reference does not arise.
There is no substantial conflict of view between the two decisions of this court in Nanak Chand 's case and Suraj Pal 's case.
Section 233 of the Code is a mandatory provision and the force of its direction is not weakened by the fact that another provision of the Code permits the conviction of the accused for an offence with which he had not been charged.
The total absence of a charge from the beginning to the end where it is incumbent that a charge must be framed is a contravention of the Code regarding the mode of trial it prescribes and a conviction of the accused in such a case is invalid and no question of prejudice can arise.
In cases, however, where a charge is framed but there is an omission or irregularity but the mode of trial is not affected the Code provides that the conviction may be set aside if, in fact, a failure of justice as resulted.
It is difficult to lay down any hard and fast rule as to the applicability of section 535.
That will depend on the facts of each case.
|
No. 1810 of 1971.
(Appeal by Special Leave from the Judgment and Order dated 1.3.1971 of the Orissa High Court in O.J.C. No. 1597 of 1968) AND C.A. No. 1170 of 1972 (Appeal by Special Leave from the Judgment and Order dated 8.3.1971 of the Orissa High Court in O.J.C. No. 316 of 1970) AND Civil Appeal No. 1981 of 1972 (Appeal by Special Leave from the Judgment and Order dated 28.3 .1971 of the Orissa High Court in O.J.C. No. 1885 of 1968) AND Civil Appeal No. 1982 of 1972.
(Appeal by Special Leave from the Judgment and Order dated 28.6.1971 of the Orissa High Court in O.J.C. No. 153 of 1971) AND Civil Appeal No. 1603 & 1604 of 1972 716 (Appeal by Special Leave from the Judgment and Order dated 2.3.1971 of the Orissa High Court in O.J.C. Nos. 202 and 203 of 1969.) A.K. Sen, Bishamber Lal Khanna and Bishamber Lal for the appellants in CA No. 1810/71.
A.K. Sen, (CA No. 40/72) H.R. Gokhale (CAs 1603 1604) Gobind Das (CAs 1170, 198, 1982, SLPs and for the interven ers) Bijoy Mohenty, Mrs. Sunanda Bhandare, M.S. Narsimhan, A. K. Mathur, A.K. Sharma and Miss Malini Poduval for the appellants in CA Nos.
1170, 1981 1982, 1603 1604 of 1972 and CA No. 40/72 and in the SLPs Nos. 305 310/72 and for the Interveners.
G. Rath, Adv.
During the pendency of the writ petitions filed by the appellants in the Orissa High Court, the Orissa Legislature passed the Orissa Taxation (on Goods carried by Roads or Inland Waterways) Validation Act, 18 of 1962, validating the Act of 1959.
The High Court accepted the appellants ' contention that the Act of 1959 was unconstitutional but it dismissed the Writ petitions on the ground that the appellants were not entitled to any relief as they had not challenged the Act of 1962 which had validated the Act of 1959.
After the decision of the High Court.
respondent No. 2, the Tax Officer, assessed tax in varying amounts for different quarters on the goods carried by the appellants by road.
The appellants then filed fresh writ petitions under article 226 of the Constitution challeng ing the Act of 1962.
Those petitions were dismissed by the High Court but in appeal, the judgment of the High Court was set aside by this Court on August 10, 1967.
It was held by this Court that the Validating Act of 1962 did not cure the defect from which the Act of 1959 suffered and therefore, respondents were not entitled to recover any tax from the appellants under the aforesaid Acts.
On March 25, 1968 the Orissa Legislature, having ob tained the previous sanction of the President to the moving of the Bill. passed the Orissa Taxation (on Goods carried by Roads or Inland Waterways) Act, 8 of ' 1968, imposing the same levy which it had unsuccessfully attempted to levy under the Act of 1959 and to validate under the Act of 1962.
Some of the appellants from whom the State Government had recovered taxes after the Act of 1962 was upheld by the High Court asked for refund thereof after that Act was declared unconstitutional by this Court.
The refund having been refused by the Governments, the appellants filed writ peti tions in the High Court 717 challenging the validity of the 1968 Act.
The dismissal of those writ petitions has given rise to these appeals by special leave.
There is no substance in any of the contentions raised on behalf of the appellants regarding the constitutionality of the Act of 1968.
The bill which matured into the impugned Act was introduced by the Orissa Legislature after obtaining the previous sanction of the President under the Proviso to article 304 of the Constitution.
As shown by the Preamble, the Act was passed in order to provide for the level of tax on certain goods carried by roads or inland waterways in the State of Orissa and to validate certain taxes imposed on such goods.
By section 1 (3), the Act was to be deemed to have come into force on April 27, 1959 being the date on which the Act of 1959 had come into force.
Section 3 of the Act which contains the charging provision provides that there shall be levied a tax on goods of the description mentioned in the section and carried by means specified therein.
Section 27 of the Act provides in so far as material that notwithstanding the expiry of the Act of 1959 and notwith standing anything contained in any judgment, decree or order of any Court, all assessments made, all taxes imposed or realised, any liability incurred or any action taken under the Act of 1959 shall be deemed to have been validly made, imposed, realised, incurred or taken under the corresponding provisions of the Act of 1968.
These provisions of the Act of 1968 show that what the State legislature did thereby was to enact, with retrospective effect, a fresh piece of taxing statute after complying with the constitutional mandate contained in the proviso to article 304 that no Bill for the purposes of clause (b) of the Article shall be introduced or moved in the Legislature of a State without the previous sanction of the President.
The reliance of the appellants on the judgment of this Court in Jawaharmal vs State of Rajasthan(1) is wholly misconceived.
In that case, section 4 of the impugned Act of 1964 in truth and substance provided that the failure to comply with the constitutional mandate of Presidential sanction shall no.t invalidate the Finance Acts of 1961 and 1962.
It was held by this Court that it was not competent to the legislature to pass an Act providing that an earlier Act shall be deemed to be valid even though it did not company with the requirements of the Constitution.
In the instant case, the State Legislature passed an independent enactment in 1968 after complying with the constitutional requirement but it gave to that enactment retrospetive effect from the date that the 1959 Act had come into force and it created a legal fiction, which was permissible for it to do, that all actions taken under the Act of 1959 shall be deemed to have been taken under the Act or 1968.
Mr. Gobind Das, appearing on behalf of some of the appellants, raised points commonly associated with high constitutional concepts, but lacking in substance.
He urged that the Act of 1968 is a piece of colourable legislation, that it constitutes a flagrant encroachment on (1) ; 718 the functions of the judiciary and that since the Act has no operation in futuro and operates only on the dead past, it is void as lacking in legislative competence.
Learned counsel also employed the not unfamiliar phrase that the Act is a fraud on the Constitution.
Happily all ' of these attacks, in so far as they at all require an answer,"can be met effectively in a brief compass.
In Khyerbari Tea Co. Ltd. vs State of Assam(1), it was held by this Court that article 304(b) of the Constitution does not require that laws passed under it must always be prospective.
Nor was it correct to say that once the State Legislature passes an Act without recourse to that Article and that Act is struck down, the Legislature cannot re enact, that Act under that article and give it retrospective effect.
The Court fur ther held in Khyerbari (supra) that the mere fact that a validating taking statute has.
retrospective operation does not change the character of the tax ' nor can it justify the Act being branded as a colourable piece of legislation in any sense.
We may only add that since it is well settled that the power to legislate carries with it the power to legislate retrospectively as much as prospectively, the circumstance that an enactment operates entirely in the past and has no prospective life cannot effect the competence of the legislature to pass the enactment, if it fails within the list on which that competence can operate.
As regards the power to pass a validating Act, that power is essen tially subsidiary to the legislative competence to pass a law under an appropriate: entry of the relevant list.
Thus the impugned enactment is a valid exercise of legislative power and is in no sense a fraud on the Constitution.
As regards the alleged encroachment by the legislature on fields judicial, the argument overlooks that the Act of 1968 does not, like the Act under consideration in Jawahar mal(2), declare that an invalid Act shall be deemed to be valid.
It cures the constitutional vice from which the Act of 1959 suffered by obtaining the requisite sanction of the President and thus armed, it imposes a new tax, though with retrospective effect.
Imposition of taxes or valida tion of action taken under void laws is not the function of the judiciary and therefore, by taking these steps the legislature cannot be accused of trespassing on the preserve of the judiciary.
Courts have to be vigilant to ensure that the nice balance of power so thoughtfully conceived by our Constitution is not allowed to be upset but the concern for safeguarding the judicial power does not justify conjur ing up trespasses for invalidating laws.
There is a large volume of authority showing that if the vice from which an enactment suffers is cured by due compliance with the legal or constitutional requirements, the legislature has the ' competence to validate the enactment and such validation does not constitute an encroachment on the functions of the judiciary.
The validity of a validating taxing law depends upon whether the legislature possesses the compe tence over the subject matter of the law, whether ' in making the validation it has removed the defect from which the earlier enactment suffered and whether it has made due and adequate provision in the validating law for a valid imposi tion of the tax; ( See, for example Prithvi Cotton Mills vs Broach Borough Municipality(3) (1) ; (2) ; (3) [1970]1 S.C.R. 388. 719 Tirath Ram Rajindra Nath vs State of U.P.(1); Government of Andhra Pradesh vs Hindustan Machine Tools Ltd.(2).
The passage from Cooley 's ConstitutiOnal Limitations ' (Ed. 1927, Vol.
I, p. 183) that a legislative act is a "pre determination of what the law shall be for the regulation of all future cases falling under its provisions" does not bear upon the power of the legislature to pass laws which are exclusively retrospective.
Mr. Gobind Das 's reliance on that passage cannot therefore further his contention.
Mr. Gokhale, who appears on behalf of some of the appel lants, attempted to challenge the Act of 1968 on the ground of unreasonableness but he did not pursue that argument.
But he made another point which requires some attention.
The appellants or some of them, did not challenge the orders of assessment passed against them as the Acts of 1959 and 1962 were held unconstitutional.
Counsel 's apprehen sion is that any appeal filed hereafter for challenging the assesSment made under the earlier Acts would be barred by limitation and the appellants would be deprived of their statutory right to question the correctness of the assess ment.
This apprehension is unfounded because the 2nd proviso tO section 12 of the Act of 1968 empowers the appropriate authority to admit an appeal after the period of limitation is over if it is satisfied that the dealer had sufficient cause for not preferring the appeal within the said period.
Sub section (3) confers on the Commissioner the power of revision and sub section (4) of section 12 confers the power of review subject to the rules made under the Act.
We have no doubt that if any appeal challenging.
an order of assessment is filed beyond the period of limitation and the authority is satisfied that the appeal could not be filed within limitation for the reason that the Acts of 1959 and 1962 were held to be unconstitutional, the delay in filing the appeal would be condoned.
We are equally confident that if any appeal filed for challenging an order of assessment was withdrawn or not pursued for the reason that the two Acts were held unconstitutional, the authority concerned would pass appropriate orders reviving the appeal.
We are happy to note the assurance of the learned Advocate General of the State of Orissa that the State will not oppose in such cases the condonation of delay or the revival of appeals.
For these reasons we dismiss the appeals but there will be no order as to costs.
The Special Leave Petitions which were kept pending to await the decision of these appeals are hereby dismissed.
We may take this opportunity to dwell upon the incon venience resulting from the enactment of article 144A which was introduced by the 42nd Amendment to the Constitution.
That article reads thus: "Special provisions as to disposal of ques tions relating to Constitutional validity of laws.
(1) [1975] Supp S.C.R. 394.
720 "144A (1) The minimum number of Judges of the Supreme Court who shall sit for the purpose of determining any question as to the Constitu tional validity of any central law or State law shall be seven.
(2) A Central law or a State law shall not be declared to be constitutionally invalid by the Supreme Court unless a majority of not less than two thirds of the Judges sitting for the purposes of determining the question as to the constitutional validity of such law hold it to be constitutionally invalid."" The points raised in these appeals undoubtedly involve the determination of questions as to the constitutional validity of a State law but they are so utterly devoid of substance that Mr. Asoke Sen and Mr. Gokhale who appear for the appel lants could say nothing in support of their contentions beyond barely stating them.
Were it not for the valiant, though vain, attempt of Mr. Gobind Das to pursue his points, the appeals would have taken lesser time to dispose of than for a Court of seven to assemble.
Article 13(3)(a) of the Constitution defines "law" to include any Ordinance, Order, bye law, rule, regulation, notification etc.
having the force of law with the result that seven judges of this Court may have to sit for determining any and every question is to the constitutional validity of even orders and notifica tions issued by the Government, which have the force of law.
A Court which has large arrears to contend with has now to undertake an unnecessary burden by seven of its members assembling to decide all sorts of constitutional questions, no matter what their weight or worth.
It is hoped that article 144A will engage he prompt attention of the Parliament so that it may, be general consensus, be so amended as to leave to the Court itself the duty to decide how large a Bench should decide any particular case.
S.R. Appeals dismissed.
| IN-Abs | The Orissa Taxation (On goods carried by Roads or Inland Waterways) Act 7 of 1959 and the Orissa Taxation (On Goods carried by Road or Inland Waterways) Validation Act 18 of 1962 were struck down by this Court on 10 8 1967 as invalid and it was held that the respondents were not entitled to recover any tax from the appellants under the aforesaid Acts.
On March 26, 1968, the Orissa Taxation (On Goods carried by Roads or Inland Waterways) Act 8 of 1968 was passed after obtaining the previous sanction of the Presi dent under article 304 of the Constitution to the moving of the Bill, imposing the same levy which it had unsuccessfully at tempted to levy under the Actor 1959 and to validate under the Act Of 1962.
By section 1(3) of the 1968 Act, the Act was to be deemed to have come into force on April 27, 1959 being the date on which the Act of 1959 had come into force.
Section 27 of the Act provides that notwithstanding the expiry of the Act of 1959 and notwithstanding anything contained in any judgment decree or order of any court, all assessments made; all taxes imposed or realised any liabili ty incurred or any action taken under the, Act of 1959 shall be deemed 10 have been validly made, imposed, incurred or taken under the corresponding provisions of the Act 1968.
The claims of some of the appellants who had asked for refund of the tax collected under the Act of 1962 which was held unconstitutional, having been refused by the Govern ment, they filed writ petitions in the Orissa High Court challenging the validity of the 1968 Act.
The High Court dismissed the writ petitions.
In appeal to this Court by special leave, the Court, HELD: (1) The impugned enactment is a valid exercise of legislative power and is in no sense a fraud on the Consti tution.
Since it is well established that the power to legislate carries with it the power to legislate retrospec tively as much as prospectively, the circumstance that an enactment operates entirely in the past and has no prospec tive life cannot affect the competence of the Legislature to pass the enactment if it falls within the list on which that competence can operate.
As regards the power to pass a validating Act, that power is essentially subsidiary to the legislative competence to pass a law under an appropriate entry of the relevant list.
[718 B E] Khyerbari Tea Co. Ltd. vs State of Assam [1964] 5 S.C.R. 975, applied.
(2) In the instant case, the State Legislature passed an independent enactment in 1968 after complying with the constitutional requirements.
but it gave to that enactment retrospective effect from the date that the 1959 Act had come into force and it created a legal fiction which was permissible for it do, that all actions taken under the Act of '1959 shall be deemed to have been taken under the Act of 1968.
[717 FG] Jawaharmal vs State of Rajasthan ; , not applicable.
(3) If the vice from which an enactment suffers is cured by due compliance with the legal or constitutional require ment, the Legislature has 715 competence to validate the enactment and such validation does not constitute an encroachment on the functions of the judiciary.
The validity of a validating taxing law depends upon whether the legislature possesses the competence over the subject matter of the law; whether in making the valida tion it has removed the defect from which the earlier enact ment suffered and whether it has made due and adequate provision in the validating law for a valid imposition of the tax.
[718 G H] Prithvi Cotton Mills vs Broach Borough Municipality ; Tirath Ram Rajindra Nath vs State of U.P.A.I.R. and Government of Andhra Pradesh vs Hindustan Machine Tools Ltd. (1975) Supp.
SCR 394 referred to.
(4) If any appeal challenging an order of assessment is filed beyond the period of limitation and the authority is satisfied that the appeal could not be filed within limita tion for the reason that the Acts of 1959 and 1962 were held to be unconstitutional, the delay in filing.
the appeal can be condoned under the second proviso to section 12 of the Act of 1968.
If any appeal filed for challenging the order of assessment was withdrawn or not pursued for the reason that the two Acts were held unconstitutional, the authority concerned can pass appropriate orders reviving the appeal.[719 D F] Observation: It is hoped that article 144A. introduced by the 42nd Amendment will engage the prompt attention of the Parliament so that it may, by so that it may, by general con sensus, be so amended as to general consensus, be so amended as to leave to the court itself the duty to decide how large a Bench should decide any particular case.
A court which has large arrears to contend with has now to undertake an unnecessary burden by 7 of its members assembling to decide all sorts of constitutional questions, no matter what their weight or worth.
Since article 13(3) (a) of the Constitution defines "law" to include any Ordinance, Order, bye law, rule, regu lation.
notification etc.
having the force of law, seven Judges of this Court may have to sit for determining any and every question as to the constitutional validity of even orders and notifications issued by the Government, which have the force of law.
This will inevitably cause great inconvenience and undue delay in disposal of cases.
[720 C D]
|
ivil Appeal No. 1134 of 1973.
(From the judgment and Order dated 14 7 1972 of the Cal cutta High Court in Appeal from Original Order No. 253 of 1969).
CRIMINAL APPELLATE JURISDICTION: Criminal Appeal No. 319 of 1974.
(Appeal by special leave petition from the judgment and order dated 4 10 1973 of the Delhi High Court in Criminal Revision No.264 of 1973).
CRIMINAL APPEAL No. 358 of 1976.
(Appeal by Special Leave from the Judgment and Order dated 30 7 1976 of the Special Judge Delhi in criminal C.C. No. 16 of 1975).
V.P. Ratnan, D.N. Mukherjee and G.S. Chatterjee, for the appellant in C.A. No. 1134/73.
760 Niren De and N.C. Talukdar, B.M. Bagaria, Dilip Sinha and D.P. Mukherjee, for respondent No. 1, in CA 1134/73.
R.N. Sachthey, for the respondent No. 3 in CA No. 1134/73.
Praveen Kumar, for the appellant in Crl.
A. No. 319/74.
R.N. Sachthey, for respondent No. 1 in Crl.
A. No. 319/74.
R.H. Dhebar and B.V. Desai for the appellant in Crl.
A. No. 358 of 1976.
V.P. Raman and R.N. Sachthey, for the respondents in Crl.
A. No. 385/76.
The Judgment of the Court was delivered by GOSWAMI, J.
In these appeals a common question of law arises for consideration.
We will therefore refer to the facts as appearing in Civil Appeal No. 1134 of 1973 to decide the issue and our decision will govern these appeals.
We are informed that the sole appellant in Criminal Appeal No. 319 of 1974 died.
The said appeal, therefore, abates and is dismissed.
Civil Appeal No. 1/34 of 1973 is directed against the judgment the Division Bench of the Calcutta High Court whereby the earlier judgment of the single Judge was re versed.
The facts so far as material may be briefly stated: On or about May 27, 1967, a case was lodged by the Deputy Superintendent of Police, Central Bureau of Investi gation, Sub Division, Calcuta, against R.C. Bhattacharjee who was an ex Major of the Indian Army and Manmal Bhutoria (hereinafter, the respondent) who was a businessman.
It was alleged that R.C. Bhattacharjee in collusion and conspiracy with the respondent had accepted certain tenders from a fictitious nominee of the.
said respondent for supply of certain stores to the military authorities at a price ex ceeding the price quoted by the other tenderers and thereby caused substantial loss to the Military Authority and to the Government of India.
It was further alleged that the said Bhattacharjee along with the respondent had committed of fence of conspiracy of criminal misconduct by a public servant in dishonestly abusing his position as a public servant for obtaining undue pecuniary advantage which amounted to an offence under section 5(2) of the Prevention of Corruption Act, 1947.
Accused Bhattacharjee was invalidated from the Military service with effect from February 14, 1966, as permanently unfit for any form of military service.
A case under the Prevention of Corruption Act, 1947 (hereinafter, briefly the Act) can be tried only by a spe cial court constituted under the provisions of the West Bengal Criminal Law Amendment (Special Courts) Act, 1949 (West Bengal Act XXI of 1949) (briefly the Bengal Act).
By a notification in the Calcutta Gazette dated June 15, 1967, the State Government allotted the said case to the Fourth 761 Additional Special Court in Calcutta under sub section (2) of Section 4 of the Bengal Act.
When the Special Court fixed the case for trial on 23rd, 24th and 25th November, 1967, the respondent moved the High Court of Calcutta under Article 226 of the Constitution on November 7, 1967, inter alia, contending that (1 ) at the point of time when the case was distributed to the Special Court the co accused, ex Major Bhattacharjee, had ceased to be a public servant and as such the Bengal Act had no application and the said Court had no jurisdiction to entertain the case; (2) a public officer having ceased to be such an officer at the date of allotment of the case the order of allotment by the State Government was without jurisdiction and void; and (3) the Special Court.
had no jurisdiction to try cases in which two private persons were involved and the allotment of the case to the Special Court was thus illegal.
A point regarding absence of sanction was also taken up but was not pressed before us in view of the decision of this Court in S.A. Venkataraman vs The State(1).
The single Judge of the High Court dismissed the writ application but the Division Bench by two concurring judg ments set aside the said judgment and order of the single Judge.
That is how this matter has come before us on cer tificate under Article 133(1) (c) of the Constitution.
P.B. Mukherjee, J. held " . the only solution is to hold that these two acts, namely, the Special Courts Act and the Prevention of Corruption Act do not apply to a public servant who had ceased to be a public servant on the date the court takes cognisance.
This solution seems all the more proper because it seems to steer clear of Article 14 of the Constitution . ".
The learned Judge further observed "Therefore a person who has ceased to be in office, that is, who has ceased to be a public servant, does not come within the ambit of the expression 'public servant ' and conse quently is not governed by the Prevention of Corruption Act and, as such, cannot commit an offence under section 5(2) of the said Act".
The learned Judge again observed "It will appear that though Major Bhat tacharjee had ceased to be a public servant, the state Government by distributing the present case to the Special Court violated the (1) 762 principle of equal protection clause by deny ing the advantages associated with the office of a public servant but imposing on him the disadvantages and/or disabilities associated with the office of a public servant.
Hence the Act is not discriminatory but the action, allotment and distribution of this case to the Special Court of the State Government is discriminatory.
Therefore it is to be struck down and the order of the distribution quashed".
The learned Judge also observed " . but a public servant who has ceased to be a public servant, can neither be prosecuted in respect of any scheduled offence nor of an offence under section 5(2) of the Prevention of Corruption Act and as such, the trial of such a person cannot be in accordance with the provisions of those two statutes".
* * *.
* " . so far as the appellant Manmal Bhutoria is concerned, he never being 'a public servant ' is dearly not triable by the Special Court under the Prevention of Corrup tion Act and West Bengal Criminal Law Amend ment (Special Courts) Act, 1949 and suffer all the handicaps of being presumed to be guilty".
B.C. Mitra, J. in his concurring judgment observed as follows : "On a careful consideration of the various clauses under section 21 of the Penal Code, I have no doubt that a person who was previously a public servant, but who has ceased t0 be such, do not come within the ambit of that section.
Both section 5(1) and section 5(2) deal with public servants only.
There is no provision in this Act whereby a person who was previously a public servant, but has ceased to be a public servant at the relevant time, can be charged with an offence under section 5(1)(d) or section 5(2) of the Prevention Act".
Before we proceed further we may immedi ately set out what this Court has held in venkataraman 's case (supra) since what was held therein has largely influenced the deci sion of the Division Bench.
At page 1044 of the report in that decision this Court ob served as follows : "These provisions of the Act (namely Act 2 of 1947) indicate that it was the intention of the legislature to treat more severely than hitherto corruption on the part of a public servant and not to condone it in any manner whatsoever.
If section 6 had not found a place in the Act it is clear that cognizance of an offence under section 161,164 or section 165 of the Indian Penal Code or under section 5(2) of the Act committed by a 763 public servant could be taken by a court even if he had ceased to be a public servant.
The mere fact that he had ceased to be a public servant after the commission of the offence would not absolve him from his crime.
Section 6 certainly does prohibit the taking of cogni zance of his offence, without a previous sanction, while he is still a public servant but does that prohibition continue after he has ceased to be a public servant" ? Again at page 1048/1049 this Court observed as follows : "In our opinion, in giving effect to the ordinary meaning of the words used in section 6 of the Act, the conclusion is inevitable that at the time a court is asked to take cognizance not only the offence must have been committed by a public servant but the person accused is still a public servant removable from his office by a competent authority before the provisions of section 6 can apply.
In the present appeals, admittedly, the appellants had ceased to be public servants at the time the court took cognizance of the offences alleged to have been committed by them as public serv ants.
Accordingly, the provisions of section 6 of the Act did not apply and the prosecution against them was not vitiated by the lack of a previous sanction by a competent authority".
A similar view was affirmed by the Court in C.R. Bansi vs State of Maharashtra.(1) This Court held therein as follows : "The policy underlying section 6, and similar sections, is that there should not be unneces sary harassment of public servants.
But if a person ceased 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 dismiss al 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".
Accepting the position that sanction under section 6 of the Act is not necessary if the public servant ceased to be a public servant on the date the court takes cognizance of the offence, the High Court arrived at the conclusion that there would be discrimination between one class of public servants and another similarly situated when those in office will be protected from harassment on account of the require ment of sanction for prosecution whereas the public servants after they ceased to be in office will be prosecuted and harassed in absence of the requirement of the sanction.
It is in that view of the matter the High Court has held that the Special Court has no jurisdiction to try a public serv ant who has ceased to be a public servant on the date the Court was required to take cognizance of the offence, since, according to the High Court, "it cannot be said that in certain respects he (1) ; 764 is a public servant for the offences under the Prevention of Corruption Act and for certain other respects, he is not a public servant".
It is in taking this view that P.B. Mukher jee, J. observed that "this solution seems all, the more proper because it seems to steer clear of Article 14 of the Constitution".
The High Court, however, did not strike down the Act or any provisions of the Act as unconstitutional.
It has only held the order of allotment of the case to the Special Court as illegal as the case of a public servant who has ceased to be a public servant cannot be allotted to the Special Court since, according to the High Court, to hold otherwise would be violative of Article 14 of the Constitu tion.
It is in the background of such a conclusion that Mr. Niren De, counsel for the respondent, submits that tiffs appeal involves the determination of a question as to the constitutional validity, on the basis of Article 14 of the Constitution, of the provisions of the Bengal Act, particu larly the proviso to section 4(1) of that Act.
He further submits that a person who ceased to be a public servant cannot be treated differently from a person who is a public servant in office for the purpose of the Bengal Act.
He, therefore, submits that in view of Article 144(A), as in serted by the 42nd Amendment, this appeal should be heard by a minimum number of seven Judges of this Court and we should therefore, refer the same to a larger Bench.
This submission is supported by Mr. Dhebar who is appearing in.
an identical matter in Criminal Appeal No. 358 of 1976 and he has submit ted an application to urge additional grounds on the basis of Article 14 of the Constitution.
There is some misconception both in the judgment of the High Court as well as in the submission made by counsel on this point.
In view of the decision in Venkataraman 's case (supra) there is no warrant for including in one category public servants in office and public servants who have ceased to be so.
These two classes of public servants are not similarly situated as has been cleared out in Bansi 's case (supra).
The plea of applicability of Article 14 on the basis of the judgment in Venkataraman 's case (supra) is, therefore, wholly misconceived.
It cannot be argued that the, decision in Venkataraman 's case (supra) is violative of Article 14 of the Constitution.
That decision only says that section 6 of the Act is not applicable to a public servant if at the time of taking cognizance by the court he ceases to be so.
Because a particular section is not applicable to a public servant after he has ceased to be in office, the question of the Act being violative.
of Article 14 of the Constitution will not arise.
This Court has clearly placed a public servant, who has ceased to be in office, in a sepa rate category and that classification has held the field all these years without demur.
There is, therefore, no sub stance in the contention that this appeal should be referred to a larger Bench.
Under section 4(1) of the Bengal Act, the scheduled offences which include an offence under section 5 (2) of the Act as also conspiracy to commit that offence shall be triable by Special Courts only.
No other court can, there fore, try these offences.
The provisions of the Bengal Act are clearly different from those of the West Bengal 765 Special Courts Act which were the subject matter in The State of West Bengal vs Anwar Ali Sarkar(1) Proviso to section 4(1) of the Bengal Act is in the following terms: " 'Provided that when trying any case, a Special Court may also try any offence other than an offence specified in the Schedule, with which the accused may under the Code of Criminal Procedure, 1898, be charged at the same trial".
By this proviso the Special Court, when trying a scheduled offence finds that some other offence has also been commit ted and the trial of the same in one trial is permissible under the Code of Criminal Procedure, may try such a charge.
It is difficult to imagine how such a proviso can at all attract Article 14 of the Constitution.
On merits it is submitted 'by Mr. De that the respondent is a complete outsider and is not a public servant at all.
The Bengal Act is not applicable to him.
It is submitted that the Bengal Act provides for reference to the SpeCial Court only offences mentioned in the Schedule to that Act and all the offences mentioned in the Schedule, according to him, are those which may be committed by a public servant.
He draws our attention to the definition of public servant under section 21 o{ the Indian Penal Code which definition is applicable under section 2 of the Act.
He submits that the public servant in 'view of the definition means a public servant in office and not one who has ceased to be in of fice.
It is true that section 21 IPC enumerates various classes of public servants who are or who happen to be in office.
That is, however, not the true test in determining the present controversy.
The crucial date [c: ' the.
purpose of attract ing the provisions of the Act as well as those of the Bengal Act is whether the offence has been committed by a public servant within the definition of section 21.
The date for determining the offence is the date of the commission of the offence when the person arraigned must be a public servant.
Section 6 of the Act provides that no court shall take cognizance.
of an offence specified in that section alleged to have been committed by a public servant except with the previous sanction.
The section itself makes a clear dis tinction between cognizance of an offence and alleged commission of an offence.
Sanction refers to the date when after submission of a report or a complaint the court takes cognizance of the offence.
That date is necessarily subsequent to the date of commission of the offence and sometimes far remote from that date.
Retirement, resigna tion, dismissal or removal of a public servant would not wipe out the offence which he had committed while in serv ice.
Under section 6(1) of the Act, as in the, case of section 190(1) Cr.
P.C. the court takes cognizance of an offence.
and not an offender (see Raghubans Dubey vs State of Bihar(e).
The crucial date, therefore, for taking cogni zance in this case is the date when the case was received by the Special Court on being allotted by the State Government under section 4(2) of the Bengal Act.
(1) ; (2) ; , 428.
766 Mr. De submits that section 10 of the Bengal Act pro vides that the provisions of the Prevention of Corruption Act shall apply to trials under the Bengal Act.
He, there fore, submits that section 6 of the Act must apply and since this Court has held that that section does not apply and section 6 is also not applicable in the case of the respondent, being not a public servant, the Special Court has no jurisdiction to try the offence.
We are clearly of opinion that section 10 of the Bengal Act will apply when the provisions of that section are clearly attracted.
Section 6 is interpreted by this Court not to apply to a public servant who has ceased to be in office.
That would not affect the interpretation of section 10 of the Bengal Act.
There is no merit in the submission that because of section 10 the Special Court cannot be said to have juris diction to try the offence.
in, this case.
Mr. De further submits that since the respondent is not a public, servant he is outside the provisions of the Bengal Act, as well as the Prevention of Corruption Act.
This argument is entirely misconceived.
Even under the Preven tion of Corruption Act, an outsider can be prosecuted under section 5(3) of the Act when a person habitually commits an offence punishable under section 165A of the Indian Penal Code.
Section 165A provides that "whoever, abets any of fence punishable under section 161 or section 165, whether or not that offence is committed in consequence of the abetment, shall be punished . ".
This section is clear ly applicable to an outsider who may abet a public servant.
Item 8 of the Schedule to the Bengal Act mentions any con spiracy to commit or any attempt to commit or any abetment of any of the offences specified '.
in items 1, 2, 3 and 7.
It is, therefore, clear that under item 8 of the Schedule an outsider can be tried along with a public servant if the former abets or commits an offence of conspiracy to commit an offence under section 5 of the Prevention of Corruption Act which is mentioned in item 7 to the Schedule.
There is, therefore, no merit in the submission that the Special Court cannot try the offence under section 5(2) of the Act read with section 120B IPC against the respondent.
All the submissions of counsel for the respondent fail.
The judgment and order of the Division.
Bench are set aside.
The appeal is allowed but there will be no order as to costs.
In Criminal Appeal No. 358 of 1976 the appellant was charged under section 5(2) read with section 5(1)(e) of the Prevention of Corruption Act.
At the time of commission of the offence he was admittedly a public servant.
He, howev er, ceased to be a public servant on October 30, 1974, when the chargesheet against him was put up before the Special Judge.
The offences are triable only by the Special Judge under the provisions of the Criminal Law Amendment Act 1952 (Act XI, VI of 1952).
For the reasons given above in con nection with Civil Appeal No. 1134 of 1973, the trial before the Special Judge cannot be questioned as illegal.
The appeal fails and is dismissed.
P.B.R. Appeal dis missed.
| IN-Abs | In May 1967 a case was lodged against the respondent and a Major of the Indian Army who was retired in 1966, alleging that the Major, along with the respondent, had committed offences of conspiracy of criminal misconduct by a public servant in dishonestly abusing his position as a public servant, under section 5(2) of the Prevention of Corruption Act, 1947.
When the case, which was allotted to the Fourth Additional Special Court under section 4(.2) of the West Bengal Criminal Law Amendment (Special Courts) Act, 1949, came up for hearing the respondent filed a writ petition challenging its jurisdiction to try the case.
The order of allotment to the Special Court was held illegal by the High Court on the ground that the Special Court had no jurisdiction to try a person who had ceased to be a public servant on the date the Court was required to take cognisance of the offence since it could not be said that in certain respects he was a public servant and in certain others he was not.
It was contended on behalf of the respondent that (1) since the case involved interpretation of article 14 of the Constitu tion it should be referred to a larger Bench in view of Art 144(A) of the Constitution; (2) in view of the definition of public servant contained in section 21 IPC, a public servant is one who is in office and not one who has ceased to be in office; (3) in view of section 10 of the Bengal Act the Special Court had no jurisdiction to try the offence; and (4) the respondent, not being a public servant, is outside the provisions of the Bengal Act and the Prevention of Corrup tion Act.
Allowing the appeal.
HELD: (1) There is no substance in the contention that the appeal should be referred to a larger Bench.
The plea of applicability of article 14 on the basis of the judgment in S.A. Venkataraman vs The State is wholly misconceived.
[764 G] (a) In view of the decision in Venkataraman 's case there is no warrant for including in one category public servants in office and public servants who have ceased to be so.
These two classes of public servants are not similarly situated as has been clearly pointed out in C.R. Bansi vs State of Maharashtra [19711 3 S.C.R. 236.
[764 E] (b) It cannot be argued that the decision in Venkatara man 's case is violative of article 14 of the Constitution.
That decision only says that section 6 of the Act is not applica ble to a public servant if at the time of taking cognizance by the Court he ceases to be so.
Because a particular section is not applicable to a public servant after he has ceased to be in office, the question of the Act being violative of article 14 will not arise.
This Court has clearly placed a public servant, who has ceased to be in office, in a separate category and the classification has held the field all these years without demur.
[764 F G] (c) The proviso to section 4(1) of the Bengal Act cannot attract article 14.
By this proviso the Special Court, when trying a schedule offence finds that some other offence has also been committed, and the trial of the same in one trial is permissible under the Cr.
P.C., it may try such a charge.
Under section 4(1) of the Bengal Act a scheduled offence which includes an offence under section 5(2) of 759 the Prevention of Corruption Act as also conspiracy to commit that offence shall be triable by Special Courts only.
No other court can try those offences.
[764 H, 765 B C] The State of West Bengal vs Anwar Ali Sarkar [1952] S.C.R. 284 held inapplicable.
(2) Section 21 IPC does not afford a true test in deter mining the present controversy.
The crucial date for the purpose of attracting the provisions of the Act as well as those of the Bengal Act is whether the offence had been committed by a public servant within the definition of section 21 IPC.
The date for determining the offence is the date of the commission of the offence when the person arraigned must be a public servant.
Section 6 makes a clear distinction between cognizance of an offence and alleged commission of an offence.
The date of sanction is necessarily subse quent to the date of commission of the offence and some times far remote from that date.
Retirement, resignation, dismissal or removal of a public servant would not wipe out the offence which he had committed while in service.
Under section 6(1), as in the case of section 190(1) Cr.
P.C., the Court takes cognizance of an offence and not an offender.
[765 E G] Raghuban Dubey vs State of Bihar ; referred to.
(3) Section 10 of the Bengal Act which provides that the provisions of the Prevention of Corruption Act shall apply to trials under the Bengal Act are clearly attracted.
Section 6 is interpreted by this Court not to apply to a public servant who has ceased to be in office.
That would not affect the interpretation of section 10 of the Bengal Act.
[766 A B] (4) There is no merit in the submission that the special Court cannot try the offence under section 5(2) of the Act read with section 120B IPC against the respondent.
Even under the Prevention of Corruption Act, an outsider can be prosecuted under section 5(3) of the Act when a person habitually commits an offence punishable under section 165A, IPC.
Section 165A which provides that "whoever abets an offence punishable under section 161 or section 165, whether or not that offence is committed in consequence of the abetment, shall punished . is clearly "applicable to an outsider who may abet a public servant.
Item 8 of the Schedule to the Bengal Act mentions any conspiracy to commit or any attempt to commit or any abetment of any of the offences specified in items 1, 2. 3 and 7.
It is clear that under item 8 of the Schedule an outsider can be tried alongwith a public servant if the former abets or commits an offence of conspiracy to commit an offence under section 5 of the Prevention of Corruption Act which is mentioned in item 7 to the Sched ule.
[766 C E]
|
Appeal No. 2003/71 (From the Judgment and Order dated 5 12 1969 of the Madras High Court in Tax Case No. 40 of 1965) S.T. Desai, P.L. Juneja and R.N. Sachthey, for the appellant.
G. Venkatarama Sastry, K.R. Ramamani and J. Ramamurthi for the respondent.
The Judgment of the Court was delivered by FAZAL ALI, J.
This appeal by certificate is directed against a Full Bench judgment of the Madras High Court dated December 5, 1969 Alladi Kuppuswami vs Controller of Estate Duty, Madras(1) by which the reference made to the High Court by the Central Board of Revenue was answered in favour of the accountable person and against the Revenue.
The case involves an interesting and important question of law in respect of ambit and scope of sections 7(1) & (2) as also 39 of the (1) 7 707SCI/77 724 Estate Duty Act, 1953 hereinafter referred to as 'the Act '.
In order to decide the question of law arising in the ap peal, it may be necessary to set out briefly the facts of the case.
Sri Alladi Krishnaswami Iyer died some time.before the passing of the , but during his life time he had settled certain properties absolutely on his wife Smt.
Alladi Venkatakshmamma to be referred in short as 'Smt.
Alladi ' and he had also declared certain other properties to from part of the joint family properties.
Sri Alladi Krishnaswami Iyer hereafter to be referred to as "Shri Alladi" was a member of the Hindu coparcenary consisting of himself, his wife and three sons.
In the instant case we are only concerned with the joint family properties left by Shri Alladi.
Alladi died on January 5, 1956 a few months before the passing of the and the Assistant Controller of Estate Duty valued her estate at a total amount ot Rs. 7,25,527 including a sum of Rs. 2,02,271 being the value of her the share in the joint family properties.
The dispute in the present case centres round the inclusion of the aforesaid sum of Rs 2,02,271/ .
The Revenue assessed the estate duty on the footing that as Smt.
Alladi was a member of the Hindu coparcenary her interest in the joint family proper ties passed on her death to the other three sons and the value of this interest being 1/4th the heirs would be liable to pay estate duty on the value of the 1/4th share assessed at Rs. 2,02,271/ .
The accountable persons raised several contentions before the Revenue including the question as to whether or not the Act would apply to agricultural lands as also whether interest on certain fixed deposits in Govern ment securities would be assessable under the Act.
It appears, however, that before the High Court the respondent pressed only the question relating to the inclusion of the value of 1/4th share of Smt.
Alladi valued at Rs. 2,02,271/ .
The respondent filed an appeal before the Board and contended that as Smt.
Alladi died as a Hindu widow she possessed no coparcenary interest which could pass on her death: her interest merged without any benefit accruing or arising to the coparceners and hence section 7 sub section
(1) had no application.
The plea taken by the respondent did not find favour with the Central Board of Revenue which upheld the order of the Assistant Controller of Estate Duty.
Thereupon the respondent moved the Board of Revenue to make a reference to the High Court of Madras for decision of the questions of law involved in the case.
The Board ac cordingly referred the following questions to the High Court: "1.
Whether, on the facts and in the circumstances of the case, one fourth share of the deceased in the joint family properties, to which she was entitled under section 3 of the Hindu Women 's Rights to Property Act, 1937, was correctly included in her estate as property deemed to pass on her death under section 7 of the ? 2.
Whether the , in so far as it seeks to levy duty on agricultur al lands, is ultra vires of the legislative powers of the Union Legislature ? 725 3.
Whether, on the facts and in the circumstances of the case, the accrued inter est on fixed deposits and Government securi ties up to the date of death of the deceased was correctly included in her estate under section 34(2) of the ? Although three questions had been referred to the High Court by the Board at the hearing of the appeal the respondent gave up questions Nos. 2 and 3 and confined his arguments only to question No. 1 which falls for determination in this case.
The High Court, relying mainly on the decisions of the Privy Council in Attorney General of Ceylon vs Arunacha lam Chettiar;(1) and Gartside vs Inland Revenue ' Commission ers(2) came to the conclusion that the interest of Smt.
Alladi was not a coparcenary interest which could have passed under section 7 (1) of the Act and as the said interest was incapable of valuation was not exigible to estate duty.
Thereafter the appellant applied to the High Court for granting a certificate of fitness for leave.
to appeal to this Court and the same having been granted the appeal has now been placed before us for hearing.
The respondent reiterated his contentions before us and submitted that section 7(1) of the Act had no application to the facts of the present case, and therefore, the share of Smt.
Alladi was not exigible to estate duty.
The appellant, however, submitted that a Hindu widow had a coparcenary interest in the joint family properties which could be valued on the basis of the factors enumerated in section 39 of the Act, the High Court was in error in holding that the interest of Smt.
Alladi was not capable of any valuation.
The appellant, therefore, submitted that the High Court had not correctly appreciated the legal nature and character of the interest of the Hindu widow conferred on her by virtue of the Hindu Women 's Rights to Property Act, 1937.
In our opinion the answer to the problem would naturally lie in a correct interpretation of ss 7(1) & (2) of the Act as also on a true construction of section 3(2) of the Hindu Women 's Rights to Property Act, 1937 as amended by Act 11 of 1938.
It is true that while this Court has had occasions to interpret the provisions of the Hindu Women 's Rights to Property Act, 1937 hereafter referred to as the Act of 1937 ' on several occasions, yet the exact point which arises in this case has not yet been determined by this Court.
In order to understand the implications Of the arguments advanced by counsel for the parties.
before us, it may be necessary to extract the relevant provisions of the Act as also of the Act of 1937.
Section 7 sub sections
(1) & (2) of the Act run thus: "7.
Interests ceasing on death, (1) Subject to the provisions of this section, property in which the deceased or any other person had an interest ceasing on the death of the deceased shall be deemed to pass on the deceased 's death to the extent to which a benefit accrues I.T.R. (E.D.) 20 (2) (1968) A.C5.53 70 I.T.R. 663 (II. L.) 726 or arises by the cesser of such interest, including, in particular, a coparcenary inter est in the joint family property of a Hindu family governed by the Mitakshara, Marumakkat tayam or Aliyasantana law.
(2) If a member of a Hindu coparcenary governed by the Mitakshara school of law dies, then the provisions of sub section (1) shall apply with respect to the interest of the deceased in the coparcenary property only : (a) if the deceased had completed his eighteenth year at the time of his death, or (b) where he had not completed his eighteenth year at the time of his death,.
if his father or other male as cendant in the male line was not a coparcener of the same family at the time of his death.
" It would be seen that section 7(1) consist of two parts the first part refers to the interest of the deceased which ceases on his death and according to this part two condi tions are necessary before there is a passing of the inter est (1) that there must be a cesser of the interest by virtue of the death of the deceased; and (2) that as a result of such cesser a benefit accrues or arises.
The second part of sub section
(1) contains an inclusive category which brings within the fold of sub section
(1) a coparcenary interest in the joint family property of a Hindu family governed by the Mitakshara, Marumakkattayarn or Aliyasantana law.
In the instant case, we are mainly concerned with the Mitakshara law.
We might dispose of a short argument ad vanced by Mr. S.T. Desai in support of the appeal on this question.
It was submitted that the words "governed by the Matakshara, Marumakkattayam or Aliyasan ana law" clearly show that the coparcenary interest has been used in a wide sense and cannot be restricted to the strict coparcenary interest known to the Mitakshara law alone In the view which we take in this case, however, it is not at all neces sary to go into this point.
The main question for determi nation is as to whether the interest acquired by a Hindu widow under the Act of 1937 can be said to be a coparcenary interest in the legal sense of the term.
Once a Hindu widow is held to have a coparcenary interest, then there would be no difficulty in treating her as a member of the Hindu coparcenary, in which case her interest could be easily valued according to the relevant provision of section 39 of the Act which runs thus: "39.
(1) The value of the benefit accruing or arising from the cesser of a coparcenary interest in any joint family property governed by the.
Mitakshara school of a Hindu law which ceases on the death of a member thereof shall be the principal value of the share in the joint family property which would have been allotted to the deceased had there been a partition immediately before his death.
" In order to understand the content and charac ter of the interest which a Hindu widow gets by virtue of the statutory provisions con tained in 727 the Act of 1937 there can be no doubt that prior to the passing of the Act of 1937 a Hindu woman had no right or interest at all in a Hindu coparcenary.
She was neither a copar cener nor a member of the coparcenary nor did she have any interest in it, except the right to get maintenance.
She also had no right to demand partition of the coparcenary property after the death of her husband.
The Act of 1937 introduced broad and important changes by bettering the rights of a Hindu widow and conferring on her the same interest as pos sessed by her husband.
Sub sections (2) and (3) of section 3 of the Act of 1937 run thus: "(2) When a Hindu governed by any school of Hindu law other than the Dayabhaga school or by customary law dies having at the time of his death an interest in a Hindu joint family property, his widow shall, subject to the provisions of sub section (3), have in the property the same interest as he himself had." "(3)Any interest devolving on a Hindu widow under the provisions of this section shall be the limited interest known as a Hindu Woman 's estate, provided however that she shall have the same right of claiming parti tion as a male owner.
The words "the same interest as he himself had" in sub section (2) of section 3 of the Act of 1937 clearly indicate that the statute gave effect to the well settled doctrine of Hindu Shastric Law that the persons of the.
husband after his death continues through his wife who is the surviving half of the husband and the husband continues to live through the widow so long as the widow is alive.
It was this concept of the Hindu Law which was sought to be recognised and given effect to by the Act of 1937.
In these circumstances, therefore, when ' the Legislature used the expression "the same interest as he himself had" it would include all the bundle of rights possessed by the husband which would de volve on the wife and if there were to be any limitations on those rights they were spelt out by subs.
(3) itself, name ly, that while the Hindu widow would have the same right and interest as her husband, her interest would only be the limited interest known as a Hindu Woman 's estate.
Sub section (2) of section 3 of the Act of 1937 further conferred on the widow the right to demand partition and on partition she was entitled to get the same share as her husband.
Thus the position appears to be that a Hindu widow was introduced for the first time into the Hindu coparcenary having the same rights as her husband and became as it were a member of the Hindu coparcenary with two qualifications, viz., (1) that she had only a limited interest; and (2)that she could not be a coparcener because having regard to the nature of her entry into the family after marriage with her husband there was no question of her getting interest in the Hindu copar cenary by birth which is one of the most important incidents of a Hindu coparcenary.
All the other rights of a coparcener were duly conferred on her by the Act of 1937.
Dwelling on the content and import of the nature of the interest of a Hindu widow this Court pointed out in Jaisri Sahu vs Rajdewan 728 Dubey & Others(1) that on the death of her husband the properties vested in the widow and she fully represented the estate.
In this connection, this Court made the following observations: "When a widow succeeds as heir to her hus band, the ownership in the properties, both legal and beneficial, vests in her.
She fully represents the estate, the interest of the reversioners therein being only spes succession 'section The widow is entitled to the full beneficial enjoyment of the estate and is not accountable to any one.
It is true that she cannot alienate the properties unless it be for necessity or for benefit to the estate, but this restriction on her powers is not one imposed for the benefit of reversion ers but is an incident of the estate as known to Hindu law.
" Similarly in a later case in Potti Lakshmi Perumallu vs Potti Krishnavenamma(2) this Court reiterated that a Hindu widow was the surviving half of her husband and so long as she was alive the husband continued to live in her.
This 'Court observed as follows: "The decisions also recognise that though the widow does not, by virtue of the interest given to her by the new law become a coparcener she being entitled to claim parti tion of the joint family property is in the same position in which her deceased husband would have been in the matter of exercise of that right.
That is to say, according to these decisions her interest is a fluctuating one and is liable to increase or decrease according as there are accretions to or dimi nutions of the property.
In our opinion these decisions lay down the law correctly.
" It may be pertinent to note that in the aforesaid case the Court was considering the nature of the interest which a widow derived by virtue of the statutory substitution con tained in s.3(2) of the Act of 1937.
It was also pointed out that like other coparceners of a Hindu coparcenary the interest of a widow until separated by a partition continued a fluctuating one which was liable to increase case or decrease with the deaths or additions in the family.
In Satrughan Isser vs Smt.
Subujpari & Others(3) this Court pointed out that the interest conferred on a Hindu widow arose by statutory substitution and the Act of 1937 introduced changes which were go far alien to the structure of a Hindu coparcenary.
In this connection the Court observed as follows: "The Act in inventing the widow of a member of a coparcenary with the interest which the member had at the time of his death has introduced changes which are alien to the (1) , 564 565.
(2) ; , 33.
(3) ; 729 structure of a coparcenary.
The interest of a widow arises not by inheritance nor by survi vorship, but by statutory substitution: A Hindu coparcenary under the Mitakshara school consists of males alone: it includes only those members who acquire by birth or adoption interest in the coparcenary property.
The essence of coparcenary property is unity of ownership which is vested in the whole body of coparceners.
While it remains joint, no individual member can predicate of the undi vided property that he has a definite share therein.
The interest of each coparcener is fluctuating, capable of being enlarged by deaths, and liable to be diminished by the birth of sons to coparceners: it is only on partition that the coparcener can claim that he has become entitled to a definite share.
The two principal incidents of coparcenary property are: that the interest of coparceners devolves by survivorship and not by inheri tance; and that the mate issue of a coparcener acquires an interest in the coparcenary property by birth, not as representing his father but in his own independent right ac quired by birth." As pointed out above the essence of coparce nary property is the unity of ownership which is vested in the whole body of coparceners and the two principal incidents of coparcenary property are that the interest of coparceners devolves by survivorship and not by inheri tance and that the male issue of a coparcener acquires an interest in the coparcenary property by birth and not as representing his father.
Alter having described the incidents of a Hindu coparcenary, the Court proceeded to observe as follows: "By the Act (Act of 1937) certain anti thetical concepts are sought to be reconciled.
A widow of a coparcener is invested by the Act with the same interest which her husband had at the time of his death in the property of the coparcenary.
She is thereby introduced into the coparcenary, and between the surviv ing coparceners of her husband and the widow so introduced, there arises community of interest and unity of possession.
But the widow does not on that account become a copar cener: though invested with the same interest which her husband had in the property she does not acquire the right which her husband could have exercised over the interest of the other copareeners.
Because of statutory substitu tion of her interest in the coparcenary property in place of her husband, the right which the other coparceners had under the Hindu law of the Mitakshara school of taking that interest by the rule of survivorship remains suspended so long as that estate enures.
* * * She has still power to make her interest definite by making a demand for partition, as a male owner may.
If the widow 730 after being introduced into family to which her husband belonged does not seek partition, on the termination of her estate her interest will merge into the coparcenary property.
" Again this Court did not approve of the as sumption made by some Courts that the fight vested in the widow was liable to revert to the coparcenary, even where, on demand for partition it became separated from the copar cenary property, and in this connection this court observed as follows: "The assumption that though the right vested in the widow by the Act is a right of property which may on demand for partition become separated from the coparcenary property it is still liable to revert to the coparce nary on the determination of the widow 's estate, does not give full effect to the statutory conferment upon the widow of the same right of claiming partition as a mate owner".
Finally this Court approved of certain obser vations made by the Madras High Court in Parappagari Parappa alias Hammanthappa and Another vs Parappagari Nagamma and others(1) where Subba Rao J.as he then was, made the following observations: "She could ask for partition and sepa rate possession of her husband 's share.
In case she asked for partition, her husband 's interest 'should be worked out having regard to the circumstances obtaining in the family on the date of partition.
If she divided herself from the other members of the family during her lifetime, on her demise the succession would be traced to her husband on the basis that the property was his separate property.
If there was no severance, it would devolve by survivorship to the other members of the joint Hindu family :" It is, therefore, manifest from the aforesaid deci sion that if the widow had not chosen to exercise her right of partition, there is no severance of the Hindu coparcenary and on her death the interest of the widow merges in the coparcenary property or lapses to the other coparceners.
As already indicated above, this Court in Satrughan vs Smt.
Sabujpari & others (supra) had taken the same view and had con firmed the Division Bench decision of the Patna High Court in Smt.
Sabujpari and another vs Satrughan Isser and others(2), where the Patna High Court after considering the entire law on the subject, observed thus: "After having considered the various authorities and the various aspects of the case, my conclusions are that, under the Provisions of the Act a widow of a deceased coparcener is placed in same position as the deceased coparcener was, for the reason of the fiction that half the body of the deceased husband survived in the widow; that, like her husband, the widow also is entitled to effect severance of the joint status (2) A.I.R. 1958 Pat. 405, 410. 731 of the family by an unequivocal expression of intention separate;* * * that in case the widow does not exercise her right of partition and dies without expressing any intention to separate, the interest of the husband, which she enjoyed, goes by survivor ship to the other members of the joint family.
" We find ourselves in complete agreement with the observations made by the Patna High Court to which one, of us (Untwalia, J., as he then was) was a party.
The view taken by the Patna High Court in the aforesaid case was later on approved by a Full Bench of the Patna High Court in Mst.
Khatrani Kuer vs Smt.
Tapeshwari Kuer(1).
In State Bank of India vs Ghamandi Ram (dead) through Shri Gurbux Rai(2), this Court, while dealing with the incidents of Hindu coparcenary, observed as follows: "According to the Mitakshara School of Hindu Law all the property of a Hindu joint family is held in collective ownership by all the coparceners in a quasi corporate capa city.
* * * The incidents of coparcenership under the Mitakshara law are: first, the lineal male descendants of a person up to the third generation, acquire on birth ownership in the ancestral properties is common; secondly, that no alienation of the property.
any time work out their rights by asking for partition; thirdly, that till partition each member has got ownership ex tending over the entire property, conjointly with the rest; fourthly, that as a result of such co ownership the possession and enjoyment of the properties is common; fifthly, that no alienation of the property is possible unless it be for necessity, without the concurrence of the Coparceners, and sixthly, that the interest of a deceased member lapses on his death to the survivors.
A coparcenary under the Mitakshara School is a creature of law and cannot arise by act of parties except in so far that on adoption the adopted son be comes a coparcener with his adoptive father as regards the ancestral properties of the lat ter." Thus analysing the ratio of a aforesaid case regarding the incidents of a Hindu coparcenary it would appear that a Hindu coparcenary has six essential characteristics, namely, (1) that the lineal male descendants up to the third genera tion acquire an independent right of ownership by birth and not as representing their ancestors; (2) that the members of the coparcenary have the right to work out their rights by demanding partition; (3) that until partition, each member has got.
ownership extending over the entire property con jointly with the.
rest and so long as no partition takes place, it is difficult for any copercener to predicate the share which he might receive; (4) that as a result of such co ownership the possession and enjoyment of the property iS common; (5) that there can be no alienation of the property without (1) A.I.R. 1964 Pat 261.
[19691 3 S.C.R, 681,686.
732 the concurrence of the other coparceners unless it be for legal necessity; and (6) that the interest of a deceased member lapses on his death and merges in the coparcenary property.
Applying these tests to the interest of a Hindu widow who has been introduced into a coparcenary by virtue of the Act of 1937, we find that, excepting condition No. (1), all other conditions are fully satisfied in case of a Hindu widow succeeding to the interest of her husband in a Hindu coparcenary.
In other words, after her husband 's death the Hindu widow under the Act of 1937 has got the right to demand partition, she cannot predicate the exact share which she might receive until partition is made, her dominion extends to the entire property conjointly with the other members of the coparcenary, her possession and enjoy ment is common, the property cannot be alienated without concurrence of all the members of the family, except for legal necessity, and like other coparceners she has a fluctuating interest 'in the property which may be increased or decreased by deaths or additions in the family.
It is manifest that she cannot fulfil the first condition, because she enters the coparcenary long after she is born and after she is married to her husband and acquires his interest on his death.
Thus, short of the first condition, she possess es all the necessary indicia of a coparcenary interest.
The fact that before the Act of 1956, she had the characteristic of a widow estate in her interest in the property does not detract any the less from this position.
It must follow as a logical corollary that though a Hindu widow cannot be a coparcener, she has coparcenary interest and she is also a member of a coparcenary by virtue of the rights conferred on her under the Act of 1937.
There is yet another important aspect of the matter which has to be considered.
At the time when the was passed in 1953, the Legislature was fully aware of the statutory interest conferred on a widow by virtue of the Act of 1937 and the incidents thereof.
In these circum stances it is not reasonable to infer that the Legislature could have intended that though a Hindu widow has got the Same interest as her husband in the Hindu coparcenary and has also the right to demand partition and her interest which is a fluctuating.
one would lapse to the other copar ceners in case of her death without seeking partition in the same manner as that of other coparceners, yet it should be exempt from estate duty.
The sheet anchor of the argument of the respondent was the Privy Council decision in Arunachalam Chettiar 's case (supra).
In the first place, the facts of that case are clearly distinguishable from the facts of the present case.
In that case, the Hindu undivided family consisted of father, son and some female members.
According to the Privy Council, the females were merely entitled to maintenance.
The females there could not have any interest in the coparcenary nor could any such argument be advanced because there was no statute similar to the Act of 1937.
Moreover, in the Estate Duty Ordinance which was being construed by the Privy Council there was neither any provision like the inclusive part of sub section
(1) and sub section
(2) of section 7 nor any provision similar to section 39 of the Act.
In these circumstances, we do not see how the Privy Council decision in Arunachalam Chattiar 's case 733 (supra) can be called in aid to support the contention of the respondent.
In the instant case, once it is held, as it must be, that Smt.
Alladi was a member of the Hindu coparce nary, her interest was undoubtedly a coparcenary interest which lapsed on her death and merged into the coparcenary.
It was also clearly capable of valuation, unlike the posi tion in Arunachalam Chettiar 's case where the Privy Council was construing a provision similar to section 40 of the Act, which, in our opinion, has no application in the present case, it being covered by section 39 of the Act.
A fortiori the same observations apply to the case of Gertside vs Inland Revenue Commissioners (supra).
That case has no application here where we are concerned with the concept of a Hindu coparcenary which is totally alien to the estates contem plated under the English Acts.
For these reasons, there fore, we are clearly of the opinion that the two cases relied upon by the High Court do not appear to be of any assistance in deciding the points at issue in the present appeal, and the High Court was in error in basing its deci sion on the aforesaid cases ignoring the decisions of this Court as also the peculiar and special provisions of the Act.
Finally, it was vehemently contended by Mr. Sastri for the respondent that the right of a Hindu widow under the Act of 1937 was merely a statutory substitution of a new status by her introduction into the copercenary and she could not be treated either as a coparcener or a me, tuber of the copercenary or to possess any kind of coparcenary interest.
While we agree that the widow after the introduction in the coparcenary could not be held to have become a coparcener, because one of the essential characteristics of a coparcen er, namely, acquisition of interest by birth, is wholly wanting in her case, yet when the Legislature which was fully aware of the status of a Hindu widow under the Shas tric Law chose to improve her status by conferring a new right on her under the Act of 1937, and with this avowed object clothed her with all the rights and concomitants of a coparcener 's interest, it is futile to contend that the widow could not be treated either as a member of the Hindu coparcenary or as having been conferred coparcenary interest in the property.
Even though the widow is not a coparcener in the strictly legal sense of the term, the interest which she has is the same interest as her husband and that is the coparcenary interest with the only limitation placed on her by section 3(3) of the Act of 1937, namely, that her interest would be the limited interest of a Hindu widow.
The conclu sion is therefore inescapable that Smt.
Alladi did possess a coparcenary interest which lapsed on her death and merged into the coparcenary and the case was clearly covered by the inclusive part of sub section
(1) of section 7 and under section 39 the value of the benefit accruing or arising from the cesser of her coparcenary interest was to be determined by taking the principal value of the share in the joint family property which would have been allotted to her, had there been a partition immediately before her death.
The last plank of the argument of the respondent was that the being a fiscal statute should be construed strictly so as to give every benefit of doubt to the subject.
There can be no quarrel with this proposition but when the phraseology of a particular section of the statute takes within its sweep the transaction which is 734 taxable, it is not for the Court to strain and stress the language of the section so as to enable the tax payer to escape the tax.
In the view that we take in this case, it is manifest that the legislative intent reflected in the Act of 1937 and the Estate Duy Act, 1953, must be given full effect.
Summarising, therefore, the position that emerges is as follows: By virtue of the provisions of the Act of 1937 a Hindu widow undoubtedly possesses a coparcenary interest as con templated by section 7( 1 ) of the Act and she is also a member of a Hindu copercenary as envisaged by section 7(2) of the Act.
On the death of Smt.
Alladi, therefore, there was clearly a cesser of her interest and her interest merged in the coper cenary property and by reason of the inclusive part of sub section (1 ) of section 7, it must be taken to have passed on her death and was hence exigible to estate duty.
Since Smt Alladi was a member of the copercenary, this interest of her 's which passed on her death was liable to be valued in accordance with the method provided by section 39 of the Act.
The interpretation of section 40 of the Act is not free from difficulty, but as the present case squarely falls within the ambit of section 7 (1 ) latter part and sub section
(2) of section 7 of the Act which attracts section 39, it is not at all necessary for us to enter into the complex domain of the scope and ambit of section 40 of the Act in this case.
The result is that the appeal is allowed, the judgment of the High Court is set aside and the question referred to the High Court is answered in the affirmative.
There will be no order as to costs.
S.R. Appeal allowed.
| IN-Abs | Shri Alladi was a member of the Hindu coparcenary con sisting of himself his wife (Smt.
Alladi) and three sons.
Shri Alladi who died before the came into force, during his life time had settled certain proper ties absolutely on his wife and had also declared certain other properties to form part of the joint family proper ties.
Alladi died on January 5, 1956, a few months before the passing of the .
The Assistant Controller of Estate Duty valued her estate at a total amount of Rs. 7,25,527/ including a sum of Rs. 2,02,271/ being the value of her 1/4th share in the joint family properties, on the footing that as Smt.
Alladi was a member of the Hindu coparcenary, her interest in the joint family properties.
passed on her death to the other three sons and the value Of this interest being 1/4th, the heirs would be liable to pay estate duty on the value of the 1/4th, share.
The respondent filed an appeal before the Central Board of Revenue and contended that as Smt.
Alladi died as a Hindu widow she possessed no coparcenary interest which could pass on her death; her interest merged without any benefit accruing or arising to the coparceners and hence section 7 subsection (1) had no application.
This plea did not find favour with the Board.
which upheld the order of the Assistant Controller of Estate Duty as correct.
The Board further held that the Hindu widow 'section estate created by section 3(2) of the Hindu Widows Rights to Property Act, 1937, was an interest in property which ceased on the death of the widow attracting estate duty.
Thereupon, the respondent moved the Board to make reference to the High Court of Madras for decision of the questions of law involved in the case.
The Board referred three questions to the High Court under section 64(1) of the Act, but at the time of the hearing of the reference, the respondent confined his arguments only to the following issue, namely "Whether on the facts and in the circumstances of the case 1/4th share of the deceased in the joint family properties to which she was entitled under section 3 of the Hindu Womens Rights to Property Act, 1937, was correctly included in her estate as property deemed to pass on her death under section 7 of the ." The High Court relying on the decisions of the Privy Council in Attorney General of Ceylon vs Arunachalam Chettiar and Gartside vs Inland Revenue Commissioners ; held that the interest of Smt.
Alladi was not a coparcenary interest which could have passed under section 7(1) of the Act and as the said interest was incapable of valuation, it was not exigible to estate duty and thus held against the Revenue and in favour of the accountable person.
Allowing the appeal by certificate, the Court, HELD: (1) By virtue of the provisions of the Act of 1937 a Hindu widow undoubtedly possess a coparcenary interest as contemplated by section 7(1) of the Act and she is also a member of the Hindu coparcenary as envisaged by section 7(2) of the Act.
[734 B] 722 (2) Prior to the passing of the Act of 1937 a Hindu Woman had no right interest at all in a Hindu coparcenary.
The Act of 1937 bettered the rights a Hindu widow and conferred on her by section 3 the same interest as possessed her husband.
[727 A] (3) The words "the same interest as he himself had" in sub section (2) of section 3 of the Act of 1937 clearly indicate that the statute gave effect to the well settled doctrine of Hindu shastric law that the persons of the husband after his death continues through his wife who is a surviving half and the husband continues to live through the widow so long as the widow is alive.
When the Legislature used the expres sion ' "the same interest as he himself had", it would in clude all the rights possessed by the husband which could devolve on the wife.
Thus, a Hindu widow was introduced for the first time into the Hindu coparcenary having the same rights as her husband and became as it were a member of the Hindu coparcenary with two qualifications, namely, (i) she had only a limited interest and (ii) that she could not be a coparcener because having regard to the nature of her entry into the family after marriage with her husband, there was no question of her getting interest in the Hindu copar cenary by birth which is one of the most important incidents of a Hindu coparcenary.
[727 D E] (4) The essence of coparcenary property is the unity of ownership which is vested in the whole body of coparceners and the two principal incidents of coparcenary are that the interest of coparceners devolve by survivorship and not by inheritance and that the male issue of a coparcenary ac quires an interest in the coparcenary property by birth and not as representing his father.
[729 D E] (5) A Hindu coparcenary has six essential characteris tics, namely, (i) that the lineal male descendants upto the third generation acquire an independent right of ownership by birth and not as representing their ancestors; (ii) that the members of the coparcenary have the right to work out their rights by demanding partition; (iii) that until parti tion, each member has got ownership extending over the entire property jointly with the rest and so long as no partition takes place it is difficult for any coparcener to predicate the share which he might receive; (iv) that as a result of such co ownership the possession and enjoyment of the property is common; (v) that there can be no alienation of the property without the concurrence of the other copar ceners unless it be for legal necessity and (vi) that the interest of a deceased member lapses on his death and merges in the coparcenary property.
Applying these tests to the interest of a Hindu widow who has been introduced into a coparcenary by virtue of the Act of 1937, it will be seen, that short of the first condition she possesses all the necessary indicia of a coparcenary interest.
The fact that before the Act of 1956 she had the characteristic of a widow estate in her interest in the property does not detract any the less from this position.
Therefore, though a Hindu widow cannot be a coparcener she has conarcenary interest and is also a member of the coparcenary by virtue of the rights conferred on her under the Act of 1937.
[731 F H, 732 A B D] State Bank of India vs Ghamandi Ram (dead) through Shri Gurbax Rai 686 applied.
(6) If the widow has not chosen to exercise her right of partition, there no severenee of the Hindu coparcenary and on her death the interest of the widow merges in the copar cenary property or lapses to the other coparceners.
Parappagari Parappa alias Harmmanthappa and Anr.
vs Parappagari Nagaman and Ors.
ILR 1954 Madras 183; S.T. Sabujpari and Anr.
vs Satrughan Isser and Ors.
AIR 1958 Patna 405, 410 and Mst.
Khatrant Kuer vs Smt.
Tapeskwari Kuer AIR 1964 Pat 261, approved.
(7) It was not the intent of the legislature which was folly aware of the statutory interest conferred on a Hindu widow by virtue of the Act of 1937 and the incidents thereof that though a Hindu widow has got the same interest as her husband in the Hindu coparcenary and has also the right to demand 723 partition and her interest is a fluctuating one would lapse to the other coparceners in case of her death without seek ing partition in the same manner as that of other coparcen ers, yet it should be exempt from estate duty.
In the instant case, Smt.
Alladi was a member of the Hindu coparce nary, her interest was undoubtedly a coparcenary interest which lapsed on her death and merged into the coparcenary.
It was clearly capable of valuation, it being covered by section 39 of the Act.
The High Court was in error in basing its decision on the Arunachalam Chettiar 's case and also in Gartside 's case ignoring the decisions of this Court and also the peculiar and special provisions of the Act.
A C] Attorney General of Ceylon vs Arunchalam Chettiar 34 ITR (E.D.) 20 and Gattside vs Inland Revenue Commissioners ; ITR 663 (H.L.) held inapplicable.
(8) It is wrong to contend that the widow could not be treated either as a member of the Hindu coparcenary or as having been conferred coparcenary interest in the property.
Even though the widow is not a coparcener in the strictly legal sense of the term, the interest which she has is the same interest as her husband and that is the coparcenary interest with the only limitation placed on her by section 3(3) of the Act of 1937, namely, that her interest would be limited interest, of a Hindu widow.
In the instant case, Smt.
Alladi possessed a coparcenary interest which lapsed on her death and merged into the coparcenary and was clearly covered by the inclusive part of sub section
(1) of section 7 and under section 39, the value of the benefit accruing or arising from the cesser of the coparcenary interest was to be deter mined by taking the principal value of the share and the joint family property which would have been allotted to her had there been partition immediately before her death.
The present case squarely falls within the ambit of section 7(1) latter part and sub section
(2) of section 7 of the Act which at tracts section 39.
By reason of the inclusive part of sub a.
(1) of section 7 it must be taken to have passed on her death and was hence exigible to estate duty.
[733 D G] (9) When the phraseology of a particular section of the statute takes within its sweep the transaction which is taxable, it is not for the court to strain and stress the language of the section so as to enable the tax payer to escape the tax.
The legislative intent reflected in the Act of 1937 and , must be given full effect to.
[733 H, 734 A]
|
N: Special Leave Peti tion (Criminal) No. 216/1977.
(From the Judgment and Order dated 28 9 1973 of the Judicial Commissioner, Court, Goa Daman and Diu in Crl.
Appeal No. 17/72).
S.J.S. Fernandez, amicus curiae, for the petitioner.
The Order of the Court was delivered by KRISHNA IYER, J. A death sentence, with all its dreadful scenario swinging desperately out of the last breath of mortal life, is an excrutiating hour for the judges called upon to lend signature to tiffs macabre stroke of the execu tioner 's rope.
Even so, judges must enforce the laws, whatever they be, and decide according to the best of their lights, but the laws, are not always just and the lights are not always luminous.
Nor, again, are judicial methods always adequate to secure justice.
We are bound by the Penal Code and the Criminal Procedure Code, by the, very oath of our office.
Section 354(3) of the new Code gives the convicting judge, on a murder charge, a discretion to choose between capital sentence and life term.
It is true that in the present Code, the unmistakable shift in legislative emphasis is on life imprisonment for murder as the rule and capital sentence an exception, to be resorted to for reasons to be stated (Edige Annamma, , AIR).
Even so, the discretion is limited and courts can never afford to forget Benjamin ' Cardozo 's wise guidance: "The judge, even when he is free, is still not wholly free.
He is not to innovate at pleasure.
He is not a knight errant roam ing at will in pursuit of his own ideal of beauty or of goodness.
He is to draw his inspiration from consecrated principles.
He is not to yield to spasmodic sentiment, to vague and unregulated benevolence.
He is to exercise a discretion informed by tradition, methodized by analogy, disciplined by sys tem, and subordinated to the primordial necessity of order in the social life.
Wide enough in all conscience is the field of dis cretion that remains." (Cardoze: The Nature of the Judicial Proc ess: Wale University Press ( 1921 ) ).
We have heard counsel on the merits and.perused the paper book with some care and see no ground to disturb the conviction.
The question of 'sentence ' projects sharply before us and what we.
have stated above turns our focus on cicumstances justifying the graver sentence.
The learned Sessions Judge has given valid reasons as to why he is imposing the death sentence.
The guidelines laid down by this Court, in its precedents which bind us, tell us that if the offence has been perpetrated with attendant aggravating circumstances, if the perpetrator discloses an extremely depraved state of mind and diabolical trickery in committing the homicide, accompanied by brutal dealing with the cadaver, the court can hardly help in the present state of the law, avoiding infliction of the death penalty.
When discretion has been exercised by the trial Court and it is difficult to fault that 773 court on any ground, statutory or precedential, an appellate review and even referral action become too narrow to demol ish the discretionary exercise of power by the inferior court.
So viewed, it is clear that the learned Judicial Commissioner has acted rightly in affirming the death sentence.
We are unable to, grant leave on, this score either.
Counsel for the petitioner has urged that the affirma tion by the Judicial Commissioner 's court of Goa, Diu and Daman, of the Death sentence is illegal.
According to.
him section 377 of the old code (which govern the instant case), is a missile which will bit down the confirmation by the Judicial Commissioner.
The said section reads: "377.
In every case so submitted the confirmation of the sentence, or any new sentence or order passed by the High Court, shall, when such Court consists of two or more Judges, be made, passed and signed by at least two of them." This section means, as we understand it, that when the High Court concerned consists of two or more judges, the confirmation or other sentence shall be signed by at least two of them.
This provision obviously applies only to situations where the court, at the time of the confirmation of the death sentence.
, consists of two or more judges.
It is true that section 4 (1) (i) in relation to a Union Territory brings within the definition of the 'High Court ' the highest court of criminal appeal for that area viz. the Judicial Commissioner 's court.
It therefore follows that if, at the time the case for confirmation of the death sentence is being heard, the Judicial Commission er 's court consists of more than one judge, at least two judges must attest the confirmation.
In the present case it is common ground that when the case was heard and judg ment pronounced there was.
only one Judicial Commissioner, although the sanctioned strength was two.
So long as one Judicial Commissioner alone functioned in the court, section 377 was not attracted.
The necessary inference is that in the present case there is nothing illegal in a Single (i.e. the only) Judicial Commissioner deciding the refer ence.
We are aware that the insistence of the Code on two judges hearing the matter of such gravity as a death sentence involves is because of the law 's grave concern that human life shall not be judicially deprived unless at least two minds at almost the highest level are.
applied.
Even so, exceptional situations may arise where two judges are not available in a High Court and, in that narrow contingency, the Code permits what has now happened.
We cannot fault the judgment on this ground either.
Counsel for the petitioner contends that the Criminal Procedure Code is a general statute but the Goa, Daman and Diu (Judicial Commissioners Court) Regulation, 1963 is a special law which prevails against the general.
On that footing he argues that under Regulation, 8 (1) the Court of the Judicial Commissioner shall have only such jurisdiction as is exercisable in respect of Goa, Daman and Diu by the Tribunal de Relacao.
According to him, the said Tribunal did not have the powers of confirmation of death sentence, and, 774 therefore, the judicial Commissioner cannot exercise such power.
He also argues that under the said provision the Judicial Commissioner ' is the highest Court of Appeal and Revision but not of Reference and for that reason cannot exercise the powers under section 377 of the old Crimi nal Procedure Code.
We see no force in these twin submis sions.
A Code is complete and that marks the distinction between a Code and an ordinary enactment.
The Criminal Procedure Code, by that canon, is serf contained and com plete.
It defines a High Court which takes in a Judicial Commissioner 's Court.
(Section 4(1)(i).
We need not and indeed may not travel beyond the Code into the territory of the Regulation.
Even otherwise, there is nothing in Regulation 8 ( 1 ) which helps the petitioner.
It pro vides that the Judicial Commissioner shall be the highest criminal 'Court, Appeal and Revision ' used in that provision are words of the widest import and cover all proceedings which are not original proceedings but are by way of judicial review for a higher level.
Referral jurisdiction, under section 377, is skin to appeal and revision and we think that Regulation 8(1) does not disentitle the Judicial Commissioner from exercising power under section 377 of the Code: nor are we inclined to accept the submission that on the speculative assumption that the Tribunal de Relacao did not have the power to confirm death sentences, and, there fore, the Judicial Commissioner, acting as the High Court under the Code, cannot enjoy such power.
Regulation 8(1) does not limit the jurisdiction of the.
Judicial Commission er in the sense counsel wants us to accept.
We therefore hold that the Judicial Commissioner 's confirmation of the death sentence is not without jurisdiction.
Undeterred by the fact that the murder is gruesome counsel has pleaded that at least on the question of sen tence leave should be granted because his client is a young man and the sentence of death has been haunting him agonis ingly for around six years.
May be that such a long spell of torment may be one circumstance in giving the lesser sen tence.
Even s0, we have to be guided by the rulings of this Court which have not gone to the extent of holding that based on this circumstance alone, without other supplement ing factors or in the face of surrounding beastly circum stances of the crime, judicial clemency can attenuate the sentence.
Possibly, Presidential power is wider but judicial power is embanked.
We refuse special leave and dismiss the petition.
Petition dismissed.
| IN-Abs | The petitioner was convicted for the offence of murder under section 302, I.P.C. and sentenced to death by the Trial Court.
The Judicial Commissioner, Goa confirmed the death sentence in the referred trial under section 374 of the 1898 Code of Criminal Procedure.
Dismissing the special leave petition to appeal, the Court.
HELD: (1) Discretion to choose between the capital sentence and life term under section 354(3) of the 1973 Code of Criminal Procedure is limited.
If the offence has been perpetrated with attendant aggravating circumstances, if the perpetrator discloses an extremely depraved state of mind and diaboli cal trickery in committing the homicide, accompanied by brutal dealing with the cadaver, infliction of death penalty cannot be avoided.
Special leave under article 136.
of the Constitution cannot be granted when it is difficult to fault the court on any ground, statutory or precedential.
[772 G H, 773 A] Ediga Annamma; , , referred to.
(2) Section 377 of 1898 Code of Criminal Procedure applies only to situations where the court at the time of the con firmation of the death sentence consists of two or more Judges.
Section 4(1)(i) of the Code of Criminal proce dure, in relation to a Union Territory, brings within the definition of "High Court", the highest court of criminal appeal for that area, namely, the Judicial Commissioner 's Court.
If, at the time the case for confirmation of death sentence is being heard, the Judicial Commissioner 's Court consists of more than one Judge, at least two Judges must attest the confirmation.
So long as one Judicial Commis sioner alone functions in the Court, section 377 was not attracted.
In the present case there is nothing illegal in a single (i.e.the only) Judicial Commissioner deciding the reference.
[773 D F] (3) Referral jurisdiction under section 377 is akin to appeal and revision.
Regulation 8(1) of the Goa, Daman and Diu (Judicial Commissioner 's Court) Regulation 1963 does not disentitle the Judicial Commissioner from exercising power section 377, Cr.
In the instant case, the Judicial Commis sioner 's confirmation of death sentence is not without jurisdiction.
[774 C D] (4) Judicial clemency cannot attenuate the sentence of death on the sole circumstance that the accused was a young man and the sentence of death been haunting him for long without other supplement factors or in the face of surround ing beastly circumstances of the crime.
Possibly, Presiden tial power wider but judicial power is embanked.
[774 E F] 10 707SCI/77 772
|
Criminal Appeal No. 195 of 1977.
Appeal by Special Leave from the Judgment and Order dated the 25 10 1976 of the Andhra Pradesh High Court in Crl.
R., Case No. 660 of 1970 and Crl.
R.P. No. 646 of 1976.
155 G. Yenkatrama Sastry and G. Narasinhulu for the Appellant.
P. Parwneswara Rao and G. Narayana Rao for Respondent.
The Judgment of the Court was delivered by KRISHNA IYER, J.
Some basic issues bearing on prescription of punishments arise for judicial investigation in this criminal appeal where leave has been limited to tailoring the sentence by appellate review to fit the gravity of the delinquency and the redemption of the deviant.
The facts leading up to the conviction may need brief narration.
The appellant, along with another accused, deceived several desperate unemployed young men, received various sums of Rs. 1200/ by false pretences that they would secure jobs for them through politically influential friends and other make believe representations.
The offence of cheating under section 420 IPC was made out and convic tion of both the accused followed.
The 1st accused (appellant before us) is a young man around 28 years old and works as a Junior Assistant in the Planning and Financial Department of the Andhra Pradesh Secretariat and the other accused is his friend who personated as a State Port Officer.
Before the trial court, there was a formal, almost pharisaic, fulfilment 'of the pre sentencing provision in section The opportunity contemplated in the sub section has a penological significance of far reaching import, which has been lost on the trial Magistrate.
For he disposed of this benignant obligation by a brief ritual : "I made of the accused that they were found guilty under section 420 IPC and the punishment contemplated thereof.
" Reform of the black letter law is a time lagging process.
But judicial metabolism is sometimes slower to assimilate the spiritual substance of creative ideas finding their way into the statute book.
This may explain why the appellate courts fell in line with the Magistrate 's mechanical approach and confirmed the condign punishment of 3 years ' rigorous imprisonment.
At all the three tiers the focus was on the serious nature of the crime (cheating of young men by a government servant and his blackguardly companion) and no ray of light on the 'criminal ' or on the pertinent variety of social facts, surrounding him penetrated the forensic mentation.
The humane art of sentencing remains a retarded child of the Indian criminal system.
Now we enter the area of punitive treatment of criminals, assuming that the guilt has been brought home.
Certain elemental factors are 'significant strands of criminological thought.
Since the whole territory of punishment in its modem setting is virtually Virgin so far as our country is concerned, we may as well go into the subject in some incisive depth for the guidance of the subordinate judi ciary.
The subject of study takes us to our cultural heritage that there is divinity in every man which has been translated into the 11 722SCI/77, 156 constitutional essence of the dignity and worth of the human person.
We take the liberty of making an Indian approach and then strike a cosmic note.
Progressive criminologists across the world will agree that the Gandhian diagnosis of offenders at patients and his conception of prisons as hospitals mental and moral is the key to the pathology of delinquency and the therapeutic role of 'punishment ' The whole man is a healthy man and every man is born good.
Criminality is a curable deviance.
The morality of the law may vary, but is real.
The basic goodness of all human beings is a spiritual axiom, a fall out of the advaita of cosmic creation and the spring of correctional thought in criminology.
If every saint has a past, every sinner has a future, and it is the role of law to remind both of this.
The Indian legal genius of old has made a healthy contribution to the world treasury of criminology.
The drawback of our criminal process is that often they are built on the bricks of impressionist opinions and dated values, ignoring empirical studies and deeper researches.
India, like every other country, has its own crime complex and dilemma of punishment.
Solutions to tangled social issues do not come like the crack of down but are the product of research and study, oriented on the founding faiths of society and driving towards that transformation which is the goal of free India.
Man is subject to more stresses and strains in this age than ever before, and a new class of crimes arising from restlessness of the spirit and frustration of ambitions has erupted.
White collar crime, with which we are concerned here, belongs to this disease of man 's inside.
If the psychic perspective and the spiritual insight we have tried to project is valid, the police billy and the prison drill cannot 'minister to a mind diseased nor tone down the tension, release the repression, unbend the perversion, each of which shows up as debased deviance, violent vice and behavioral turpitude.
It is a truism, often forgotten in the hidden vendetta in human bosoms, that barbarity breeds barbarity, and injury recoils as injury, so that if hearing the mentally or morally maimed or malformed man (found guilty) is the goal, awakening the inner being, more than torturing through exterior compulsions, holds out better curative hopes.
An aside.
A holistic view of sentencing and a finer perception of the effect of imprisonment give, short shrift to draconian severity as self defeating and fillips meditational relaxation, psychic medication and like exercises as apt to be more rewarding.
Therefore, the emphasis has to be as much on man as on the system, on the inner imbalance as on the outer tensions.
Perhaps the time has come for Indian criminologists to rely more on Patanjali sutra as a scientific curative for crimogenic factors than on the blind jail term set out in the Penal Code and that may be why western researchers are now seeking Indian yogic ways of normalising the individual and the group.
157 Western jurisdiction and 'sociologists, from their own angle have struck a like note.
Sir Samual Romilly, critical of the brutal penalties in the then Britain, said in 1817 : "The laws of England are written in blood".
Alfieri has suggested : 'society prepares the crime, the criminal commits it.
George Micodotis, Director of Criminological Research Centre, Athens, Greece, maintains that 'Crime is the result of the lack of the right kind of education. ' It is thus plain that crime is a pathological aberration, that the criminal can ordinarily be redeemed, that the State has to rehabilitate rather than avenge.
The sub culture that leads to anti social behaviour has to be countered not by undue cruelty but by re culturisation.
Therefore, the focus of interest in penology is the individual, and goal is salvaging him for society.
The infliction of harsh and savage punishment is thus a relic of past and regressive times.
The human today views sentencing as a process of reshaping a person who has deteriorated into criminality and the modern community has a primary stake in the rehabilitation of the offender as a means of social defense.
We, therefore consider a therapeutic, rather than an in 'terrorem ' outlook, should prevail in our criminal courts, since brutal incarceration of the person merely produces laceration of his mind.
In the words of George Bernard Shaw : 'If you are to punish a man retributively, you must injure him.
If you are to reform him, you must improve him and, men are not improved by injuries '.
We may permit ourselves the liberty to quote from Judge Sir Jeoffrey Streatfield : 'If you are going to have anything to do with the criminal courts, you should see for yourself the conditions under which prisoners serve their sentences. ' In the same strain a British Buddhist Christian Judge, speaking to a BBC reporter underscored the role of compassion : "Circuit Judge Christmas Humphreys told the BBC reporter recently that a judge looks 'at the man in the dock in a different way : not just a criminal to be punished, but a fellow human being, another form of life who is also a form of the same one life as oneself. ' In the context of karuna and punishment for karma the same Judge said : 'The two things are not incompatible.
You do punish him for what he did, but you bring in a quality of what is sometimes called mercy, rather than an emotional hate against the man for doing something harmful.
You feel with him; that is what compassion means.
" The Listener, November 25, 1976, p. (692) Incidentally, we may glance at the prison system which leaves much to be desired in the sense of humanizing and reforming the man we call criminal.
Jimmy Carter, currently President of the United States and not a law man, made certain observations in his Law Day Speech to the University of Georgia while he was Governor of that State, which bear quotation : "In our prisons, which in the past have been a disgrace to Georgia, we 've tried to make substantive changes in the 158 quality of those who administer them and to put a new realm of understanding and hope and compassion into the administration of that portion of the system of justice.
Ninety five percent of those who are presently incarcerated in prisons will be returned to be our neighbors.
And now the thrust of the entire program, as initiated under Ellis Mac Dougall and now continued under Dr. Ault, is to try to discern in the soul of each convicted and sentenced person, redeeming features that can be enhanced.
We plan a career for that person to be pursued while he is in prison.
I believe that the early data that we have on recidivism rates indicates the efficacy of what we 've done." In the light of what we propose to do, in disposing of this appeal, another observation of Jimmy Carter in the course of the same speech is relevant: "Well, I don 't know the theory of law, but there is one other point I want to make, just for your own consideration.
I think we 've made great progress in the Pardons and Paroles Board since I 've been in Office and since we 've reorganized the Government.
We have five very enlightened people there now.
And on occasion they go out to the prison system to interview the inmates, to decide whether or not they are worthy to be released after they serve one third of their sentence.
I think most jurors and most judges feel that when they give the sentence, they know that after a third of the sentence has gone by, they will be eligible for careful consideration.
Just think for a moment about your own son or your own father or your own daughter being in prison, having served seven years of a lifetime term and being considered for a release.
Don 't 'you think that they ought to be examined and that the pardons and Paroles Board ought to look them in the eye an d ask them a question and if they are turned down, ought to give them some substantive reason why they 'are not released and what they can do to correct their defects We have dealt 'with the subject sufficienty to set the humanitarian tone that must inform the sentencing judge, the Karuna that must line his verdict.
The same compassionate outlook is reflected in some of the decision of this Court and of the High Courts indicating the distance between current penal strategy and Hammurabi 's Code, which, in about 1975 B.C., insited 'on an eye for an eye, a tooth for a tooth '.
Referring to the earlier Criminal Procedure Code and its deficiency in regard to sentencing, this Court observed in Telani (AIR 1974 SC 228, 236) "Finally comes the post conviction stage where the current criminal system is weakest.
The Court 's approach has at once to be socially informed and personalised.
Unfortunately, the meaningful collection and presentation of 159 the penological facts bearing on the background of the individual, the dimension of damage, the social milieu and what not these are not provided in the Code and we have to make intelligent hunches on the basis of materials adduced to prove guilt.
In this unsatisfactory situation which needs legislative remedying we go by certain broad features." Similarly, in Jagmohan Singh. ; :1973 SCR 541,560 this Court observed : "The sentence follows the conviction, and it is true that no formal procedure for producing evidence with reference to the sentence is specifically provided.
The reason is that relevant facts and circumstances impinging on the nature and circumstances of the crime are already before the Court Where counsel addresses the court with regard to the charac ter and standing of the accused, they are duly considered by the Court unless there is something in the evidence itself which belies him or the Public Prosecutor for the State challenges the facts.
If the matter is relevant and is essential to be considered, there is nothing in the Or.
P. C. which prevents additional evidence being taken.
It must however be stated that it is not the experience of criminal courts in India that the accused with a view to obtaining a reduced sentence ever offers to call additional evidence.
However, it is necessary to emphasize that the Court is broadly concerned with the facts and circumstances whether aggravating or mitigating, which are connected with the particular crime under enquiry.
All such facts and circumstances are capable of being proved in accordance with the provisions of the Indian Evidence Act in a trial regulated by the Cr.
P.C. The trial thus does not come to an end until all the relevant facts are proved and the counsel on both sides have an opportunity to address the court. .
The Kerala High Court, in Shiva Prasad had also something useful to say in this regard : "Criminal trial in our country is largely devoted only to finding out whether the man in the dock is guilty.
It is a major deficiency in the Indian system of criminal trials that the complex but important sentencing factors are not given sufficient emphasis and materials are not presented before the court to help it for a correct judgment in the proper personalised, punitive treatment suited to the offender and the crime. .
Likewise, Shri Justice Dua (as lie then was) of the Punjab High Court had indicated the guidelines on the application of the rehabilitative theory in Lekharaj & Ors vs State (AIR 1960 Punjab 482) where the learned Judge had pointed out the relevance of the offender 's circumstances and social milieu, apart 160 from the daring and reprehensible nature of the offence.
The Law Commission of India (in 47th Report) has summed up the components of a proper sentence : "A proper sentence is a composite of many factors, including the nature of the offence, the circumstances extenuating or aggravating of the offence, the prior criminal record, if any, of the offender, the age of the offender, the professional and social record of the offender, the background of the offender with reference to education.
home life, sobriety and social adjustment, the emotional and mental condition of the offender, the prospect for the rehabilitation of the offender, the possibility of a return of the offender to normal life in the community, the possibility of treatment or of training of the, offender, tie possibility that the sentence may serve as a deterrent to crime by this offender, or by others, and the present community need, if any for such a deterrent in respect to the particular type of offence involved." (para 7.44) All that we have said upto now emphasizes the need on the part of the judges to see that sentencing ceases to be downgraded to Cinderella status.
The new Criminal Procedure Code, 1973 incorporates some of these ideas and gives an opportunity in section 248(2) to both parties to bring to the notice of the court facts and circumstances which win help personalize the sentence from a reformative angle.
This Court, in Santa Singh , has emphasized how fundamental it is to put such provision to dynamic judicial use, while dealing with the analogous provisions in section 235(2) "This new provision in section 235(2) is in consonance with the modern trends in penology and sentencing procedures.
There was no such provision in the old Code,.
It 'was realised that sentencing is an important stage in the process of administration of criminal justice as important as the adjudication of guilt and it should not be con signed to a Subsidiary position as if it were a matter of not much consequence.
It should be a matter of some anxiety to the court to impose an appropriate punishment on the criminal and sentencing should, therefore, receive serious attention of the Court.
(p. 194.).
Modern penology regards crime and criminal as equally material when the right sentence has to be picked out.
It turns the focus not only on the crime, but also on the criminal and seeks to personalise the punishment so that the reformist component is as much operative as the deterrent element.
It is necessary for this purpose that facts of a social and personal nature, sometimes altogether irrelevant if not injurious, at the stage of fixing the guilt, may have to be brought to the notice of the court when the actual sen tence is determined.
(p. 195).
161 A proper sentence is the amalgam of many factors such as the nature of the offence, the circumstances extenuating or aggravating of the offence, the prior criminal record, if any, of the offender, the age of the offender, the record of the offender as to employment, the background of the offender with reference to education, home life, sobriety and social adjustment, the emotional and mental condition of the offender, the prospects for the rehabilitation of the offender, the possibility of return of the offender to normal life in the community, the possibility of treatment or training of the offender, the possibility that the sentence may serve as a deterrent to crime by the offender or by others and the current community need, if any, for such a deterrent in respect to the particular type of offence.
These factors have to be taken into account by the Court in deciding upon the appropriate sentence.
(p. 195).
The hearing contemplated by section 235(2) is not confined merely to hearing oral submissions, but it is also intended to give an opportunity to the prosecution and the ac cused to place before the court facts and material relating to various factors ' bearing on the question of sentence and if they are contested by other side, then to produce evidence for the purpose of establishing the same.
Of course, care would have to be taken by the court to see that this hearing on the question of sentence is not abused and turned into an instrument for unduly protracting the proceedings.
The claim of due and proper hearing would have to be harmonised with the requirement of expeditious disposal of proceedings." (p. 196).
It will thus be seen that there is a great discretion vested in the Judge, especially when pluralistic factors , enter his calculations Even so, the judge must exercise this discretionary power, drawing his inspiration from the humanitarian spirit of the law, and living down the traditional precedents which have winked at the personality of the crime doer and been swept away by the features of the crime.
What is dated has to be discarded.
What is current has to, be incorporated.
Therefore innovation, in all conscience, is in the field of judicial discretion.
Unfortunately, the Indian Penal Code still lingers in the somewhat compartmentalised system of punishment viz. imprisonment simple or rigorous, fine and, of course, capital sentence.
There is a wide range of choice and flexible treatment which must be available with the judge if he is to fulfil his tryst with cruing the criminal in a hospital setting.
Maybe in an appropriate case actual hospital treatment may have to be prescribed as part of the sentence.
In another case, liberal parole may have to be suggested and, yet in a third category, engaging in certain types of occupation or even going through meditational drills or other courses may be part of the sentencing prescription.
The perspective having changed, the legal strategies and judicial resources, in their variety, also have to change.
Rule 162 of thumb sentences of rigorous imprisonment or other are too insensitive to the highly delicate and subtle operation expected of a sentencing judge.
Release on probation, conditional sentences, visits to healing centres, are all on the cards.
We do not wish to be exhaustive.
Indeed, we cannot be.
Sentencing justice is a facet of social justice, even as redemption of a crime doer is an aspect of restoration of a whole personality.
Till the new Code recognised statutorily that punishment required considerations beyond the nature of the crime and circumstances surrounding the crime and provided a second stage for bringing in such additional materials, the Indian courts had, by and large, assigned an obsolescent backseat to the sophisticated judgment on sentencing.
Now this judicial skill has to come of age.
The sentencing stance of the court has been outlined by us and the next question is what 'hospitalization ' techniques will best serve and sentencee, having due regard to his just deserts, blending a feeling for a man behind the crime, defence of society by a deterrent component and a scientific therapeutic attitude at once correctional and realistic.
The available resources for achieving these ends within the prison campus also has to be considered in this context.
Noticing the scant regard paid by the courts below to the soul of section 248 (2) of the Code and compelled to gather information having sentencing relevancy, we permitted counsel on both sides in the present appeal to file affidavits and other materials to help the Court make a judicious choice of the appropriate 'penal ' treatment.
Both sides have filed affidavits which disclose some facts pertinent to the project.
We have earlier mentioned that the social abhorrence of the crime is an input, since the emphatic denunciation of a crime by the community must be reflected in the punishment.
From this angle we agree with the trial court that unconscionable exploitation of unfortunately unemployed 'young men by heartless deception, compounded by pretension to political influence, calls for punitive severity to serve as deterrent.
The crime here is doubly bad and throws light on how gullible young men part with hard money in the hope that political influence, indirectly purchased through money, can secure jobs obliquely.
But then the victims of the crime must be commiserated with and in such white collar offences it is proper to insist upon reparation of the victims, apart from any other sentence.
In the present case, four young men have been wheedled out of their little for tunes by two convicts and so, to drive home a sense of moral responsibility to repair the injury inflicted, we think it right to direct the appellant to pay a fine of Rs. 1200/ which will be made over by the trial court to P.W. 1 (whose case alone is the subject of the prosecution) under section 357 of the Code.
That is to say, a fine of Rs. 1200/is imposed will be ,paid over to the aforesaid P.W.1.
What are the other circumstances which we may look into ? The appellant is a young man of 28 years.
He has a degree in Bachelor of Oriental Languages and another in Commerce, which suggests that he may respond to new cultural impact.
He was working as a Junior 163 Assistant in the Government Secretariat and has now lost the post consequent on the conviction.
This is a hard lesson in life.
The socioeconomic circumstances of the man deserve to be noticed.
His parents are old and financially weak, since they and the appellant '& sisters and younger brother are his dependents.
The younger brother also is unemployed.
These factors suggest that the economic blow, if the appellant is imprisoned for long, will be upon his brothe r at College and the other members of his family.
Extenuation is implicit in this fact.
He prays for release on probation or under section 360 of the Code because he has no blemish by way of previous crime or bad official record.
Having regard to his age (not immature) and the deliberate plan behind the crime operated in partnership upon four perhaps more persons, we reject his request as over ambitious.
At the same time, a contrite convict, yet in his twenties, may deserve clement treatment.
A just reduction of the sentence is justified and we think that incarceration for 18 months may be adequate.
But this long period has to be converted into a spell of healing spent in an intensive care ward of the penitentiary, if we may say so figuratively.
How can this be achieved ? First, by congenial work which gives job satisfaction not jail frustration, nor further criminalisation.
We therefore direct the State Government to see that within the framework of the Jail Rules, the appellant is assigned work not of a monotonous, mechanical, degrading type, but of a mental, intellectual, or like type mixed with a little manual labour(1).
This will ensure that the prisoner does work more or less of the kind he is used to.
The jail, certainly, must be able to find this kind of work for him, even on its own administrative side under proper safeguards though.
Shri PP Rao, appearing for the State,, assures us, that in keeping with this constructive suggestion of the Court the jail authorities will assign to the appellant congenial work of a mental cum manual type and promote him to an officer warder 's position if his conduct is good.
We have also made the suggestion that the appellant must be paid a reasonable faction of remuneration by way of wages for the work done, since unpaid work is bonded labour and humiliating.
This amount may be remitted to his father once in three months Shri Rao, on behalf of the State Government, has assured the Court that immediate consideration will be given to this idea by the State Government and the jail authorities.
We also think that the appellant has slipped into crime for want of moral fibre.
If competent Jail Visitors could organise for him processes whichwill instill into him a sense of ethics it may help him become a better man.
Self expression and self realisation have a curative effect.
Therefore, any sports and games, artistic activity (1) Says Gandhiji in Harijan : Feb. 6, 1947 "Intellectual work is important and has an undoubted place in the scheme of life.
But what I insist on is the necessity of physical labour.
No man, I claim, ought to be free from that obligation; it will serve to improve even the quality of his intellectual output,,.
164 and/or meditational course, may also reform.
We strongly recommend that the appellant be given such opportunities by the jail authorities as will stimulate his creativity and sensitivity.
In this connection we may even refer to proven advantages of kindling creative intelligence and normalising inner imbalance reportedly accomplished by Transcendental Meditation (TM) propagated by Maharshi Mahesh Yogi in many countries in the west.
Research projects conducted in various countries bring out that people practising such or like courses change their social behaviour and, reduce their crime proneness.
We do not prescribe anything definite but indicate what the prison doctors may hopefully consider.
While it is beyond us to say whether the present facilities inside the Central Prison, Hyderabad, make it feasible for the appellant to enjoy these benefits and thereby improve his inner being, we strongly feel that the humanitarian winds must blow into the prison barricades.
More than this is expected in this decade, when jail reforms, from abolition of convict 's costume and conscript labour to restoration of basic companionship and atmosphere of self respect and fraternal touch, are on the urgent agenda of the nation.
Our prisons should be correctional houses, not cruel iron aching the soul We have given thought to another humanising strategy, viz., a guarded parole release every three months for at least a week, punctuating the total prison term.
We direct the State Government to extend this parole facility to the appellant, Jail Rules permitting, and the appellant submitting to conditions of discipline and initiation into an uplifting exercise during the parole interval.
We further direct the Advisory Board of the, Person periodically to check whether the appellant is making progress and the Jail authorities are helping in the process and implementing the prescription hereinabove given.
Indeed, the direction of prison reform is not towards dehumanization but dehumanization, not maim and mayhem and vulgar callousness but man making experiments designed to restore the, dignity of the individual and the worth of the human person.
This majuscule strategy involves orientation courses for the prison personnel.
The State will not hesitate, we expect, to respect the personality in each convict, in the spirit of the Preamble to the Constitution and will not permit the colonial hangover of putting people 'behind the bars ' and then forget about them.
This nation cannot and, if it remembers its incarcerated leaders and freedom fighters will not but revolutionize the conditions inside that grim little world.
We make these persistent observations only to drive home the imperative of Freedom that its deprivation, by the State, is validated only by a plan to make the sentencee more worthy of that birthright.
There is a spiritual dimension to the first page of our Constitution which. projects into penology.
Indian courts may draw inspiration from Patanjali sutra even as they derive punitive patterns from the Penal Code (most of Indian meditational therapy is based on the sutras of Patanjali).
Before we close this judgment we wish to dispel a possible misapprehension about the fine we are imposing upon the cheat although we have proceeded on the footing of his family being relatively indigent.
The further direction for making over the fine to the deceivees also needs a small explanation.
165 There is nothing in principle, as Lord Parker pointed out in R. V. King (1970 2 AR.
E. R. 248) to prevent a court from imposing a fine even when imposing a suspended sentence of imprisonment. 'Indeed, in many cases it is quite a good thing to impose a fine which adds a sting of course, the fine should not be altogether beyond the sentences means.
As to whether it is wrong to make a sort of compensation order in a case of a convicted person without much means, again, Lord Parker in R. V. Ironfield (1971 1 All.
E. R. 202) has observed "If a man takes someone else 's property or goods, he is liable in Law to make restitution, or pay compensation.
A victim. need not be put to the additional trouble and expense of independent proceedings, and certainly cannot be required to forego his rights in order to facilitate the rehabilitation of the man who has despoiled him.
" Counsel for the appellant has repeated that his client is taking examination in Accountancy an indication of this anxiety to improve himself.
We have no doubt that the jail authorities will afford facilities to the appellant to do his last minutes studies and take the examination and, for that purpose, allow him to go to any library and the examination hall under proper conditions of security.
The affidavit on behalf of the State indicates that a tendency to, turn a new page is discernible in the appellant and this has to be strengthened imaginatively by the Jail Superintendent, if need be, by affording him opportunity for initiation into Transcendental Meditation courses or like exercises provided the appellant shows an appetite in that direction and facilities are available in Hyderabad City.
Shri P. P. Rao, for the State, has represented that the Andhra Pradesh Government is processing rules for payment of wages to prisoners who work but that it may take a few months more for finalisation.
It is a little surprising that at least two decades or more have been spent in this country after Freedom discussing active programmes of correction although in some States, for long years the wage system has been in vogue.
Andhra Pradesh State will rise to this civilized norm and, when it finalises rules, will take care to see that the wages rates are reasonable and not trivial and that retrospective effect will be given to see that at least from October 2, 1976 (the birthday of the Father of the Nation) effect is given to the wage policy.
Shri Sastry, for the appellant, assured the Court that he had been instructed to state that Rs. 1200/ would be paid right away out of the fine, imposed.
We allow the appeal in humanist part, as outlined above, while affirming the conviction.
More concretely, we direct that (a) the sentence shall be reduced to 18 (eighteen) months, less the period already undergone; (b) our directions, above mentioned, regarding parole and assignment of suitable work and payment of wages in jail shall be complied with; and (c) the appellant shall pay a fine of 166 Rs. 1200/ .
We appreciate the services of counsel Shri P. P. Rao in disposing of this appeal justly.
We may also mention that Shri G. V. R.Sastry appearing for the appellant has also helped the court towards the same en P.H.P. Appeal allowed.
| IN-Abs | The appellant along with another accused deceived several desperate unemployed youngmen, received various sums of Rs. 1200 by false pretences that they would secure jobs for them through politically influential friends and other make believe representations.
The offence of cheating under a. 420 was made out and all the 3 courts concurrently convicted both the accused.
The appellant was sentenced to 3 years rigorous imprisonment.
The appellant is an unemployed youngman around 28 years old and used to work as a Junior Assistant in the Andhra Pradesh Secretariat.
This Court granted special leave limited to the question of sentence.
Allowing the appeal partly, HELD : (1) The pre sentencing provision in section 248(2) Cr. P. C. has a penological significance of far reaching import which has been lost on the trial magistrate.
Reform of the black letter law is a time lagging process.
At an the three tiers the focus was on the serious nature of the crime and no ray of light on the criminal or on the pertinent variety of social facts surrounding him penetrated the forensic mentation.
[153 D, E] (2)Since the whole territory of punishment in its modern setting is virtually virgin so far as our country is concerned, the court went into the subject in some incisive depth for the guidance of the subordinate judiciary.
[155 G] (3)Progressive criminologists in the world agree that the Gandhian diagnosis of offenders as patients and his conception of prisons as hospitals mental and moral is the key to the pathology of delinquency and the therapeutic role of punishment.
The whole man is a healthy man and every man is born good.
Criminality is a curable deviance.
If every saint has a past every sinner has a future and it is the role of law to remind both of this.
[155 B C] (4)Man is subject to more stresses and strains in this age than ever before and a new class of crimes arising from restlessness of the spirit and frustration of ambitions has erupted.
White collar crime, as in the present case, belong% to this disease of man 's inside.
Barbarity and injury recoils as injury so that if healing the mentally or morally maimed or malformed man is the goal, awakening the inner being more than torturing through exterior compulsions, holds out better curative hopes.
The infliction of harsh and savage punishment is thus a relic of past and regressive times.
Today sentencing should be a process of re shaping a person who has deteriorated into criminality and the modern community has a primary stake in the rehabilitation of the offender as a means of social defence.
Therefore, a therapeutic, rather than a terrors outlook should prevail in our criminal courts.
[156 E, H, 157 C D] Tejani AIR 1974 S C 228, 236; Jagmohan Singh ; and Santa Singh , referred to.
(5)There is a great discretion vested in the judge while imposing sentence.
The Judge must exercise this discretionary power, draw his inspiration from the humanitarian spirit of the law living down the traditional precedents which have winked at the personality of the crime doer and been swept away by the features of the crime.
Unfortunately, the Indian Penal Code still lingers in the somewhat compartmentalised system of punishment viz., imprisonment, 154 simple or rigorous, fine and, of course, capital sentence.
There is a wide range of choice and flexible treatment which must be available with the Judge if he is to fulfil his tryst with curing the criminal in a hospital setting.
Rule of thumb sentences of rigorous imprisonment or other are too insensitive to the highly delicate and subtle operation expected of a sentencing judge.
Release on probation, conditional sentences, visits to healing centres, are all on the cards.
[161 E H 162 A] (6)In the present case the crime is doubly bad and throws light on how gullible youngmen part with hard earned money in the hope that political influence indirectly purchased through money can secure jobs obliquely.
But the victims of the crime must be commiserated with and in such white Collar offences it is proper to insist upon reparation of the victims apart from any other sentence.
The Court, therefore, directed the appellant to pay a fine of Rs. 1200/ which was directed to be made over by the Trial Court to P.W. 1 who was victim in the present case.
[162 E FG] (7)The appellant is a youngman of 28 years.
He has a degree in Oriental Languages and another in Commerce.
He was working as a Junior Assistant in the Government Secretariat and has now lost the post consequent on the conviction.
This is a hard lesson in life.
The socioeconomic circumstances of the man deserve notice.
His parents are old and financially weak.
His parents, sisters and younger brothers are his dependents.
The younger brother is also unemployed.
These factors suggest that the economic blow, if the appellant is imprisoned for long, will be upon his brother at College and other members of his family.
He had not committed any previous crime.
The court rejected the prayer of the appellant for release on probation on the ground that the appellant had a deliberate plan behind the crime operated in partnership upon 4 or more persons and that his age is such that he cannot be called immature, The court, however, reduced the sentence to 18 months.
The court also recommended that (a) he should not be given work of a monotonous, mechanical, degrading type, but of a mental, intellectual or like type mixed with a little manual labour.
This would ensure that the person does work more or less of the kind he used to; (b) the appellant must be paid a reasonable fraction of remuneration by way of wages for the work done, as unpaid work is bonded labour and humiliating; (c) the appellant should be allowed to participate in sports and games, and take to artistic activity and/or meditational course.
He should be given such opportunities by the Jail authorities as would stimulate his creativity and sensitivity.
(d) a guarded parole release every 3 months for at least a week.
[162 H, 163 A E] Humanitarian winds must blow into the prison barricades.
Jail reforms from abolition of convict 's costume and conscript labour to restoration and fraternal touch, are on the urgent agenda of the nation.
Our prisons should be correctional houses, and not cruel iron aching the soul.
[164 C] The court observed that the State should not hesitate to respect the personality in each convict in the spirit of the preamble to the Constitution and not to permit the colonial hangover of putting people behind the bars and then forget about them.
[164 F] R. vs King and R. vs Ironfield , referred to.
|
Appeal No. 49 of 1972.
Appeal from the Judgment and Order dated 24th December, 1970 of the Madhya Pradesh High Court in Mic.
Petition No. 474/68.
Panjwani, H.S. Parihar and 1.
N. Shroff for the Appel lants.
B. Sen, (Mrs.) Leila Seth, T.M. Sen, Praveen Kumar and O.P Khanan for Respondent.
The Judgment of the Court was delivered by KRISHNA IYER, J.
The State of Madhya Pradesh, blessed with abundant forest wealth, whose exploitation, for reasons best known to that government, was left in part to the private sector, viz., the respondent, Orient Paper Mills, which is the appellant in this appeal by certificate.
The subject matter of this litigation, however, is the competen cy to collect sales tax from the respondent for the bamboo and salai wood extracted by it, under a transaction relating to some government forests in Vindhya Pradesh which, on 'states reorganisation ' in 1956, became part of Madhya Pradesh.
The transaction itself was dressed up as a lease deed executed by the then State of Vindhya Pradesh on August 4, 1956 in favour of Orient Paper Mills, the respondent herein.
At that time no sales tax could be levied under the law from the forest department of the appellant State or the respondent mills.
However, on April 1, 1959 the M.P. Gener al Sales Tax Act, 1958, (hereinafter referred to acronymi cally as M.P.G.S.T. Act) came into force.
On the footing that the Forest Department was a dealer it got itself regis tered as such, under the sales tax law, on November 3, 1962.
The respondent, of course, is a registered dealer under the same law.
Subsequently, the Chief Conservator of For ests, representing the appellant, demanded of the respondent that it pay sales tax on the timber extracted under the 'lease deed ', whereupon the claim was repudiated by the respondent.
In consequence, 151 the appellant proceeded to.
levy the sum representing the sales tax on the value of the timber cut and removed as per the terms of the contract, resorting to revenue recovery proceedings authorised by Sec. 82 of the Indian Forest Act.
Thereupon the respondent moved the High Court for the issu ance of a writ under article 226 of the Constitution of India against the State.
to forbear from collecting sales tax illegally.
Holding that the State Government and its Forest Department were not dealers w;thin the sense of the sales tax law, the writ petition was allowed, notwithstand ing the adverse findings against the petition respondent on some other vital points.
The State has challenged this finding in the appeal before us.
The validity of the attempted exaction is the gut issue in these proceedings, although the centre of gravity on this forensic stage has shifted from the question of the forest department being a dealer to whether the transaction styled 'lease ' does at all involve sale of goods.
From 'no dealer, no sales tax ' to 'no sale no sales tax ' is the shift in the epicentre of the argument caused by an amendment to the sales tax statute legislated after and on account of the very judgment under appeal.
Suffice it to say for the present, no sale, no sales tax is a legal tru ism.
It may be mentioned right here that the respondent before us is not directly liable to pay sales tax, even assuming that the 'lease deed ' involves sale of goods.
The forest department of government is admittedly a registered dealer for the relevant period, and it is claimed by the appellant State that it was liable qua dealer to pay tax on sales of timber, and by virtue of section 64 A of the Sale of Goods Act such sums, which became leviable only after the agreement was entered into in 1956, could be recovered from the purchaser respondent.
It is virtually admitted in this appeal, as stated earlier, that both parties are registered dealers under the relevant sales tax Act.
Nor is it in dispute that if the appellant forest department were liable to pay sales tax for the sales of timber which were alleged to have taken place, the respondent, in turn, would be liable to make good that sum in view of the plain provision in section 64A of the Sale of Goods Act.
But to attract that provision there has to be sale of goods.
Was there any sale of wood under the lease deed ? That is the core of the legal quarrel agitated before us.
We may straight proceed to consider the questions canvassed before the High Court since both sides have had to challenge one or other of the findings.
We may borrow the formulation of the four points set out in the judgment of the High Court.
"(i) The transaction is not a sale of goods and no sales tax is payable in respect of bamboos and salai wood extracted thereunder by the petitioner.
(ii) No sales tax is payable under the terms of the lease deed dated August 4, 1956 and, therefore, such tax cannot be recovered.
(iii) Neither the State Government nor the Forest Department of that Government is or could be a dealer and for this reason also no sales tax is payable or recoverable.
152 (iv) The sales tax, even if payable, is not recoverable as arrears of land revenue, particularly when the revenue recovery certificate was issued by the Divisional Forest Officer.
" The time is set true for stating the decisive statutory changes which occurred after the High Court ruled against the State, calculated to undo the disability discovered by that pronouncement.
This development deserves attention as the sole point on which the State lost in the High Court, viz. that the Forest Department is not doing business, ceases to have relevance today on account of the amendment to the Madhya Pradesh.
General Sales Tax Act by the MPGST (Amendment and Validation) Act 13 of 1971.
The definition of 'dealer ' and other related provisions were touched up and redefined in such manner that the finding on point No. 3 formulated by the High Court was effectively nullified.
Indeed, the legislation is a sequel to the decision and has squarely undone the impediment in the way of the State collecting sales tax from the respondent.
So long as that law holds good the State 's claim cannot be bowled out.
Of course, Sri B. Sen, for the respondent, desired to challenge the vires of the Amending Act but the Presidential Proclama tion during the Emergency, suspending the operation of article 14, handcuffs the respondent from seeking to strike down this legislation.
When the Presidential Proclamation, sterilising article 14, lapses then it may be time enough to assail ' this law.
So far as this appeal is concerned, article 14 is under eclipse and the ground of challenge unavailable.
The amendatory provisions must therefore be held impregna ble, on this score, and we proceed on that footing.
Its post Emergency validity will be decided, if attacked, at that time, since we leave that aspect untouched.
To abbre viate the discussion, thanks to Act 13 of 1971, the Forest Department of the State shall be deemed to be dealer.
If it is a dealer, the levy of sales tax from it is legal and the controversy on this score is silenced.
The meat of the matter is the judicial determination of the true character of the transaction of 'lease ' from the angle of the MPGST Act and the Sale of Goods Act whose combined operation is pressed into service for making the tax exigible from the Forest Department and, in turn, from the respondent mills.
It is the part of judicial prudence to decide an issue arising under a specific statute by confining the focus to that ' statutory compass as far as possible.
Diffusion into wider jurisprudential areas is fraught with unwitting conflict or confusion.
We, there fore, warn ourselves against venturing into the general law of real property except for minimal illumination thrown by rulings cited.
In a large sense, there are no absolutes in legal propositions and human problems and so, in the jural cosmos of relativity, our observations here may not be good currency beyond the factual legal boundaries of sales tax situations under a specific statute.
The major plea to bomb the tax demand having been shot down by retroactive legislative missiles, the respondent has sought a manouvre to victory by reliance on the contention covered by formulation No. 1 set out at the beginning.
Point 2 hinges on the result of point No. 1 and deserves no separate discussion.
153 The High Court 's holding on these twin points is in favour of the respondent on the basic submission of non exigibility of tax on the score that the transactions in question are not sales at all and the payments not price of goods at all but mere royalty under a lease.
A short legal survey will take us to an easy solution of this issue.
Section 64A of the Sale of Goods Act enables the seller, under certain circumstances, to recover, as sale price, any sales tax which the vendor has had to pay.
So, if in the present case, the Forest Department of the State is liable to pay sales tax on the bamboo.
and salai wood cut and removed by the respondent, the claim to recover it from the buyer is good under the said s.64A.
The next logical series of questions are whether the Forest Department is liable to sales tax on the timber covered by demise ? Can the timber s0 extracted and the royalty paid at the rates stipulated be called goods and sale price respectively under Sec.
2(0) of the MPGST Act ? Can the levies made by the Forest Department become its turnover of sales under Sec. 2(t) ? Does removal of timber by the lessee constitute sale of goods under section 2(n) of the MPGST Act or section 64A of the Sale of Goods Act ? The ignition point which sets in motion the chain reac tion is the character of the transaction whereby bamboo etc.
are cut and removed and money paid, measured by the weight of the timber extracted.
If it is a sale the tax is leviable from the Forest Department and the amount, in turn, recoverable from the lessee and vice versa.
We must set out parts of the 'lease deed ' so that its basic structure and essential nature may be decoded.
Is it really a lease of forest or is it a sale of certain timber with ancilliary licences ? No. doubt, the deed styles itself a lease.
But it is argued that a soi disant lease may well be a mere contract of sale of goods.
Theoretical ly, this is perfectly possible in law, as in literature: 'What 's in a name ? that which we call a rose/By any other name would smell as sweet '! But what is there in the document to detract from the prima facie validity of the label ? Here the clarity of the reasoning lies in the correct approach t0 the question which is not so much whether the contract is one of lease but whether it works out a sale of goods under the two concerned statutes.
Sales tax is payable by a dealer.
The Forest Department, by force of the statutory amendment, is admittedly a dealer.
Such tax is computed on the turnover as defined in section 2(t) of the MPGST Act, which reads: "2.
In this Act, unless there is anything repugnant in the subject or context, X X X X (t) 'turnover ' used in relation to any period means the aggregate of the amount of sale prices received and receivable by a dealer in respect of any sale or supply or distribu 154 tion of goods made during that period, whether or not the whole or any portion of such turnover is liable to tax but after deducting the amount, if any refunded by the dealer to a purchaser, in respect of any goods purchased and returned by the purchaser within the prescribed period.
" The essential ingredients of turnover are thus 'sale of goods ' and 'sale prices '.
The latter concept has received definitional expression in s.2(0) and the former in s.2(n).
They may be read here: "(o) 'sale price ' means the amount payable to a dealer as valuable consideration for the sale of any goods, less any sum allowed as cash discount according to ' ordinary trade practice but including any sum charged for anything done by the dealer in respect of the goods at the time or before delivery thereof other than the cost of freight or delivery or the cost of installation when such cost is Separately charged and the expression 'purchase price ' shall be construed accordingly.
(n) 'Sale ' with all its grammatical variations and cognate expressions means any transfer of property in goods for cash or deferred payment or for other valuable consideration and includes a transfer of property in goods involved in the supply or distribution of goods by a society or club or any association to its members, but does not include a mortgage, hypothecation charge or pledge, and the word 'purchase ' shall be construed accordingly;" For all these words to apply, the pivotal factor is 'goods ' which is defined in substantially similar manner in both the Sale of Goods Act and in section 2(g) of the MPGST Act which latter reads: "2 (g) "goods" means all kinds of movable property other than actionable claims, newspapers, stocks, shares, securities or Government stamps and includes all materials, articles and commodities whether or not to be used in the construction, fitting out, improvement or repair of movable or immovable property; and also includes all growing crops, grass, trees, plants and things attached to, or forming part of the land which are agreed to be severed before sale or under the ' contract or sale;" The key expressions which unlock the mystique of turn over curesale of goods are the last inclusive limb of the clause 'also includes . trees which are agreed to be severed under the contract of sale '.
The crunch issue thus is whether the self styled lease deed is in substance a contract of sale of timber.
The true import of the document may be gathered from its terms, not from rulings on other documents.
There is a serious limitation on the service of case law in this area.
It depends firstly on the actual issue in each case and the angle of vision adopted and secondly on the clauses, pur poses and surrounding circumstances of each tran 155 saction.
While, therefore, we may cite some rulings later we bear in mind the limits of their use.
Shri Sen rightly stressed the importance of the deliber ate description of the deed as a lease.
He drew our atten tion, with emphasis, to annual payments of royalty, not price.
Royalty has a slight fedual flavour with a tell tale demise relish, if we may say so, while price is a mercantile concept smacking of commercial relations.
By the deed, the forest lands of the lessor are 'hereby demised '.
There are frequent references to the 'leased area '.
The period of the lease is stated to be a long 20 years, later substituted by 30 years.
There is also refer ence to discharge of lease, royalties, compensation and other monies, suggestive of a demise rather than of a sale.
The provision for payment of a minimum royalty runs in these terms: lm15 "Provided that the minimum royalty payable by the lessees to the State Government during the first year of this lease shall not be less than 1.5 lakhs of rupees and for the next and subsequent years, shall, during the term of this demise, be not less than two lakhs of rupees per annum.
" Whether there is cutting of timber or not, Shri Sen argues, the minimum royalty has to be paid, thus showing that the provision for payment is sometimes de linked from the ex ploitation of the forest or the value of the timber cut.
Considerable reliance was placed for taking the document out of the category of mere sale of goods, on clause 5 of the Deed, which reads: "The lessees shall with the previous permission in writing of the State Government be at liberty to make dams, cross streams, cut canals, make water course irrigation works, construct roads, railways and tramways and do any other works useful or necessary for the purposes of the business connected with these presents in or upon the leased area provided that they are in accordance with the plan approved by the State Government and also with the like approval to widen or deepen any existing creeks or channels of waterways for the purposes of the said business and all timbers required for the above purposes shall be allowed half royalty rates in the case of timbers of reserved species and free in case of timbers of unreserved species by the State Government.
" There is also provision for renewal of the lease deed which savours, again, of a transaction of real property since renewals cannot obtain for sales.
The face value of these features tends to fix the trans action as a lease but, lift the veil and feel the reality behind, Shri Shroff urged us, only to discover that the lease is no more than a simple sale of goods, viz., of bamboo and salai wood.
He dismissed tags and labels as of the least consequence when the heart of the matter turned on the crucial terms of the document which were, in his submis sion, loudly 156 obtrusive of the 'sale of goods ' character of the transac tion.
Of course, if in essence there is a sale of goods covered by the deed, we have to locate the taxing event which occurs when the title to the goods is transferred.
The description of the document as a lease 'deed ', the reference to royalty, the right to construction of buildings etc., cannot hamper a contrary conclusion if there are luminous characterstics of a 'sale of goods ', in what is but a lease deed in name.
From this angle Shri Shroff has high lighted certain principal provisions in the deed.
There is no doubt, he says, that if one scans the document closely, one finds that possession of the land is not given; which means that parties have slurred over the demise part of it notwithstanding the dubious expressions used.
What is authorised under the deed is the 'exclusive liberty ' to enter upon the leased area to fell, cut or extract bamboos and salai wood and to remove, store and utilise the same for meeting the full requirements of the Paper Mill.
This reads more like a sale of standing timber coupled with a licence to enter and do certain things on another 's land.
Counsel also emphasised that an insightful understanding of cl.
2(g) of the deed would bring out the price fixed for the goods sold viz., 'a fiat rate of Rs. 6/ per ton on air dry bamboo and Rs. 2/ per ton on air dry salai wood . actually extracted and removed from the leased area on the weighment at the weighbridge of the said Paper Mill and in case of export at the weighbridge or weighbridges to be installed at suitable places by the lessees, in which case the royalty shall be Rs. 7/8/0 (rupees seven and eight annas) and Rs. 2/8/0 (rupees two and annas eight) per ton of air dry bamboo and salai wood respectively.
In this context supportive strength was sought to be drawn from cl. 2(h) which reads: "(h) The lessees shall keep an account of all bamboos and salai wood cut and removed in the manner as may mutually be settled and such account shah be open to inspection by the Forest Officer authorised in this behalf by the Divisional Officer concerned.
" Shri Shroff went to the extent of saying that the real nature of the transaction was disclosed in the deed itself in clause 2(k): "(k) The lessees in conducting their operation on the leased area shall not in any way interfere with the surface of land save and in so far as may be necessary in connection with and for the purposes of this licence." Clause 4 bears on its bosom, in his submission, the imprint of a contract for sale of goods and it may be read: "4. "Without prejudice to the provisions of this lease, the rights, liberties and privileges of the lessees hereinbefore mentioned shall extend only to bamboos and salai wood within the leased area and nothing herein shall in any way be deemed to authorise the lessees to interfere with the working of the forest areas within the leased area or the rights, liberties, privileges of other contractors of the said forest lands.
" 157 We are considerably impressed with this analysis.
The upshot of the whole transaction is that, for a price fixed, bamboos and salai wood are permitted to be removed from the forest of the appellant by the respondent.
For the exercise of the right under this contract, certain necessary licences are conceded.
It is made perfectly plain that the posses sion of the land qua land is not given, and there is a fool proof provision that the rights of the 'lessees ' shall extend only to bamboos and salai woods within the leased area and nothing herein shall in any way be deemed to autho rise the lessees to interfere with the working of the forest area . of other contractors of the said forest lands.
Can there be a lease without exclusive, possession of the lands ? Can there be a lease to A of lands when the only right is to cut certain species of timber above a certain height and according to.
stipulated conditions ? Can there be a lease of lands where similar right to cut timber from the same land co exist in other contractors ? There are mere circumstances than these, but we need not be exhaus tive, especially when we agree with the conclusion reached by the High Court.
We are satisfied that despite its description, the deed confers in truth and substance a right to cut and carry timber of specified species.
Till the trees are cut, they remain the property of the owner, namely the appellant.
Once the trees are severed, the property passes.
The 'Royalty ' is a feudalistic euphemism for the 'price ' of the timber.
We may also observe that the question before us is not so much as to what nomenclature would aptly describe the deed but as to whether the deed results in sale of trees after they are cut.
The answer to that question, as would .appear from the above, has to be in the affirmative.
Now to a brief reference to two out of several cases cited at the Bar.
Sri Sen relied heavily upon Raja Bahadur Kamakshya Narain Singh(1).
That was a case under the Income Tax law.
The assessee there received large payments by way of royal ty under various mining leases.
The leases purported to be for 999 years and related to the coal mining rights set Out in the Schedule to the lease.
The lessees were to pay a sum by way of salami or premium and an annual sum as royalty computed at a certain rate per ton on the amount of coal raised and coke manufactured.
It was contended on behalf of the assessee that the sums received as salami and royalty did not constitute 'income ' but were capital receipts, representing the price of the minerals removed.
There was also a provision for minimum royalty which was pressed into service by the party.
The Judicial Committee held that the royalty payable under the lease was not the price of the actual coal extracted but represented compensation which the lessees paid to the lessor for that species of occupa tion which the contract allowed and it was therefore 'in come ' from other sources ' within the meaning of the relevant Income tax Act.
We must point that the legal setting in which a question is considered colours the ratio of the case.
The Judicial Committee was considering an issue arising under the Income Tax Act and, interpreting the clauses of a deed with particular terms, to ascertain wheth er the payments made thereunder fell within the meaning of 'income ' understood in its broadest connotation [1943] 11 .T.R. 513. 158 in England and in India.
Construing, as we do, a special statute and a differently worded deed and the signification of the words used therein we are unable to draw any legiti mate instructional inferences from a decision contextually different, concerned with a different branch of law; and dealing with different issues although with seeming resem blances in superficial respects.
Another decision which, perhaps, has some helpful reasoning, is by this Court in Badri Prasad(1).
We need not discuss the details of that case except to point out that it has been recognised, in that ruling, that trees which are to be severed before sale or under the contract of sale are 'goods ' for the purposes of the Sales of Goods Act.
On the facts of that case, property in the cut timber could pass to the plaintiff under the contract at the earliest when the trees were felled but before that happened the trees had vested in the state under an agrarian reform measure.
The crutches of case law are not always necessary in Court.
While direct light on the legal situation present before us is not available from Badri Prasad, or 'Kamakshya Narain Singh, (supra) there is not the slightest doubt that going by the definition of 'sale of goods ' under 8.
2(7) of the Sale of Goods Act and of s.2(g) of the MPGST Act, stand ing timber is 'movable property ' if under the contract of sale they are to be severed.
But the severance must take place when the timber still vests in the contracting party.
Ultimately, the case before us has to.
be decided on the facts and the law which form the backdrop to the deci sion.
We have already held that the crucial fact to be found before we can designate the transaction as 'sale of goods ' is to scan and see whether the 'lease deed ' really deals with sale of timber.
We are clear that there is sale of bamboo and salai wood under the contract and, in the contemplation of the parties they are to be cut and severed, pursuant to the contract itself.
It follows that the find ing of the High Court on this point is correct.
The appeal deserves to be allowed on account of the statutory amendment.
The Madhya Pradesh Legislature had taken great care and responded with prompt attention to deal with a situation where considerable revenue would be lost to it on account of inadequate expression of its intendment in the MPGST Act.
A diligent and considered amendment has fulfilled the legislative purpose.
Had the State lost the appeal before Us on another point, that is as to whether royalty was 'price for sale of goods ', the whole amendatory effort would have been an exercise in futility or a legisla tive brutum fulmen.
In view of our finding that there is a 'sale of goods ' under the contract, the State is entitled to succeed.
Counsel for the respondent, when we briefly indicated our mind, and even otherwise by way of abundant caution,.
rightly urged that his client had a good case for reduction of the quantum of tax even if sales tax was payable by the Forest Department which could be shift (1) ; 159 ed to the respondent by virtue of s.64A of the Sale of Goods Act.
He prayed for an opportunity to establish that he was being called upon to foot a larger bill than was legally tenable.
We regard this a reasonable request and, indeed, Shri Shroff, for the State, has very rightly agreed with this prayer of the respondent.
For one thing, the amending Bill whereby the liability was being de novo fastened was enacted into law after the judgment of the High Court.
Read with s.82 of the Indian Forests Act, the amount was being recovered as if it were land revenue.
This process deprived the respondent of his right to challenge the quantification of the tax.
It is fair and the State agrees to be fair that the respondent should be enabled to prove his case that the sum claimed was much higher than could be legitimately recovered.
Shri B. Sen brought to our notice that the rate of tax on sales to a registered dealer, if the commodity was to be consumed within the State, in view of Section 8 of Madhya Pradesh General Sales Tax Act for manu facturing purposes was less than the general rates.
The appellant, on the other hand was seeking to recover at the higher rate.
Moreover, even the lesser rate varied over the years from 1% to 2% and on to 3 %.
Thus the arithmetics of the case had also to be gone into before the actual sum due from the Forest Department to the Sales Tax Department was fixed.
More could not be exacted from the respondent.
These reasons persuade us to allow the appeal and remand the case for consideration of the quantum of tax that the State, in the Forest Department, was legally liable to pay as a dealer, to the Sales Tax Department.
Shri Shroff took up a point that when the Forest Depart ment made a demand on the respondent and required him to furnish a declaration necessary to reduce the rate of tax, the latter ignored the request.
This, according to him, had an impact on the eventual liability.
We do not propose to investigate this aspect at the present stage but leave it to be raised by the State before the High Court.
In this view, we allow the appeal and remand the case for disposal after recording a finding on the limited issue/issues above indicated.
We may mention that although the High Court has not properly adjudicated upon the recov erability of the Sales Tax as and by way of arrears of land revenue, it is not necessary to go into the matter afresh especially because once the tax amount is settled, the payment by the respondent will follow.
However, we are not upsetting the finding of the High Court in this behalf in the present case.
The appeal is allowed and remanded, to be disposed of in the light of the directions given above.
Parties will bear their costs throughout.
P.B.R. Appeal allowed.
| IN-Abs | Under section 2(g) of the Madhya Pradesh General Sales Tax Act the term 'goods ' means all kinds of movable property and includes all growing crops, trees, plants and things at tached to.
or forming part of the land which are agreed to be severed before sale or under the contract of sale.
Under el.
(n) 'Sale ' means any transfer of property in goods for cash or deferred payment.
Clause (0) defines 'sale price ' as the amount payable by a dealer as valuable consideration for the sale of goods and under cl.
(t) 'turnover ' means the aggregate of the amount of sale price received and receiva ble by a dealer.
The respondent Mills entered into a lease with the Forest Department of the State for the cutting of bamboo and salai wood from the leased forest area in the State.
The lease deed provided that the lessee shall pay a minimum royalty every year whether there was cutting of timber or not, the lessee could construct roads, railways etc.
for the purposes of business; should pay the price fixed for the wood removed from the leased area; should keep a,n account of all wood cut and removed and that the rights and privi leges of the lessees shall extend only to bamboos and salai wood within the leased area.
The appellant (Forest Department) which was a registered dealer under Sates Tax Act demanded front the respondent, (also a registered dealer) sales tax in respect Of timber extracted from the leased area.
When the respondent repudi ated the Department 's claim it paid the tax and proceeded to recover the tax under the revenue recovery proceedings under section 82 of the Indian Forests Act.
Allowing the respondent 's writ petition under article 226 of the Constitution the High Court held that the State Govern ment and its Forest Departments were not a 'dealer ' within the meaning of the sales tax law and as such were not enti tled to recover the amount from the respondent.
Thereupon the definition of the dealer under the Act was altered to undo the effect of the High Court 's decision.
In appeal to this Court the appellant contended that though apparently the transaction was a lease, in reality the lease was no more than a simple sale of standing timber, coupled with a licence to enter and do certain things on another 's land and the transaction in essence was a sale of goods within the meaning of the Act.
Allowing the appeal to this Court.
HELD: Going by the definition of 'sale of goods ' under s.2(7) of the Sale of Goods Act and section 2(g) of the Sales Tax Act standing timber is 'movable property ' if under the contract it is to be severed.
But the severence must take place when the timber still vests in the contracting party.
[158D] In the instant case there was sale of bamboo and salai wood under the contract and, in the contemplation of the parties they were to be cut and severed pursuant to the contract itself.
Raja Bahadur Kamakshya Narain Singh (1943) 11 I.T.R. 513; Badri Prasad [1969] 2 S C R. 380 held inapplicable.
150 1.
(a) Despite its description, the deed conferred in truth and substance a right to cut and carry timber of specified species.
Till the tress were cut, they remained the property of the appellant.
Once the trees were severed, the property passed.
Royalty is a euphemism for the price of the timber.
[157D] (b) From the terms of the lease it was clear that for a price fixed, bamboo and salai wood were permitted to be removed by the respondent from the forest of the appellant.
Possession of the land qua land was not given and there was a provision that the rights of the lessess shall extend only to bamboos and wood within the leased area and nothing therein shall in any way be deemed to authorise the lessees to interfere with the working of the forest area of other contractors of the forest lands.
[157A B] (2) The amending bill, whereby the liability was being de novo fastened, was enacted into law ' after the judgment of the High Court.
Read with section 82 of the Indian Forests Act, the amount was being recovered as if it were land revenue.
This process deprived the respondent of his right to chal lenge the qualification of the tax.
The respondent should be enabled to prove his case that the sum claimed was much higher than could be legitimately recovered.
[159B] [The case was remanded for consideration of the quantum of tax that the Forest Department was legally liable to pay as a dealer, to the Sales Tax Department.
Once the tax is settled the payment by the respondent will follow.]
|
Appeal NOS.
467 470 & 470A of 1971.
(Appeals by Special Leave from the Judgment and Order dated 3 3 1970 of the Andhra Pradesh High Court in case Ref.
No. 8 of 1967.) G.C. Sharma, P.L. Junels and R.N. Sachthey, for the appel lant in all the appeals.
N. A. Palkhivala, Y.V. Anjaneyulu, Mrs. A. K. Verma, A. Subba Rao, Ravinder Narain, I. B. Dadachanji, and O.C. Math ur, for the respondents in all the appeals.
The Judgment of the Court was delivered by BHAGWATI, J.
These appeals by special leave are directed against a judgment of the High Court of Andhra Pradesh answering certain questions referred to it by the Tribunal in favour of the assessee.
The questions are of some impor tance and complexity and they turn on the true 739 interpretation of sections 3 and 21 of the Wealth Tax Act, 1957 but ,since they can be answered only by applying the correct interpretation to the facts of the case, it is necessary to briefly recapitulate the facts giving rise to these appeals.
In the year 1950 the late Nawab Sir Mir Osman Ali Khan Bahadur, The Nizam of Hyderabad and Berar created several trusts out of which we are concerned in these appeals with the trust known as the Family Trust.
The Nizam, by a Deed of Trust dated 16th May, 1950, created the Family Trust by transferring a corpus of Rs. nine crores in Government securities to the trustees constituted by him.
The corpus was notionally divided into 175 equal units, of out of which five units constituted a Fund called the 'Reserve Fund ' 31/2 units constituted a 'Family Trust Expenses Fund and the remaining 166 1/2 units were allocated amongst the relatives mentioned in the first column of the Second Schedule in the manner specified in that Schedule, the number of units allocated to each individual relative being that mentioned in the second column.
The Second Schedule was divided into two parts.
Part I specified the names of the Nizam 's wife Laila Begum, her five sons and two daugh ters and his another wife Jani Begum and her minor son as beneficiaries and in Part II were mentioned the names of the other wives, sons, daughters, daughters in law, sons in law, would be sons inlaw and certain other ladies of the Palace.
None of the beneficiaries mentioned in the Second Schedule, whether in Part I or Part II, was to be entitled to the corpus of the units allocated to him or her.
Each was entitled to be paid the income from the units allocated to him or her and detailed provisions were made for the manner in which the units were to devolve after his or her death.
Clause (4) of the Trust Deed provided that 30 out of 1661/2 units shall be allocated amongst the relatives mentioned in Part I of the Second Schedule in such manner that one unit each shall be allocated to Laila Begum and Jani Begum, two units each shall be allocated to the daugh ters of Laila Begum and four units each shall be allocated to the five sons of Laila Begum and the minor son of Jani Begum.
So far as one unit allocated to Laila Begum was concerned, the trustees were directed by sub clause (a) of clause (4) to pay the income of this one unit to Laila Begum during her life time and after her death, it was to be divided into 12 equal parts and 2 equal parts each were to be added to the four units allocated to each of her five sons and one equal part each was to be added to the two traits allocated to each of her two.
daughters to be held upon the same trusts as those declared in respect of the original units allocated to each son or daughter as the case may be.
Each of the five sons of Laila Begum was allocated four units and under sub clause (b) of clause (4) it was provided that the income from these four units, supplemented by parts out of Laila Begum 's unit on her death, shall be paid to the respective son during his life time and on and after his death, the corpus of the four units allocated to him together with the parts out of Laila Begum 's unit added to it, shall be divided amongst his children or remot er issues per stirpes in the proportion of two shares for every male child to one share for every female child stand ing in the same degree of relationship.
If such son died without leaving any child or remoter issue him surviving, sub clause (b) of clause (4) provided that the trustees shall divide the four units allocated to him together with the 8 707 SCI/77 740 subsequently added parts out of Laila Begum 's unit into such sub parts and in such manner that they shall allocate two equal sub parts each to each of the then surviving sons of Laila Begum by the settlor and the issue then surviving of any pre deceased son and one equal sub part each to each of the then surviving daughters of Laila Begum by the settlor and the issue then surviving of any pre deceased daughter.
The parts of such surviving sons and daughter of Laila Begum as are specified in the Second Schedule were to be added to and amalgamated with the basic units, four or two as the case may be, allocated to them and they were to be held on the same trusts as those declared in respect of such basic units.
So far as concerns the sub parts allocated to the surviving sons and daughters of Laila Begum who were born after the date of the Trust Deed, it was directed that such sub parts would be taken by them absolutely and so also the sub parts allocated to the issue of any pre deceased son or daughter of Laila Begum were to be divided between them absolutely per stirpes in the proportion of two shares for ' every male child to one share for every female child stand ing in same degree of relationship.
Sub clause (c) of clause (4) made similar provisions with regard to the two units allocated to each of the two daughters of Laila Begum.
The income of the two units together with the subsequently added parts out of Laila Begum 's unit was to be given to the respective daughter for her life time and on her death, the corpus was to be divided amongst her children and remoter issue per stirpes in the proportion of two shares for every male child to one share for every female child standing in the same degree of relationship and if she died without leaving any issue her surviving, the corpus was to be divid ed into such sub parts and in such manner that one equal sub part was to go to each of the then surviving children of Laila Begum by the settlor and the issue then surviving of any pre deceased son or daughter.
The other provisions in regard to the interest taken by these beneficiaries in the corpus were the same as in sub clause (b) of clause (4).
Subclause (d) of clause (4) dealt with the unit allocated to Jani Begum and provided that the income of this unit would go to Jani Begum during her life time and on her death, the corpus of this unit would be added to and amalgamated with the four units allocated to her minor son Imdad Ali Khan to be held upon the same trusts as those declared in respect of those four units and if neither Imdad Ali Khan nor any child or remoter issue of his was living at the date of the death of Jani Begum, then this one unit of Jani Begum was to be held upon the same trusts as the one unit allocated to Laila Begum on her death.
Similarly,.
sub clause (e) of clause (4) provided that the income of the four units allocated to Imdad Ali Khan shall be paid to him during his life time and on his death, the corpus shall be divided amongst his chil dren and remoter issue per stirpes in the proportion of two shares for every male child to one share for every female child standing in the same degree of relationship and if he does without leaving any child or remoter issue him surviv ing, the corpus shall be held on the same trusts as those upon which the four units allocated to any of the five sons of Laila Begum are held on the death of such son without leaving any child or remoter issue him surviving.
It will thus be seen that detailed and elaborate provisions were made in the Trust Deed regarding the disposition of the different units allocated to the various beneficiaries specified in Part 741 I of the Second Schedule and every contingency was taken care of in laying down the mode of devolution, so that at any particular point of time could always say who would be the beneficiaries entitled to the corpus, if the owner of the life interest were to die at that point of time.
The remaining 1361/2 units left after the allocation of 30 units as set out in clause (4) were dealt with in clause (5) of the Trust Deed.
These 1361/2 units were allocated to the respective relatives of the settlor specified in Part II of the Second Schedule in the respective proportions set out.against their names.
Sub clause (a) of clause (5) provided that the income of the respective unit or units or fraction thereof allocated to the respective relative shall be paid to them respectively for life.
But so far as the 15 daughters of the settlor were concerned, to each of whom three units were allocated, it was provided that out of the income of such three units, each daughter was to be paid only 2/3rd part of the income and the remaining 1/3rd part was to be set apart by way of a reserve fund.
Such reserve fund was to be utilised for any special, unusual, unforeseen or emergency expenses relating to the particular daughter from whose income the reserve fund was created and on her death, the,reserve fund or the unutilised portion thereof was to.
be amalgamated with the three units of the corpus allocated to her, to be held on the same trusts as those declared in respect of such three units.
There was also a special provision made regarding Nawab Rashid Nawaz Jung, the son in law of the settlor, that, though allocated one unit, he was not to receive the income of that unit so long as he received the allowance as Amir of the Vikar al Mulk Paigah and till then, the income of this unit was to be added to the five units allocated to the Reserve Fund creat ed under clause (6) to be held upon the same trusts as those declared in respect of such Reserve Fund.
The other son inlaw and the future husbands of the 13 other daughters of the settlor were also allocated 1/2 unit each and it was provided that until the marriage of each of these 13 daugh ters, the income of 1/2 unit allocated to her future husband should be set apart as a reserve fund and utilised in the same manner as the Reserve Fund of such daughter created out or one third part of the income of the three units allocated to her and after her marriage, the income of such 1/2 unit should be paid to her husband.
So far as Fauzia Begum, the daughter of the second son of the settlor was concerned, a special provision was made that the income of two units allocated to her should be set apart and credited in her account called 'Fauzia Begum Reserve Fund ' and on the death of the second son of the settlor during the minority of Fauzia Begum, the income of these two units should be paid to a committee of management for the maintenance, education, welfare, advancement in life and benefit of Fauzia Begum until she attained the age of majority and during the minor ity of Fauzia Begum, the trustees.
were also authorised to spend out of the Reserve Fund such sums as may be necessary for any special.
unusual, unforeseen or emergency expenses for her benefit and on Fauzia Begum attaining the age of majority, the trustees were to hand over the reserve fund or the unutilised portion thereof to her absolutely and also to pay to her the income of the two units during her life time.
Sub clause (b) of clause (5) provided for the devolution of the respective unit or units or fraction thereof allocated 742 to the respective relatives on their death.
It was directed that on the death of any of these relatives, the corpus of the unit or units or fraction thereof allocated to him or her should be divided 'and distributed, subject to some restrictions, amongst the children and remoter issue per stirpes in the ratio of 2:1 as between male and female children standing in the same degree of relationship.
The contingency of any of these relatives dying without leaving any child or remoter issue him or her surviving.
was dealt with in sub clause (c) of clause (5) which provided that in the event the unit or units or the fraction thereof allocat ed to such relative should be divided amongst the other relatives of the settlor but in accordance with certain specified rules.
Sub clause (d) of clause (5) made a spe cial provision in regard to Dulhan Pasha Begum, namely, that on her death, the five units allocated to her should be added to and amalgamated with the four units allocated to her daughter Shahzadi Begum, to be held upon thus be seen that according to the scheme envisaged in clause (5), each of the settlors specified in Part II of the Second Schedule was given life interest in the unit or units or fraction thereof allocated to him or her and on his or her death, subject to certain special provisions in regard to some of the relatives, the corpus of such unit or units or fraction thereof was to be divided and distributed amongst the chil dren or remoter issue and if any of the relatives died without leaving any child or remoter issue him or her sur viving, the corpus allocated to him or her was to go to the other relatives in accordance with certain specified rules.
Clause (6) of the Trust Deed directed the trustees to hold 5 units out of the corpus of the trust fund aS and by way of a Reserve Fund, This Reserve Fund was primarily intended to meet special, unusual, unforeseen or emergency expenses of or for the benefit of the relatives of the settlor specified in the Second Schedule and it was also provided that if there was any deficit in the Family Trust Expenses Account in meeting the charges of collection, the remuneration of the trustees and the members of the commit tee of management and other costs, charges, expenses and outgoing in connection with the trust, such deficit should be made good out of the income or the corpus of the Reserve Fund.
There was also a provision made that on and after the death of any of the relatives of the settlor specified in the Second Schedule, a corresponding proportion of the Reserve Fund should be added to and amalgamated with the unit or units or fraction thereof allocated to such relative and held on trusts similar to the original trust.
The remaining 31/2 units were allocated under clause (7) of the Trust Deed to a fund called 'The Family Trust Ex penses Account '.
This fund was intended to meet all the charges for the collection of the income of the trust fund and the remuneration of the trustees and the members of the committee of management and all the costs, charges and expenses and outgoings relating to the trust and its admin istration.
It was also directed that after all the afore said trusts relating to the 30 units, 136 1/2 units and 5 units out of the corpus of the trust fund had been fully administered and carried out and the corpus of all such units had been handed over and transferred absolutely to the ultimate beneficiaries, the 743 trustees should transfer and hand over 31/2 units comprising this fund to the then successor in title of the settlor or to the eldest male descendant in the direct male line of succession of the settlor according to the rule of primoge nature.
During the course of assessment of the trustees (herein after referred to as the assessees) to wealth tax for the assessment year 1957 58, a question arose as to how the assessment to wealth tax should be made.
The Wealth Tax Officer assessed the assessees to wealth tax on the value of 131/2 units of the trust fund comprising 5 units allocated to the Reserve Fund, 31/2 units allocated to the Family Trust Expenses Account and 5 units representing the units allocated to the future husbands of the then unmarried daughters of the settlor.
The wealth corresponding to the remaining 1611/2 units was assessed in the hands of the several beneficiaries specified in the Second Schedule, who were assessed to wealth tax on the value of the respective units allocated to them under the Trust Deed.
Similar assessments were also made for the assessment year 1958 59 with this difference that by the time these assessments came to be made, one other daughter was also married and the Wealth Tax Officer, therefore, assessed the assessees to wealth tax only in respect of the value of 13 units of the Trust Fund and the values of the other units were assessed in the hands of the respective beneficiaries to whom they were allocated as specified in the Second Schedule.
There were appeals to the Appellate Assistant Commis sioner against the assessments for the assessment years 1957 58 and 1958 59 and in these appeals, the Appellate Assistant Commissioner held that the inclusion ' of 5 units constituting the Reserve Fund, 31/2 units constituting the Family Trust Expenses Account and the units allocated to the future husbands of the unmarried daughters in one single assessment was unjustified, since the clauses constituting the Reserve Fund and the Family Trust Expenses Account and creating a trust in favour of the future sons in law consti tuted three distinct trusts and hence separate assessments must be made in respect of the several units forming the subject matter of these clauses.
The Wealth Tax Officer accordingly made separate assessments on the assessees in respect of 5 units constituting the Research Fund and 31/2 units constituting the Family Trust Expenses Account for the assessment years 1957 58 and 1958 59 and similar assess ments were also made on the assessees in respect of the assessment years 1960 61 and 1961 62.
We are not concerned in these appeals with the assessments made on the assessees in respect of 5 units constituting the Reserve Fund and 31/2 units constituting the Family Trust Expenses Account since these assessments have become final.
The several beneficiaries specified in the Second Schedule also appealed against their assessments to wealth tax on the ground that each of them was entitled only to a life interest in the corpus of the units allocated to him or her and he or she could not, therefore, be assessed in respect of the entire value of the corpus.
This contention was accepted by the Appellate Assistant Commissioner who held that inasmuch as each beneficiary was entitled only to the income of the Units allocated to him or her during his or her life time, he or she could be assessed to wealth tax only on the value of his or her life interest 744 the respective units and not on the value of the corpus and in this view, the Appellate Assistant Commissioner set aside the assessments made on the beneficiaries and directed the Wealth Tax Officer to make fresh assessments by includ ing only the value of the life interest of each of the beneficiaries in his or her assessment.
The Wealth Tax Officer accordingly valued the life interest of each of the beneficiaries in the respective unit or units allocated to him or her and made assessment to wealth tax by including the value of such life interest.
But the result of making assessments on this basis on the several beneficiaries was that the value of the 'remainder wealth ' in respect of 1661/2 units esCaped tax.
The Wealth Tax Officer was of the view that the beneficiaries in respect of the several re mainder estates after the lives of the immediate benefici aries mentioned in the Second Schedule were unknown and their shares undeterminate and the assessees were, there fore, liable to be assessed in respect of the remainder wealth under section 21, subsection (4) of the Wealth Tax Act.
The Wealth Tax Officer accordingly reopened the assess ments made on the assessees for the assessment years 1957 58 to 1960 61 and made fresh assessments on the assessees in respect of the 'remainder wealth ' by applying the provisions of section 21, sub section (4).
He arrived at the value of the remainder wealth by taking the value of the entire original corpus and deducting therefrom the value of 5 units allocated to the Reserve Fund, the value of 3 1/2 units allocated to the Family Trust Expenses Account and the aggregate of the values of the life interests assessed in the hands of the several beneficiaries.
Similar assessment was also made on the assessees in respect of the remainder wealth for the assessment year 1961 62.
The assessees appealed to the Appellate Assistant Com missioner against the assessments made on them in respect of the remainder wealth and in the appeals, they contended that the Trust Deed created distinct and separate trusts for the benefit of the several beneficiaries mentioned in the Second Schedule and the Wealth Tax Officer was, therefore, not justified in clubbing the entire remainder wealth relat ing to these distinct and separate trusts in a single as sessment on the assessees and a further contention was also urged by them that, in any event, the assessments were bad in law inasmuch as the provisions of section 21, sub section (4) were not applicable to the facts and circumstances of the case.
The Appellate Assistant Commissioner agreed with the first contention of the assessees and held that though there was only one single Deed of Trust, it created several distinct and separate trusts.
one in favour of each benefi ciary mentioned in the Second Schedule with its own inde pendent and complete provision in regard to devolution after the death of such beneficiary and on this view, the Appel late Assistant Commissioner annulled the assessments made on the assessees in respect of the remainder wealth, leaving it open to the Wealth Tax Officer "to take such steps as he may consider necessary to assess the remainder wealth pertaining to each distinct trust separately".
This view taken by the Appellate Assistant Commissioner rendered it unnecessary to decide the second contention as to the applicability of section 21, sub section (4).
The Revenue being aggrieved by the order passed by the Appellate Assistant Commissioner preferred appeals before the Tribunal on the 745 main ground that there was only one single trust created by the Trust Deed and not several distinct and separate trusts.
Two further contentions were also sought to be urged on behalf of the Revenue at the hearing of the appeals and one of them was, and that is the only contention material for our purpose, that the Appellate Assistant Commissioner should have "given a definite finding regarding the applica bility of section 21, sub section (4) or section 3 to the facts of the case".
The argument of the Revenue in regard to this contention was that the assessees were liable to be assessed as an 'individual ' under section 3 in respect of the entire corpus of the trust fund and section 21, sub section (4) being merely a machinery section did not have the effect of overriding the charge imposed on the assessees under section 3.
The Tribunal allowed the Revenue to raise this new contention, but made it clear that it would be only "for the purpose of supporting the assessments already made and not for the purpose of enhancing the assessments".
The answer given by the assessees to this contention was that section 3 had no application at all, because the assessees as trustees would be an "association of persons ' and under the Wealth Tax Act an 'association of persons ' is not an assessable entity and they went on further tO say that they could not be assessed even under sub section (1) or subsec tion (4) of section 21, since in respect of the remainder estate after the death of each relative, the beneficiaries were unknown.
The asses.sees also contended that, in any event, even if section 3 were applicable, the assessment on the assessee could be made only in accordance with the provisions of section 21, since section 3 was subject to the other provisions of the Act including section 21.
It was also urged on behalf of the assessees that the Trust Deed created distinct and separate trusts 'in respect of the several units allocated to the beneficiaries mentioned in the Second Schedule and in any event, even if the trust was a single indivisible trust, the remainder estate in respect of the several units was required to be assessed separately in the hands of the assessees and to the assessment of such remainder, it was sub,section (1 ) of section 21 which applied and not sub section (4) of section 21.
The Tribu nal, on a proper construction of section 3 ,and 21, came to the Conclusion that these two sections have to be read together and so read it was clear that section 3 was subject to section 21 and the assessees could not, therefore, be assessed to wealth tax under section 3 in respect of the entire corpus, ignoring the provisions of section 21.
Sub section (1) of section 21 was, in the view of the Tribunal, not applicable and the only question, therefore, was whether assessment could be made on the assessees under sub,sec tion (4) of section 21.
The Tribunal held that it was not correct to say that sub section (4) of section 21 was not applicable in the present case on the ground that the bene ficiaries in respect of the remainder estate were unknown and proceeded to apply the provisions of section 21, sub section (4) in the assessment of the assessees.
The Tribu nal accepted the contention of the Revenue that there was only one single trust created by the Trust Deed and not as many trust as there were beneficiaries, but all the same it held, on the application of section 21, sub section (4) that "even if the Trust Deed be viewed as a single trust, sepa rate assessments should be made on the trustees in respect of the several units allocated to the groups of the several beneficiaries mentioned in the Second Schedule".
The result was that the appeals filed by the Revenue were dismissed.
746 The Revenue thereupon applied to the Tribunal for refer ring to the High Court certain questions of law said to arise out of the order of the Tribunal and on the applica tion of the Revenue, the Tribunal referred the following questions for the decision of the High Court: "(i) Whether the Trustees are liable to be assessed under section 3 of the Wealth tax Act in the status of an individual ' ? (ii) Whether, on the acts and in the circumstances of the case, the Appellate Tribunal was right in holding that the provi sions of section 3 of the Wealth Tax Act should not be considered as subject to the provisions of section 21 of the above Act '? (iii) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was correct in refusing to admit the additional ground filed on behalf of the De partment (in W.T.A. No. 690 to 694 of 1963 64) except to the extent of supporting the assess ment as made ? (iv) Whether, on a proper construction of the trust deed in question, the Tribunal was correct in holding that the settlor had created only one trust in favour of several beneficiaries and not separate and independent trust in favour of several beneficiaries or groups of beneficiaries ? (v) Whether, having held that a single trust was created by the trust deeds, the Tribunal was correct in law in holding that under section 21 (4) of the Act the remainder wealth could be assessed in respect of each of the several units or groups of units allocated in favour of the beneficiaries specified under the relevant trust deeds ? (vi) Whether, on the facts and in the circumstances of the case and on a proper construction of the provisions of section 21 of the Act, the Tribunal was right in holding that the provisions of section 21 (4) are applicable in the circumstances of this case ?" So far as the first question is concerned, the High Court answered it in favour of the Revenue by holding that the trustees are liable to be assessed as an 'individual ' under section 3, because the word 'individual" in section 3 is wide enough to include a group of persons forming a unit.
But section 3 being subject to the provisions of section 21, the High Court held, in answer to the second question, that it was not permissible to the Revenue to tax the trustees under section 3 ignoring the provisions of section 21.
The High Court held that the assessment on the trustees could be made only in accordance with the provisions of section 2 '1.
The question then was as to which sub section of section 21 applied in the present case: sub section (1) or sub section (4).
The High Court took the view that on the relevant valuation date, ' it: was not possible to say that the bene ficiaries of the remainder estate in respect of each set of unit or units allocated to the respective relatives 747 Specified in the Second Schedule were unknown or their shares were indeterminate so as to attract the applicability of sub section (4) of section 21.
The High Court.observed that it could be predicated with certainty and definiteness on the relevant valuation date as to who would succeed to the corpus of each set of unit or units and in what shares, if the conditions for the vesting of the corpus were ful filled on that date.
The High Court accordingly held that sub section (1) of section 21 was applicable to the facts of the case and the assessment on the assessees was liable to be made in conformity with that provision.
The High Court then addressed itself to the fourth question and held that the Tribunal was not right in holding that the Trust Deed created one single indivisible trust but there were really several distinct and separate trusts created by the Trust Deed in favour of each of the relatives mentioned in the Second Schedule.
This view taken by the High Court neces sarily resulted in questions Nos.
(v) and (vi) being an swered in favour of the assessees.
That left the third question, but so far as that is concerned, the High Court took the view that it was not necessary to consider it in view of the answers given to the other questions.
It is this decision of the High Court on the various questions referred by the Tribunal which is impugned in the present appeals preferred by special leave.
Before we take up the questions of law that arise for consideration in these appeals, we may clear the ground at the outset by pointing out that though before the High Court, it was contended on behalf of the assessees that they were not liable to be assessed to wealth under section 3 since unlike the charging section in the Income tax Act 3 did not provide for levy of wealth tax on association of persons his contention was not pressed before us and it was conceded, and in our opinion rightly, that the assessees constituted an assessable unit and opinion liable to be assessed to wealth tax as 'individual ' under section 3.
This position indeed could not be disputed after the decision of this Court in Trustees of Gordhandas Govindram Family Chari ty Trust vs Commissioner of Income Tax, Bombay.
(1) But the question is whether assessment could be made on the asses sees under section 3 apart from and without reference to section 21.
That depends on the true meaning and effect of sections 3 and 21 and the inter relation between these two sections.
SectiOn 3 is the charging section and it levies the charge of Wealth tax on the net wealth of the assessee on the relevant valuation date. 'Net wealth ' is defined in section 2 (m) to mean "the amount by which the aggregate value computed in accordance with the provisions of this Act of all the assets, wherever located, belonging to the asses see on the valuation date is in excess of the.aggregate value of all the debts owed by the assessee on the valuation date ".
It is clear from this definition that any property, wherever located, 'belonging to ' the assessee on the relevant valuation date would be includible in the net wealth of the assessee assessable to wealth tax.
One argu ment based on semantics advanced on behalf of the assessees was that assets held by a trustee in trust for others cannot be said to be assets belonging to the, trustee so as to be includible in his net wealth.
The assets so held "are not trustee 's property in any real sense": they are (1) 748 the property of the beneficiaries and, to use the words of Lord Mac Naughton in Heritable Reversionary Co. Ltd. vs Millar, (1) the beneficiaries are the true owners all along.
The trustee of a trust cannot, therefore, be assessed to wealth tax in respect of the trust properties under section 3.
It was for this reason, contended the assessees, that special provision had to be made in section 21 for assessing the trustee and hence assessment on the trustee could be made only in accordance With such special provision.
This was precisely the argument which found favour with the Gujarat High Court in Commissioner of Wealth Tax, Gujarat vs Kum.
Manna G. Sarabhai(2) which was a case decided by a Division Bench presided over by one of us (Bhagwati, J. as the Chief Justice).
On this argument, the trustee of a trust would not be liable to be assessed to wealth tax in respect of the trust properties under section 3.
It is only by reason of section 21 that he would be assessable and hence assessment cannot be made on him except in accordance with the provisions of section 21.
Prima facie, there seems to be force in this argument, but we do not think it neces sary to express any final opinion upon it, since there is an alternative argument advanced on behalf of the assessees which is quite substantial and leave no room for judicial doubt or hesitation.
Let us assume that the trustee of a trust would be assessable in respect of the trust properties under section 3, even in the absence of section 21.
But section 3 imposes the charge of wealth tax 'subject to the other provisions ' of the Act and these other provisions include section 21.
Section 3 is, therefore, made expressly subject to section 21 and it must yield to that section in so far as the latter makes special provision for assessment of a trustee of a trust.
Section 21 is mandatory in its terms and as it stood at the material time it provided as follows: "21(1) In the case of assets chargeable to tax under this Act which are held by a court of wards or an administrator general or an official trustee or any receiver or manager or any other person, by whatever name called, appointed under any order of a court to manage property on behalf of another, or any trustee appointed under a trust declared by a duly executed instrument in writing, whether testa mentary or otherwise (including a trustee under a valid deed of wakf), the wealth tax shall be levied upon and recoverable from the court of wards, administrator general, official trustee, receiver, manager or trus tee, as the case may be, in the like manner and to the same extent as it would be leviable upon and recoverable from the person on whose behalf the assets are held, and the provisions of the Act shall apply accordingly.
(2) Nothing contained in sub section (1) shall prevent either the direct assessment of the person on whose behalf the assets above referred to are held, or the recovery from such person of the tax payable in respect of such assets.
(1) (2) 749 (3) Where the guardian or trustee of any person being a minor, lunatic or idiot (all of which persons are hereinafter in this sub section included in the term "beneficiary") holds any assets on behalf of such benefici ary, the tax under this Act shall be levied upon and recoverable from such guardian or trustee, as the case may be, in the like manner and to the same extent as it would be leviable upon and recoverable from any such beneficiary if of full age or sound mind and in direct ownership of such assets.
(4) Notwithstanding anything contained in this section, where the shares of the persons on whose behalf or for whose benefit any such assets are held are indeterminate or unknown, the wealth tax shall be levied upon and recovered from the court of wards, administrator general, official trustee, receiver, manager, or other person aforesaid as if the persons on whose behalf or for whose benefit the assets are held were an individual for the purposes of this Act.
" Sub section (5) was not a part of section 21 at the material time since it was introduced only with effect from 1st April, 1965 but it throws some light on the interpretation of the other sub sections of section 21 and hence it may be reproduced here: "21(5) Any person who pays any sum by virtue of the provisions of this section in respect of the net wealth of any beneficiary, shall be entitled to recover the sum so paid from such beneficiary, and may hold on behalf or for the benefit of such beneficiary, an amount equal to the sum so paid.
" It would, therefore, be clear on a combined reading of sections 3 and 21 that whenever assessment is made on a trustee, it must be made in accordance with the provisions of section 21.
Every case of assessment on a trustee must necessarily fall under section 21 and he cannot be assessed apart from and without reference to the provisions of that section.
To take a contrary view giving option to the Revenue 'to assess the trustee under section 3 without following the provi sions of section 21 would be to refuse to give effect to the words "subject to the other provisions of this Act ' in section 3, to ignore the maxim genralia specialibus non derogent and to deny mandatory force and effect to the provisions enacted in section 2|.
It may be noted that, while interpreting the corresponding provisions in section 41 of the Indian Income Tax Act, 1922 and section 161 of the Income Tax Act, 1961 , this Court in C.R. Nagappa vs Commissioner of IncomeTax(1) approved the following observa tions made by Chagla, C.J. in regard to the scheme of section 41 of the Indian Income Tax Act, 19v22 in Commissioner of Income tax, Ahmedabad vs Balwantrai Jethalal Vaidya(2): "If the assessment is upon a trustee, the tax as to be levied and recovered in the manner provided in section 41.
(1) (2) 750 The only option that the Legislature gives is the option embodied in sub section (2) of section 41, and that option is that the de partment may assess, the beneficiaries instead of the trustees, or having assessed the trus tees it may proceed to recover the tax from the beneficiaries.
But on principle the contention of the department cannot be accept ed that, when a trustee is being assessed to tax, his burden which will ultimately fall upon the beneficiaries should be increased and whether that burden should be increased or not should be left to the option of the depart ment.
The basic idea underlying section 41, and which is in conformity with principle, is that the liability of the trustees should be co extensive with that of the beneficiaries and in no sense a wider or a larger liability.
Therefore, it is clear that every case of an asessment against a trustee must fall under section 41, and it is equally clear that, even though a trustee is being assessed, the as sessment must proceed in the manner laid down in Chapter III.
Section 41 only comes into play after the income has been computed in accordance with Chapter III.
Then the ques tion of payment of tax arises and it is at that stage that section 41 issues a mandate to the taxing department that, when they are dealing with the income of a trustee, they must levy the tax and recover it in the manner laid down in section 41." (Emphasis supplied by us).
This Court also observed that "the some considerations must apply in the interpretation of section 161 (2) of the Income Tax Act, 1961".
The same view, it may be pointed out, was taken by this Court in an earlier decision in Commissioner of Income Tax vs Nandial Agarwal.(1) These decisions given under the Income Tax law must apply equally in the interpre tation of section 21, since the relevant provisions of both the statutes are almost identical.
That was pointed out by this Court in Commissioner of Wealth Tax, Bihar & Orissa vs Kripashankar Dayashanker Worah(2) where it was said: "Section 21(1) of the Act is analogous to section 41 of the Income Tax Act, 1922.
The only difference between the two sections is that whereas the former deals with assets, the latter deals with income.
Subject to this difference, the two provisions are identically worded.
Hence, the decisions rendered under section 41 (1) of the Indian Income tax Act, 1922, have a bearing on the question arising for decision in this case".
It must therefore, be held to be incontroverti ble that whenever a trustee is sought to be assessed, the assessment must be made in accordance with the provisions of section 21.
It must also be noted that the assessment which is contem plated to be made on the trustee under sub section (1) or sub section (4) of section 21 is assessment in a representa tive capacity.
It is really the beneficiaries who are sought to be assessed in respect of their interest in the trust properties through the trustee.
Sub section (1) provides that in respect of trust properties held by a trustee, wealth tax (1) at 762.
(2) 751 shall be levied upon him 'in the like manner and to the same extent ' as it would be leviable on the beneficiary for whose benefit the trust properties are held.
This provision obviously can apply only where the trust properties are held by the trustee for the benefit of a single beneficiary or.
where there are more beneficiaries than one, the individual shares of the beneficiaries in the trust properties are determinate and known.
Where such is the case, wealth tax can be levied on the trustee in respect of the interest of any particular beneficiary in the trust properties 'in the same manner and to the same extent ' as it would be leviable upon the beneficiary and in respect of such interest in the trust properties, the trustee would be assessed in a repre sentative capacity as representing the beneficiary.
This, of course, does not mean that the Revenue cannot proceed to make direct assessment on the beneficiary.
in respect of the interest in the trust properties which 'belongs to ' him.
The beneficiary would always be assessable in respect of his interest in the trust properties, since such interest 'belongs to ' him and the right of the Revenue to make direct assessment on him in respect of such interest stands unim paired by the provision enabling assessment to be made on the trustee in a representative capacity.
Sub section (2) makes this clear provided that nothing contained in sub section (1) shall prevent either the direct assessment of the beneficiary for whose benefit the trust properties are held or the recovery from the beneficiary of the wealth tax in respect of his interest in the trust properties which is assessed in the hands of the trustee.
The Revenue has thus two modes of assessment available for assessing the interest of a beneficiary in the trust properties: it may either assess such interest in the hands of the trustee in a representative capacity under sub section (1) or assess it directly in the hands of the beneficiary by in cluding it in the net wealth of the beneficiary.
What is important to note is that in either case what is taxed is the interest of the beneficiary in the trust properties and not the corpus of the trust properties.
So also where beneficiaries are more than one, and their shares are inde terminates or unknown, the trustees would be assessable in respect of their total beneficial interest in the trust properties.
Obviously in such a case.
it is not possible to make direct assessment on the beneficiaries respect of their interest in the trust properties, because their shares are indeterminate or unknown and that is why it is provided that the assessment may be made on the trustee as if the benefi ciaries for whose benefit the trust properties are held were on individual.
The beneficial interest is treated as if it belonged to one individual beneficiary and assessment is made on the trustees in the same manner and to the same extent as it would be on such fictional beneficiary.
It will therefore, be seen that in this case too, it is the beneficial interest which is assessed to wealth tax in the hands of the trustee and not the corpus of the trust proper ties.
This position becomes abundantly clear if we look at sub section (5) which clearly postulates that where a trus tee is ' assessed under sub section (1) or sub section (4), the assessment is made on him 'in respect of the net wealth ' of the beneficiary, that is, the beneficial interest belong ing to him.
Now wherever there is a trust, it is obvious there must be beneficiaries under the trust because the very concept of a trust connotes that though the legal title vests in the trustee, he does not own or hold the trust pro 752 perties for his personal benefit but he holds the same for the benefit of others, whether individuals or purposes.
It must follow inevitably from this premise, that since under sub section (1) and (4) of section 21 it is the beneficial interests which are taxable in the hands of the trustee in a representative capacity and the liability of the trustee cannot be greater than the aggregate liability of the bene ficiaries no part of the corpus of the trust properties can be assessed in the hands of the trustee under section 3 and any such assessment would be contrary to the plain mandatory provisions of section 21.
It is also necessary to notice the consequences that seem to flow from the preposition laid down in section 21, sub section (1) that the trustee is assessable 'in the like manner and to the same extent ' as the beneficiary.
The consequences are three fold.
In the first place it follows inevitably from this proposition that there would have to be as many assessments on the trustee as there are benefici aries with determinate and known shares, though for the sake of convenience, there may be only one assessment order specifying separately the tax due in respect of the wealth of each beneficiary.
Secondly, the assessment of the trustee would have to be made in the same status as that of the beneficiary whose interest is sought to be taxed in the hands of the trustee.
This was recognised and laid down by this Court in N.V. Shanmugham & Co. vs Commissioner of Income Tax Madras (1) And lastly, the amount of tax payable by the trustee would be the same as that payable by each beneficiary in respect of his beneficial interest, if he were assessed directly.
Vide Padmavati Jayakrishna Trust vs CommiSsioner of Wealth Tax, Gujarat(2) Trustees of Putlibai R.F. Mulla Trust vs Commissioner of Wealth Tax.(3) and Chintamani Ghosh vs Commissioner of Wealth Tax.(4) Let us, by way of illustration, take a case where property of the value of Rs. ten lacs is held in trust under which the income of the property is given to A for life and on his death, the property is to be divided equally between B and C. The beneficiaries in this case are clearly A, B and C, A having life interest in the trust property and B and C having equal shares in the remainder.
The Revenue has option to assess the beneficial interests of A, B and C in the trust property in the hands of the trustee or to make direct assessment on each of the three beneficiaries.
If the trustee is assessed under sub section (1) of section 21, three separate assessments would have to be made on him, one in respect of the acturial valuation of the life interest of A, which ' may be, to take an ad hoc figure, say, Rs. 5 lacs and the other two in respect of the acturial valuations of the remaindermen 's interests of B and C, which may be, to take again an ad hoc figure, say, Rs. 2 lacs each.
But, as pointed out above, the Revenue may, instead of assessing the trustee, proceed to make direct assessment on each of the three beneficiaries A, B and C and in that case, Rs. 5 lacs, Rs. 2 lacs and Rs. 2 lacs would be included in the net wealth of A, (1) (2) ; at 73 4.
(3) , at 657 8 (4) at 341.
753 B and C respectively.
The result would be that though the value of the corpus of the trust property is Rs. 10 lacs, the assessments, whether made on the trustee or on each of the three beneficiaries, Would be only in respect of Rs. 5 lacs, Rs. 2 lacs and Rs. 2 lacs and the balance of Rs. 1 lac would not be subject to taxation.
In fact in most cases, if not all, the aggregate of the values of the life interest and the remaindermen 's interest would be less than the value of the total corpus of the trust property, since the value of the remaindermen 's interest would be the present value of his right to receive the corpus of the trust property at an uncertain future date and this would almost invariably be less than the value of the corpus of the trust property after deducting the value of the preceding life interest.
The balance of the value of the corpus of the trust proper ty would not, in the result, be subjected to assessment to wealth tax.
But that is the logical and inevitable effect of the schemes of section 21.
Once it is established that a trustee of a trust can be assessed only in accordance with the provisions of section 21 and under these provisions, it is only the beneficial interests which are taxed in the hands of the trustee, it must follow as a necessary corol lary that no part of the value of the corpus in excess of the aggregate value of the beneficial interests can be brought to tax in the assessment of the trustee.
To do so would be contrary to the scheme and provisions of section 21.
It would be clearly erroneous to assess the trustee to wealth tax on the excess of the value of the corpus over the acturial valuations of the life interest and the reversion ary interest of the beneficiaries.
We find that the same view has been taken by the Gujarat High Court in Commission er of Wealth Tax, Gujarat vs Smt.
Arundhati Balkrishna Trust(1) and this view, in our opinion, represents the correct law on the subject.
We have given in the preceding paragraph illustration of a case falling within section 21, sub section (1), but the illustration can be slightly modified by taking a case where property is held in trust for giving income for life to A and on his death, to such of the children of A as the trustee might think fit.
Section 21, sub section (4) would be clearly attracted in such a case so far as the reversion ary interest is concerned, because, on the relevant valua tion date, the remaindermen and their shares would be inde terminate and unknown.
But here also two assessments would have to be made on the trustee: one in respect of the actu rial valuation of the life interest of A under sub section (1) of section 21 and the other in respect of the acturial valuation of the totality of the beneficial interest in the remainder as if it belonged to one individual under sub section (4) of section 21.
The difference between the value of the corpus of the trust property and the aggregate of the acturial valuations of the life interest of A and the re maindermen 's interest would not be assessable in the hands of the trustee because, as pointed out above, the trustee can be taxed only in respect of the beneficial interests and there being no other beneficiary apart from A and such of the children of A as the trustee might think fit, the bal ance of the value of the corpus cannot (1) 754 be brought to tax in the hands of the trustee under sub section (1) or (4) of section 21.
It is, therefore, obvious that no part of the corpus of the trust funds could be assessed in the hands of the asses sees, but the assessment could be made on the assessees only in respect of the beneficial interests of the beneficiaries in the trust funds under sub section (1) and (4) of section 21.
Now so far as the beneficiaries specified in the Second Schedule are concerned, each of them had a life interest in the unit or units allocated to him or her and the assessees.
were liable under sub section (1) of section 21 to.
be assessed in respect of such life interest 'in the same manner and to the same extent ' as the respective benefici aries.
But the question is as to how the beneficial inter est in the remainder in respect of each set of unit or units was liable to be taxed in the hands of the assessees.
The argument of the Revenue wag that it could not be said on the relevant valuation date as to who would be the beneficiaries entitled to the remainder on the death of the concerned relative and hence the beneficiaries were indeterminate and unknown on the relevant valuation date and in the circum stances, sub section (1) of section 21 had no application.
Sub section (4) of section 21 was also not attracted, said the Revenue, because that sub section could apply only where the shares of the beneficiaries were indeterminate or un known and not where the beneficiaries themselves were inde terminate and unknown.
The Revenue contended, on the basis of this argument, that since the beneficial interest in the remainder in respect of each set of unit or units was not taxable either under sub section (1) or sub section (4) or section 21, the assessees were liable to be assessed in respect of the value of the corpus of such unit or units minus the valuation of the life interest under section 3.
But this contention is plainly erroneous, because, on the view we have taken as regards the interpretation of section 3 and 21, a trustee can be assessed to wealth tax only in respect of the beneficial interests of the beneficiaries and no assessment can be made on him in respect of any part of the corpus of the trust funds apart from and without reference to section 21.
We shall presently show that under the Trust Deed on each relevant valuation date the shares of the beneficiaries in the remainder in respect of each set of unit or units were determinate and known and the case was, therefore, governed by sub section (1) of section 21, but we may point out that even if the beneficiaries were indetermi nate or unknown, sub section (4) of section 21 would apply and the assessee would be liable to the assessed in respect of the totality of the beneficial interest in the remainder as if it belonged to one single beneficiary.
When the beneficiaries are indeterminate or unknown, then obviously their shares would also be indeterminate and unknown.
We cannot conceive of a case where the shares would be determi nate or known while the beneficiaries are indeterminate and unknown.
The expression 'where the shares of the benefici aries are indeterminate or unknown ' carried with it by necessary implication, a situation where the beneficiaries themselves are indeterminate or unknown.
Such, for example, would be the case in the modified illustration given above.
There.
the beneficiaries are such of the children of A as the trustee might think fit 755 and the beneficiaries themselves would, therefore, be inde terminate and unknown and yet sub section (4) of section 21 would apply to their case.
To take any other view would be to deny full meaning and effect to the words "where the shares of the beneficiaries are indeterminate or unknown" and to create a lacuna where, even though the beneficial interest in the remainder is disposed of under the Trust Deed, such beneficial interest would escape assessment.
The correct interpretation of sub section (4) of section 21 must, therefore, be that even where the beneficiaries of the remainder are indeterminate or unknown, the trustee can be assessed to wealth tax in respect of the totality of the beneficial interest in the remainder, treating the benefici aries fictionally as an individual.
This immediately takes us to the question as to which of the two sub sections, (1) or (4) of section 21 applies for the purpose of assessing the assessees to wealth tax in respect of the beneficial interest in the remainder qua each set of unit or units allocated to the relatives specified in the Second Schedule.
Now it is clear from the language of section 3 that the charge of wealth tax is in respect of the net wealth on the relevant valuation date, and, therefore, the question in regard to the applicability of sub sec tion (1) or (4) of section 21 has to be determined with reference to the relevant valuation date.
The Wealth Tax Officer has to determine who are the beneficiaries in re spect of the remainder on the relevant date and whether their shares are indeterminate or unknown.
It is not at all relevant whether the beneficiaries may change in subsequent years before the date of distribution, depending upon con tingencies which may come to pass in future.
So long as it is possible to say on the relevant valuation date that the beneficiaries are known and their shares are determi nate,the possibility that the beneficiaries may change by reason of subsequent events such as birth or death would not take the case out of the ambit of sub section (1) of sec tion.
It is no answer to the applicability of sub section (1) of section 21 to say that the beneficiaries are indeterminate; and unknown because it cannot be predicated who would be the beneficiaries in respect of the remainder on the death of the owner of the life interest.
The posi tion has to be seen on the relevant valuation date as if the preceding life interest had come to an end on that date and if, on that hypothesis, it is possible to determine who precisely would be the beneficiaries and on what determinate shares, sub section (1) of section 21 must apply and it would be a matter of no consequence that the number of beneficiaries may vary in the future either by reason of some beneficiaries ceasing to exist or some new benefici aries coming into being.
Not only does this appear to us to be the correct approach in the application of subsection (1) of section 21, but we find that this has also been the general concensus of judicial opinion in this country in various High Courts during the last about thirty years.
The first decision in which this view was taken was rendered as far back as 1945 by the Patna High Court in Khan Bahadur M. Habibur Rahman vs Commissioner of Income Tax, Bihar & Orissa(1) and since then, this view has been followed by the Calcutta High Court in Subhashini Karuri vs Wealth (1) 9 707SCI/77 756 Tax Officer Calcutta(1) the Bombay High Court in Trustees of Putlibai R.F. Mulla Trust vs Commissioner of Wealth Tax (supra) and Commissioner of Wealth Tax, Bombay vs Trustees of Mrs. Hansabai.
Tribhuwandas Trust(2) and the Gujarat High Court in Padmavati Jaykrishna Trust vs Commissioner of Income Tax, Gujarat (supra).
The Calcutta High Court point ed out in Subhashini Karuri 's case: "The share of a benefi ciary can be said to be indeterminate if at the relevant time the share cannot be determined but merely because the number of beneficiaries vary from time to time, one cannot say that it is ideterminate".
The same proposition was formulated in slightly different language by the Bombay High Court in Trustees of Putlibai R.F. Mulla Trust 's case: "The question whether the shares of the beneficiaries are deter minate or known has to be judged as on the relevant date in each respective year of taxation.
Therefore, whatever may be the position as to any future date, so far as the rele vant date in each year is concerned, it is upon 'the terms of the trust deed always possible to determine who are the shares and what their shares respectively are.
" The Gujarat High Court also observed in Padmavati Jaykrishna Trust 's case: " . in order to ascertain whether the shares of beneficiaries and their numbers were determinate or not, the Wealth Tax Officer has to ascertain the facts as they prevailed on the relevant date and therefore any varia tion in the number of beneficiaries in future would not matter and would not make sub section (4) of section 21 applicable." These observations represent correct state ment of the law and we have no doubt that in order to deter mine the applicability of sub section (1) of section 21, what has to be seen is whether on the relevant valuation date, it is possible to say with certainty and definiteness as to who would be the beneficiaries and whether their shares would be determinate and specific, if the event on the happening of which the distribution is to take place occurred on that date.
If it is, sub section (1) of sec tion 21 would apply: if not, the case will be governed by sub section (4) of section 21.
Now in the resent case it is clear from the provisions of the Trust Deed that, in the case of each set of unit or units, it is possible to say with certainty and definiteness on each relevant valuation date as to who would be the beneficiaries and in 'what specific shares, if the respec tive relative mentioned in the Second Schedule to whom such set of unit or units is allocated under the Trust Deed were to die on that date.
That is the view taken ,by the High Court in the judgment impugned in these appeals and we think it is a correct view on the interpretation of the provisions of the Trust Deed.
We may point out in fairness to the learned counsel appearing on behalf of the Revenue that he did not seriously contest this position.
There is not a single contingency unprovided for in the Trust Deed and whenever a relative specified in the Second Schedule, who is the owner of life interest in the set of unit or units allocated to him or her dies, there would always be beneficiaries capable of being easily ascertained and identified who would be entitled to the corpus of such unit or units in determinate and specific shares, either immedi ately on the (1) (2) 757 death of such life tenant or after another life interest.
The remainder in respect of each set of unit or units allo cated to the respective relative specified in the Second Schedule was, therefore, liable to be assessed in the hands of the assessees under section 21, sub section (1) in the same manner and to the same extent ' as each beneficiary in respect of his determinate and known share in such re mainder.
That plainly excluded the applicability of sub section (4) of section 21 in the assessment of the remain der.
The High Court also examined the question whether the Trust Deed created one single indivisible trust or several distinct and separate trusts and, disagreeing with the view taken by the Tribunal, came to the conclusion that "the Deed of Trust created several trusts in favour of the relatives specified in the Second Schedule and their issues.
" But.on the view taken by us that it is sub section (1) of section 21 and not sub section (4) of that section which applies in the assessment of the remainder in respect of each set of unit or units in the hands of the assessees, it is unneces sary to pursue this question and decide whether the Trust Deed created one single indivisible trust or as many trusts as the number of beneficiaries specified in the Second Schedule.
We accordingly agree with the High Court that question No. (i) should be answered in favour of the Revenue and Question Nos.
(ii), (v) and (vi) should be answered in favour of the assessees.
We do not propose to answer Ques tions Nos.
(iii) and (iv), since in view of the answers given by us to the other questions, it is unnecessary to decide them.
The appeals are accordingly dismissed.
The Commissioner will pay the costs of these appeals to the assessees in one set.
P.B.R. Appeals dismissed.
| IN-Abs | Section 21(1) of the Wealth Tax Act provides that in case of assets chargeable to tax under the Act which are held by . . any trustee appointed under a Trust, wealth tax shall be levied upon and recoverable from the trustee in the like manner and to the same extent as it would be leviable upon and recoverable from the person on whose behalf the assets are held.
Sub section (4) provides that notwithstanding anything contained in this section, where the shares of the persons on whose behalf or for whose benefit any such assets are held are indeterminate or un known, wealth tax shall be levied upon and recovered from the trustee as if the persons on whose behalf or for whose benefit the assets are held were an individual for the purposes of this Act.
The corpus of a family trust created by the Nizam of Hyderabad was notionally divided into 175 equal units, out of which 1611/2 units were allocated amongst relatives mentioned in the Second Schedule to the Deed in the manner specified therein.
The essence of the Trust was that none of the beneficiaries was entitled to the corpus of the units allocated to him or her but was only entitled to be paid the income from the units allocated to him or her.
The trust deed made detailed and elaborate provisions as to the dispo sition of the different units allocated to the various beneficiaries and also provided for every other contingency in such a manner that at any particular point of time one could say, if the owner of the life interest were to die at that point of time, who the beneficiaries entitled to the corpus would be.
The Wealth Tax Officer assessed wealth tax on the value of the respective units allocated to each of the several beneficiaries.
In appeal the Appellate Assistant Commissioner upheld the assessees ' contention that since each of them was enti tled only to a life interest in the corpus of the units allocated, they could not be assessed in respect of the entire value of the corpus.
When assessments were made on this basis, the value of the remainder wealth escaped tax.
The Wealth Tax Officer, therefore, assessed the remainder wealth under section 21(4) taking the view that the beneficiaries in respect of the several remainder estates after the lives of the immediate beneficiaries were unknown and their shares were indeterminate.
On appeal the appellate Assistant Commissioner, without, deciding the contention as to the applicability of section 21(4), annulled the assessments on the ground that though the trust deed was one, it created several distinct and separate trusts, one in favour of each beneficiary with its own independent and complete provision in regard to devolution.
after the death of each beneficiary and the Wealth Tax Officer was not justified in clubbing the entire remainder wealth in a single assessment.
Before the Appellate Tribunal the.
Revenue contended that the assessees were liable to be assessed as an individ ual under section 3 in respect of the entire corpus of the trust fund and section 21(4) being merely a machinery provision did not have the effect of overriding the charge imposed under section 3. 736 The Tribunal held (i) that 8. 3 was subject to section 21 and the assessees could not be assessed to wealth tax under that section in respect of the entire corpus ignoring the provisions of section 21; (ii) that section 21(1) was not applicable in this case and (iii) that section 21(4) was applicable because the beneficiaries in respect of the remainder estate were unknown.
The following questions, among others, were referred by the Tribunal the High Court: 1.
Whether the trustees were liable to be taxed under section 3 in the status of an "individual"? 2.
Whether the Tribunal was right in hold ing that the provisions of section 3 should be considered as subject to the provisions of section 21 ? 3.
Whether the Tribunal was correct in holding that under section 21(4) the remainder wealth could be assessed in respect of each of the several units or groups of units allocated in favour of the beneficiaries ? 4.
Whether the Tribunal was right in holding that the provisions of section 21(4) are applica ble? The High Court held that (i) since the terms "individu al" occurring in section 3 is wide enough to include a group of persons forming a unit, the trustees were liable to be assessed under section 3 but, section 3 being subject to the provi sions of section 21, it was not permissible to tax the trustees under s 3 ignoring the provisions of section 21; (ii) it was not possible to say, on the valuation date, that the benefici aries of the remainder estate in respect of each unit were unknown or their shares were indeterminate so as to attract the applicability of section 21(4); and (iii) section 21(1) was ap plicable because it could be predicated with certainty and definiteness on the relevant valuation date as to who would succeed to the corpus of each set of unit and in what shares, if the conditions for the vesting of the corpus who fulfilled on that date.
Dismissing the appeals in part, HELD: The trustees constituted an assessable unit and were liable to be assessed to wealth tax as "individual" under section 3.
[747 E] (1)(a) Section 3 imposes the charge of wealth tax sub ject to other provisions of the Act and these other provi sions include section 21.
Section 3 is, therefore, made express ly subject to section 21 and it must yield to that section in so far as the latter makes special provision for assessment of a trustee.
[748 D E] (b) Section 21 is mandatory On a combined reading of ss 3 and 21,it is clear that an assessment on a trustee must be made in accordance with the provisions of s 21 Every case of assessment on a trustee must necessarily fall under section 21 and he cannot be assessed apart from and without reference to that section.
To hold otherwise would be to refuse to give effect to the words "subject to the other provisions of this Act" in section 3 and to deny mandatory force and effect to the provisions of section 21.
[749 E G] C.R. Nagappa vs Commissioner of Income tax , Commissioner of Income Tax vs Nandial Agarwal at 762 and Commissioner of Wealth Tax, Bihar & Orissa vs Kripashankar Dayashanker Worah followed.
Commissioner of Income Tax, Ahmedabad vs Balwantrai Jetha lal Vaidya approved.
(c) The assessment which is contemplated to be made on the trustee under section 21(1) or section 21(4) is assessment in a representative capacity.
It is really the beneficiaries who are sought to be assessed in respect of their interest in the trust properties through the trustee.
Section 21(1) can apply only where the trust properties are held by the trus tee for the benefit of a single beneficiary 737 or where there are more beneficiaries than one, the individ ual shares of the benenciaries in the trust properties are determinate and known.
Where such is the case wealth tax can be levied on the trustee in respect of the interest of any particular beneficiary in the trust properties in the same manner and to the same extent as it would be leviable upon the beneficiary and in respect of such interest in the trust properties, the trustees would be assessed in a repre sentative capacity as representing the beneficiary.
The beneficiary would always be assessable in respect of his interest in the trust properties since such interest belongs to him and the right of the Revenue to make direct asesss ment on him in respect of such interest stands unimpaired by the provisions enabling assessment to be made on the trus tees in a representative capacity.
[750 G H, 751 A B, C] (d) The Revenue has thus two modes of assessment: (a) it may either assess such interest in the hands of the trustee in a representative capacity under sub section (1); or (b) assess it directly in the hands of the beneficiary by in cluding it in the net wealth of the beneficiary.
In either case what is taxed is the interest of the beneficiary in the trust properties and not the corpus of the trust properties.
So also where beneficiaries are more than one and their shares are indeterminate or unknown, the trustee would be assessable in respect of their total beneficial interest in the trust properties.
In the instant case it is the beneficial interest which is assessed to wealth tax in the hands of the trustee and not the corpus of the trust properties.
Since under sub sections
(1) and (4) of section 21 it is the beneficial interest which is taxable in the hands of the trustee in a representative capacity and the liability of the trustee cannot be greater than the aggregate liability of the beneficiaries, no part of the corpus of the trust properties can be assessed in the hands of the trustee under section 3 and any such assessment would be contrary to the plain mandatory provisions of section 21.
[751 D E, G H] (e) The consequences that flow from the proposition laid down in section 21(1) that the trustee is assessable "in the like manner and to the same extent" as the beneficiary, are: (i) There would have to be as many assessments on the trustee as there are beneficiaries with determinate and known shares, though for the sake of convenience, there may be only one assessment order specifying separately the tax due in re spect of the wealth of each beneficiary; (ii) The assessment of the trustee would have to be made in the same status as that of the beneficiary whose interest is sought to be taxed in the hand of the trustee; and (iii) The amount of tax payable by the trustee would be the same as that payable by each beneficiary in respect of his beneficial interest, if he were assessed directly.
[752 B D] N.V. Shanmugham & Co., vs Commissioner of Income Tax, Madras, , Padmavati Jaykrishna Trust vs Commissioner of Wealth Tax, Gujarat , at 73 4, Trustee of Putlibai R.F. Mulla Trust vs Commissioner of Wealth Tax , at 657 8 and Chintamani Ghosh vs Commissioner of Wealth Tax at 341 referred to.
(f) Once it is established that a trustee can be assessed only in accordance with the provisions of section 21 and under these provisions, it iS only the beneficial interests which are taxed in the hands of the trustee, it must follow that no part of the value of the corpus in excess of the aggre gate value of the beneficial interests can be brought to tax in the assessment of the trustee.
To do so would be con trary to the scheme and provisions of section 21.
It would be deafly erroneous to assess the trustee t.o wealth tax on the excess of the value the corpus over the actuarial valuations of the life interest and the reversionary interest of the beneficiaries.
[753 C D] Commissioner of Wealth Tax, Gujarat vs Smt.
Arundhati Balkrishna Trust approved.
(g) No part of the corpus of the trust funds could be assessed in the hands of the trustees but the assessment could be made on them only in respect of the beneficial interests of the beneficiaries in the trust funds under sections 21 (1) and (4).
[754 A] 738 (2)(a) Even if the beneficiaries were indeterminate or unknown, section 21(4) would apply and the trustees would be liable to be assessed in respect of the totality of the beneficial interest in the remainder as if it belonged to one single beneficiary.
The expression 'where the shares of the beneficiaries are indeterminate or unknown ' carries with it by necessary implication a situation where the benefici aries themselves are indeterminate or unknown.
[754 F G] (b) The correct interpretation of section 21(4) must be that even where the beneficiaries of the remainder are indetermi nate or unknown, the trustees can be assessed to wealth tax in respect of the totality of the beneficial interest in the remainder, treating the beneficiaries fictionally as an individual.
[755 B] (c) The Wealth Tax Officer has to determine as to who the beneficiaries are in respect of the remainder on the relevant date and whether their shares are determinate and known.
So long as it is possible to say on the relevant valuation date that the beneficiaries are known and their shares are determinate, the possibility that 'the benefici aries may change by reason of subsequent events such as birth or death would not take the case out of the ambit of section 21(1), [755 D El Khan Bahadur M. Habibur Rehman vs Commissioner of Income Tax, Bihar & Orissa Subashini Karuri vs Wealth Tax Officer, Calcutta , Commissioner of Wealth Tax, Bombay vs Trustees of Mrs. Hansabai Tribhu wandas Trust and Padmawati Jaykrishna Trust vs Commissioner of Wealth Tax, Gujarat , at 73 4 approved.
(d) In order to determine the applicability of section 21(1) on the relevant valuation date, it has to be seen whether it is possible to say with certainty and definiteness as to who would be the beneficiaries and whether their shares would be determinate and specific, if the event on the happening of which the distribution is to take place occurred on that date.
If it is, section 21(1) would apply, if not, the case will be governed by section 21(4).
In the instant case the trust deed provided for every contingency and whenever a relative specified in Second Schedule, who is the owner of the life interest in the set of unit or units allocated to him or her dies, there would always be beneficiaries capable of being easily ascertained and identified who would be entitled to the corpus of such unit or units in determinate and specific shares, either immediately on the death of such life tenant or after anoth er life interest.
The remainder in respect each set of unit or units allocated to the respective relative specified in the Second Schedule was, there fore, liable to be as sessed in the hands of the trustees under section 21(1) "in the same manner and to the same extent" as each beneficiary in respect of his determinate and known share in such remain der.
That excluded the applicability of s.21 (4) in the assessment of the remainder.
[756 'D E, F, H, 757 A C]
|
l Appeal No. 11 14 of 1976.
From the Judgment and Order dated 22nd September 1976 of the Kamataka High Court in Election Petition No. 1 of 1974.
L. N. Sinha, K. R. Karanah & B. P. Singh for the Appellant.
K. N. Bhat and (Miss) section Pramila for the Respondent No. 1 Y. section Chitley and Narayan Nettar for Respondent No. 2 The Judgment of the Court was delivered by KRISHNA IYER, J.
Four heavy volumes of case records confron ted us in this appeal, as counsel opened the arguments, but some, Socratic processing seemed to condense the controversy and forensic prolixity so much so we first thought the case had shrunk to such small dimensions as to be disposed of in a short judgment.
But what we initially felt, when the brief narration of facts was given, proved a 195 snare.
For, when we read out in court our opinion on the only crucial aspect of the case, counsel for the 1st respondent hopefully insisted that the factual grounds, requiring our ploughing through ponderous tomes of testimonial collection, pleadings and what not, should be investigated as he expected to sustain the invalidation of the election by the High Court on the score of corrupt practice and the consequential disqualification of the rival candidate i.e., the appellant before us.
He was entitled to press that part of his case and so we agreed to hear both sides extensively thereon.
However, hours of argument after, we were back to square one.
At this stage, some relevant facts and circumstances need narration.
The Karnataka Legislative Council has, in its composition, some members elected from the local authorities constituencies.
One such member is elected by the local bodies of Bidar district and the specific election that falls for decision was held on May 12, 1974.
According to the calendar for the poll contemplated in s.30 of the Representation of the People Act, 1951 (hereinafter called the 1951 Act), the last date for presenting the nominations was appointed as April 17, 1974.
Section 33(1) requires that each candidate shall deliver to the returning officer a nomination paper as set out in the section 'between II o 'clock in the forenoon and 3 o 'clock in the after noon '.
The appellant and the first respondent did file their nomi nations in conformity with the law; their scrutiny over, they entered the fray and, after the poll was over, the appellant was declared elected, having secured 64 votes as against the 1st respondent 's 54 votes.
The frustrated 1st respondent found 16 illegitimate votes having been cast in favour of the successful candidate and further discovered that these 16 electors were ineligible to figure on the electoral roll but had been surreptitiously introduced therein by collusion, fraud and other improper machinations in which the returned candidate and the returning officer were collaborative actors.
The purity of the election was polluted.
The result of the poll was materially affected.
The electoral process was vitiated by 'corrupt practice ' in which the appellant and the 2nd respondent were particeps criminis.
He ventured on an election petition with the prayer to set aside the poll verdict inter alia under section 123(7) of the 1951 Act and also sought a declaration 'that he was duly elected on the score that the exclusion of the invalid votes, very probably cast in favour of the appellant, led inevitably to his arithmetical success as the one who had secured the larger number of valid votes.
Such was his case.
The petitioner had made somewhat vague, sweeping and speculative allegations about government, higher and lower echelons of officialdom and the rival candidate but, if an apology for specificity is partially present in the petition, it is about the charge of corrupt practice roping in the returning officer cum electoral registering officer (2nd respondent) and the successful candidate (appellant).
No issue was originally framed on the critical question of corrupt practice but the learned judge permitted evidence thereon to be adduced a procedure difficult to appreciate.
After the trial was virtually closed and the arguments finished, the Court discovered the need for framing this decisive issue.
On objection as to the absence of material facts and 196 or material particulars, the learned Judge framed an issue also on the actual vagueness and legal flawsomeness of pleadings on corrupt practice.
Naturally, this latter question demanded prior decision but, curiously, the Court delivered all its findings, on the day of judgment, a faux pas which we must point out.
Processual proprieties are designed to ensure fair play in adjudications and while such prescriptions are not rigid punctilios, their observance serves to help the judge do, effective justice between parties and the disputants have faith in the intelligent impartiality and full opportunity so necessary for the success of the rule of law.
In election proceedings where the whole community is silently present and the controversy is sensitive and feelings suspicious, the principles of procedural rectitude apply a fortiori.
The judge is the guardian of processual justice and must remember that judgment on judgment belongs, in the long run, to the people.
We state this stern proposition here not merely because a forensic stitch in time saves cassational nine but because courts are on continuous trial in a democracy.
In this case we are not satisfied that either party has suffered in substance and procedural breaches, unless they spell unmerited prejudice, may be brushed aside at the appellate level.
Having said this, we hasten to add that had not the learned judge uncovered the suspect happenings sinisterly hovering around the last day for finalising the electoral roll, the dubious doings of the political government in a seat hungry setting might not have been ventilated for public edification.
The electoral events brought out in evidence are 'power ' portents 'to be prevented preemptively by law and this prompts us to deal with the testimonial circumstances surrounding the inviolable roll of voters having been adulterated after the final hour, zealous officers frantically exerting themselves in what seems at first sight to be a series of belated circus operations geared to inclusion of additional names in the rolls before 17th mid night drew the curtain.
Caesar 's wife must be above suspicion and wielders of public power must fill this bill.
A moral matrix and administrative culture must nurture the power process if democracy is not to commit suicide.
We will make good the relevance of these critical statements with reference to the incontrovertible facts of this case.
However, we do not delve into the minutiae of evidence or span the entire factual range, that being otiose.
A catalogue of circumstances, fair to both sides, will tell its own moral tale and so we set it out.
The last date for completing the electoral roll was April 17, 1974.
The rival candidates (the appellant and the 1st respondent) belonged to opposing political parties but the appellant"s party was in power.
Both the candidates had semi V.I.P. status in their respective parties.
One member more in the Legislative Council would, pro tanto, strengthen the Ministry.
This political backdrop be lights some of the things which occurred on the, dates proximate to the completion of the electoral roll.
The administrative locomotion and the human motivation behind what the trial judge had described as 'manouvres ' is simple to understand, although, as will be shown below, we do not agree 197 wholly with all the deductions of the High Court.
A particular party is in office.
The strength of its members in both Houses is therefore of political significance, especially if fluid Politics turns out to be the field of all possibilities.
Karnataka has a bicameral legislature, and it is reasonable to suppose that the political government has an understandable concern in the election of a member of the Legislative Council, who will be of their party.
Bidar district in Karnataka has a local authorities constituency seat, to be elected by the members of the local bodies there.
It follows that the potential electors who are likely to favour their candidate must be brought on the rolls to ensure his victory.
Inevitably there was therefore keen interest in incorporating in the electoral roll the members of the Taluk Development Board, Bidar (for short, the Bidar Board).
The election to the Bidar Board had taken place years ago, 11 of them having been elected way back in 1968 and 8 later.
The election of the 11 members had been duly notified in 1968 but the Board itself stood suspended, an Administrator having been appointed to run its affairs.
8 members who had been later elected to the Board landed up in the High Court on account of writ petitions filed by their rivals.
Stay had been granted by the High Court and this led to an absence of 2/3 of the total members being able to function, statutorily necessitating the appointment of an Administrator.
Long later the High Court disposed of the writ petitions whereby 3 returns were set aside and 5 upheld.
The arithmetical upshot of these happenings was that there were 16 members duly elected to the Bidar Board, and the High Court having disposed of the writ petitions in June 1972, the local body could have been liberated from the bureaucratic management of an Administrator and allowed to function through elected representatives.
All that was needed to vivify this body of local self government was a notification under the Mysore Village Panchayats Act X of 1959, terminating the Administrator 's term, and perhaps another extending the terms of some members.
Elections to local bodies and vesting of powers in units of self government are part of the Directive Principles of State Policy (article 40 of the Constitution) and, in a sense, homage to the Father of the Nation, standing as he did for participative democracy through decentralisation of power.
Unfortunately, after holding elections to the Bidar Board and making people believe that they have elected their administrative representatives at the lowest levels, the State Government did not bring to life the local board even long after the High Court had disposed of the challenges to the elections in June 1972.
A government, under our Constitution, must scrupulously and energetically implement the principles fundamental to the governance of the country as mandated by article 37 and, if even after holding elections Development Boards are allowed to remain moribund for failure to notify the curtailment of the Administrator 's term, this neglect almost amounts to dereliction of the constitutional duty.
We are unhappy to make this observation but power to the people, which is the soul of a republic, stands subverted if decentralisation and devolu tion desiderated in article 40 of the Constitution is ignored by executive inaction even after holding election to the floor level administrative 198 bodies.
The devolutionary distance to ideological Rajghat from power jealous State capitals is unwillingly long indeed, especially in view of the familiar spectacle of long years of failure to hold elections, to local bodies, supersession aplenty of local self government units, and gross inaction even in issuing simple notifications without which elected bodies remain still born. 'We, the people ' is not constitutional mantra but are the power holders of India from the panchayat upward.
Back to the main trend of the argument.
It became now compulsive for the party in power to de notify the Administrator and revive the elected body if they wanted the members of the Bidar Board to vote perhaps in favour of their candidate.
The 11 members elected long back in 1968 could not vote, on account of the expiry of the 4year term unless in view of section 108 of Act 10 of 1959, the government issued another notification extending the term of office of these members.
So the elective interest of the candidate of the party in power could be promoted only if three or four quick administrative steps were taken.
Firstly, there was to be a notification ending the Administrator 's term over the Bidar Board.
Secondly, there was to be a notification extending the term of the 11 members elected in 1968.
Thirdly, there was to be a notification of the election of the 5 members whose return had been upheld in the High Court in June 1972.
Fourthly, the electoral roll had to be amended by inclusion of these 16 names.
If these steps were duly taken, 16 additional members would become electors and the party in power (if these electors be longed to that party or were under its influence) could probably expect their votes.
The poll results show that the contest was keen and these 16 votes would have been of great moment.
In this high risk predicament, long bureaucratic indolence in issuing notifications and political indifference to the functioning of local bodies produced a situation where the elected roll did not contain the names of the 16 members of the Bidar Board.
Only a few days prior to April 17, 1974 the D day the affected candidate, i.e., the appellant, moved the government for initiation of the steps mentioned above ' but nothing happened.
On April 16, the day before the crucial date for closing the electoral roll, i.e., the last date for making nominations, the appellant moved the Minister concerned who was in Bidar to get the necessary administrative steps taken quickly.
He also moved the returning officer, RW 2.
We find the Minister making an endorsement on the petition.
We notice the returning officer seeking telegraphic instructions from government.
We see government sending an Under Secretary, PW 3, by air from Bangalore to Hyderabad and onward by car to Bidar with some orders.
This PW 3 probably apprised the returning officer RW 2 about orders having been passed raving the way for inclusion of the 16 names in the electoral roll.
PW 3, the Under Secretary, for reasons not known, makes a bee line the same evening to Gulbarga where be meets the Minister.
The returning officer does not have with him any gazette ' notifications.
as we see that under section 2(20) of Act X of 1959, a notification must possess the inalienable attribute of publication in the official gazette.
Admittedly, the returning officer did not come by any 199 of the necessary notifications before the evening of the 17th.
Admittedly, he did not have any gazette notifications before April 25th.
Under section 27 of the Representation of the People Act, 1950, the electoral registration officer who, in this case, is also the returning officer, had to have before him gazette notifications which clearly he did not have till the 25th, i.e., 8 days after the relevant date.
Nevertheless he, obligingly enough including the 16 names which was in breach of the legal provisions.
Frenzied official movements on and after April 16 are visible in this case.
The scenario excites suspicion.
The candidate meets the Minister of his party on the 16th.
The returning officer takes the unusual steps of sending a telegram for instructions from government for inclusion of names in the electoral roll.
The Secretariat despatches an Under Secretary to reach Bidar by air dash and long car drive.
A meeting between the Under Secretary and the electoral registration officer follows and then the Under Secretary winds up the day by meeting the Minister, presumably to report things done, and the registration officer supplements the electoral roll by including 16 more names, without getting the gazette notification.
We have no doubt, as we will presently explain, that this inclusion is invalid, but what we are presently concerned with is the protracted inaction for years of the State government in issuing simple notifications to resuscitate the Bidar Board and the sudden celerity by which a quick chase and spurt of action resulting in a Minister 's endorsement, the regis tration officer 's telegram, Secretariat hyper busyness, the unusual step of an Under Secretary himself journeying with government orders to be delivered to the registration officer, the electoral registration officer hastening to amend the, electoral roll slurring over the legal require ment of a gazette notification and making it appear that everything was done on the 17th before mid night, and a few other circumstances, make up a complex of dubious doings designed to help a certain candidate belonging to the party in power.
The officers had no, personal interest as such and, in fairness, we must state the High Court has exonerated them of any oblique conduct to further their own interests.
We wish to state clearly that having taken a close look at the developments we are not inclined to implicate any of the officers and there are quite a few involved with mala fide conduct or collusion with the returned candidate.
Legal peccadilloes are not fraud or collusion without more.
However, the performance of the political government and the pressurization implicit in the hectic activities we have adverted to, read in the light of the likely political gains accruing to the party in power, generate apprehensions in our minds about the peril to the electoral process if poli tical bosses in office rubberise the public services to carry out behests which are contrary to the law but non compliance with which might be visited with crypto punitive consequences.
We would have taken a harsher view against the public servants bad we something more than what may even be a rather strong suspicion of obliging deviance.
Sometimes they are transfixed between Scylla and Charybdis.
Even 200 strong suspicion is no substitute, for proof.
It has often been said that suspicion is the Upas tree under whose shade reason fails and justice dies.
There is, a core of truth in this caveat.
Shri Bhat, counsel for the 1st respondent, argued his case strenuously but could not make out that vital nexus between the candidate who stood to gain and the officers whose action he impugned.
over, the movements of the Minister at about that time raises doubts and the huge expenditure involving in rushing an Under Secretary from Bangalore by air and road to Bidar were a drain on the public exchequer which could have been avoided if action had been taken in time by a few postal communications.
But the trial judge erred in substituting suspicion for certitude and drawing untenable inferences where paucity of evidence snapped the nexus needed for collusion.
A court must, as usual, ask for proof beyond reasonable doubt from the party setting up corrupt practice even when there is a veneer of power politics stooping to conquer and officers thereby becoming vulnerable to 'higher displeasure.
The faith of the people in the good faith of government is basic to a republic.
The administrative syndrome that harms the citizens ' hopes in the State often manifests itself in callously slow action or gravely suspicious instant action and the features of this case demonstrate both.
Pi Admittedly, the Bidar Board elections were substantially over in 1968 and were more or less complete in 1972 and yet the necessary notifications in the gazette, which are the statutory precondition for the local body to be legally viable, were, for years, not published and, when the critical hour for the electroal list to be finalised fell at 3 p.m. on April 17, 1974, the government and its officer,,, went through exciting exercises unmindful of legal prescriptions and managed the illegitimate inclusion of 16 names in the electoral roll.
We hope that the civil services in charge of electoral processes which are of grave concern for the survival of our democracy will remember that their masters in statutory matters are the law and law alone, not political superiors if they direct deviance from the dictates of the law.
It is never to be forgotten that our country is committed to the rule of law and therefore functionaries working under statutes, even though they be government servants, must be defiantly dedicated to the law and the Constitution and, subject to them, to policies, projects and directions of the political government.
"Be you ever so high, the law is above you" this applies to our Constitutional order.
Shri Bhat, counsel for the 1st respondent ultimately argued these aspects of the case.
But, when we were more than half way through, it became clear that the material link to make out invalidation of the election on account of 'corrupt practice under section 123(7) of the 1951 Act was missing because it had not been made out in the evidence that there was collusion between the 2nd respondent and the appellant.
At that stage, taking a realistic stance, counsel acceded to our view that while there was sufficient room for the 1st respondent to be 201 disturbed about the electoral verdict on the score of the inclusion of 16 names there was not any telling material, other than speculation or weak suggestion, that there was corrupt participation on the part ,,of the officers.
If this position were right and we hold it is what remains to be done is to ascertain the legal effect of the inclusion in the electoral roll of the new names after the expiry of the appointed ,hour and date.
According to the calendar for the poll contemplated in section 30 of the 1951, Act the last date for making the nominations was appointed as April 17, 1974.
Section 33(1) of the 1951 Act requires that each , candidate shall deliver to the Returning officer a nomination paper as set out in the section : "between 11 o 'clock in the forenoon and 3 o 'clock in the afternoon".
The appellant and the 1st respondent did ,file their nominations in conformity with sections 30 and 33 of the 1951 Act but the electoral registration officer 2nd respondent in the appeal), included the names of 16 persons representing the Bidar Board after 3 p.m. of April 17, 1974.
There is a dispute between the parties as to whether such inclusion was directed on the 17th (after 3 p.m.) or on the 18th, the former being the case of the appellant as well as the 2nd respondent, the latter being the case of the 1st respondent and upheld by the High Court.
The Court held that, in law, any inclusion of additional names in the electoral roll of a constituency after 3 p.m. on the last date for making nomination fixed under section 30(a) of the 1951 Act was illegal.
Consequently.
it arrived at the follow up decision that the 16 votes which had been cast by those objectionably added, had to be ignored.
On a further study of the evidence, the Court concluded that these 16 votes had been cast in favour of the elected candidate and should therefore be deducted from his total tally.
The appellant, who had secured 64 votes as against respondent no. 1 's 54, had only a lead of 10 votes.
He slumped below the 1st respondent when 16 votes were deducted from his total.
The necessary result, in the view of the High Court, was that not only had the appellant 's election to be set aside but the 1st respondent deserved to be declared duly elected.
This was done.
An appreciation of the evidence bearing on the question as to whether the 2nd respondent i.e., the Registration officer bad acted under the appellant 's oblique influence in including the additional names after the last date for such inclusion, has led us to overturn the affirmative answer from the learned trial judge.
The holding that a 'corrupt practice ', within the ambit of section 123, had been committed by the appellant who was therefore disqualified under section 8A led to two consequences.
The appellant, who had won the election at the polls, lost the election in the court and, worse still, suffered a six year disqualification.
The doubly aggrieved appellant has challenged the adverse verdict and the wounded 2nd respondent (electoral registration officer) has separately appeared to wipe out the damaging effect of the obliging inclusion of names of electors after the time set by the law was over.
We have already set aside the finding under section 123(7) of the 1951 Act, of corrupt practice and with it falls the disqualification.
2 768 SCI/77 202 The short point, whose impact may be lethal to the result of the election, is as to whether section 23 of the 1950 Act should be read down in conformity with sections 30 and 33 of the 1951 Act.
The proposition,, which has appealed to the High Court, has the approval of the ruling in Baidyanath(1).
The Court, there, observed: "in our opinion cl.
23(a) takes away the power of the electoral registration officer or the chief electoral officer to correct the entries in the electoral rolls or to include new names in the electoral rolls of a constituency after the last date before the completion of that election.
It interdicts the concerned officers from interfering with the electoral rolls under the prescribed circumstances.
It puts a stop to the power conferred on them.
Therefore it is not a question of irregular exercise of power but a lack of power.
(p.842 We have earlier come to the conclusion that the electoral registration officer had no power to include new names in the electoral roll on April 27, 1968.
Therefore votes of the electors whose names were included in the roll on that date must be held to, be void votes." (p. 843) There is a blanket ban in section 23(3) on any amendment, transposition or deletion of any entry or, the issuance of any direction for the inclusion of a name in the electoral roll of a constituency 'after the last date for making nominations for an election in that constituency.
This prohibition is based on public policy and serves a public purpose as we will presently bring out.
Any violation of such a mandatory provision conceived to preempt scrambles to thrust into the rolls, after the appointed time, fancied voters by anxious candidates or parties spells invalidity and we have, therefore, no doubt that if in flagrant violation of section 23(3), names have been included in the electoral roll, the bonus of such illegitimate votes shall not accrue, since the vice of avoidance must attach to such names.
Such void votes cannot help a candidate win the contest.
Why do we say that there is an underlying public policy and a paramount public purpose served by section 23(3) ? In our electoral scheme as unfolded in the 1951 Act, every elector ordinarily can be a candidate.
Therefore, his name must be included in the list on or before the date fixed for nomination.
Otherwise he losses his valuable right to run for the elective office.
It is thus vital that the electoral registration officer should bring in the names of all the electors into the electoral roll before the date and hour fixed for presenting the nomination paper.
There is another equally valid reason for stressing the inclusion of the names of all electors before (1) [1970] 1.S.C.R. 839.
203 the hour for delivering to the returning officer the nomination paper.
Section 33(4) of the 1951 Act reads "(4) On the presentation of a nomination paper, the returning officer shall satisfy himself that the names and electoral roll numbers of the Candidate and his proposer as entered in the nomination paper are the same as those entered in the electoral rolls : x x x x" In the light of this provision the returning officer, on receipt of the nomination paper, satisfies himself that the candidate 's name and electoral roll number are correctly entered.
Necessarily, this is possible only if the electoral roll contains the names of all the electors.
Likewise, section 33(5), which deals with a candidate who is an elector from a different constituency, requires of the candidate the production of a certified copy of the relevant entry showing his name in such a roll.
The inference is inevitable that there must be a completed electoral roll when the time for filing the nomination paper expires.
The argument is therefore incontrovertible that the final electoral roll must be with the returning officer when the last minutes for delivering the nomination paper ticks off.
Subsequent additions to the electoral register will inject confusion and uncertainty about the constituents or electors, introduce a disability for such subsequently included electors to be candidates for the election and run counter to, the basic idea running through the scheme of the Act that in the preponderant pattern of elections, viz., for the legislative assemblies and parliament, the electors shall have the concomitant right of being candidates.
The cumulative effect of these various strands of reasoning and the rigour of the language of section 23(3) of the 1950 Act leaves no doubt in our minds that inclusion of the names in the electoral roll of a constituency after the last date for making nominations for an election in that constituency, must be visited with fatality.
Such belated arrivals are excluded by the talons of the law, and must be ignored in the poll.
It is appropriate to quote from Baidyanath(1) here : "The object of the aforesaid provision is to see that to the extent possible, all persons qualified to be registered as voters in any particular constituency should be duly registered and to remove from the rolls all those who are not qualified to be registered.
Sub section
(3) of section 23 is not an important exception to the rules noted earlier.
It gives a mandate to the electoral registration officers not to amend, transpose, or delete any entry in the electoral roll of a constituency after the last date for making nominations for election in that constituency and before the completion of that election.
If there was no such provision, there would have been room for considerable manipulations, particularly when there are only limited number of electors in a constituency.
But for that (1) ; ,842.
204 provision, it would have been possible for the concerned authorities to so manipulate the electoral rolls as to advanced the prospects of a particular candidate.
" A more trickly issue now arises, Assuming April 17, 1974 to be the last date for filing nominations (and it is so in the case), can the electoral roll be amended on that date to include additional names, but after the hour set for presenting the nomination paper ? Section 33(1) specifies inflexibly that the nomination paper shall be presented between the hours of 11 o 'clock in the forenoon and 3 o 'clock in the afternoon '.
That means that the duration of the day for presentation of nomination papers terminates at 3 o 'clock in the afternoon.
If an elector is to be able to file his nomination paper, his name must be on the electoral roll at 3 p.m., on the last day for filing nominations.
So the temporal terminus adquem is also the day for finalisation ofthe electoral register and by the same token, that day terminates atjust that hour when the returning officer shuts the door.
The day is truncated to terminate with the time when reception of nominations closed.
Section 23 of the 1950 Act does state that the inclusion of the names in the electoral roll can be carried out till the last date for making nominations for an election in the concerned constituency.
What, then, is the last date? When does the last date cease to be? If the purpose of the provision were to illumine its sense, if the literality of the text is to be invigorated by a sense of rationality, if conscionable commonsense were an attribute of 'statutory construction, there can hardly be any doubt that the expression 'last date for making nominations ' must mean the last hour of the last date during which presentation of nomination papers is permitted under section 33 of the 1951 Act.
In short, section 23 (3) of the 1950 Act and section 33(1), (4) and (5) of the 1951 Act interact, fertilise and operate as a duplex of clauses.
So viewed, the inclusion of the names in the electoral roll after 3 p.m., on April 17, 1974, is illegitimate and illegal.
At this stage, it may be appropriate to make reference to Ramji Prasad Singh(1) to which one of us was a party.
Indeed, attention of counsel was invited to this decision by the Court.
That case turned on the inclusion of 40 voters in contravention of section 23(3) of.
the 1950 Act.
By incorporating in the electoral roll new names after the last date for filing nomination, this Court held that such inclusion of new names would be clearly in breach of the mandate contained in section 23(3) of the 1950 Act and, therefore, beyond the jurisdiction of the electoral registration officer.
This view is precisely what we have taken in the present case.
In that case this Court, on fact, took the view that the communication from the Chief Executive Officer of the local authority to substitute certain new names in the electoral roll could not have been acted upon (1) ; 205 before April 6, 1972, the last date of nomination being April 5, 1972.This is clear from the following observation in the judgment : "In fact the letter was 'diarised ' by Shri Bose 's office on the 6th.
The fact of the matter seems to be that the notifications of the 4th April came too late for being acted upon before the dead line, which was the 5th.
The red tape moved slowly, the due date expired and then every one awoke to the necessity of curing the infirmity by hurrying with the implementation of the notifications.
But it was too late and the law had already put in seal on the electoral roLL as it existed on the 5th April.
It could not be touched thereafter, until the completion of the election.
" This Court, in that case, observed that it was 'impossible to accept the half hearted claim of Shri Bose that he passed orders for inclusion of the new names on the 5th itself '.
This Court was not called upon to go into the question as to what would be the legal position if the electoral rolls were actually amended at 11.30 p.m. on 5th April after the last hour for the nomination, viz., 3 p.m. on that day.
This finer facet which falls for consideration in the present appeal viz., whether the 'last day ' contemplated in section 23(3) of the 1950 Act ends at 3 p.m. on that day for the purpose, or continues until mid night did not actually arise for judicial investigation in Ramji Prasad 's Case(supra).
The upshot of the above interpretation is that the 16 names which have been brought into the electoral register subsequent to 3 p.m. of April 17, 1974 must be excluded from the reckoning to determine the returned candidate.
The learned Judge has declared the 2nd respondent duly elected on the strength, mainly, of inference drawn from the oral evidence of the rival candidates.
The ballots are alive, and available and speak best.
Why, then, hazard a verdict on the flimsy foundation of oral evidence rendered by interested parties ? The vanquished candidate 's apse digits or the victor 's vague expectations of voters ' loyalty the grounds relied on are shifting sands to build a firm finding upon, knowing how notorious is the cute art of double crossing and defection in electoral politics and how undependable the testimonial lips of partisans can be unless authenticated by surer corroboration.
Chancy credulity must be tempered by critical appraisal, especially when the return by the electoral process is to be overturned by unsafe forensic guesses.
, And where the ground for recount has been fairly laid by testimony, and the ballot papers, which bear clinching proof on their bosoms, are at hand, they are the best evidence to be looked into.
No party can run away from their indelible truth and we wonder why the learned judge avoided the obvious and resorted to the risky.
May be thought reopening and recount of ballots may undo the secrecy of the poll.
We are sure that the correct course in the circumstances of this case is to send for and scrutinize the 16 ballots for the limited purpose of discovering for whom, how many of the invalid sixteen have been cast.
Secrecy of ballot shall be maintained when scrutiny is conducted and only that part which reveals the vote (not the persons who voted) shall be open for inspection.
206 What, then, is the result of the reasonings which have prevailed with us ? It is simply this, viz., that the 16 votes of the members of the Bidar Board should be excluded and the consequential tilting of the result re discovered.
We are, therefore, constrained to direct the High Court to send for the ballot papers and pick out the 16 ballots relating to the Bidar Board members, examine them without exposing the identity of the persons who have voted and to whom they have voted and record a rectally excluding these 16 tainted votes from the respective candidates.
It the resultant balance sheet shows that the appellant has polled less valid votes than the 1st respondent, his election will be set aside and the 1st respondent declared duly elected.
If, on the other hand, despite these deletions the appellant scores over the 1st respondent, his return will be maintained.
Any way, counsel on both sides agree that the best course will be to call for a report from the High Court in the light of the operations above indicated.
The learned Single Judge who heard the case will examine the 16 ballots as directed above consistently with natural justice, record the number of votes out of the 16 each has got and forward to this Court a comprehensive and correct statement with the necessary particulars.
This report shall be made within 3 weeks from the receipt of the records from this Court and the appeal shall be posted for disposal immediately the report reaches.
With these directions we dispose of the appeal pro tempore.
By way of post script, we may state that counsel for the 1st respondent submitted, after we crystallized the directions indicated above, that he was not too sure whether the 16 ballot papers could be identified.
The appellant 's counsel, however, asserted that there were numbers indelibly imprinted on the reverse of the ballot papers and, as such, the identification of 16 impugned votes may not present a problem.
In the event of impossibility of fixing identity, a report to.
that effect will be forthcoming from the High Court and we may, notwithstanding the observations about the oral evidence made above, rehear the case with a view to record our finding as to which way the voting went, out of the offending 16, so that we may determine whether the result of the election has been materially affected.
If it is not possible, further suitable directions will be considered.
We may also mention that at one stage of the arguments Shri L.N. Sinha drew our attention to a designedly wide amendment to the Act of 1951 made in the wake of the election case of Smt.
Indira Gandhi.
Its validity, for our provisions, has been upheld by this Court in Smt.
Indira Nehru Gandhi vs Raj Narain(1).
It was pressed before us that with the re definition of 'candidate ' in section 79(b) and the addition of a proviso to section 127(7), by Act XL of 1975, the present election petition had met with its statutory Waterloo.
But Shri Bhat urged that his averments of officials ' abetment of promotion of the appellant 's candidacy related also to a point of time after the nomination paper was filed.
He also submitted that the imputations against the electoral registration officer were so far beyond his duties that the blanket proviso could not protect the acts.
Since we have taken the view that corrupt practice, even under the amended section 123(7), has not been established, (1) 207 the pronouncement on the exonerative efficacy of the amended Act does not arise.
But officials must realise and so too the highest in Administration that the proviso to section 123(7) does not authorise ,out of the way doings which are irregular.
A wrong does not become right if the law slurs over it.
We part with this case with an uneasy mind.
There is a finding by the High Court that an influential candidate had interfered with officials to adulterate an electoral roll.
We have vacated the finding but must warn that the civil services have a high commitment to the rule of law, regardless of covert commands and indirect importunities of bosses inside and outside government.
Lord Chesham said in the House of Lords in 1958 : "He is answerable to law alone and not to any public authority.".
A suppliant, obsequious, satellite public service or one that responds to allurements promotional or pecuniary is a danger to a democratic polity and to the supremacy of the rule of law.
The courage and probity of the hierarchical election machinery and its engineers, even when handsome temptation entices or huffy higher power browbeats, is the guarantee of electoral purity.
To conclude, we are unhappy that such aspersions against public servants affect the integrity and morale of the services but where the easy virtue of an election official or political power wielder has distorted the assembly line operations, he will suffer one day.
Be that as it may, we express no final opinion beyond what has already been said.
P.B.R. Appeal allowed in part.
| IN-Abs | Article 171(3) of the Constitution of India provides that of the total number of members of the Legislative Council of a State one third shall be elected by electorates consisting of members, among others, of local authorities in the State as Parliament may by law specify.
Part IV of the Representation of the People Act, 1950 which deals with electoral rolls for council constituencies provides in section 23(3) that no amendment, transposition or deletion of any entry shall be made under section 22 and no direction for the inclusion of a name in the electoral roll of a constituency shall be given under this section after the last date for making nominations for election in that constituency.
Section 33(1) of the Representation of the People Act, 1951 requires that each candidate shall deliver to the Returning Officer a nomination paper "between 11 o 'clock in the forenoon and 3 o 'clock in the afternoon.
" By a notification issued under section 30 of the Representation of the People Act, 1951 the Electoral Registration Officer appointed April 17, 1974 as the last date for presenting nomination papers from the local authorities constituency.
In the election that ensued the appellant was declared elected with 64 votes polled by him as against 54 polled by respondent No. 1.
In his election petition the respondent alleged that the appellant, in collusion with the electoral officer, surreptitiously introduced names of 16 persons representing a taluk board after 3 p.m. on April 17, 1974 and that this act of his constituted a corrupt practice within the meaning of section 123 of the 1951 Act and that the election was void.
The High Court set aside the election on the ground that any inclusion of additional names in the electoral roll of a constituency after 3 p.m. on the last date for making nominations fixed under section 30(a) was illegal, and after deducting the 16 votes cast by those persons from the total votes polled by the appellant, declared the respondent duly elected.
Allowing the appeal in part and remitting the case to the High Court.
HELD : (1) There was no telling material other than speculation or weak suggestion that there was corrupt participation on the part of the officers.
The material link to make out invalidation of the election on account of corrupt practice under section 123(7) was missing because it had not been made out in the evidence that there was collusion between the second respondent and the appellant.
[201A] 2.
(a) The expression 'last date for making nominations ' must mean the last hour of the last date during which presentation of nomination papers is permitted under section 33 of the 1951 Act.
In short section 23(3) of the 1950 Act and section 33(1), (4) and (5) of the 1951 Act interact, fertilise and operate as a duplex of clauses.
So viewed the inclusion of the names in the electoral roll after 3 p.m. on April 17, 1974 is illegitimate and illegal.
[204F] The sixteen names brought into the electoral register subsequent to 3 p.m. of April 17, 1974 must be excluded from the reckoning to determine the returned candidate.
[205E] 194 Baidyanath ; and Ramji Prasad Singh ; referred to.
(b)The prohibition contained in section 23(3) of the 1950 Act is based on public policy and serves a public purpose.
Any violation of such a mandatory provision conceived to pre empt scrambles to thrust into the rolls, after the appointed time, fancied voters by anxious candidates or parties spells invalidity and there can be no doubt that if, in flagrant violation of section 23(3), names have been included in the electoral roll, (he bonus of such illegitimate votes shall not accrue, since the vice of viodance must attach to such names.
[202F] (c)In our electoral scheme as unfolded in the 1951 Act every elector ordinarily can be a candidate.
Therefore, his name must be included in the list on or before the date fixed for nomination.
Otherwise he loses his valuable right to run for the elective office.
It is thus vital that the electoral registration officer should bring in the names of all the electors into the electoral roll before the date and hour fixed for presenting the nomination paper.
[202G H] (d)Section 33(1) specifies that the nomination paper shall be presented "between the hours of 11 o 'clock in the forenoon and 3 o 'clock in the afternoon".
That means that the duration of the day for presentation of nomination papers terminates at 3 o 'clock in the afternoon.
If an elector is to be able to file his nomination paper, his name must be on the electoral roll at 3 p.m. on the last day for filing nominations.
So the temporal terminus ad quem is also the day for finalisation of the electoral register and by the same token, that day terminates at just that hour when the returning officer shuts the door.
[204C] (e)The inference that could be drawn from section 33(4) is that there must be a completed electoral roll when the time for filing the nomination paper expires.
Therefore, the final electoral roll must be with, the returning officer when the last minute for delivering the nomination paper ticks off.
Subsequent additions to the electoral register will inject confusion and uncertainty about the constituents or electors, introduce a disability for such subsequently included electors to be candidates for the election.
[203D] (f)The cumulative effect of the various strands of reasoning and the rigour of the language of s.23(3) of the 1950 Act leaves no doubt that inclusion of the names in the electoral roll of a constituency after the last date for making nominations for an election in that constituency, must be visited with fatality.
[203E] [The case had been sent to the High Court for scrutinising the 16 ballots for the limited purpose of discovering for whom, bow many of the invalid sixteen had been cast.]
|
iminal Misc.
Petition No. 1907 of 1976.
Application for Bail in Criminal Appeal No. 110 of 1974.
U. P. Singh for the Appellant.
O. P. Sharma for the Respondent.
J., This is an application for bail pending the hearing of an appeal by special leave.
The appellant was convicted by 386 the Sessions Court for an offence under section 323 of the Indian Penal Code and sentenced to suffer six months ' rigorous imprisonment.
There was also a charge against the appellant for an offence under section 302 of the Indian Penal Code but he was acquitted of that offence by, the Sessions Court and hence the State preferred an appeal against the order of acquittal to the High Court.
This appeal was allowed and the High Court set aside the order of acquittal and convicted the appellant of the offence under section 302 and sentenced him to suffer imprisonment for life.
The appellant, thereupon, preferred a petition for special leave to appeal to this Court and special leave was granted to, him on 28th February, 1974.
The, appellant filed an application for bail pending the hearing of the appeal, but the application was dismissed on 10th January, 1975.
Since the appeal did not reach hearing for a long time, the appellant preferred another application for bail and that is the application which is now being disposed 'of by this judgment.
The appellant contends in this application that pending the hearing of the appeal he should be released on bail.
Now, the practice in this Court as also in many of the High Courts has been not to release on bail a person who has been sentenced to life imprisonment for an offence under section 302 of the Indian penal Code.
The question is whether this practice should be departed from and if so, in what cir cumstances.
It is obvious that no practice howsoever sanctified by usage and hallowed by time can be allowed to prevail if it operates to cause injustice.
Every practice of the Court must find its ultimate justification in the interest of justice,.
bail a person whohas been sentenced to life imprisonment was evolved in the High Courts and in this Court on the basis that once a person has been found guilty and sentenced to life imprisonment, he should not be let loose, so long as his conviction and sentence are not set aside, but the underlying postulate of this practice was that the appeal of such person would be disposed of within a measurable distance of time, so that if he is ultimately found to be innocent, be would not have to remain in jail for an unduly long period.
The rationale of this practice can have no application where the Court is not in a position to dispose of the appeal for five or six years.
It would indeed be a travesty of justice to keep a person in jail for a period of five or six years for an offence which is ultimates found not to have been committed by him.
Can the Court ever compensate him for his incarceration which is found to unjustified ? Would it be just at all for the Court to tell a person : "We have admitted your appeal because we think you have a prima facie case, but unfortunately we have no time to hear your appeal for quite a few years and, therefore, ,until we hear your appeal, you must remain in jail, even though you may be innocent ?" What confidence would such administration of justice inspire in the mind of the public ? It may quite conceivably happen, and it has in fact happened in a few cases in this Court, that a person may serve out his full term of imprisonment before his appeal is taken up for hearing.
Would a judge not be overwhelmed with a feeling of contrition while acquitting such a person after hearing the appeal ? Would it not be an affront to his sense of justice ? Of what avail would the acquittal be to such a person who has already served out his term of impri 387 sonment or at any rate a major part of it ? It is, therefore, absolutely essential that the practice which this Court has been following in the past must be reconsidered and so long as this Court is not in a position to hear the appeal of an accused within a reasonable period of time, the Court should ordinarily, unless there are cogent grounds for acting otherwise, release the accused on bail in cases where special leave has been granted to the accused to appeal against his conviction and sentence.
Here in the present case, the appellant, after serving out the sentence 'of six months ' rigorous imprisonment for the offence under section 323 imposed upon him by the Sessions Court, was on bail throughout the duration of the appeal before the, High Court and since the appeal was allowed and he was convicted for the offence under section 302 and sentenced to life imprisonment, he surrendered before presenting his petition for special leave to appeal to this Court.
Since then, the appellant has been in jail and the total period he has spent in jail so far is about four and a half years.
The appeal is of 1974 ;and it is not likely to come up for hearing for at least another two years since.
this Court is at present hearing appeals preferred in the year 1972.The very fact that this Court has granted to the appellant specialleave to appeal against his conviction shows that, in the opinion of thisCourt, he has prima facie a good, case to consider and in the circumstances it would be highly unjust to detain him in jail any longer during the bearing of the appeal.
We, therefore, direct that the appellant be released on bail to the satisfaction of the Chief Judicial Magistrate, Patiala.
The appellant will report at the nearest police station once in a fortnight.
S.R. Appeal allowed.
| IN-Abs | The appellant, though charged with offences sections 323 and 302 I.P.C., was convicted only section 323 and sentenced to suffer 6 months ' rigorous imprisonment.
The appeal preferred by the State against acquittal section 302, I.P.C. was accepted by the High Court and the appellant was convicted under that charge and sentenced to life imprisonment.
As required under Rule 6, Order XXI of the Supreme Court Rules, the appellant surrendered before the trial court and preferred special leave which was granted on 28 2 1974; but the application for bail, preferred subsequently, was rejected on 10 1 1975.
Since the appeal did not come up for hearing for a long time, the appellant preferred another application for bail.
Allowing the application, the Court, HELD : No practice howsoever sanctified by usage and hallowed by time can be allowed to prevail if it operates to cause injustice.
Every practice of the court must find its ultimate justification in the interest of justice.
The practice not to release on bail a person who has been sentenced to life imprisonment was evolved on the basis that once a person has been found guilty and sentenced to life imprisonment, he should not be let loose so long as his conviction and sentence are not set aside; but the underlying postulate of this practice was that the appeal of such person would be disposed of within a measurable distance of time so that if he is ultimately found to be innocent, he would not have to remain in jail for an unduly long period.
The rationale of this practice can have no application where the court is not in a position to dispose of the appeal for five or six years.
It would, indeed, be a travesty of justice to keep a person in jail for a period of five or six years for an offence which is ultimately found not to have been committed by him.
So long as this court is not in a position to hear the appeal of an accused within a reasonable period of time, the court should ordinarily, unless there are cogent grounds for acting otherwise, release the accused on bail in cases where special leave has been granted to the accused to appeal against his conviction and sentence.
In the instant case, the very fact that this court has granted to the appellant special leave to appeal against his conviction shows that, in the opinion of this court, he has, prima facie, a good case to consider and in the circum stances, namely, that he has been in jail and the total period he has spent in jail so far is about 4 1/2 years, it would be highly unjust to detain him in jail any longer during the hearing of the appeal and he should be released on bail.
[386 D G, 387 A D]
|
97 of 1976.
(Under Article 32 of the Constitution of India).
section Ramchandra Rao and B. Kanta Rao for the appellants in W.P. No. 97/76.
section Ramachandra Rao and ,A. Subba Rao, for the appel lants in W.P. No. 114/76.
366 Niren De, Attorney General, P.p.
Rao, Sr.
Advocate and T.V.S. Narasimhachari, for the respondents in W.P. No. 97/76.
P. Parmeshwara Rao, and G. Narayana Rao, for respond ents in W.P. No. 114/76.
The Judgment of the Court was delivered by RAY, C.J.
These writ petitions challenge the compulsory retirement of the petitioners.
The petitioners were retired compulsorily under order dated 23 September, 1975.
The order dated 23 September 1975 in the case of the first petitioner in writ petition No. 97 of 1976 may be referred to as typical of orders in the case of other peti tioners.
This order stated first that the said first peti tioner completed 25 years of qualifying service on 24th July, 1975.
The order next stated that the Commissioner of Police being the authority to make a substantive appointment to the post of Inspector of Police is of opinion that it is in public interest to retire the persons mentioned in the order.
The order thereafter states that in exercise of the powers conferred by Clause (a) of sub rule (2)/sub rule 2(A) read with Clause (a) of sub rule (2) of rule 3 of the Andhra Pradesh Liberalised Pension Rules, 1961/sub rule (1) of rule 2/rule 3 read with sub rule (1) of rule 2 of the Andhra Pradesh Government Servants Premature Retirement Rules, 1975, the Commissioner of Police directs that the person mentioned in the order shall retire in public inter est from service with effect from the date of service of the order and that he shall be paid a sum equivalent to the amount pay and allowances for 3 months in lieu of notice calculated at the same rate at which he was drawing immedi ately before the date on which the order is served on him.
The Government of Andhra Pradesh passed a general order dated 28 November, 1975.
In that Government order it is stated that in several Government orders recited therein, orders for the premature retirement of the Government serv ants in public interest had been issued in those cases after giving 3 months previous notice in writing or after giving 3 months salary in lieu of such notice.
The 28 November, 1975 order next states that an instance came to the notice of the Government that a Government servant after compulsory re tirement as per orders mentioned above was re appointed in a cooperative institution as executive officer.
Though the reappointment of the incumbent was in the Semi Govern ment Institution, his re appointment was stated to be irreg ular and contrary to the intention of the Government in retiring corrupt and inefficient persons.
The Government order directed that all the Departments of the Secretariat, all Heads of Department, and all Collectors etc., should ensure that on no account persons who are retired premature ly in pursuance of orders issued by the Government should be re instated or re appointed in any Semi Government or Quasi Government Institutions.
367 The petitioners challenged the compulsory retirement orders as violation of Article 16.
The petitioners also challenged the Government order forbidding re appointment of compulsorily retired persons in Semi Government or Quasi Government Institutions as a stigma within the meaning of Article 311.
At the outset it should be stated that enforcement of violation of Article 311 does not come within the scope of Article 32.
The challenge to the Government order forbid ding re appointment of compulsorily retired persons as a stigma within the meaning of Article 311 is, therefore, not an infringement of fundamental rights.
The petitioners challenged the orders of compulsory retirement as an infraction 0f Article 16.
It is not known how the petitioners have been discriminated against other persons because no such person is impleaded as a respondent and there are no allegations to that effect.
During the subsistence of the Presidential Order issued under Article 359(1 ) it is not competent to invoke Article 14 for enforcement of any fundamental rights.
Articles 14 and 16 are to a certain extent overlapping in regard to rights of equality.
Equality of opportunity for all citizens in matters relating to employment is not violated by provisions for compulsory retirement of Government servants in public interest after the completion of a certain period of quali fying service or attainment of a certain age.
This Court has consistently taken the view that compulsory retirement does not involve any civil consequences.
See Union of India vs Col. J. N. Sinha and Another(1) and Tara Singh etc.
vs State of Rajasthan and Ors.(3) A writ petition under Article 32 can lie only for in fringement of fundamental rights.
See B. Narayana Murthy and Ors.
vs State of Andhra Pradesh etc.(3) The general order for compulsory retirement is applicable to all employees.
The individual application of the order in a given case cannot offend Article 16.
It cannot be suggested that an order for compulsory retirement in the case of one person is denial of equality of opportunity relating to employment because another person in employment has not been compulsorily retired.
Article 16 does not prohibit the prescription of reason able rules for compulsory retirement.
A question arose in T.C. Shivacharana Singh vs State of Mysore (4) whether a rule providing for compulsory premature retirement from Government service violates Article 16.
This Court said that the law in relation to the validity of rules permitting compulsory premature retirement from Government ser (1) [1971] 1 S.C.R. 791.
(2) ; (3) [1971] Supp S.C.R. 741.
(4) A.I.R. 1965 S.C. 280.
368 vice is well settled by prior decision of this Court which does not require to be reconsidered.
The ratio is that the provision for compulsory retirement in public interest applies to all Government servants and as such it is not open to challenge either under Article 14 or under Article 16.
In Shyam Lal vs Stale of U.P.(1) the appellant had been compulsorily retired.
The order was challenged as violating Article 311.
This Court held that there is no stigma in volved in compulsory retirement.
Compulsory retirement does not amount to a dismissal or removal and, therefore, it is not within the vice of Article 311.
One of the petitioners, namely, the first in writ peti tion No. 97 of 1976, challenged the order of compulsory retirement on the ground that he did not complete 25 years of service.
He alleged that he was appointed on 10 Sep tember, 1952 and, therefore, the order of compulsory retire ment dated 23 September, 1975 is bad.
The State on the other hand contends that the correct date of appointment of the first petitioner is 25 July, 1950.
In writ petitions the Court does not go into disputed questions of fact, like date of appointment as in the present case.
In Tata Engi neering and Locomotive Company Ltd. vs Assistant Commission er of Commercial Taxes & Anr.
(a) this Court said that the exercise of jurisdiction in writ matters is not desirable if facts have to be found on evidence.
This Court has also said that there may be exceptions.
One such exception is when action is taken under an invalid law or arbitrarily without the sanction of law.
In the present case there is no aspect of either kind.
Further it has to be observed that in the present writ petitions several petitioners have combined as petitioners.
Their causes of action are separate and independent.
Each is alleged to be an instance of individual assertion of constitutional right in regard to facts and circumstances of each case.
Where several petitioners combine for alleged violation of their rights, it is difficult for court to go into each and every individual case.
In the present case the affidavit evidence on behalf of the State is preferred and, therefore, the first petitioner cannot agitate the question of disputed date of appointment.
In Krishna Chandra Nayar vs Chairman, Central Tractor Organization and Others(3) this Court considered the imposi tion of a ban against one man, namely, the petitioner in that case from being ever taken into Government service.
He was a temporary servant and his services were terminated by giving him pay and allowances in lieu of notice for one month.
This Court found that case to be one of arbitrary imposition of ban against the employment or appointment one individual to an office.
(1) ; (2) ; (3) 369 Krishna Chander 's case (supra) is of no aid to the petitioners in the present case.
The ban is not challenged here.
In Krishna Chander 's case (supra) the ban was chal lenged as an arbitrary act against one individual.
In the present case the ban is not against anyone individually but it is not to employ in Quasi Government service or Semi Government service, persons who are compulsorily retired from Government service.
The ban has a reasonable basis and has some relation to the suitability for employment or appointment to an office.
When compulsory retirement is made in public interest it will be an exercise in futility if Government servants who are compulsorily retired are again employed in Government service or Semi Government service or Quasi Government service.
The petitioners challenged the orders for compulsory retirement also on the ground that reference to so many rules was made and, therefore, it was not possible for the petitioners to know under what provision the orders for compulsory retirement had been made.
It is not open to the petitioners to challenge the orders on that ground.
The orders specifically mention that compulsory retirement is made in public interest.
The State affidavit evidence is that petitioners No. 4 and 5 in writ petition No. 97 of 1976 are governed by Hyderabad Civil Service Regulations and the rest of the petitioners are governed by Andhra Pradesh Liberalised Pension Rules, 1961.
Rule 292 of the Hyderabad Civil Service Regulations and sub rule (2) (a) of rule B of the Andhra Pradesh Liberalised Pension Rules, 1961 are similar.
Both the rules confer power on the authority to require Government servant to retire in the public interest from service on the date on which he completes 25 years of qualifying service or attains 50 years of age.
Rule 2(1) of the Andhra Pradesh Government Servants ' Premature Retirement Rules, 1975 is also worded in similar language.
The word ing of the rules relating to retirement in public interest is identical in all the three sets of rules mentioned above.
The mere fact that three different rules.
were mentioned in the impugned orders without scoring out the rules which are not applicable to a petitioner in one case cannot be any grievance for the reason that in each case the relevant rule is identically worded.
The omission on the part of the officers competent to retire the petitioners in not scoring out the rules which are inapplicable to a particular individual does not render the order bad.
The reason is that one of the rules is applicable to him and the omission to strike out the rules which are not applicable will not in any manner affect the applicability of the rule mentioned.
Further this Court has taken the view that a wrong reference to power will not vitiate any action if it can be justified under some other power under which the Government can law fully do the act.
See Hukumchand Mills Ltd. vs The State of Madhya Bharat and Another(1).
In the present case the valid rule is mentioned in each case.
(1) ; 370 The Government of Andhra Pradesh has by an administra tive order constituted a review committee for each depart ment to review orders of retirement in public interest and to revoke and modify the same, if necessary.
The petition ers made representations to the review committee.
The petitioners yet choose to come to this court.
The petition ers are not justified in applying to this court.
The petitioners obtained rules in these two cases during the vacation.
A similar matter came before this Court on 29 April, 1976 and this Court did not issue any rule.
If the attention of this Court had been drawn to that order, perhaps no rule would have been issued in these matters.
The Andhra Pradesh Administrative Tribunal Order, 1975 confers power on the Tribunal to exercise jurisdiction with respect to appointment, allotment or promotion and other conditions of service of such persons.
It is open to a person who complains about an order of compulsory retirement to approach the Tribunal in a given case.
For the foregoing reasons, the writ petitions are dis missed.
There will be no order as to costs.
M.R. Petitions dismissed.
| IN-Abs | On the completion of their 25 years of qualifying serv ice, the appellants were compulsorily retired in public interest, and were to receive 3 months salary in lieu of notice.
Thereafter, the respondent Government passed a general order forbidding re employment of compulsorily retired persons in semi Government institutions.
The appellants filed, writ petitions under article 32 of the Con stitution challenging the compulsory retirement orders as violative of article 16 and the ban on such re employment as a stigma under article 311.
Dismissing the petitions, the Court, HELD: (1) Article 16 does not prohibit the prescription of reasonable rules for compulsory retirement.
The provi sion for compulsory retirement in public interest after the completion of a certain period of qualifying service or attainment of a certain age, applies to all Government servants and as such it is not open to challenge either under article 14 or under article 16, and the individual applica tion of the order in a given case cannot offend article 16.
[367 D H] T. C. Shivacharana Singh V. State of Mysore A.I.R. 1965 S.C. 280, applied.
Union of India vs Col. J.N. Sinha, & Anr.
[1971] 1 S.C.R. 791; Tara Singh etc.
vs State of Rajasthan & Ors.
[19753 3 S.C.R. 1002, and B. Narayana Murthy & Ors.
vs State of Andhra Pradesh etc.
[1971] Supp.
S.C.R. 741, referred to.
(2) The Government order forbidding re appointment of compulsorily retired persons as a stigma within the meaning of Article 311 is not an infringement of fundamental rights, and the enforcement of violation of Article 311 does not come within the scope of Article 32.
The ban is not against anyone individually and has a reasonable basis and some relation to the suitability for employment or appointment to an office.
[367A B,369 A B] Krishna Chander Nayar vs Chairman, Central Tractor Organisation & Ors. ; Shyam Lal vs State of U.P. ; ; Tata Engineering and Locomo tive Company Ltd. vs Assistant Commissioner of Commercial Taxes & Anr. ; and Hukumchand Mills Ltd. vs The State of Madhya Bharat & Anr. ; , referred to.
(3) The Government of Andhra Pradesh has by an adminis trative order constituted a review committee for each department to review orders of retirement it public interest and to revoke and modify the same, if necessary.
petitioners made representations to the review committee, and are not justified in applying to this Court.
[370A B]
|
iminal Appeal No. 25 of 1954.
Appeal under Article 134(1) (c) of the Constitution from the judgment and order dated the 12th January 1954 of the Patna High Court in Criminal Miscellaneous Case No. 10 of 1953.
M. C. Setalvad, Attorney General of India and Mahabir Prasad, Advocate General of Bihar (Balbhadra Prasad Sinha and P. G. Gokhale, with them) for the appellant.
Purshottam Prikamdas, (R. Patnaik, with him) for the respondent.
November 8.
The Judgment of the Court was delivered by BHAGWATI J.
This appeal with certificate under article 134(1)(c) of the Constitution arises out of an application under section 2 of the Contempt of Courts 121 956 Act (XXXII of 1952) and section 8 of the (XXXVII of 1850) read with article 227 of the Constitution filed by the respondent against the appellant in the High Court of Judicature at Patna and raises an important question as to whether the Commissioner appointed under Act XXXVII of 1850 is a Court.
The respondent is a Member of the Bihar Civil Service (Executive Branch).
The State Government received reports to the effect that the respondent bad been guilty of serious misconduct and corrupt practices in the discharge of his official duties while employed as Sub Divisional Officer at Aurangabad and they accordinly decided that an inquiry into the truth of.
the various charges against him should be made under the provisions of the (Act XXXVII of 1850, hereinafter referred to as the Act) and Mr. Anjani Kumar Saran who was the then Additional District and Sessions Judge, Gaya, and was thereafter the District and Sessions Judge of that place was appointed Commissioner under the Act for making the inquiry.
Gaya was fixed as the venue of the inquiry and the State Government also ordered that, during the pendency of the inquiry, the respondent will remain under suspension.
The Government made the appointment aforesaid after obtaining the concurrence of the High Court on its administrative side which was obtained on the condition that an extra temporary post of Additional District and Sessions Judge was created by the Government for the period Mr. Saran was occupied with the inquiry.
The appointment was made on the 2nd June 1952 and it was expected that Mr. Saran would be able to complete the inquiry during a period of three months.
The respondent, however, adopted dilatory tactics.
He made various representations to the Government, one on the 6th June 1952 demanding that a Judge of the High Court be appointed as Commissioner under the Act to make the inquiry against him and that inquiry be made at Patna and not at Gaya, another on the 10th July 1952 protesting against the appointment of Mr. Saran 957 as Commissioner to hold the inquiry against him and demanding that a ' confirmed District and Sessions Judge be appointed as Commissioner in his place, and ' a third on the 17th November 1952 in which he requested the Government to appoint three Commissioners instead of one for holding the inquiry against him and also to pay the entire cost of his defence at the same rates at which the Special Public Prosecutor engaged by the Government was being paid and also to reimburse other incidental expenses to be incurred by him.
All these representations were turned down by the Government.
Being thus thwarted in his attempts to put off the inquiry on some pretext or the other, the respondent tried to evade the same and failed and neglected to reply to the queries made from him by the Commissioner.
The Commissioner also could not communicate to him the orders passed by him from time to time because the respondent did not stay at the headquarters and did not leave his proper address for communication either at Gaya or at Motihari.
On the 24th November 1952 the Commissioner passed an order calling upon the parties to attend the hearing of the proceedings before him on the 8th December 1952 and forwarded a copy of this order to the appellant for communication to the respondent.
The District Magistrates of Champaran and Gaya who were requested to serve a true copy of the order upon the respondent could not do so as he was available neither at Motihari nor at Gaya and it was with great difficulty that he could be traced at Patna and the order served upon him.
On the 18th December 1952, the Commissioner passed another order recording that he was feeling great difficulty in contacting the respondent and in communicating his orders to him.
He observed that this was a highly undesirable state of affairs and that it was necessary that his orders should be communicated to the res pondent as early as possible.
A copy of this order was forwarded by the Commissioner to the appellant along with his letter dated the 20th December 1952 for information and doing the needful.
The appellant thereafter wrote the letter complained against to 958 the Commissioner on the 26th December 1952 being D.O. No. II/3C 306/52A 11614 which ran as under: "Dear Mr. Saran, I am desired to refer to your memo No. 8266 dated the 26th November 1952 and to say that Government are anxious not to allow Mr. Jyoti Narayan to adopt dilatory tactics and delay the progress of the inquiry against him.
I am to request you to be vigilant against such tactics adopted by Mr. Narayan.
Yours sincerely, (Sd.) B. N. Sinha".
The Commissioner acknowledged receipt of this letter by his D.O. letter No. 244, dated the 5th January 1953 stating that he would not allow the respondent to adopt any dilatory tactics and delay the progress of the inquiry against him.
On the 2nd February 1953, the respondent filed a petition before the Commissioner stating inter alia that he had not been able to engage any lawyer or counsel for want of necessary papers and copies and prayed for an adjournment of the inquiry.
He also prayed for starting a contempt of Court proceeding against the appellant but the Commissioner rejected both his prayers.
The order which was passed by the Commissioner on these applications may as well be set out in extenso inasmuch as it has a bearing on the question whether the appellant was guilty of contempt of Court for having addressed the letter complained against to him: "3 2 53.
Another point raised in the first petition of the accused was that Mr. B.N. Sinha, Deputy Secretary to Government in addressing his D.O. letter No. 11614, dated the 26th of December, 1952, was guilty of contempt, because he had interfered in my judicial discretion.
I do not find anything in this letter from which it can be inferred that the author of the letter intended to influence me in the exercise of my judicial function.
This letter was sent to me in reply to my memo No. 8266 dated 26 11 1952 whereby I had forwarded a copy of my order dated 24 11 1952 for communication to Mr. Narayan.
Mr. 959 B.N. Sinha wrote in his letter dated the 26th of December 1952 that Government are anxious not to allow Mr. Jyoti Narayan to adopt dilatory tactics and to delay the progress of the inquiry.
Now it is to be noted that Mr. Narayan in paragraph 11 of his petition has himself charged the State Government for delaying the inquiry and thereby causing harassment to him.
Therefore, it is obvious that both parties, that is, the State and the accused are anxious that the inquiry should be expedited so what Mr. B.N. Sinha meant by writing the D.O. was that the inquiry should be expedited.
This cannot by any stretch of imagination be construed to mean that the aforesaid officer in any way tried to influence me in the discharge of my judicial functions.
For these reasons I rejected the two prayers contained in the first petition of Mr. J. Narayan".
The respondent thereafter started proceedings in, contempt against the appellant in the High Court of Judicature at Patna.
A Rule was issued by the High Court against the appellant which was heard and finally disposed of on the 12th June 1954.
The High Court was of the opinion that the Commissioner appointed under Act XXXVII of 1850 was a Court, that the Court was subordinate to the High Court, that the letter complained against amounted to a contempt of Court and that the appellant was guilty of such contempt.
It accordingly sentenced the appellant to pay a fine of Rs. 250 and in default to undergo simple imprisonment for a period of one month.
The appellant obtained a Certificate under Article 134(1), (e) of the Constitution from the High Court.
The Certificate was, however, limited to the question as to whether the Commissioner appointed under the Act is a Court.
At the hearing before us, the appellant filed a petition for urging additional grounds which included inter alia the ground that the High Court erred in holding that the Commissioner appointed under the Act is a Court subordinate to the High Court within the meaning of the for the mere reason that its orders are open to be reviewed 960 judicially in exercise of the power vested in the High Court under article 227 of the Constitution and also the ground that the High Court erred in holding that the letter complained against tended to interfere with or obstruct the course of justice and constituted contempt of Court.
The learned Attorney General for the appellant contended in the first instance that the Commissioner appointed under the Act is not a Court.
He next contended that even if he is a Court, he is not a Court subordinate to the High Court within the meaning of the .
He lastly contended that the letter complained against did not tend to interfere with or obstruct the course of justice and did not constitute contempt of Court.
Prior to the enactment of the , there was in existence in India the Contempt of Courts Act, 1926 (XII of 1926).
The various States also had their corresponding enactments.
The Contempt of Courts Act, 1926 (XII of 1926) and the corresponding enactments in the States of Hyderabad, Madhya Bharat, Mysore, Pepsu, Rajasthan and Travancore Cochin and the Saurashtra Ordinance II of 1948 were repealed by the and a uniform Act to define and limit the powers of certain Courts in punishing contempts of Courts was enacted which extended to the whole of India except the State of Jammu and Kashmir.
In section 2 of the Act, "High Court" was defined as meaning the High Court for a Part A State or a Part B State and including the Court of the Judicial Commissioner in a Part C State.
Section 3 of the Act enacted: "3.
(1) Subject to the provisions of sub section (2) every High Court shall have and exercise the same jurisdiction, powers and authority, in accordance with the same procedure and practice, in respect of contempts of Courts subordinate to it as it has and exercises in respect of contempts of itself.
(2) No High Court shall take cognisance of a contempt alleged to have been committed in respect of a Court subordinate to it where such contempt is an 961 offence punishable under the Indian Penal Code (Act XLV of 1860)".
The word "Court" was not defined in the Act and ' the expression "Courts subordinate to the High Courts" would prima facie mean the Courts of law subordinate to the High Courts in the hierarchy of Courts established for the purpose of administration of justice throughout the Union.
It would be relevant, however, to notice the definitions of "Court" available elsewhere.
Coke on Littleton and Stroud defined the word "Court" as the place where justice is judicially administered.
According to Stephen, "In every Court, there must be at least three constituent parts the actor, reus and judex; the actor or plaintiff, who complains of an injury done; the reus, or defendant, who is called upon to make satisfaction for it; and the judex, or judicial power, which is to examine the truth of the fact, and to determine the law arising upon that fact, and if any injury appears to have been done, to ascertain, and by its officers to apply, the remedy".
Section 3 of the Indian Evidence Act (I of 1872) defines "Court" as including all Judges and Magistrates, and all persons, except arbitrators.
legally authorised to take evidence.
This definition, however, has been held to be not exhaustive but framed only for the purpose of Indian Evidence Act and is not to be extended where such an extension is not warranted.
Sections 19 and 20 of the Indian Penal Code (Act XLV of 1860) define the words "Court" and the "Court of Justice" as under: "Section 19.
The word 'Judge ' denotes not only every person who is officially designated.
as a Judge, but also every person who is empowered by law to give, in any legal proceeding, civil or criminal, a definitive judgment, or a judgment which, if not appealed against would be definitive, or a judgment which, if confirmed by some other authority would be definitive, or who is one of a body of persons, which body of persons is empowered by law to give such a judgment.
962 Section 20.
The words "Court of Justice" denote a Judge who is empowered by law to act judicially alone, or a body of Judges which is empowered by law to act judicially as a body, when such Judge or body of Judges is acting judicially".
The pronouncement of a definitive judgment is thus considered the essential sine qua non of a Court and unless and until a binding and authoritative judgment can be pronounced by a person or body of persons it cannot be predicated that he or they constitute a Court.
The Privy Council in the case of Shell Co. of Australia vs Fedral Commissioner of Taxation(1) thus defined "Judicial Power" at page 295: "Is this right? What is "judicial power"? Their Lordships are of opinion that one of the best definitions is that given by Griffith, C. J. in Huddart, Parker & Co. vs Moorehead(2) where he says: "I am of opinion that the words judicial power ' as used in section 71 of the Constitution mean the power which every sovereign authority must of necessity have to decide controversies between its subjects, or between itself and its subjects, whether the rights relate to life, liberty or property.
The exercise of this power does not begin until some tribunal which has power to give a binding and authoritative decision (whether subject to appeal or not) is called upon to take action".
Their Lordships further enumerated at page 297 certain negative propositions in relation to this subject: "1.
A tribunal is not necessarily a Court in this strict sense because it gives a final decision; 2.
Nor because it hears witnesses on oath; 3.
Nor because two or more contending parties appear before it between whom it has to decide; 4.
Nor because it gives decisions which affect the rights of subjects; 5.
Nor because there is an appeal to a Court; 6.
Nor because it is a body to which a matter is referred by another body.
See Rex vs Electricity Commissioners(3)" (1) (2) ; , 357.
(3) 963 and observed at page 298: "An administrative tribunal may act judicially, but still remain an administrative tribunal as distinguished from a Court, strictly so called.
Mere externals do not make a direction to an administrative officer by an ad hoc tribunal an exercise by a Court of Judicial power".
The same principle was reiterated by this Court in Bharat Bank Limited vs Employees of Bharat Bank Ltd.(1) and Maqbool Hussain vs The State of Bombay(1) where the test of a judicial tribunal as laid down in a passage from Cooper vs Wilson(1) was adopted by this Court: "A true judicial decision presupposes an existing dispute between two or more parties, and then involves four requisites: (I) The presentation (not necessarily orally) of their case by the parties to the dispute; (2) if the dispute between them is a question of fact, the ascertainment of the fact by means of evidence adduced by the parties to the dispute and, often with the assistance of argument by or on behalf of the parties on the evidence; (3) if the dispute between them is a question of law, the submission of legal arguments by the parties; and (4) a decision which disposes of the whole matter by a finding upon the facts in dispute and an application of the law of the land to the facts so found, including where required a ruling upon any disputed question of law".
Maqbool Hussain 's case, above referred to, was followed by this Court in section A. Venkataraman vs The Union of India and, Another(4) where a Constitution Bench of this Court also laid down that both finality and authoritativeness were the essential tests of a judicial pronouncement.
It is clear, therefore, that in order to constitute a Court in the strict sense of the term, an essential condition is that the Court should have, apart from having some of the trappings of a judicial tribunal, power to give a decision or a definitive judgment which has finality and authoritativeness which are (1) ; (2) (1953] S.C.R. 730.
(3) , 340.
(4) ; 122 964 the essential tests of a judicial pronouncement.
It was, however, urged by Shri Purshottam Tircamdas for the respondent that the word "Court" should not be limited to a Court of Justice or a Court of law but should be construed in a wide sense, including within the connotation, other Courts which, though not Courts of Justice, were nevertheless Courts according to law and be relied upon a decision of the Court of Appeal in England in Royal Aquarium and Summer and Winter Garden Society Ltd. vs Parkinson(1) and the observations of Fry, L.J. at page 446 therein: "I do not desire to attempt any definition of a "court".
It is obvious that, according to our law, a court may perform various functions.
Parliament is a court.
Its duties as a whole are deliberative and legislative: the duties of a part of it only are judicial.
It is nevertheless a court.
There are many other courts which, though not Courts of Justice, are nevertheless courts according to our law.
There are, for instance, courts of investigation, like the coroner 's court.
In my judgment, therefore, the existence of the immunity claimed does not depend upon the question whether the subject matter of consideration is a Court of Justice, but whether it is a Court in law.
Wherever you find a Court in law, to that the law attaches certain privileges, among which is the immunity in question".
The question involved in that case was whether the defendant was entitled to absolute immunity from action for anything done by him while performing his duty as a member of the County Council in dealing with the applications for licences for music and dancing.
It was contended on behalf of the defendant that he was exercising a judicial function when he spoke the words complained of and therefore was entitled to absolute immunity in respect of anything he said.
The argument that "wherever you find a Court in law, to that the law attaches certain privileges among which is the immunity in question" was used on behalf of the defendant and Fry, L. J. dealt with the same as under at page 447: 965 "It was said that the existence of this immunity is based on considerations of public policy, and that, as a matter of public policy, wherever a body has to decide questions, and in so doing has to act judicially, it must be held that there is a judicial proceeding to which this immunity ought to attach.
It seems to me that the sense in which the word "judicial" is used in that argument is this: it is used as meaning that the proceedings are such as ought to be conducted with the fairness and impartiality which characterize proceedings in Courts of Justice, and are proper to the functions of a judge, not that the members of the supposed body are members of a Court.
Consider to what lengths the doctrine would extend, if this immunity were applied to every body which is bound to decide judicially in the sense of deciding fairly and impartially.
It would apply to assessment committees, boards of guardians, to the Inns of Court when considering the conduct of one of their members, to the General Medical Council when considering questions affecting the position of a medical man, and to all arbitrators.
Is it necessary, on grounds of public policy, that the doctrine of immunity should be carried as far as this? I say not.
I say that there is ample protection afforded in such cases by the ordinary law of privilege.
I find no necessity or propriety in carrying the doctrine so far as this argument requires".
Lord Esher, M. R. expressed himself as follows while dealing with this argument at page 442: "It is true that, in respect of statements made in the course of proceedings before a Court of Justice, whether by judge, or counsel, or witnesses, there is an absolute immunity from liability to an action.
The ground of that rule is public policy.
It is applicable to all kinds of Courts of Justice; but the doctrine has been carried further; and it seems that this immunity applies wherever there is an authorized inquiry which, though not before a Court of Justice, is before a tribunal which has similar attributes.
In the case of Dawkins vs Lord Rokeby(1) the doctrine was extended (1) L.R. 8 Q.B. 255; , 966 to a military court of inquiry.
It was so extended on the ground that the case was one of an authorized inquiry before a tribunal acting judicially, that is to say, in a manner as nearly as possible similar to that in which a Court of Justice acts in respect of an inquiry before it.
This doctrine has never been extended further than to Courts of Justice and tribunals acting in a manner similar to that in which such Courts act.
Then can it be said that a meeting of the county council, when engaged in considering applications for licences for music and dancing, is such a tribunal? It is difficult to say who are to be considered as judges acting judicially in such a case".
The case of Dawkins vs Lord Rokeby(1) was a case where immunity was claimed by a witness who had given evidence before a military Court of inquiry.
The case went to the House of Lords and the Lord Chancellor, in his speech at page 754, in observed: "Now, my Lords, adopting the expressions of the learned Judges with regard to what I take to be the settled law as to the protection of witnesses in judicial proceedings, I certainly am of opinion that upon all principles, and certainly upon all considerations of convenience and of public policy, the same protection which is extended to a witness in a judicial proceeding who has been examined on oath ought to be extended, and must be extended, to a military man who is called before a Court of Inquiry of this kind for the purpose of testifying there upon a matter of military discipline connected with the army".
Both these cases, the one before the Court of Appeal and the other before the House of Lords, were concerned with the extension of the principle of immunity of members of a tribunal or witnesses in judicial proceedings and the Courts logically extended the principle of immunity beyond the Courts of Justice to tribunals or bodies of persons functioning in a manner and according to procedure which was assimilated to a judicial inquiry.
The extension of the (1) L.R. 8 Q.B. 255; 967 immunity to such tribunals or bodies would not, however, constitute them Courts of Justice or Courts of law.
The position is thus summarised in the following passage in Halsbury 's Laws of England, Hailsham Edition, Volume 8, page 526: "Many bodies are not courts, although they have to decide questions, and in so doing have to act judicially, in the sense that the proceedings must be conducted with fairness and impartiality, such as assessment committees, guardians committees,, the Court of referees constituted under the Unemployment Insurance Acts to decide claims made on the insurance funds, the benchers of the Inns of Court when con sidering the conduct of one of their members, the General Medical Council, when considering questions affecting the position of a medical man".
We must, therefore, fall back upon the tests laid down above for determining what is a Court strictly so called within the connotation of the term as used in the .
It would be appropriate at this stage to note the relevant provisions of the (XXXVII of 1850) which would fall to be considered for determining whether the Commissioner appointed under the Act is a Court or not.
The Act was passed for regulating inquiries into the behaviour of public servants and the preamble runs: "Whereas it is expedient to amend the law for regulating inquiries into the behaviour of public servants not removable from their appointments without the sanction of Government, and to make the same uniform throughout India; It is enacted as follows: " Section 2 requires the articles of charges to be drawn out and a formal and public inquiry to be ordered whenever the Government shall be of opinion that there are good grounds for making a formal and public inquiry into the truth of any imputation of misbehaviour by any such person.
The inquiry may be committed under section 3 either to the Court, 968 Board or other authorities to which the person accused is subordinate or to any other person or persons specially appointed by the Government, Commissioners for the purpose.
Sections 4 to 7 contain provisions in regard to the conduct of the prosecution and section 8 prescribes the powers of the Commissioners.
This section has been particularly relied upon as constituting the Commissioners a Court, and runs as under: "Section 8.
The commissioners shall have the same power of punishing contempts and obstructions to their proceedings, as is given to Civil and Criminal Courts by the Code of Criminal Procedure, 1898, and shall have the same powers for the summons of witnesses, and for compelling the production of documents, and for the discharge of their duty under the commission, and shall be entitled to the same protection as the Zila and City Judges, except that all process to cause the attendance of witnesses or other compulsory process, shall be served through and executed by the Zila or City Judge in whose jurisdiction the witness or other person resides, on whom the process is to be served, and if he resides within Calcutta, Madras or Bombay, then through the Supreme Court of Judicature thereto.
When the commission has been issued to a Court, or other person or persons having power to issue such process in the exercise of their ordinary authority, they may also use all such power for the purposes of the commission".
Section 9 prescribes a penalty for disobedience to process issued as aforesaid for the purpose of the commission and sections 10 to 20 prescribe the procedure to be followed in the conduct of the inquiry.
It ,may be noted that this procedure is assimilated as far as possible to the conduct of a prosecution in a Criminal Court of law and the person accused is given the fullest opportunity to enter upon his defence and lead evidence in order to clear himself of the charges levelled against him.
Sections 21 and 22 lay down the functions of the Commissioners in regard to the report to be made by them to the Government of their proceedings under the commission and the powers of 969 the Government to pass final orders on such reports.
These sections have an important bearing on the question before us and they enact: "Section 21.
After the close of the inquiry the commissioners shall forthwith report to Government their proceedings under the commission, and shall send with the record thereof their opinion upon each of the articles of charge separately, with such observations as they think fit on the whole case.
Section 22.
The Government, on consideration of the report of the commissioners, may order them to take further evidence, or give further explanation of their opinions.
It many also order additional articles of charge to be framed, in which case the inquiry into the truth of such additional articles shall be made in the same manner as is herein directed with respect to the original charges.
When special commissioners have been appointed, the Government may also, if it thinks fit, refer the report of the commissioners to the Court or other authority to which the person accused is subordinate, for their opinion on the case; and will finally pass such orders thereon as appear just and consistent with its powers in such cases".
These provisions were considered by this Court in the case of S.A. Venkataraman vs The Union of India and Another(1).
The question that arose for consideration there, was whether an inquiry made and concluded under the Act amounted to prosecution and punishment for an offence as contemplated under article 20(2) of the Constitution.
Articles of charge bad been framed against the petitioner in that case and evidence had been led both by the prosecutor and by the defence and witnesses on both sides were examined on oath and cross examined and re examined in the usual manner.
The Commissioner bad found, on a consideration of the evidence, that some of the charges had been proved against the petitioner and had submitted a report to that effect to the Government.
The President had accepted the opinion of the Commissioner and, in view of the findings on (1) ; 970 the several charges arrived at by the latter, was pro visionally of the opinion that the petitioner should be dismissed.
Opportunity was given to the petitioner under Article 311(2) of the Constitution to show cause against the action proposed to be taken in regard to him and after considering his representation and after consultation with the Union Public Service Commission, the President finally decided to impose the penalty of dismissal upon him and he was accordingly dismissed.
After his dismissal, the police submitted a charge sheet against him before the Special Judge, Sessions Court, Delhi, charging him with offences under sections 161 and 165 of the Indian Penal Code and section 5(2) of the Prevention of Corruption Act and upon that summons were issued by the learned Judge directing the petitioner to appear before his Court.
The petitioner thereupon challenged the legality of this proceeding in a writ petition contending, that the proceedings were without jurisdiction inasmuch as they amounted to a fresh prosecu tion, for offences for which he had been prosecuted and punished already.
While considering whether under the circumstances there had been a violation of the fundamental right of the petitioner under Article 20(2) of the Constitution, this Court, scrutinised the provisions of the Act and the position of the Commissioner appointed, thereunder.
Justice Mukherjea, as he then was, delivered the judgment of the Court and observed at page 1159: "As the law stands at present, the only purpose, for which an enquiry under Act XXXVII ' of 1850 could be made, is to help the Government to come to a definite conclusion regarding the misbehaviour of a public servant and thus enable it to determine provisionally the punishment which should be imposed upon him, prior to giving him a reasonable opportunity of showing cause, as is required under article 311(2) of the Constitution.
An enquiry under this Act is not at all compulsory and it is quite open to the Government to adopt any other method if it so chooses.
It is a matter of convenience merely and 971 nothing else.
It is against this background that we will have to examine the material provisions of the of 1850 and see whether from the nature and result of the enquiry which the Act contemplates it is at all possible to say that the proceedings taken or concluded under the Act amount to prosecution and punishment for a criminal offence."; and at page 1160: "A Commissioner appointed under this Act has no duty to investigate any offence which is punishable under the Indian Penal Code or the Prevention of Corruption Act and he has absolutely no jurisdiction to do so.
The subject matter of investigation by him is the truth or otherwise of the imputation of misbehaviour made against a public servant and it is only as instances of misbehaviour that the several articles of charge are investigated, upon which disciplinary action might be taken by the Government if it so chooses.
The mere fact that the word "prosecution" has been used, would not make the proceeding before the Commissioner one for prosecution of an offence.
As the Commissioner has to form his opinion upon legal evidence, be has been given the power to summon witnesses, administer oath to them and also to compel production of relevant documents.
These may be some of the trappings of a judicial tribunal, but they cannot make the proceeding anything more than a mere fact finding enquiry.
This is conclusively established by the provisions of sections 21 and 22 of the Act.
At the close of the enquiry, the Commissioner has to submit a report to the Government regarding his finding on each one of the charges made.
This is a mere expression of opinion and it lacks both finality and authoritativeness which are the essential tests of a judicial pronouncement.
The opinion is not even binding on the Government.
Under section 22 of the Act, the Government can, after receipt of the report, call upon the Commissioner to take further evidence or give further explanation of his opinion.
When Special Commissioners are appointed, their report could be referred to the court or other authority 123 972 to which the officer concerned is subordinate for further advice and after taking the opinion of the different authorities and persons, the Government has to decide finally what action it should take".
The Court was no doubt concerned in that case with finding whether the inquiry before the Commissioner was tantamount to a prosecution of the petitioner.
While considering the same, however, the position of the Commissioner was discussed and the conclusion to which the Court came was that he was a mere fact finding authority, that the report made by the Commissioner to the Government was merely his expression of opinion and it lacked both finality and auth oritativeness which are the essential tests of a judicial pronouncement.
This conclusion is sufficient to establish that the Commissioner appointed under the Act was not a Court and his report or findings were not a definitive judgment or a judicial pronouncement inasmuch as they were not binding and authoritative and lacked finality.
We are also of the same opinion.
Apart from the above considerations which weighed with the Court in that case, we have also the provisions of section 8 of the Act itself which go to show that the Commissioners are given certain powers 'of the Civil and Military Courts in regard to punishing contempts and obstruction to their proceedings, summoning of witnesses, compelling the production of documents and for service of their process as also the same protection as Zila and City Judges.
The very fact that this provision had got to be enacted shows that the position of the Commissioners was not assimilated to that of Judges and that they did not constitute Courts of Justice or Courts of law but were mere fact finding tribunals deriving whatever powers they could exercise under the very terms of the Act which created them.
The power of punishing contempts and obstruction to their, proceedings as is given to Civil and Criminal Courts by the Code of Criminal Procedure, 1898 was also similar in its nature and the very nature and extent of the power indicated that they were not Courts in the ordinary sense of the term.
No such provision would have been 973 uted Courts of Justice or Courts of law and it is no argument to say that these provisions were enacted even though they were not strictly necessary merely for the sake of abundant caution or clarification of the position.
We are of the opinion that the Commissioner appointed under the Act, having regard to the circumstances above set out, does not constitute a Court within the meaning of the term as used in the .
Our attention was, however, drawn by, Shri Purshottam Tricamdas to a decision of a Division Bench of the Punjab High Court in Kapur Singh vs Jagat Narain(1).
That was a case directly in point and on all fours with the case before us.
The learned Chief Justice of the Punjab High Court bad been appointed a Commissioner under the Act in the matter of an inquiry against Sardar Kapur Singh, I.C.S., and Lala Jagat Narain, the editor, printer and publisher of ail Urdu Daily newspaper published at Jullundur called The Hindu Samachar, was called upon to show cause why he should not be punished under section 3 of with regard to a leading article which appeared in his name in the issue of the paper dated the 12th March 1951.
A preliminary objection was taken on his behalf that the Court had no jurisdiction to take proceedings against him for contempt and the argument was that the Court of the Commissioner appointed to hold an inquiry under the Act was not a Court and in any event was not a Court subordinate to the High Court.
Mr. Justice Falshaw who delivered the judgment of the Court observed at page 50 in connection with this argument: "The itself seems clearly to indicate that a Commissioner or Commissioners appointed under the Act constitute a Court as they are given all the powers of a Court regarding the summoning of witnesses and other matters, and the only ground on which the learned counsel for the respondent could base his argument that the Commissioner does not constitute a Court was that he can (1) A.I.R. 1951 Punjab 49. 974 give no final decision, but merely has to draw up a report giving his findings on the charge or charges against the respondent, which is to be forwarded to the Government.
In my opinion, however, this fact alone is not sufficient to make the Commissioner or Commissioners any thing other than a Court and it is to be noted that the definition of Court in section 3, Evidence Act, is very wide indeed as it reads: " 'Court ' includes all Judges and Magistrate and all persons, except arbitrators, legally authorised to take evidence".
The learned Judges there relied upon the definition of Court given in section 3 of the Indian Evidence Act which, as has already been noted, is framed only for the purposes of the Act and is not to be extended where such an extension is not warranted.
This definition does not help in the determination of the question whether the Commissioners appointed under the Act constitute a Court and the attention of the learned Judges was not drawn to the position that finality and authoritativeness are the essential tests of a judicial pronouncement.
We are of the opinion that the decision reached by the learned Judges of the Punjab High Court in that case was wrong and cannot help the respondent.
Our attention was also drawn to another decision of the Nagpur High Court in M. V. Rajwade vs Dr. section M. Hassan(1).
The question which came to be considered by the Court in that case was whether a commission appointed under the was a, Court within the meaning of section 3 of the , and, while considering the provisions of that Act, the learned Judges of the Nagpur High Court incidentally considered the provisions of the .
They rightly observed that "the term 'Court ' has not been defined in the .
The Act, however, does contemplate a 'Court of Justice ' which as defined in section 20, Indian Penal Code, 1860, denotes 'a judge who is empowered by law to act judicially '.
The least that is required of a Court is the capacity to deliver a "definitive judg (1) A.I.R. 1954 Nag.
975 ment" and unless this power vests in a tribunal in any particular case, the mere fact that the procedure adopted by it is of a legal character and it has the power to administer an oath will not impart to it the status of a Court", and came to the conclusion that the commission appointed under the is not a Court within the meaning of the Contempt of 'Courts Act, 1952.
The learned Judges were merely considering the provisions of the and were not concerned with the construction of the provisions of the and whatever observations they made in regard to the provisions of the latter Act by way of comparing the same with the provisions of the former which they were there considering would not have the effect of putting on the provisions of the latter Act a construction which would be any avail to the respondent before us.
The ratio which was adopted by the learned Judges was quite correct but it appears that they digressed into a consideration of the provisions of the in order to emphasize the character and position of the commission appointed under the even though it was not strictly necessary for the purpose of arriving at their decision, though it must be mentioned that while discussing the nature and function of the commission they expressed themselves correctly as under: "The Commission governed by the is appointed by the State Government "for the information of its own mind", in order that it should not act, in exercise of its executive power, "otherwise than in accordance with the dictates of justice & equity" in ordering a departmental enquiry against its officers.
It is, therefore, a fact finding body meant only to instruct the mind of the Government without producing any document of a judicial nature".
We are of the opinion that neither of these cases which have been relied upon by Shri Purshottam Tricamdas is of any help to the respondent or detracts 976 from the true position as we have laid down above.
The only conclusion to which we can come on a consideration of all the relevant provisions of the Act is that the Commissioner appointed under the Act is not a Court within the meaning of the .
In view of the conclusion reached above, we do not think it necessary to go into the question whether the Commissioner appointed under the Act is a Court subordinate to the High Court within the meaning of the .
Nor do we think it necessary to express any opinion as to whether the letter complained against constituted a contempt of Court.
We may, however, note in passing that the circum stances under which the letter came to be addressed by the appellant to the Commissioner, the terms thereof and the order which was passed by the Commissioner on the application made by the respondent to proceed against the appellant in contempt on date the 2nd February 1953 lend support to the argument which was advanced on behalf of the appellant that the letter complained against did not constitute contempt of Court.
The result, therefore, is that the appeal will be allowed, the order passed against the appellant by the Court below will be set aside and the original Criminal Miscellaneous Petition No. 10 of 1953 filed by the respondent in the High Court of Judicature at Patna will stand dismissed.
The fine if paid will be refunded.
| IN-Abs | Held, that a Commissioner appointed under the (XXVII of 1850) is not a court within the meaning of the (XXXII of 1952).
Shell Co. of Australia vs Federal Commissioner of Taxation ([1931] A.C. 275), Huddart,Parker & Co. vs Moorehead ([1909] ; , Rex vs Electricity Commissioners ([1924] 1 K.B. 171), Bharat Bank Limited vs Employees of Bharat Bank Ltd. ([1950] S.C.R. 459), Maqbool Hussain vs The State of Bombay ([1953] S.C.R. 730), Cooper vs Wilson ([1937] 2 K.B. 309), section A, Venkataraman vs The Union of India and Another ([1954] S.C.R. 1150), Royal Aquarium and Summer and Winter Garden Society Ltd. vs Parkinson ([1892] 1 Q.B. 431), Dawkins vs Lord Rokeby ([1873] L.R. 8 Q.B. 265), Kapur Singh vs Jagat Narain (A.I.R. 1951 Punjab 49) and M. V. Bajwade vs Dr. section M. Hassan, (A.I.R. , referred to.
|
Criminal Appeal No. 342 of 1974.
Appeal under Section 2(a) of the Supreme Court Enlargement of Criminal Appellate Jurisdiction Act, 1970 from the Judgment and Order dated 2 7 74 of the Kerala High Court in Criminal Appeal No. 338 of 1973 and 87/74.
T. C. Raghavan and N. Sudhakaran for the Appellant.
K. R. Nambiar for the Respondent.
The Judgment of the Court was delivered by JASWANT SINGH, J.
Narayanan Satheesan alias Baboo, the appellant herein, was tried by the Additional Sessions Judge, Mavelikara, under section 302 of the Indian Penal Code for intentionally causing the death of one K. G. Thomas alias Thampi, a well built male, aged about 32 years, who was an inhabitant of Eruvallipra Muri in Thiruvala Village, by inflicting an injury with a dagger (M.O. 1) on the back of his chest at 7.30 P.M. on December 16, 1972 at a sandy place situate on the Western side of the village road which goes to Veliyam Kadavu (Ghat Ferry) from Thirumoola on the eastern extremity of Purayidom known as Kaval Purayidom belonging to Arya Community within the jurisdiction of Thiruvalla Police Station.
On a consideration of the material adduced before him, the learned Judge acquitted the appellant of the charge under section 302 of the Indian Penal Code but convicted him under section 326 of the Code and sentenced him to rigorous imprisonment for a term of seven years with the finding that he had, by means of a dangerous weapon like M.O. 1.
caused grievous hurt on the person of the deceased which had endangered his life.
Aggrieved by this judgment and order, both the State as well as the appellant appealed to the High Court of Kerala at Ernakulam.
The High Court set aside the conviction of the appellant under section 326 of the Indian Penal Code and instead convicted him under section 302 of the Code and sentenced him to imprisonment for life.
Dissatisfied with this judgment, the appellant has come up in appeal to this Court under section 2(a) of the (Act 28 of 1970).
The case as put forth by the prosecution is that a couple of weeks before the date of occurrence, there was an altercation between the appellant and the deceased over the refusal by the latter to relinquish possession of the Purayidom before the expiry of the term of one year of the lease granted in his favour by the father of the accused on a pattom of Rs. 550/ which entitled him to the usufruct of the coconut trees standing on the Puravidom that during the course of the aforesaid alternation the appellant threatened to kill the deceased if he 579 did not hand back possession of the property peaceably; that irked at the refusal of the deceased to surrender possession of the Purayidom, the appellant armed himself with a dagger and followed the deceased on the evening of December 16, 1972, While the latter was passing along the above mentioned road and after thrusting the dagger in the back of the chest of the deceased,took to his heels without even taking out the weapon from the situs of the wound; that the deceased pulled out the weapon from his back and threw it on the ground hereafter blood gushed out of the wound and he fell down; that on seeing this incident Gopala Kurup (P.W.1), who was going to have his bath at Veliyam Kadavu and Thommi Mathai (PW.2) who was on his way to Thirumoola which is about five furlongs from his house to buy some provisions rushed to the scene of occurrence; that Thommi Mathai (P.W. 2) and Gopala Kurup (P.W. 1) removed the deceased about 6 or 7 feet towards the East whereafter Gopala Kurup (P.W. 1) bandaged the wound of the deceased which was bleeding profusely with his thorough (bath towel); that while the wound was being bandaged by Gopal Kurup, Pappan (P.W. 5), the Ferryman employed by the Municipality at Veliyath for ferrying people across Manimala river, also hastened to the scene of occurrence, saw the appellant running away and heard the deceased saying "Mathaichacha.
Babu stabbed me"; than after bandaging the wound as aforesaid, Gopal Kurup (P.W. 1) Thommi Mathai (P.W. 2) and Pappan (P.W. 5) removed the deceased to the middle of the road, laid him on the level surface and started raising an alarm, on hearing which the brothers of the deceased including Geevarghese George (P.W. II ) and some other persons arrived at the scene of occurrence, that in reply to the query made by his elder brother, Geevarghese George (P.W. 1 1), the deceased said "Achaya, Babu stabbed me"; that the deceased was thereafter removed by his brothers in a taxi car to the Thiruvalla Hospital where P.W. 6, Dr. G. K. Pai, examined his person and found a stab injury over his left infrascapular area, 3 XI c.m., horizontal in position, both edges sharp penetrating into the pleural cavity (left side) Direction of the wound obliquely forward and to the right side(?) Anenumothorax on the left side; that the doctor made an entry of the injury noticed by him in the relevant register of the Hospital and rendered first aid to the deceased; that while the first aid was being given to him, the deceased told the doctor that the injury was caused to him by stabbing at 8.00 P.M.; that in view of the serious nature of the wound, the doctor advised the relatives of the deceased to take him to the Medical College Hospital, Kottayam for expert medical attention and treatment; that thereafter the doctor gave intimation of the incident on telephone and by means of a letter (Ext.
p 4) to the Thiruvalla Police Station whereupon P.W. 15 viz. Madhavan Pillai Head Constable attached to the said Police Station proceeded to the Hospital but on learning on arrival at that place that the injured had already been sent to the Medical College Hospital, Kottayam, he at once returned to the Police Station and forthwith contacted Arpookara Police Station on telephone and informed the person in charge thereof that since the statement of the injured person by name K.G. Thomas who had been brought to Thiruvalla Hospital with serious injuries could not be, taken as he had been removed to the Medical College Hospital.
Kottayam for expert medical treatment, his 580 statement might be taken and the needful be done in the matter; that on being thus informed by Madhavan Pillai (P.W.15), Govinda Pillai (P.W. 13), Head Constable In charge of the Police Station, Kottayam proceeded to the College Hospital and after taking the permission of Dr. K. M. R. Mathew, who was examining the deceased in the casualty room, recorded his statement (Exh. p 9) at 9.30 P.M. which was to, the following effect : "I know that it is a Head Constable who is talking to me now.
I am called Thampi.
Babu, son of Ezharapra Narayanan stabbed, me with a dagger.
It was on my back that he stabbed me from behind.
It was at Veliyamkadavu (ferry) that he stabbed me.
It was I myself who pulled out the dagger with which I was stabbed and threw it there.
Ferryman Pappan and others have seen him stabbing me.
It was today at 7.30 p.m. that the incident took place.
It was in order to kill me on account of prior enmity that he stabbed me.
The place of incident is within the limits of Thiruvalla Station.
It is 40 kms.
south from here.
" The prosecution case further proceeds that it was not before 2 O 'clock at night intervening between 16th and 17th December, 1972 that Govinda Pillai (P.W. 13) could return to his Police Station as he had to record statements in four or five other cases intimation regarding which was received by him while he was at the Hospital; that on his return to the Police Station, Govinda Pillai (P.W. 12) prepared the First Information Report (Exh.
P 10) on the basis of Exbibit P 9 and sent the same to the Munsiff Magistrates Court Ettumanoor; that an hour after his return to the Police Station, Govinda Pillai got intimation from the Hospital vide Exhibit P 1 1 that the injured person, whose statement (Exh.
P 9) he had recorded had died at 3.00 A.M.; that about 8 O 'clock in the morning, Govinda Pillai went to the Medical College Hospital and prepared the Inquest Report (Exh.
P 8) whereafter he sent the dead body of the deceased to the Police Surgeon for post mortem examination; that P.W. 4, Dr. vs K. Jayapalan, Professor of Forensic Medicine and Police Surgeon, Medical College, Kottayam conducted the autopsy of the body of the deceased on December 17, 1972 at 2.00 P.M. and noticed the following appearances : "General Body was that of a well built adult male.
Rigor mortis fully established and retained all over.
Dried blood stains were seen on the front of right fore arm and front of chest.
Injuries (antemortem) (1) Sutured incised penetrating wound horizontally placed on the back of chest 3 cm.
to the left of middle and 24 cm.
below the top of shoulder.
The wound was found entering chest cavity cutting through the 9th intercostal space, perforated the lower lobe of left lung and penetrated the left ventricle of the heart.
The wounds on the lung and heart measured 2.8 cm.
in length and were found sutured.
The wound was directed forwards upwards and to the right.
581 (2) Sutured surgical thorocotomy wound 26 cm.
in length on the outer aspect and back of left chest 17 cm.
below the arm pit.
(3) Surgical wound 1.3 X .5 cm.
obliquely placed on the back of chest 3 cm.
below injury No. 1.
(4) Multiple small abrasions over an area 3.5 x 2 cm.
on the outer aspect of right shoulder.
Other findings are; Left lung was collapsed.
Left chest cavity contained 75 cc.
of blood clots.
Pericardial cavity contained 50 cc.
of blood clots.
Stomach was empty and mucous was normal.
" The doctor opined that injury No. 1 which could have been caused with a weapon like M.O. 1 was sufficient in the ordinary course to cause death.
The doctor further opined that the cause of death of the deceased was bleeding and shock following stab injury sustained by him on the back.
P.W. 17, V. Rajasekharan Nair, Circle Inspector of Police, Kayamkulam, took over investigation of the crime on receipt of the express intimation regarding the registration of the case under section 302 of the Indian Penal Code on December 17, 1972.
He repaired to the scene of occurrence without any loss of time, prepared the, scene mahazar, seized the blood stained earth and questioned the witnesses and prepared notes of their statements on the same evening.
He also seized the dagger (M.O. 1) which was produced before him by Geevarghese George (P.W. 11) on December 30, 1972.
It was not, however, before January 1, 1973 that the Police could arrest the appellant at Nedumbram.
After completion of the investigation, the appellant was proceeded against in the Court of Sub Magistrate, Thiruvalla, who committed him to the Court of Sessions to stand his trial under section 302 of, the Indian Penal Code with the result as stated above.
Although in addition to the other witnesses, the prosecution examined Gopal Kurup (P.W. 1), Thommi Mathai (P.W. 2) and Pappan (P.W. 5), who claimed to be the eye witnesses of the incident, both the Additional Sessions Judge and the High Court while holding that their arrival on the spot was proved, discarded the evidence of Gopal Kurup (P.W. 1) and Thommi Mathai (P.W. 2) on the )ground that their testimony was not trustworthy and rested the conviction of the appellant on the dying declaration (Exh.
P 9) which, according to them.
received ample corroboration from the testimony of Pappan (P.W. 5).
Appearing in support of the appeal, Mr. Raghavan has urged that the conviction of the appellant cannot be sustained firstly because the evidence on the record is not sufficient to bring home the offence to the appellant.
secondly because the dying declaration (Exh. P 9) which 582 has been heavily relied upon by the trial court and the High Court could not have been made by the deceased who was in a critical condition and clearly appears to have been fabricated after the death of the deceased and thirdly because the testimony of Pappan (P.W. 5) and Geevarghese George (P.W. 11) from which corroboration has been mainly derived is not cogent and convincing.
We have carefully gone through the entire evidence on the record.
While we do not consider it safe to place reliance on the eye witness account of the occurrence given by Gopal Kurup (P.W. 1) and Thommi Mathai (P.W. 2) which has been rejected as untrustworthy by the trial court and the High Court or on the statement of Geevarghese George (P.W. II) in view of his queen and unnatural conduct in wiping away the blood from the weapon of offence and not producing the same before the Police for nearly 14 days, we think that the statements of ' Govinda Pillai (P.W. 13) and Pappan (P.W. 5) cannot easily be brushed aside.
Pappan (P.W: 5) who belongs to the community of the appellant and has no animus against him and whose testimony is natural and consistent and whose credit has remained unshaken despite the lengthy cross examination to which he was subjected has unequivocally stated that at about 7.30 on the evening of December 16, 1972 while he was sitting in his boat which he had rowed to the Northern ferry as there were no passengers to take across the river, he heard the cry "Heigho", "heigho" from the shore; that on ascending five or six steps, be saw the deceased standing in a bent position on the western side of the road with a dagger stuck on his back and the accused whom he knew from his childhood running westwards from near the deceased; that the deceased himself pulled out the dagger and threw it in the Purayidom; that it was after Gopal Kurup (P.W. 1) and Thommi Mathai (P.W. 2) had come running lo the spot from the North that the deceased fell down on the right side; that Gopal Kurup (P.W. 1) bandaged the wound of the deceased with his bath towel and while his wound was being bandaged, the deceased was saying "Mathaicha, abut stabbed me".
The evidence of Govinda Pillai, Head Constable (P.W. 13) has also remained unshaken in cross examination.
From his statement which receives corroboration from the statements of not only Dr. V. K. Jayapalan (P.W. 4) and Dr. G. K. Pai (P.W. 6) who were examined by the prosecution but also from the statement of Dr. Mathew Varghese (P.W. 5) who was examined by the appellant, it is crystal clear that the deceased (whose central nervous system remained normal and who neither lost his consciousness nor his power of speech) gave a coherent account of the circumstances leading to his injury which be faithfully and accurately recorded in Exhibit P 9 and forthwith asked the deceased to append his signatures thereon which he did with a steady hand.
We are, therefore, absolutely convinced that the incident took place in the manner disclosed by the prosecution.
This does not, however, conclude the matter.
The important question as to the nature of the offence committed by the accused still remains to be determined by us.
adopting the reasoning of the trial court, it is emphasized by learned counsel for the appellant that since the appellant inflicted only one stab injury on the person of the 583 deceased and the deceased died during the performance of operation on his lung and heart and the prosecution has not tried to establish either that the doctor who performed the delicate operation was at specialist or a competent and skilful surgeon and took all reasonable; care and caution or that the death was the inevitable result of the stab injury, the appellant can at the utmost be held guilty of the offence, under section 326 of the Indian Penal Code.
We find it difficult to accede to this contention.
It is true that the appellant inflicted only ones stab wound on the deceased but the facts established in the case viz. that the appellant did not act under any sudden impulse but pursued the deceased after arming himself with a dagger which is a dangerous weapon in execution of a premeditated plan motivated by ill feelings nurtured for a number of days and inflicted a servere stab injury on the vital region of the body of the deceased which perforated not only his left lung but also penetrated into and impaired the left ventrical of his heart clearly show that the appellant had the intention of causing the death of the deceased and pursuant thereto acted in a manner which brings his offence within the mischief of section 302 of the Penal Code.
It is no doubt unfortunate that the prosecution has not attempted to examine the doctor who performed the operation but this lapse is, in our opinion, not sufficient to downgrade the enormity of the offence committed by the accused.
It cannot be overlooked that Dr. V. K. Jayapalan (P.W. 4) who conducted the autopsy has categorically stated that stab injury No. 1 was 'sufficient in the ordinary course to cause death ' and that the cause of death of the deceased was bleeding and shock following the said injury.
In Gudar Dusadh vs State of Bihar(1) where the accused made a pre meditated assault and inflicted an injury with a lathi on the head of the deceased which was sufficient in the ordinary course of nature, to cause death and actually resulted in the death of the latter, it was held that the mere fact that the accused gave only one blow on the head would not mitigate the offence of the accused and make him guilty of the offence of culpable homicide not amounting to murder.
In the instant case, the prosecution having succeeded in establishing that the stab injury inflicted on the person of the deceased was sufficient in the ordinary course of nature to cause the death, the offence committed by the accused squarely falls within the purview of clause 'thirdly ' of section 300 of the Indian Penal Code according to which culpable homicide is murder if the act by which the death is caused is done with the intention of causing bodily injury to any person and the bodily injury intended to be caused is sufficient in the ordinary course of nature to cause death of the deceased.
Again the non production by the prosecution of the doctor who performed the operation on the deceased is of no avail to the appellant.
As rightly held by the High Court, the case is clearly covered by Explanation 2 to Section 299 of the Indian Penal Code which provides that where death is caused by an injury the person who (1)A.I. R. 584 causes it would be deemed to have caused the death although by resorting to proper remedies and skilful treatment the death might have been prevented.
It appears that the attention of the Additional Sessions Judge was not drawn to this aspect of the matter and while quoting a passage from Modi 's Medical Jurisprudence and Texicology (1963 Edition), he not only glossed over the last sentence thereof where it is succinctly stated that "it should be, noted that the liability of the offender is in no way lessened even though life might have been preserved by resorting to proper remedies and skilful treatment" but also tried to highlight something which did not possess any significance.
Taking into consideration the deadly character of the weapon used, the dastardly assault made by the accused and the vital organs of the body on which the injury was caused as also the categorical.
statement of Dr. V. K. Jayapalan, Professor of Forensic Medicine, who conducted the autopsy of the dead body of the deceased that the injury No. 1 was sufficient in the ordinary course to cause death of the deceased, we have no hesitation in holding that the appellant deliberately caused the fatal wound on the person of the deceased and in maintaining the conviction under section 302 of the Indian Penal Code.
For the foregoing reasons, we find no merit in this appeal which is dismissed.
S.R. Appeal dismissed.
| IN-Abs | The appellant, though charged section 302 of the Indian Penal Code for intentionally causing the death of one K. G. Thomas alias Thampi, a well built male of 32 years on the night of December 16, 1972, by inflicting a stab 3X1 cm.
over his left infrascapular area was, however, on a consideration of the material adduced before him, acquitted of the said charge and convicted section 326 and sentenced to 7 years rigorous imprisonment by the Sessions Judge.
Both the appellant and the State appealed against the said orders.
The High Court ,accepted the State 's appeal, set aside the conviction section 326 and convicted him u/s 302 and sentenced him to imprisonment for life.
The High Court rested the conviction on the dying declaration (exhibit p. 9) which received ample corroboration from the testimony of; one of the three eye witnesses, Pappan (P.W. 5).
Dismissing the appeal to this court section 2(a) of the Supreme Court (Enlargement of Criminal Appellate Jurisdiction) (Act 28 of 1970), 1970, the court, HELD : (1) Non production by the prosecution of the doctor who performed the operation on the deceased is of no avail.
It is no doubt unfortunate that the prosecution has not attempted to examine the doctor who performed the operation, but this lapse is not sufficient to downgrade the enormity of the offence committed by the accused.
[583 C D, H] Explanation (2) to section 299 of the Indian Penal Code which provides that where death is caused by an injury, the person who causes it would be deemed to have caused the death although by resorting to proper remedies and skilful treatment, the death might have been prevented.
[583 H, 584 A] (3)(a) In the instant case, taking into consideration the deadly character of theweapon used, the dastardly assault made by the accused and the vital organsof the body on which the injury was caused as also the categorical statement of Dr. Jayapalan, P.W. 4, who conducted the autopsy of the dead body of the deceased that the injury No. 1 was sufficient in the ordinary course to cause death of the deceased, it is clear that the appellant deliberately caused the fatal wound on the person of the deceased.
The conviction u/s 302 of the Indian Penal Code must be maintained.
[584 B C] (b)It is true that the appellant inflicted only one stab wound on the deceased but the facts established in the case, namely, that the appellant did not act under any sudden impulse but pursued the deceased after arming himself with a dagger which is a dangerous weapon in execution of a premeditated plan motivated by ill feelings nurtured for a number of days and inflicted a severe stab injury on the vital region of the body of the deceased which perforated not only his left lung but also penetrated into and impaired the left centrical of his heart clearly show that the appellant had the intention of causing the death of the deceased and pursuant thereto acted in a manner which brings the offence within the mischief of section 302 of the Penal Code.
The offence committed by the accused squarely falls within the purview of clause "thirdly" of section 300 of the Indian Penal Code according to which culpable homicide is murder if the act 13 930SCI/77 578 by which the death is caused is done with the intention of causing bodily injury to any person and the bodily injury intended to be caused is sufficient in the ordinary course of nature to cause death of the deceased.
[583 B E] Gudar Dusadh vs State of Bihar, A.I.R. 1972 S.C. 952, followed.
|
ON: Criminal Appeal No. 301 of 1971.
(Appeal by Special Leave from the Judgment and Order dated the 15th/l6th June 1971 of the Bombay High Court in Criminal Appeal No. 1405 of 1969).
P.H. Parekh and Miss Manju Jatley, for the appellant.
H.R. Khanna and M.N. Shroff, for respondent.
The Judgment of the Court was delivered by FAZAL ALI, J.
Corruption and nepotism is so rampant in our society of to day, and more particularly in the services, that the Indian Penal Code was not considered sufficient to meet this menace, and the Prevention of Cor ruption Act, .1947 (Act II of 1947) hereinafter referred to as 'the Act ' had to be enacted and amended from time to time to stamp out this evil.
This is an appeal by special leave 534 directed against the judgment of the Bombay High Court affirming the conviction of the appellant under section 5(1)(d) read with section 5(2) of the Act and the sentence of six months rigorous imprisonment passed by the Special Judge, Bombay.
The facts of the present case are more or less undisputed and are the least complicated and, therefore, they fall within a very narrow compass, and by and large we have to examine whether or not the inferences drawn by the High Court from the proved facts are legally correct and lead to only one hypothesis, namely, that the accused is guilty.
It may.
be necessary to give a resume of the prosecution case before indicating the evidence and the circumstances relied upon by the courts below in convicting the appellant.
The appellant was a senior officer in the Army, holding the rank of a Major, and was at the material time the local Purchase Officer, hereinafter to be referred to as LPO, at Ordnance Depot at Talegaon Dabhade, District Poona.
Fol lowing the Chinese attack in 1962 an Emergency was declared and the Army required certain engineering tools to be sup plied immediately.
The Ordnance Depot, Jabalpur, sent a requisition of engineering tools to the Ordnance Depot at Talegaon Dabhade, Poona.
In this connection the Control Officer of the Ordnance Depot wrote a letter to the Group Officer requesting him to despatch the stores immediately.
The Group Officer consequently wrote a letter to the appel lant who was the LPO at the relevant time to arrange the supply of stores immediately.
The appellant was directed to purchase the stores locally and to deliver them to the Group Officer.
The Group Officer also indicated in his letter that the stores requisitioned by him were not available at the Depot at Talegaon.
The detailed list of the tools, while is at Ext.
9, was received by the appellant on March 27, 1963.
On the same day the Chief Ordance Officer passed an order enabling the LPO to immediately purchase the tools on cash purchase basis.
We might pause for a little while in order to explain the nature of the order passed by the Chief Ordnance Officer.
It appears that the normal procedure in the Department was that the LPO had to draw cash and then go to the market and purchase the goods against cash.
But in view of the Emer gency and the immediate necessity of the tools this proce dure was waived and the appellant was permitted to buy the tools on covering purchase order basis; in other words, the appellant could himself purchase the tools without obtaining the previous sanction of the Chief Ordnance Officer, and on receiving the bills from the supplier and processing the same could get them sanctioned by the Chief Ordnance Officer and then make the payment to the supplier.
According to the prosecution the appellant, a day after he received the list, Ext. 9, placed orders with Jayantilal Himatlal Shah, P.W. 2, for supply of the tools.
It is not disputed that P.W. 2 was one of the contractors on the approved list of the Depart ment, and still continues to be so.
P.W. 2 further assured the appellant that he would make the supply as early as possible, and that .he would do so at moderate rates.
P.W. 2 accordingly procured .the articles from Bombay and delivered the same in the Depot by April 6, 1963 along with his bills after which 535 the bills were placed before.
the Chief Ordnance Officer and after sanction by him the payment was made to P.W. 2.
Apart from engineering tools there was another requisition for the supply of 900 dessert spoons.
The appellant first wanted to place this order also with P.W. 2, but he found that his rate was a little higher than the rate which was tendered to the Department sometime before, and, therefore, placed orders with another firm of M/s Devichand Lalchand Gandhi, P.W. 11, and received 900 dessert spoons of stain less steel from them.
Sometime in 1964, P.W. 18, an Inspector of Police in the Office of Special Police Establishment, Bombay, received some information regarding the appellant having committed an offence punishable under the Act on the basis of which he recorded the First Information Report on January 25, 1964.
Thereafter he obtained the permission of the Special Judi cial Magistrate for investigating the case and eventually submitted a chargesheet against the appellant before the Special Judge, Bombay, on April 28, 1966 as a result of which the appellant was tried, convicted and sentenced by the Special Judge, and his appeal against the said convic tion and sentence before the High Court failed.
The gravamen of the allegation against the appellant is that although the supplies were to be made as quickly as possible the appellant made a deliberate departure from the normal procedure which was adopted in the Department, in that he followed the procedure of covering purchase order basis and placed orders with P.W. 2 a,lone without making any enquiries from the local market whether the tools were available there.
It was also alleged that by placing orders with P.W. 2 the appellant caused P.W. 2 to earn a profit of 45% and thereby caused wrongful loss to the Army Department.
It was further alleged that a number of firms in Poona were prepared to supply the goods required at a much lesser profit of 10 to 15 % and the appellant made no enquiries whatsoever from these firms although some of them were also on the approved list of the Department.
On the basis of these circumstances only the prosecution sought the convic tion of the appellant.
The appellant pleaded innocence and denied that he had any intention to cause pecuniary benefit to P.W. 2.
The appellant submitted that the arti cles were very urgently required and as no time was left he had to act quickly and take immediate decisions.
It was for this purpose that the normal procedure was waived and the Chief Ordnance Officer permitted him to adopt the covering purchase order system.
As regards the enquiries from the local market, the definite case of the appellant in his statement under section 342 of the Code of Criminal Procedure was that he had in fact made enquiries from a few firms and his enquiries revealed that either the firms did not possess the goods themselves or that they were not dealers in all the goods.
He further expressed his ignorance that P.W. 2 made a profit of 45% and pleaded, on the other hand, that he was given to understand by P.W. 2 that the articles would be supplied at moderate rates.
The appellant seemed to suggest that as all the articles required were not available in the local market he thought it a prudent act to place orders with a person who was in a position to supply all the tools required at one stretch instead of running from one dealer to another for purchasing goods piecemeal, and as P.W. 2 was prepared to supply all the goods himself and he was also on the 18 1546 SCI/76 536 approved list of dealers the appellant decided to place orders with him.
He made no secret of the fact because all the higher officers, including the Chief Ordnance Officer, sanctioned the bills sent by P.W. 2.
The Trial Court, after consideration of the evidence and circumstances, found that the appellant had by corrupt means procured pecuniary benefit for P.W. 2 and caused wrongful loss.
The High Court in appeal confirmed the finding of the Trial Court.
Normally this Court in special leave against a concurrent judgment of the High Court and the Trial Court does not re appraise the evidence, but unfortunately in this case we find that both the courts below have drawn wrong inferences from proved facts and have made a completely wrong approach to the whole case by misplacing the onus of proof which lay on the prosecution on the accused.
Both the courts below had proceeded on the footing that it was for the accused and not for the prosecution to prove that the accused made enquiries from the local market or that he knew about the rates, etc.
This approach was obviously and manifestly wrong.
It is plain that it was for the prosecution to prove the ingredients of section 5(1) (d), which runs thus: "5( 1 ) A public servant is said to commit the offence of criminal misconduced.
(a). (b). (c). (d) if lie, by corrupt or illegal means or by otherwise abusing his position as public servant, obtains for himself or for any other persons any valuable thing or pecuniary advan tage . " In other words it was for the prosecution to prove affirma tively that the appellant by corrupt or illegal means or by abusing his position obtained any pecuniary advantage for some other person.
In view of the clear defence taken by the appellant it is obvious that it was for the prosecution to prove that the accused made no enquiries, that the accused made a departure from the normal procedure with oblique motive, and that the accused knew that P.W. 2 would make a profit of 45 % whereas others would be satisfied with a profit of 10 15%.
The High Court, to begin with, started with the presumption that the accused led no evidence to show that he made any enquiries.
We might state at the .risk of repetition that it was not for the accused to prove the prosecution case but it was for the prosecution to disprove what the accused said, namely, that he had made enquiries.
The prosecution could prove this fact only by producing satisfactory and convincing evidence to show that the ac cused in fact made no such enquiries and he knew about the margin of profit which other dealers would have made.
We shall immediately show that there is no legal evidence to prove this fact.
What the courts below have done is to disbelieve the case of the appellant because he led no evidence to show that he made any enquiries regarding the availability of goods or the rates, and therefore the courts presumed that the accused had a dishonest intention.
537 In the case of Narayanan Nambiar vs State of Kerala(1) this Court had the occasion to consider the import and interpretation of the words "corrupt or illegal means" and the word "abuse", as mentioned in section 5 (1) (d).
Tiffs Court observed thus: "Let us look at the clause "by otherwise abusing the position of a public servant", for the argument mainly turns upon the said clause.
The phraseology is very comprehen sive.
It covers acts done "otherwise" than by corrupt or illegal means by an officer abusing his position.
The gist of the offence under this clause is that a public officer abusing his position as a public servant obtains for himself or for any other person any valuable thing or pecuniary advantage.
"Abuse" means mis use i.e. using his position for something for which it is not intended.
That abuse may be by corrupt or illegal means or otherwise than those means.
The word 'otherwise ' has wide connotation and if no limitation is placed on it, the words "corrupt ', 'illegal ' and 'otherwise ' mentioned in the clause become surplusage, for on that construction every abuse of position is gathered by the clause.
So some limitation will have to be put on that word and that limitation is that it takes colour from the preceding words along with which it appears in the clause, that is to say something savouring of dishonest act on his part .
The juxtaposition of the word 'otherwise ' with the words "corrupt or illegal means" and the dishonesty implicit in the word "abuse" indicate the necessity for a dishonest intention on his part to bring him within the meaning of the clause? ' We are satisfied that the judgment of the High Court runs counter to the principles laid down by this Court in the case cited above, and the High Court does not appear to have applied that principle in deciding the truth of the case presented by the prosecution against the appellant.
In the instant case it is not alleged that the accused had used any corrupt or illegal means.
It has not been shown that the accused himself accepted any illegal gratification or pecuniary benefit nor has it been shown that he violated any statutory rule or order.
Thus, even on the prosecution allegation the case of the appellant falls only within the second part of section 5 (1 ) (d), namely, abusing his position as public servant.
The abuse of position, as held by this Court, must necessarily be dishonest so that it may be proved that the appellant caused deliberately wrongful loss to the Army by obtaining pecuniary benefit for P.W. 2.
After having gone through the evidence referred to by the courts below we think the prosecution has miserably failed to prove this fact.
To begin with, the first circum stance relied upon by the High Court is that the accused made a deliberate departure from the usual procedure of purchasing against cash.
According to the prosecution, the procedure was that the officer should have drawn cash from the office and then he should have gone to the market 'and purchased the articles and (1) [1963] supp.
2 S.C.R. 724, 730 731.
538 after having made the purchases he would obtain the sanction of the Chief Commanding Officer.
This procedure is known as "cash purchase basis".
The accused, however, adopted the procedure known as "covering purchase order", i.e., he made the purchases and got the bills sanctioned by the Chief Ordnance Officer.
It is not disputed that in the present case, in view of the emergent circumstances the Chief.
Ordnance Officer himself had allowed the appellant to make the purchases on the basis of cash purchase and had himself sanctioned the bills tendered by the supplier, P.W. 2.
All the bills were paid to P.W. 2 by cheque.
It was contended by the State that in the instant ' ease the appel lant had purchased these articles against cash and later on obtained the necessary covering purchase orders.
This is not correct because the appellant had merely placed orders with P.W. 2 for supply of goods and it was only after all the goods had been supplied, verified and found correct that the bills were forwarded to the Chief Commanding Officer for sanction.
The High Court itself found that Lt. Col. Pun had passed an order directing the appellant as LPO to purchase all the articles against cash immediately.
In this connec tion the High Court observed as follows: "Similarly, it is not in dispute that regarding the mode of purchase, Lt. Col. Purl had already passed an order directing the appellant as Local Purchase Officer to pur chase all the articles against cash immediate ly." Even assuming that the appellant purchased the articles against cash he was doing so in compliance with the orders of the Chief Ordnance officer and there was absolutely no reason for the High Court or the Special Judge to have drawn inferences against the appellant for violation of the proce dure when the highest officer of the Depot had sanctioned the procedure which was adopted by the appellant and had in fact authorised him to do so in view of the Emergency.
It may be necessary to refer to the evidence of P.W. 2, Lt.
Des Raj (P.W. 10) who stated that a covering purchase order is sanctioned only when the Chief Ordnance Officer is satisfied that there are special circumstances which neces sitate the sanction of the purchase order after the stores are purchased.
It is not disputed that the Chief Ordnance Officer had issued a covering purchase order in this case.
In these circumstances the best person who would have thrown a flood of light on the subject and whose evidence would have clinched the issue whether or not the accused was authorised to depart from the normal procedure was Col. Anand, the Chief Ordnance Officer, who though examined by the Police during investigations was not produced before the Court.
In the absence of his evidence there was no legal justification for the court to hold that the accused had departed, from the normal procedure without the authority of the Chief Ordnance Officer, particularly when it is admitted that a covering purchase order was passed by the said Offi cer and the bill was also finally sanctioned by him.
In these circumstances, therefore, the entire fabric of the reasoning of the High Court as also that of the Special Judge falls to the ground.
Another circumstance on the basis of which the appellant was convicted was the fact that he made no enquiries from the local suppliers, nor did he ascertain the rates.
On this question also the High Court, as well as the Special Judge, have misplaced the onus on the accused.
539 To begin with, the accused has categorically stated in his statement under section 342, Cr.
P.C., that he had in fact made enquiries and had sent the Supply Clerk and one Deshmukh for getting the rates and find out whether the stores were available.
The prosecution could succeed only in the state ment of the accused could be falsified and this could not only be done if the prosecution had examined the Supply Clerk who was sent by the appellant or Deshmukh, both of whom were employees in the Army and in possession and control of the prosecution, and yet none of these persons were examined to falsify the statement of the accused.
The High Court, on the Other hand, was in error when it observed that the accused did not produce either the clerk or Deshmukh forgetting that it was not for the accused but for the prosecution to prove that what the appellant had said was false.
Furthermore, reliance was placed by the High Court and the Special Judge on the evidence of P.W.s 14, 15 and 16.
P.W. 14 does state that his firm was dealing in engineering tools and other articles and that he was on the list of approved contractors of ,Ordnance Depot.
He, however, admitted that out of the articles required only 80 to 90 percent wet available with the firm.
In cross exami nation, when asked about a particular type of engineering tool the witness was unable to state for what purpose it was used.
The witness admitted that he did not maintain any stock register at the shop and the fact that the articles were available was being deposed by him merely on the basis of his memory.
Finally, the witness admitted thus: "I had not gone to Talegaon Ordnance Depot to enquire whether any engineering tools were required in the depot.
" The High Court seems to think that as this witness 's firm was merely a retailor, therefore there was not necessity to keep a stock register, The witness has nowhere stated that he was a retailer and not a whole saler and, therefore, there was absolutely no basis for the High Court to have conjectured or speculated on this point in order to raise an inference against the appellant.
On the other hand, in the absence of any document, register or inventory to show the nature of goods the firm of P.W. 14 was dealing in, it is difficult to accept the ipsi dixit of the witness consisting of his bare statement based on pure memory that the engi neering tools were available six years before the date he was deposing.
Such evidence, in our opinion, is absolutely worthless.
In fact P.W. 18, the Inspector, has deposed that in the course of his investigations he had seized the ac counts and documents of the local firms, and yet no document was produced by the prosecution to show that P.W. 14 in fact had in his possession engineering goods at the relevant time.
Furthermore, the witness positively states that he never went to Talegaon Ordnance Depot to enquire whether any tools were required.
It was also not put to the wit ness whether the appellant personally or through one of his employees had approached him regarding the supply of the goods.
In these circumstances, therefore, how possibly can an inference be drawn from his evidence that the accused made no enquiries whatsoever when the accused had positively stated that he did.
Finally, on the question of rates or margin of profit also, the witness makes 540 only a verbal statement that he would have charged 10 15% which cannot be accepted in the absence of documentary proof of the fact that the firm had sold these articles during the relevant time to various persons and made 10 15% profit only.
It is manifest that if the firm was carrying on such a huge business then everything must have been writ ten in the account books which were in possession of the Inspector and yet not produced.
In these circumstances, therefore, we are satisfied that the High Court misread the evidence of P.W.14.
Reliance was then placed on the evidence of P.W. 15, Mahen drakumar, who is a partner of the firm known as 'C. Ambalal & Co. ' To begin with, he clearly admits that his firm was dealing in hardware, paints, sanitaryware and only files amongst the engineering tools.
The witness further states that Out of the articles mentioned in the list, exhibit 9, only files, being items Nos. 75 to 94 and 96 to 99 were available with him and could be supplied by him.
He does not say that he was in a position to supply the other engi neering goods also.
Again, the witness makes only a verbal statement without any documentary proof that he would have charged 10 12% of profit on the amount spent.
It may be pertinent to note here that the appellant in his statement under section 342, has positively asserted that he did make enquiries from the firm of Ambalal.
Ambalal was examined by the police but not produced in court and the explanation given was that he was ill.
That by itself is not a convinc ing explanation because the prosecution could have asked for adjournment from the court to enable Ambalal to be examined as a witness for he alone could have falsified the statement of the accused whether or not any enquiry was made from him.
Finally, this witness himself states: "I do not remember whether I was present when the list, exhibit 9, was shown to Ambalal when his statement was recorded.
" The evidence of this witness, therefore, does not exclude the possibility of the accused having made enquiries from Ambalal and the accused has in fact explained in his state ment that no orders could have been placed with this firm because he was only in a position to supply files which formed a very small component of the engineering goods required.
In these circumstances, therefore, the evi dence, of P.W. 15 does not falsify the statement of the accused that he made enquiries from this firm but, on the other hand, goes to support it.
The High Court has observed that if the appellant had made enquiries from P.W. 15, then he would have undoubtedly remembered this fact.
This process of reasoning appears to us to be absolutely perverse.
When the witness himself does not remember whether the appellant had made any enquiries in his presence then the natural inference would be that he does not exclude the possibility of the appellant having made an enquiry, and in the absence of the examination of Ambalal it cannot be said that the statement of the accused was false.
The next evidence on which reliance was placed was of P.W. 16, Taharbhai.
This witness clearly admits that he had no engineering goods in his stock and if an order had been placed he could have 541 supplied them by procuring them from somebody else.
In these circumstances he was in the same position as P.W. 2.
This witness further admits that out of the list, Ex.9, only files and drills were available, but the stock of these articles was scanty.
He again orally says that he would have charged a profit of 15%.
This witness admits that he does not remember whether the appellant had come to his shop on March 27, 1963 to enquire about the availability of the goods and the rates of engineering tools.
It was sug gested to him that enquiries were made from him by the appellant and he said, that the tools were not available with his firm.
The evidence of this witness also suffers from the same infirmities as are to be found in the evidence of P.Ws. 14 and 15.
He has not produced the stock register nor any document or accounts or inventories to show that he had all the goods required.
His statement further does not exclude the possibility of the accused having made enquires from him, or at any rate does not falsify the statement of the accused.
As regards the margin of profit, that is also ipsi dixit without any basis and is not sup ported by his account books.
It seems to us that before a presumption against the accused could be raised that he knew that other firms would have charged a much lesser profit than P.W.2, it should have been proved by the production of account books of the firms concerned and their dealings during the relevant time that they had sold similar of identical goods and made only a profit of 10 15%.
The verbal statement of the witnesses regarding the margin of profit which they would have made had orders been placed six years back can carry no weight.
This is all the evidence on the basis of which infer ences against the appellant have been drawn.
After having gone through the evidence we are satisfied that the prose cution has not produced any reliable or conclusive material to prove that the appellant had any dishonest intention in causing pecuniary benefit to P.W. 2.
Even assuming that the accused departed from the normal procedure in view of the urgent necessity of the articles it cannot be said that this was done with a corrupt or oblique motive.
The appel lant had been asked.
by the Jabalpur Depot to supply these articles immediately.
The appellant, therefore, had t6 take a quick decision and he was authorised to do so by his Chief.
Since P.W. 2 was prepared to supply all the goods in bulk at one stretch the appellant may have thought it better to place the orders with him.
May be, that this was an error of judgment or an act of indiscretion, but from that alone an inference of dishonest intention cannot be drawn.
Moreover, P.W l0 has clearly stated thus: "I had no reason to doubt the honesty or sincerity of the accused during the period he was serving under me.
" This would show that the appellant was really an honest and sincere officer and his antecedents were good.
Against this background we should have expected much better and superior evidence to justify inference of the accused having been animated by a dishonest intention in placing orders with P.W. 2.
542 There is yet one more intrinsic circumstance which negatives the guilt of the accused.
Although the appellant had given orders with respect to all the articles to P.W. 2, yet when he found that P.W. 2 was charging higher rate for the dessert spoons he did not place orders for the same with him but placed the orders with P.W. 11, who supplied at the rate of Re. 1/ per spoon which was less than the rate at which P.W. 2 was ready to supply.
This shows that the appellant did take due care and caution and did not act blindly.
There is absolutely no legal evidence on the record to show as to what was the nature of the margin of profit which the firms of P.Ws.
14, 15 and 16 had made if the orders had been placed with them, and in the absence of such an evidence the court would not be justified in holding that the accused abused his position in causing pecuniary bene fit to P.W. 2.
The appellant had admitted that if he had known that P.W. 2 would have charged such a high profit he would have been more careful.
On the other hand, what appears to us to be most sur prising is that although P.W. 2 was the sole beneficiary of the whole transaction and had, according to the prosecution, made profit of 45% and was, therefore, in the nature of an accomplice, yet he continues to be on the approved list of the departmental suppliers even on the date when he was giving evidence.
Such a conduct on the part of the depart ment can only be consistent with the innocence rather than the.
guilt of the accused.
If the prosecution allegation was true that P.W. 2 through his business influence ob tained the order in his favour, then before the prosecu tion was started against the appellant, P.W. 2 should have been blacklisted.
But this was not done.
The High Court appears to have been led away by the impression that the appellant had personal relations with P.W. 2.
There is, however, no such evidence on record and P.W. 2 himself has categorically stated that his relations with the appellant were purely business relations as he used to visit the office in connection with the supplies off and on.
In these circumstances, therefore, if P.W. 2 was not suspected by the prosecution for having received huge pecuniary benefit much less could the blame lie on the appellant.
In these circumstances, even if there was some amount of carelessness or negligence on the part of the appellant it is impossible to doubt his bona fides.
He acted as a produ ent person and tried to get the supplies as quickly as possible with the result that all the gods required by Jabalpur Depot were supplied within two weeks.
A careful analysis of the evidence and the circumstances would, therefore, show that the approach of the High Court was clearly 543 wrong and that the inferences drawn by the High Court were not at all warranted by the circumstances and facts proved in the case.
The entire charge against the appellant rested on circumstantial evidence and the prosecution has failed to prove that the circumstances were such as could be ex plained only on one hypothesis, namely, that the accused was guilty.
For these reasons, therefore, the appeal is allowed, judgment of the High Court set aside and conviction and sentence imposed on the appellant are hereby quashed, and he is acquitted of the charge framed against him.
M.R. Appeal allowed.
| IN-Abs | The appellant was posted as the Local Purchase Officer at the Army Ordnance Depot in Poona district.
In connection with the purchase of some engineering tools, charges were brought against him under section 5(1)(d) read with section 5(2) of the Prevention of Corruption Act, for having procured pecu niary benefit for a certain contractor by corrupt means, thereby causing wrongful loss to the army department.
The Trial Court convicted the appellant, and in appeal the High Court confirmed the conviction.
The Supreme Court granted him Special Leave to appeal under article 136 of the Constitu tion, and allowing the appeal, HELD: 1.
Both the courts below had proceeded on the footing that it was for the accused to prove the ingredients of section 5(1)(d) of the Act.
This approach was wrong.
It was for the prosecution to prove affirmatively that the appel lant by corrupt or illegal means or by abusing his position obtained any pecuniary advantage for some other person.
[536 C D] 2.
Normally this Court in special leave against a con current judgment of the High Court and the trial Court does not re appraise the evidence, but here we find that both the courts below have drawn wrong inferences from proved facts and have made a completely wrong approach to the whole case by misplacing the onus of proof which lay on the prosecution on the accused and presuming that the accused had a dishon est intention.
[536 B C, H] Narayanan Nambiar vs State of Kerala [1963] Supp.
2 SCR 724; 730 731, referred to.
|
Appeal No. 110 of 1976: Appeal by Special Leave from the Judgment and Order dated 28 11 75 of the Madhya Pradesh High Court in Second Appeal 495 of 1975.
(Mrs) Leila Seth, A. T. Patra and Praveen Kumar for the Appellants.
M. V. Goswami for Respondent No. 1.
G. section Chatterjee for Respondent No. 2.
The Judgment of the Court was delivered by UNTWALIA, J.
In this appeal by 'special leave the appellants and respondent No. 2 were the defendants in a suit filed by plaintiff respondent No. 1 for eviction And other reliefs in respect of the suit premises.
The suit was dismissed by the Trial Court but decreed by the 627 First Appellate Court.
The second appeal filed by the defendant in the High Court of Madhya Pradesh was dismissed.
The demised property is a shop situated at a place in the District of Hoshangabad.
It was let out by the father of the plaintiff to the husband of defendant No. 1 and the father of the other defendants in the year 1951 at a monthly rent of Rs. 50/ .
A Bhojnalaya was being run in the shop by the tenant.
The plaintiff 's father was running a sweetmeat shop in a rented premise the rent of which was Rs. 225/per month.
The plaintiff 's father died in 1970.
Sometime later the original tenant, the predecessor in interest of the defendants, also died.
He ' had paid rent upto September, 1972.
After the death of the original tenant, the defendants became the tenants of the suit shop.
The plaintiff served a notice on the defendants terminating the contractual tenancy w.e.f. 31 12 1972.
The suit for eviction was filed on 8 3 1973 claiming therein a decree for eviction chiefly on the ground of bona fide personal necessity of the plaintiff, for arrears of rent amounting to Rs. 150/ for October, November and December, 1972 and damages for the months of January and February, 1973 @ Rs. 225/per month as also future damages till the delivery of possession.
The Trial Court dismissed the suit holding that the plaintiff did not require the suit shop bona fide for his personal necessity.
On appeal by the plaintiff, the First Appellate Court by its judgment dated 11 8 1975 took a contrary view and held in favour of the plaintiff.
It decreed the suit for eviction, arrears of rent and also for past and future damages @ Rs. 125/ per month damages to be payable on and from 1 1 1973 until delivery of the vacant possession to the plaintiff.
The High Court has affirmed this decree.
Mrs. Leila Seth, learned counsel for the appellants advanced a very able and succinct argument and urged only the following three points (1) The business for which the accommodation was required by the plaintiff was not "his business" within the meaning of clause (f) of sub section (1) of Section 12, of The Madhya Pradesh Accommodation Control Act, 1961 here inafter referred to as the Act.
(2) That the rented shop in which the business of sweetmeat and Namkin was carried on should have been held to be an accommodation "of his own in his occupation" within the meaning of the second part of the clause (f).
(3) That no decree for damages could be awarded from the date of termination of.
the contractual tenancy.
It could be awarded only from the date when an eviction decree was passed.
In our judgment the first two points of the appellants have to be rejected but the third must succeed.
The plaintiff had clearly pleaded in paragraph 8 of his plaint that the sweetmeat shop which he was running in the rented premises was his business and he wanted to shift it to the accommodation in question.
The defendants did not deny the statement made in paragraph 8 of 628 the plaint rather in paragraph 6 of their written statement they admitted them to be correct.
In such a situation it was not open to them to take a stand at a very late stage of the litigation that the sweetmeat shop was the business of the joint family of the plaintiff the karta of which was his father and on his death it was the business not of the plaintiff alone but of his entire joint family.
The High Court has rightly rejected this point on this ground.
In Siddik Mahomed Shah vs Mt. Saran and others(1) it has been pointed out that where a claim has never been made in the defence presented no amount of evidence can be looked into upon a plea which was never put forward.
If it could be so even at the trial stage, undoubtedly, such a new question of fact could not be entertained at any appellate stage.
This decision has been followed by this Court in Bhagat Singh and others vs Jaswant Singh(2).
To the same effect is the view expressed in another decision of this Court in Bachan Singh vs Dhian Dass and others(3).
Hegde, J pointed out in paragraph 6 of the judgment that a contention involving determination of questions of fact ought not have been allowed to be raised for the first time in the second appeal in the High Court.
In this case we may add further that neither any issue was struck nor was any evidence adduced by the parties on this question.
The case proceeded to trial on the admitted footing that the business which the plaintiff wanted to 'shift to the suit shop was his business.
Apropos the second point it would be useful to point out that the Act replaced an earlier Act of 1955 entitled as The Madhya Pradesh Accommodation Control Act, 1955.
In a similar provision as contained in Section 4(h) of the 1955 Act, the expression used was that the landlord "is not in occupation of any other accommodation in the city or town for that purpose".
There is a clear departure in the 1961 Act where the phraseology is that the landlord "has no other reasonably suitable non residential accommodation of his own in his occupation in the cityor town concerned", in the second part of clause (f) of Section 12(1)A tenanted shop in mere occupation of the landlord filing a suit for eviction against his tenant was 'sufficient to deny him a decree on the ground of clause (h) of Section 4 of the 1955 Act.
But under the 1961 Act, mere occupation of another premises is not sufficient.
The premises must be his own, meaning.
thereby that they must be owned by or belong to the landlord and he must be in occupation of the same.
It is, therefore, plain that the tenanted shop in occupation of the plaintiff was not 'sufficient to deny him a decree for eviction against his tenant under section 12(1) (f) of the Act.
For appreciation of the third point urged for the appellant it would be again useful to refer to a few corresponding provisions of the two Acts.
In the 1955 Act, tenant was defined in clause (f) of Section 3 to mean "a person by whom rent is payable or but for a contract express or implied would be payable for any accommodation and includes any person occupying the accommodation as a sub tenant".
In the (1) [1930] Privy Council, 57 (1) (2) A.I.R. 1966 SC.
(3) A.I.R. 1974 S.C. 708.
629 1961 Act, however, the definition of tenant has been widened and Section 2(i) reads thus : "tenant" means a person by whom or on whose account or behalf the rent of any accommodation is, or, but, for a contract express or implied, would be payable for any accommodation and includes any person occupying the accommodation as a sub tenant and also, any person continuing in possession after the termination of his tenancy whether before or after the commencement of this Act; but shall not include any person against whom any order or decree for eviction has been made.
" On a plain reading of the definition aforesaid it is clear that a tenant even after the termination of his contractual tenancy does not become an unauthorised occupant of the accommodation but remains a tenant.
It has been pointed out by this Court in Damadilal and others vs Parashram and others(1) that such a tenant is conveniently called a statutory tenant.
Whether the expression aforesaid borrowed from the English Law is quite apposite or not, but, what is certain is that a person continuing in possession of the accommodation even after the termination of his contractual tenancy is,, a tenant within the meaning of the Act and on such termination his possession does not become wrongful, until and unless a decree for eviction is made.
If he con tinues to be in possession even after the passing of the decree, he does so as a wrongful occupant of the accommodation.
Mrs. Seth in support of her argument rightly pressed into service a few other provisions of the Act.
Section 13(1) giving protection against eviction on the ground of default in payment of rent provides therein that even after the institution of the suit if he clears off the amount of rent due within a period specified in the section and thereafter "continue to deposit or pay, month by month, by the 15th of each succeeding month a sum equivalent to the rent at that rate" calculated at the rate of rent at which he was paying earlier, no decree for eviction can be passed.
The conclusion is inevitable, therefore, that if a 'suit is filed on the ground of non payment of rent after termination of the contractual tenancy, the tenant still continues to be a tenant liable to pay rent not only for the past period but in future also.
In absence of a decree of eviction the person in occupation of the accommodation continues to be a tenant and is not liable to pay any damages as his occupation is not unauthorised or wrongful even after the termination of the contractual tenancy.
In Damadilal 's case (supra).
Gupta, J delivering the judgment of this Court has said at page 653 with reference to the definition of tenant in 'section 2(1) of the Act "The definition makes a person continuing in possession after the determination of his tenancy a tenant unless a decree or order for eviction has been made against him, thus putting him on par with a person whose contractual tenancy (1)[1976] Suppl.
S.C.R. 645.
630 stiff subsists.
The incidents of such tenancy and a contractual tenancy must therefore be the same unless any provision of the Act conveyed a contrary intention.
That under this Act such a tenant retains an interest in the premises, and not merely a personal right of occupation, will also appear from section 14 which contains provisions restricting the tenant 's power of subletting." In Kikabhai Abdul Hussain vs Kamlakar and others(1) a Bench of the Madhya Pradesh High Court seems to have opined even with reference to the 1961 Act that if a person continues to be in occupation after the termination of the contractual tenancy then on the passing of the decree for eviction he becomes a wrongful occupant of the accommodation since the date of termination.
It seems a theory akin to the theory of "relation back" has been applied in the sense that if no decree for eviction is passed then the person is not in unlawful occupation but on the passing of such a decree his possession becomes unlawful not from the date of the decree but such a decree makes his occupation unlawful from the date of the termination of the contractual tenancy.
Whatever could be said with reference to the provisions of 1955 Act it is clear to us that the law so enunciated by the High Court with reference to 1961 Act is not correct.
Mr. Goswami, appearing for the plaintiff respondent relied upon the decision of this Court in Ganga Dutt Murarka vs Kartik Chandra Das and others(2) In our opinion the said decision is of no help to the respondent.
The question for determination there was a different one.
With reference to the provisions of, the West Bengal Premises Rent Control Act the argument advanced before this Court was that if after the determination of the tenancy by , efflux of time or by a notice to quit the tenant continued in possession of the premises and the landlord accepted rent from him because no decree for eviction could be made in view of the subsequent Control Acts it was tantamount to holding over within the meaning of Section 116 of the Transfer of Property Act.
This argument was repelled.
Whether a new contractual tenancy would come into existence by acceptance of rent by the landlord in such a situation is a different matter.
But this case does not lay down that the occupation of the premises by the tenant whose tenancy has been terminated by efflux of time or by notice to quit becomes unauthorised or wrongful.
For the reason stated above it is manifest that the defendants remained in occupation 'of the accommodation on and from 1 1 1973 as a tenant, conveniently to be called statutory tenant, under the Act.
Their occupation was not unauthorised or wrongful until a decree for eviction was passed by the First Appellate Court on 11 8 75.
Their occupation became unauthorised or wrongful only from that date.
They are not therefore, liable to pay any damages or mesne profits for (1) (2) 631 the period commencing from 1 1 1973 and ending on 10 8 1975.
Decree for damages either in respect of the two months prior to the institution of the suit or for the subsequent period must therefore be set aside.
The defendant appellants will be liable to pay damages or mesne profits @ Rs. 125/ per month (the rate of damages could not be and was not challenged before us) from 11 8 1975 only, until the delivery of the vacant possession of the accommodation, In the result the appeal is allowed in part only to the extent stated above.
In the circumstances, we shall make no order as to costs in this Court.
S.R. Appeal allowed in part.
| IN-Abs | A shop where Bhojnalaya was being run by the appellants tenants was demised to their predecessors in interest for the said purpose by the father of plaintiff respondent No. 1 in the year 1951 on a monthly rent of Rs. 50/ .
The father of the plaintiff respondent No. 1 was running a sweetmeat shop in a rented premises, the rent of which was Rs. 225/ per mensem.
The plaintiff 's father died in 1970.
Some time later the original tenant also died.
He had paid rent up to September, 1972.
The plaintiff served a notice on the defendants terminating the contractual tenancy with effect from 31 12 1972 and filed a suit an 8 3 1973 for eviction on the ground of bona fide necessity of the plaintiff, for arrears of rent amounting to Rs. 150/ for October, November and December 1972 and damages for the months of January and February 1973 at Rs. 225/ per mensem as also future damages till the delivery of the possession.
The trial court dismissed the suit holding that the plaintiff did not require the sweet shop bona fide for his personal necessity, On appeal by the plaintiff, the first appellate court by its judgment dated 11 8 75, taking a contrary view, decreed the suit for eviction, arrears of rent anti also for past and future damages at Rs. 125/ per month to be payable on and from 1 1 1973 until delivery of the vacant possession to the plaintiff.
The High Court in second appeal affirmed the decree.
Allowing the appeal by special leave in part, the Court, HELD : (1) Where a claim has never been made in the defence presented, no amount of evidence can be looked into upon a plea which was never put forward.
If it could be so even at the trial stage, undoubtedly such a new question of fact could not be entertained at in appellate stage.
In this case, neither any issue was struck nor was any evidence adduced by the parties on the question.
The case Pr to trial on the admitted footing that the business which the plaintiff wanted to shift to the suit shop was his business.
In such a situation it was not open to the appellants to take a stand at a very late stage of the litigation that the sweetmeat shop was the business of the joint family of the plaintiff and, therefore, not the plaintiff 's business to come within the meaning If clause (f) of sub s 1 of section 12 of the Madhya Pradesh Accommodation Control Act, 1961.
[627H, 628A D] Siddik Mohommed Shah vs Mt. Saran and Ors. ; Bhagat Singh & Ors.
vs Jaswant Singh A.I.R. 1966 SC 1861 and Bachan Singh vs Dhian Dass & Ors.
AIR 1974 SC 708, applied.
(2)A tenanted shop in mere occupation of the landlord filing a suit for eviction against his tenant was sufficient to deny him a decree on the ground of clause(h) of section 4 of the Madhya Pradesh Accommodation Control Act 1955 where the expression used was that the landlord "is not in occupation of any other accommodation in the city or town for that purpose".
But, under the 626 1961 Act, mere occupation of another premises is not sufficient in view of the clear departure made by using the phraseology in the second part of cl.
(f) of section 12(1), "the landlord has no other reasonably suitable non residential accommodation of his own in his occupation in the city or town concerned".
The premises must be his own meaning thereby that they must be owned by or belong to the landlord and he must be in occupation of the same.
In the instant case, the tenanted shop in occupation of the plaintiff was not sufficient to deny him a decree for eviction against his tenant section 12(1) (f) of the Act.[628E F] (3)As per the widened definition of "tenant ' in section 2(1) of the Madhya Pradesh Accommodation Control Act, 1961, a tenant even after the termination of his contractual tenancy does not become an unauthorised occupant of the accommodation but remains a statutory tenant.
A person continuing in possession of the accommodation even after the termination of his contractual tenancy is a tenant within the meaning of the Act and on such termination his possession does not become wrongful until and unless a decree for eviction is made.
If he continues to be in possession even after the passing of the decree, he does so as a wrongful occupant of the accommodation.
[629 A D] Damadilal and others vs Parashram and others [1976] Supp.
SCR 645, referred to.
(4) If a suit is filed on the ground of non payment of rent after termination of the contractual tenancy, the tenant still continues to be tenant liable to pay rent not only for the past period, but in future also.
In absence of decree of eviction the person in occupation of the accommodation continues to be a tenant and is not liable to pay any damages as his occupation is not unauthorised or wrongful even after the termination of the contractual tenancy.
In the instant case (i) the defendants remained in occupation of the. accommodation on and from 1 1 1973 as a statutory tenant under the Act.
Their occupation was not unauthorised or wrongful until a decree for eviction was passed by the first appellate court on 11 8 1975.
Their occupation became unauthorised or wrongful only from that date.
They are liable to pay damages or mesne profits at Rs. 125/ per mensem from 11 8 1975 only until the delivery of the vacant possession of the accommodation.
They are not liable to pay any damages or mesne profits for the period commending from 1 1 1973 and ending 10 8 1975.
[629 E G, 630 G H, 631 A] Kikabhai Abdul Hussain vs Kamlakar and Ors.
[1974] M.P. Law Journal 485, over ruled.
Ganga Dutt Murarka vs Kartik Chandra Das & Ors. ; , distinguished.
|
: Criminal Appeal No. 315 of 1974.
Appeal from the Judgment and Order dated 22 5 1974 of the Allahabad High Court in Contempt Case No. 43/73.
D. Mukherjea, R.N. Sharma, Umesh Chand, R.N. Trivedi, S.P. Pathak, Hari Nath Tilhari, S.R. Srivastava, M.N. Sharma and O.P. Lal for the Appellants.
Yogeshwar Prasad, (Miss) Rani Arora, S.K. Bagga and (Mrs.) section Bagga, for Respondent No. 1.
O.P. Rana for Respondents 2 and 3.
The Judgment of the Court was delivered by RAY, C.J.
This appeal is against the judgment and order dated 22 May 1974 of the High Court of Allahabad in Criminal Contempt Case No. 43 of 1973.
The High Court issued notices to five persons on the ground that they committed contempt of Court.
602 The two appellants before us are the President of the Avadh Bar Association and the Chairman, Action Committee of the Avadh Bar Association.
There were three charges against the appellants.
It is not necessary to refer in detail to the same.
The gist of the charge against the appellants was that they had met and resolved that the Chief Justice was acting in a most parti san manner under the influence of the Allahabad Bar.
The text of the resolution was this "The Action Committee is of the opinion that the Chief Justice is acting in the dis charge of administrative power under clause 14 of the U.P. High Court 's Amalgamation Order, 1948 in a most partisan manner under the influence of Allahabad Bar quite unbecoming of the office which he holds".
The High Court discharged the notices.
The High Court yet made certain observations; some of which are confusing, some of which are conflicting and some of which are vague.
If the High Court found that there was any contempt it should have punished the appellants.
The High Court however discharged the notices.
The High Court held that the Chairman of the Action Committee, described as contemner No. 2 was actively associ ated with the passing of the resolution which contained disparaging remarks about the Chief Justice and since he also issued that resolution for publication in newspapers, he is guilty of 'Criminal Contempt '.
The High Court held that since the resolution was passed under the presidentship of the first appellant described as contemner No. 1, he is as much guilty of having committed contempt as contemner No. 2 was.
The High Court further held that contemners Nos.
1 & 2 are guilty of contumacious conduct, and the High Court gave the ground that they were responsible for the passing of the resolution.
At another place the High Court used words showing that the conduct of the appellants individually was considered only "indiscreet" by it.
The High Court confused 'criminal contempt ' with 'contu macious conduct '.
The matter becomes clear when the High Court said "we do not propose to punish contemners Nos. 1 & 2 for the contumacious conduct of which we have adjudged them guilty though we express.
our disapproval of that conduct and hope that the indiscretion will not be repeated".
We are unable to find that the High Court found the contemners guilty of criminal contempt.
It is true that the High Court referred to the contumacious conduct of the appellants but the High Court did not wish to proceed against the appellants.
The High Court said on that aspect as follows: 603 "It is a matter of regret that the contem ners who are prominent members of the Avadh Bar, should have themselves embarked on the path of vilifying the Chief Justice of this Court and that we do not want to be over sensitive in the matter, keeping in mind the surrounding circumstances in which the contu macious act was committed by them.
and also keeping in view the fact that it was a single act of the Chief Justice for which the attack was made, we do not propose to punish contem ners for the contumacious conduct for which we have adjudged them guilty, though we express our strong.
disapproval of that conduct and hope that the indiscretion will not be repeat ed".
Counsel for the appellants did not justify the language of the resolution.
There is no gainsaying that the members of the Bar did not act with dignity in regard to the resolu tion.
The language used by them was unfortunate.
Counsel for the appellants rightly said that was not proper and it should not have been passed in that manner.
It is the duty of lawyers to protect the dignity and decorum of the judiciary.
If lawyers fail in their duty the faith of the people in the judiciary will be undermined to a large extent.
It is said that lawyers are the custodians of civilisation.
Lawyers have to discharge their duty with dignity, decorum and discipline.
In view of the fact that the notices were discharged, the appeal is disposed of with the foregoing observations.
| IN-Abs | The appellant No. 1 is the President of the Oudh Bar and appellant No. 2 is the Chairman of Action Committee of the Oudh Bar Association.
They met and passed a Resolution that the Chief Justice of Allahabad High Court was acting in a most partisan manner under the influence of the Allahabad Bar and that it was unbecoming of the office which he holds.
The High Court issued notices for contempt, inter alia, to the appellants.
The High Court discharged the notices but made certain observations against the appellants.
HELD: 1.
If the High Court found that there was any contempt it should have punished the appellants.
The High Court confused criminal contempt with contumacious con duct.
This Court is unable to find that the High Court found contemners guilty of criminal contempt.
[602 D, G, H] 2.
There is no gainsaying that the members of the Bar did not act with dignity in regard to the resolution.
The language used by them was unfortunate.
It is the duty of lawyers to protect the dignity and decorum of the judici ary.
If lawyers fail in their duty the faith of the people in the judiciary would be undermined to a large extent.
It is said that lawyers are the custodian of civilization Lawyers have to discharge their duties with dignity, decorum and discipline.
[603 C D]
|
Appeal No. 709 of 1975.
(Appeal by Special Leave from the Judgment and Order dt.
9 10 74 of the Madras High Court in Referred ease No. 4 of 1968) P. Ram Reddy, C. Ramakrishna and A. V.V. Nair, for the Appellant.
V.P. Raman, A.V. Rangam and Miss A. Subhashini, for the Respondent.
The Judgment of the Court was delivered by SHINGHAL J.
This appeal by special leave arises out of the decision of the Madras High Court dated October 9, 1974, on a reference by the Chief Controlling Revenue authority under section 57 of the Indian Stamp Act, 1899, hereinafter referred to as the Act.
The Board of Revenue, Madras, which was the Chief Controlling Revenue authority, initially stated the case raising the following questions for decision, (a) Whether the decision of the Board of Revenue that the instrument relating to the Deed of Trust and Mortgage would attract the levy of a Stamp Duty as laid down in Article 40(b) of Schedule I of the Indian Stamp Act mad that the debentures would be exempted from the levy of stamp duty is correct or not; and (b) Whether the claim of the Respondent herein that the stamp duty is payable on the debenture under Article 27(a) and on the Deed of Trust and Mortgage under Article 40(c) is tenable or not ? The High Court directed the Board of Revenue to refer three additional questions, but ultimately took the view that the additional questions did not really arise in the case.
It answered the first question in 567 favour of the Revenue and the second question against the Madras Refineries Limited, hereinafter referred to as the Company.
The Company feels aggrieved and has come up in appeal to this Court.
It will be enough to state those facts which bear on the controversy before us.
The Company was incorporated under the Indian , as a public limited company.
An agreement known as the Loan and Note Purchase Agreement was executed be tween the Company and the First National City Bank and six others on December 20, 1966, by which the Company agreed to authorise the creation and issuance of $14,880,000 (U.S.) principal amount of its 5% secured notes Series 'A ', and $ 7,440,300 (U.S.) principal amount of its 51/2 secured notes Series 'S ', 'and the sale of, or the borrowing to be evidenced by such Notes in accordance with the terms and provisions of the agreement.
The Notes were to be issued under and secured by a Deed of Trust and Mortgage between the Company and the First National City Bank.
It was a1so agreed that the Notes shall be secured and shall have the other terms and provisions provided in the agreement and shall be guaranteed by the President Of India pursuant to the terms of a "Guarantee Agreement", in the prescribed form.
We shall have occasion to refer to the relevant clauses of the Loan and Note Purchase Agreement, the Deed of Trust and Mortgage and the Guarantee Agreement as and when necessary.
The Deed of Trust and Mortgage and the Guarantee Agreement were executed between the President and the First National City Bank (as Trustee) on June 15, 1967.
In the meantime the Company made an application to the Collector under section 31 of the Act for opinion as to the stamp duty with which the Deed of Trust and Mortgage was.
chargeable, and the Collector referred the matter to the Board of Reve nue.
The Board decided on June 28, 1967 that the duty was chargeable on the Trust and Mortgage Deed under Article 40(b) of Schedule I to the Act.
The Company paid Rs. 37,66,500/ as stamp duty under protest, stating that it would move the Board for a reference of the controversy to the High Court.
The Trust and Mortgage Deed was registered on_Jane 30, 1967, and the 'A ' series debentures were issued the same day.
The Company applied to the Board of Revenue to state the case to the High Court. 'B ' series debentures were issued on June 28, 1968.
The case was stated on March 28, 1969 and was decided by the impugned decision of the High Court dated October 9, 1974.
It has been argued by Mr. Ram Reddy for the appellant Company that the Guarantee Agreement was the principal and primary security, and the Deed of Trust and Mortgage was a collateral or auxiliary security and that the stamp duty on the Deed of Trust and Mortgage was payable in accordance with article 40(c).
It has been urged that Guarantee Agree ment was exempt from duty under section 3 of the Stamp Act and the debentures were exempt under article 27.
The controversy centres round the question whether the Guarantee Agreement could be said to be principal or primary security ? 568 Mr. Ram Reddy has invited our attention to the following passage in Sergeant on Stamp Duties and Companies Capital Duty, sixth edition, page 6, "Leading and principal object.
With reference to the stamp duty upon instruments generally, it is a well settled rule of law that an instrument must be stamped for its leading and principal object, and the stamp covers everything accessory to that object.
In Limeer Asphalte Paving Co. vs 1.
R.C.C) it was stated "In order to determine whether any, and if any, what stamp duty is chargeable upon an instrument the legal rule is that the real and true meaning of the instrument is to be ascer tained; that the description of it given in the instrument itself by the parties is imma terial, even although they may have believed that its effect and operation was to create a security mentioned in the Stamp Act, and they so declare? ' This appears to be a correct statement of the law.
We have therefore to determine the real and true meaning of the Guarantee Agreement and to decide whether it could be said to be the principal and primary security.
The Loan and Note Purchase Agreement was executed on December 20, 1966, between the Company and the first National City Bank and others.
Under that agreement, the Company was to authorise the creation and issuance of secured notes, series A and B, referred to above, and the notes were to be "issued under and secured 'by the Deed of Trust and Mortgage between the Company and the first Nation al City Bank".
It was then stated in the Loan and Note Purchase Agreement as follows, "The Notes shall be dated, shall ma ture, shall bear interest, shall be payable, shall be secured and shall have such other terms and provisions as provided in the Mort gage and shall be guaranteed by the President of India Pursuant to the terms of a Guar antee Agreement (the "Guarantee Agree ment) in the form attached hereto as Exhib it 3.
" It would thus appear that it was the Deed of Trust and Mortgage which was the security for the loan, although the loan was also guaranteed by the President in terms of the Guarantee Agreement.
As has been stated, the Guarantee Agreement was made between the President of India and the first 'National City Bank.
It was clearly stated in that agreement that the First National City Bank executed it "As Trustee under a Deed of Trust and Mortgage dated as June 15, 1967.
" The Trust and Mortgage Deed was thus executed before (1) exhibit 211.
569 the execution of the Guarantee Agreement, even though both of them were executed on the same day, namely, June 15, 1967.
It is true that it has been stated in the Guarantee Agreement that the President of India, as the guarantor, unconditionally guaranteed "has primary obligor and not as surety merely, the due and punctual payment from time to time" of the principal as well as the interest etc.
stated in the agreement.
And it was for that purpose that the guarantor agreed to "endorse upon each of the Notes at or before the issue and delivery thereof by the Company its guaranty of the prompt payment of the principal interest and premium thereof and of the other indebtedness.
" It is also true that as stated in paragraph 10 of the Guarantee Agree ment, the obligations of the guarantor were "absolute and unconditional under any and all circumstances, and shall not be to any extent or in any way discharged, impaired or otherwise affected, except by performance thereof in accordance with the terms thereof.
" We have also noticed the further stipulation that "Each and every remedy of the Trustee shall, to the extent permitted by law, be cumulative and shall be in addition to any other remedy given hereunder or under the Mortgage or any of the other collateral or now or hereafter existing at law or in equity or by statute." Mr. Ram Reddy has relied heavily on these averments in the Guarantee Agreement, but they cannot detract from the basic fact that the Deed of Trust and Mortgage was executed first in point of time and was the principal or primary security for the loan according to the terms and conditions of the agreement between the parties.
It was that document which constituted the First National City Bank as the Trus tee, and enabled it to enter into the Guarantee Agreement with the President, and the President guaranteed the due performance of the obligations undertaken by the Company thereunder.
The Deed of Trust and Mortgage, which was executed between the Company and the First National City Bank as a national banking association incorporated and existing under the laws of United States of America, stated that as the Company was in the process of constructing a refinery for the refining of crude oil and deemed it necessary to borrow money from time to time to.
finance such construction and to issue its notes therefor and to "mortgage and charge its properties hereinafter described to secure the payment of such notes" it executed the Deed of Trust and Mortgage as security in accordance with the terms and conditions of Article 2 of the Deed of Trust and Mortgage to secure the due payment of the principal of and the premium, if any, and the interest on the Notes and of all other moneys for the time being and from time to time owing on the security of that Indenture and on the Notes and the performance by the Company of all of its obligations thereunder.
The Deed of Trust and Mortgage was therefore clearly the principal or the primary security and could not be said to be a "collat eral agreement".
The parties in fact clearly 570 stated in Article I, section 1.01 of the Deed of Trust and Mortgage as follows, "Collateral Agreements: The term "Collateral Agreements" shall mean the Guarantee Agreement and the Undertaking, hereinfater defined.
" It was therefore specifically agreed between the parties that the Deed of Trust and Mortgage was not a collateral agreement.
In all these facts and circumstances it is futile to contend that the Deed of Trust and Mortgage was not the principal or primary security.
As was stated in Article 9 of that document, that security became enforceable in case of any or more "events of default", and it cannot be said that merely because the Guarantee Agreement contained the stipu lation that the President, as the Guarantor, uncondition ally guaranteed .the due and punctual payment of principal and interest etc. "as primary obligor and not as surety merely" that agreement become the principal or the primary security.
It is the real and true meaning of the Deed of Trust and Mortgage and the Guarantee Agreement which has to be ascertained, and this leaves no room for doubt that the view taken by the High Court in this respect is correct and does not call for interference.
Mr. Ram Reddy relied on some decisions to support his argument that the Guarantee Agreement was the security for the loan and was the princi pal or the primary document, but those cases were decided on different facts and have no real bearing on the controversy before us.
The Guarantee Agreement was executed for and on behalf of the president by his Authorised Representative, and no stamp duty was chargeable for it by virtue of the proviso to section 3 of the Act.
That in fact appears to be the reason why counsel for the appellant strenously argued that we should hold it to be the principal instrument, for he has next argued that the case falls within the purview of sec tion 4 (1) of the Act and the "Principal instrument" only would be chargeable with the duty prescribed in Schedule I, and deed of any trust and mortgage would be chargeable with a duty of Rs. 4.50 p. instead of the duty prescribed for it in that Schedule.
We find however that there is no merit in this argument also.
Sub section (1) of section 4 of the Act reads as follows, "4.
Several instruments used in single transaction of sale, mortgage or settlement. (1) Where, in the case of any sale, mortgage or settlement several instru ments are employed for completing the transaction, the principal instrument only shall be chargeable with the duty prescribed in Schedule I, for the conveyance, mortgage or settlement, and each of the other instruments shall be chargeable with a duty of four rupees fifty naye paise instead of the duty (if any) prescribed for it in that Schedule.
" 571 It is nobody 's case that the Guarantee Agreement was an instrument of sale , for it did not transfer the ownership of anything in exchange for a price paid or promised or part paid and part promised.
It was also not an instrument of mortgage because it is no boly 's case that there was any transfer of an interest in specific immovable property for the purpose of securing the payment of money advanced or to be advanced by way of loan or an existing or a furture debt or the performance of an engagement which could give rise to a pecuniary liability.
The expression "settlement" has been defined in clause (24) of section 2 of the Act as follows : "Settlement" means any non testamentary disposition in writing, of movable or immova ble property made (a) in consideration of marriage, (b) for the purpose of distributing property of the settlor among his family or those for whom he desires to provide, or for the purpose of providing for some person dependent on him, or (c) for any religious or charitable purpose; and includes an agreement in writing to make such a disposition and where any such dispo sition bas not been made in writing, any instrument recording, whether by way of decla ration of trust or otherwise, the terms of any such disposition) .
" The term "disposition" has been defined in Strouds Judicial Dictionary as a devise "intended to comprehend a mode by which property can pass, whether by act of parties or by an act of the law" and "includes transfer and charge of proper ty".
As the Guarantee Agreement did not have any such effect, it did not constitute a "settlement" also.
That document was not therefore an instrument of sale, mortgage or settlement and did not fall within the purview of sub section (1) of section 4 of the Act.
It was the Deed of Trust and Mortgage which was a "Mortgage deed" within the meaning of clause (17) of sec tion 2 of the Act, and it was therefore clearly chargeable with stamp duty at the rate prescribed in article 40(b) of Schedule I to.
the Act.
We have examined the other argument of Mr. Ram Reddy that even if the Guarantee Agreement was not the principal instrument, within the meaning of sub section (1) of section 4 of the Act, we should hold that the debentures which were issued by the Company were the principal and primary securi ty, and that the Deed of Trust and Mortgage was the "other instrument" within the meaning of that sub section and was chargeable with a duty of Rs. 4.50 p. instead of the duty prescribed for it in the Schedule.
This argument is also futile for we find that the secured Notes (Series A and B) were issued under and were secured by the Deed of Trust and Mortgage.
As 572 such, the Notes were issued in consequence and .on the security of the Deed of Trust and Mortgage and there is no justification for the contention that the debentures were the principal instruments, and not the Deed of Trust and Mortgage.
As the High Court has rightly answered both the ques tions, we find no force in this appeal and it is dismissed with costs.
P.B.R. Appeal dismissed.
| IN-Abs | The appellant company executed .a
Loan and Note Purchase Agreement with a foreign bank.
Under that agreement the appellant was to authorise the creation and issuance of secured notes, Series A and B, and the Notes were to be issued under and secured by a Deed of Trust and Mortgage between the Company and the Bank.
The Deed of Trust and Mortgage stated that as the appellant was in the process of constructing a refinery for the refining of crude oil and deemed it necessary to borrow money from time to time to finance such construction and to issue its Notes therefor, and to mortgage and charge its properties to secure the payment of such Notes, it executed the Deed of Trust and Mortgage as Security in accordance with the terms and condi tions of Article 2 of the Deed of Trust and Mortgage to secure the due payment of the principal and the premium, if any, and the interest on the Notes, and of all other monies for the time being and from time to time owing on the security of the indenture and on the Notes and the perform ance by the Company of all of its obligations thereunder.
It was also agreed that the Notes shall be secured and shall have the other terms and conditions provided in the agree ment and shall be guaranteed by the President of India pursuant to the terms of the Guarantee Agreement.
The Guarantee Agreement state.
that the President of India, as the guarantor, unconditionally guaranteed as primary obligor and not as surety merely, the due and .punctual payment from time to time of the principal as well as interest stated m the Agreement.
The obligations of the guarantor were abso lute and unconditional under any and all circumstances and were not be to any extent or in any way discharged, impaired or otherwise affected, except by performance thereof in accordance with the terms thereof.
It was also provided that each and every remedy of the Trustee shall be cumula tive and shall be in addition to any other remedy given therein or under the mortgage or any of the other collateral or now or hereafter existing at law or in equity or by statute.
The Guarantee Agreement was executed on the same day as the Deed of Trust and Mortgage between the President of India and the foreign bank as a Trustee.
The High Court decided that stamp duty was chargeable on the Trust and Mortgage Deed under article 40(b) of Schedule I to the Act.
In appeal to this Court it was contended that it was the Guarantee Agreement which was the principal and primary security and that the Deed of Trust and Mortgage was a collateral or auxillary security and as such stamp duty was payable under article 40(c) and that the Guarantee Agreement was exempt from duty under section 3 and debentures under article 27.
Dismissing the Appeal, HELD: (1) It is the real and true meaning of the deed of Trust and Mortgage and the Guarantee Agreement which has to be ascertained irrespective of the description given by the parties.
[568 E] (2) The Trust and Mortgage Deed was executed before the execution of the Guarantee Agreement though both of them were executed on the same day.
It was the Deed of Trust and Mortgage which was the security for the 566 loan though the loan was also guaranteed by the President in terms of the Guarantee Agreement.
[568 G H] (3) The.
terms and conditions of the Guarantee Agreement cannot detract from the basic fact that the Deed of Trust and Mortgage was executed first in point of time and was the principal or the primary security for the loan.
The Deed of Trust and Mortgage was clearly the principal or the pri mary security and could not be said to be a collateral agreement.
[569 H] (4) The Deed of Trust clearly stated that the terms "Collateral Agreements" shall mean the Guarantee Agreement and the Undertaking.
[570 A B] (5) The Guarantee Agreement was not an instrument of sale, mortgage or settlement and did not fall within the purview of section 4(1) of the Act.
[571 E.F] (6) There is no justification for the contention that the debentures were the principal instruments and not the Deed of Trust and Mortgage.
The secured notes were issued under and secured by the Deed of Trust and Mortgage.
The notes were issued in consequence of and on the security of the Deed of Trust and Mortgage.
[571 H, 572 A]
|
Appeal No. 1297 of 1977.
Appeal by Special Leave from the Judgment and Order dated 25th of April 1977 of the Delhi High Court in Civil Writ Petition No. 245 of 1977.
P. P. Rao, A. K. Ganguli and Ashwani Kumar for the appellant.
Soli J. Sorabjee, Additional Solicitor General, E. C. Agarwala, B. N. Kripal and Girish Chandra for Respondent No. 1.
M.N. Phadke, section section Bindra, Hardev Singh & R. section Sodhi for Respondent No. 3.
The followiug Judgments of the Court were delivered by KRISHNA IYER, J.
What troubles us in this appeal, coming before a Bench of 5 Judges on a reference under Article 145(3) of the Constitution, is not the profusion of controversial facts nor the thorny bunch of lesser law, but the possible confusion about a few constitutional fundamentals, finer administrative normae and jurisdictional limitations bearing upon elections.
What are those fundamentals and limitations? We will state them, after mentioning briefly what the writ petition, from which this appeal, by special leave, has arisen, is about, 279 The basics Every significant case has an unwritten legend and indelible lesson.
This appeal is no exception, whatever its formal result.
The message, as we will see at the end of the decision, relates to the pervasive philosophy of democratic elections which Sir Winston ChurchiU vivified in matchless words : "At the bottom of all tributes paid to democracy is the little man, walking into a little booth, with a little pencil, making a little cross on a little bit of paper no amount of rhetoric or voluminous discussion can possibly diminish the overwhelming importance of the point.
" If we may add, the little, large Indian shall not be hijacked from the course of free and fair elections by mob muscle methods, or subtle perversion of discretion by men dressed in little, brief authority.
For 'be you ever so high, the law is above you.
The moral may be stated with telling terseness in the words of William Pitt: 'Where laws end, tyranny begins '.
Embracing both these mandates and emphasizing their combined effect is the elemental law and politics of Power best expressed by Benjamin Dizreeli: "I repeat that all power is a trust that we are accountable for its exercise that, from the people and for the people, all springs, and all must exist." (Vivien Grey, BK.
7) Aside from these is yet another, bearings on the, play of natural justice, its nuances, non applications, contours, colour and content.
Natural Justice is no mystic testament of judge made juristics but the pragmatic, yet principled, requirement of fairplay in action as the norm of a civilised justice system and minimum of good government crystallised clearly in our jurisprudence by a catena of cases here and elsewhere.
The conspectus of facts The historic elections to Parliament, recently held across the ,country, included a constituency in Punjab called 13 Ferozepore Parliamentary constituency.
It consisted of nine assembly segments and the polling took place on March 16, 1977.
According to the calendar notified by the Election Commission, the counting took place in respect of five assembly segments on March 20, 1977 and the, remaining four on the next day.
The appellant and the third respondent were the principal contestants.
It is stated by the appellant that when counting in all the assembly segments was completed at the respective segment headquarters, copies of the results were given to the candidates and the local tally telephonically communicated to the returning officer (respondent 2).
According to the scheme the postal ballots are to arrive at the returning officer 's headquarters at Ferozepore where they are to be counted.
The final tally is made when the ballot boxes 280 and the returns duly reach the Ferozepore headquarters front the various segment headquarters.
The poll proceeded as ordained, almost to the very last stages, but the completion of the counting at the constituency headquarters in Ferozepore was aborted at the final hour as the postal ballots were being counted thanks to mob violence allegedly mobilised at the instance of the third respondent.
, The appellant 's version is that he had all but won on the total count by a margin of nearly 2000 votes when the panicked opposite party havoced and halted the consummation by muscle tactics.
The postal ballot papers were destroyed.
The, ballot boxes from the Fazilka segment were also done away with en route, and the returning officer was terrified into postponing the declaration of the result.
On account of an earlier complaint that the returning officer was a relation of the appellant, the Election Commission (hereinafter referred to as Commission) had: deputed an officer of the Commission Shri IKK Menon as observer of the poll process in the constituency.
He was present as the returning officer who under compulsion had postponed the concluding 3 p.m. onwards.
Thus the returning officer had the company of the observer with him during the crucial stages and controversial eruptions in the afternoon of March 21.
Shortly after sunset, presumably, the returning officer who under compulsion had postponed the concluding part of the election, reported the happenings by wireless massage to the Election Commission.
The observer also reached Delhi and gave a written account and perhaps an oral narration of the untoward events which marred what would otherwise have been a smooth finish Lo, the election.
Disturbed by the disruption of the declaratory part of the election, the appellant, along with a former Minister of the State, met the Chief Election Commissioner (i.e. the Commission) at about 10.30 A.M. on March 22nd, with the request that he should direct the returning officer to declare the result of the election.
Later in the day, the Commission issued an order which has been characterised by the appellant as a law less and precedentless cancellation, of the whole poll, acting by hasty hunch and without rational appraisal of facts.
By the 22nd of_March, when the Election Commission made the impugned order, the bulk of the electoral results in the country bad beamed in.
The gravamen of the grievance of the appellant is that while he had, in all probability, won the poll, he has been deprived of this valuable and hard won victory by the arbitrary action of the Commission going contrary to fairplay and in negation of the basic canons of natural justice.
Of course the Commission did not stop with the cancellation but followed it up a few days later with a direction to hold a fresh poll_for the whole constituency, involving all the nine segments, although there were no complaints about the polling in any of the constituencies and the ballot papers of eight constituencies were available intact with the returning officer and only Fazilka segment ballot papers were destroyed or demanded on the way, (plus the postal ballots).
It must also, be mentioned here that a demand was made, according to the version, of the third respondent, for recount in one segment which was,, 281 unreasonably, turned down.
The observer, in his report to the Election Commission, also mentioned that in two polling stations divergent practices were adopted in regard to testing valid and invalid votes.
To be more pracise, Shri IKK Menon mentioned ' in his report that at polling station No. 8, the presiding officer 's seal on the tag as well as the paper seal of one box was broken.
But the ballot papers contained in that box were below 300 and would not have affected the result in the normal course.
In another case in Jalalabad assembly segment, the assistant returning officer had rejected a number of ballot papers of a polling station on the score that they were not signed by the presiding officer.
In yet another case it was reported that the ballot papers were neither signed nor stamped but were accepted by the assistant returning officer as valid, al though the factum was not varified by Shri Menon with the assistant returning officer.
Shri Menon, in his report, seems to have broadly authenticated the story of the mob creating a tense situation leading to the military being summoned.
According to him only the ballot papers of Fazilka assembly segment were destroyed, not of the.
other segments.
Even regarding Fazilka, the result sheet had arrived.
So, far as Zira assembly segment was concerned, some documents (not the, ballot papers) had been snatched away by hooligans.
The observer had asked the returning officer to send a detailed report over and above the wireless message.
That report, dated March 21, reached the Commission on March 23, but, without waiting for the, report we need not probe the reasons for the hurry the Commission issued the order cancelling the poll.
The Chief Election Commissioner has filed a laconic affidavit leaving to the Secretary of the Commission to go into the details of the facts, although the Chief Election Commissioner must himself have had them within his personal ken.
This aspect also need not be examined by us and indeed cannot be, for reasons which we will presently set out.
Be that as it may, the Chief Election Commissioner admitted in his affidavit that the appellant met him in his office on the morning of March 22, 1977 with the request that the returning officer be directed to declare the result.
He agreed to consider and told him him off,, and eventually passed an order as mentioned above.
The then Chief Election Commissioner has mentioned in his affidavit that the observer Shri Menon had apprised him of "the various incidents and developments regarding the counting of votes in the constituency" and also had submitted a written report.
He has also admitted the receipt of the wireless message, of the returning officer.
He concludes his affidavits 'that after taking all these circumstances and information including the oral representation of the 1st petitioner into account on "2nd Much, 1977 itself I passed the order cancelling the poll in the said Parliamentary constituency.
In my view this was the only proper course to adopt in the circumstances of the case and with a view to ensuring fair and free elections, particularly when even a recount bad been rendered impossible by reason of the destruction of ballot papers. ' The order of the Election Commission, resulting in the demolition of the poll already held, may be read at this stage.
282 "ELECTION COMMISSION OF INDIA New Delhi Dated 22 March, 1977 Chaitra 1, 1899 (SAKA) NOTIFICATION S.O.
Whereas the Election Commission has received reports from the Returning Officer of 13 Ferozepore Parliamentary Constituency that the counting on 21 March, 1977 was seriously disturbed by violence; that the ballot papers of some of the assembly segments of the Parliamentary constituency have been destroyed by violence; that as a consequence it is not possible to complete the counting of the votes in the constituency and the declaration of the result cannot be made with any degree of certainty: And whereas the Commission is satisfied that taking all circumstances into account, the poll in the constituency has been vitiated to such an extent as to effect the result of the election; Now, therefore, the Commission, in exercise of the powers vested in it under Article 324 of the Constitution, Section 153 of the, Representation of the People Act, 1951 and all other powers enabling it so to do, cancels the poll already taken in the constituency and extends the time for the completion of the election up to 30 April, 1977 by amending its notification No. 464/77, dated 25 February, 1977 in respect of the above election as follows : In clause (d) of item (i) of the said notification, relating to the completion of election (a) in the existing item (i), after the words "State of Jammu and Kashmir", the words "and 13 Ferozepur Parliamentary constituency in the State of Punjab" shall be inserted; and (b) The existing item (ii) shall be renumbered as item (iii), and before the item (iii) as so renumbered, the following item shall be inserted, namely : "(iii) 30 April 1977 (Saturday) as the date before which the election shall be completed in "13Ferozepur Parliamentary constituency in the State of Punjab." [464/77] By order Sd/ A. N. Sen, Secretary The Commission declined to reconsider his decision when the appellant pleaded for it.
Shocked by the liquidation of the entire poll, the latter moved the High Court under Article 226 and sought to void the order as without jurisdiction and otherwise arbitrary and violative of any vestige of fairness.
He was met by the objection, successfully urged by the respondents 1 and 3, that the High Court 283 had no jurisdiction in view of Article 329(b) of the Constitution and the Commission had acted within its wide power under Article 324 and fairly.
Holding that it had no jurisdiction to entertain the writ petition.
the High Court never the less ]proceeded to enter verdicts on.the merits of all the issues virtually exercising even the entire ,jurisdiction which exclusively belonged to the Election Tribunal.
The doubly damnified appellant has come up to this Court in appeal by special leave.
Meanwhile, pursuant to the, Commission 's direction, a re poll was held.
Although the appellant 's name lingered on the ballot he did not participate in the re poll and respondent 3 won by an easy plurality although numerically those who voted were less than half of the, previous poll.
Of course, if the Commission 's order for re poll fails in law, the second electoral exercise has to be dismissed as a stultifying futility.
Two things fall to be mentioned at this stage, but, in passing, it may be stated that the third respondent had complained to the Chief Election Commissioner that the assistant returning officer of Fazilka segment had declined the request for recount unreasonably and that an order for re poll of the Fazilka assembly part should be made 'after giving personal hearing '.
Meanwhile, runs the request of the third respondents 'direct the returning officer to withhold declaration of result of 13 Ferozepore parliament constituency '.
We do not stop to make inference from this document but refer to it as a material factor which may be considered by the tribunal which, eventually, has to decide, the factual controversy.
The second equally relevant matter is that when a statutory functionary makes an order based on certain grounds, its validity must be judged by the reasons so mentioned and cannot be supplemented by fresh reasons in the shape of affidavit or otherwise.
Otherwise, an order bad in the beginning may, by the time it comes to court on account of a challenge, get validated by additional grounds later brought ,out.
We may here draw attention to the observations of Bose J. in Gordhandas Bhanji (1) "Public orders, publicly made, in exercise of a statutory authority cannot be construed in the light of explanations subsequently given by the officer making the order of what he meant, or of what was in Ms mind, or what he intended to, do.
Public orders made by public authorities are meant to have public effect and are intended to effect the actings and conduct of those to whom they are addressed and must be construed objectively with reference to the language used in the order itself.
" Orders are not like old wine becoming better as they grow older: A Caveat.
We must, in limine, state that anticipating our decision on the blanket ban on litigative interference during the process of the election, clamped down by Article 329(b) of the Constitution we do not propose to enquire into or pronounce upon the factual complex or the (1) A.I.T. 284 lesser legal tangles, but only narrate the necessary circumstances of the case to get a hang of the major issues which we intend adjudicating.
Moreover, the scope of any actual investigation in the event of controversion in any petition under Article 226 is ordinarily limited and we have before us an appeal from the High Court dismissing a petition under Article 226 on the score that such a proceeding is constitutionally out of bounds for any court, having regard to the mandatory embargo.
in Article329(b).
We should not,except in exceptional circumstances, breach the recognised, though not inflexible, boundaries of Article 226 sitting in appeal, even assuming the maintainability of such a petition.
Indeed, we should have expected the High Court to have considered the basic jurisdictional issue first, and not last as it did, and avoided sallying forth into a discussion and decision on the merits, self contra dicting its own holding that it had no jurisdiction even to entertain the petition.
The learned Judges observed : "It is true that the submission at serial No. 3 above in fact relates to the preliminary objection urged on behalf of respondents 1 and 3 and should normally have been dealt with & St but since the contentions of the parties on submission No. 1 are inter mixed with the interpretation of Article 329(b) of the Constitution, we thought it proper to deal with them in the order in which they have been made.
" This is hardly a convincing alibi for the extensive per incuriam examination of facts and law gratuitously made by the Division Bench of the High Court, thereby generating apprehensions in the appellant 's mind that not only is his petition not maintainable but he has been damned by damaging findings on the merits.
We make it unmistakably plain that the election court hearing the dispute on the same subject under section 98 of the R.P. Act, 1951 (for short, the Act) shall not be moved by expressions of opinion on the merits made by the Delhi High Court while dismissing the writ petition.
An obiter binds none, not even the author, and obliteration of findings rendered in supererogation must alley the appellant 's apprehensions.
This Court is in a better position than the High Court, being competent, under certain circumstances, to declare the law by virtue of its position under Article 141.
But, absent such authority or duty, the High Court should have abstained from its generosity.
Lest there should be any confusion about possible slants inferred from our synoptic statements, we clarify that nothing projected in this judgment is intended to be an expression of our opinion even indirectly.
The facts have been set out only to serve as a peg to hang three primary constitutional issues which we will formulate a little later.
Operation Election Before we proceed further, we had better have a full glimpse of tie, constitutional scheme of elections in our system and the legislative follow up regulating the process of election.
Shri Justice Mathew in lndira Nehru Gandhi(1) summarised skeletal fashion, this scheme (1) 285 following the pattern adopted by Fazal Ali, J. in Ponnuswami.
; He explained : "The concept of democracy as visualised by the Constitution presupposes the representation of the people in Parliament and state legislatures by the method of election.
And, before an election machinery can be brought into operation, there are three requisites which require to be attended to, namely, (1) there should be a set of laws and rules making provisions with respect to all matters relating to, or in connection with, elections, and it should be decided as to how these laws and rules are to be made; (2).
there should be an executive charged with the duty of securing the due conduct of elections; and (3) there should be a judicial tribunal to deal with disputes arising out of or in connection with elections.
Articles 327 and 328 deal with the first of these requisites, article 324 with the second and article 329 with the third requisite (see N. P. Ponnuswami vs Returning Officer, Nanmakkal Constituency & Ors. ; , 229).
Article 329 (b) envisages the challenge to an election by a petition to be presented to such authority as the Parliament may, by law, prescribe.
A law relating to election should contain the requisite qualifications for candidates, the method of voting, definition of corrupt practices by the candidates and their election agents, the forum for adjudication of election disputes and other cognate matters.
It is on the basis of this law that the question determined by the authority to which the petition is presented.
And, when a dispute is raised as regards the validity of the election of a particular candidate, the authority entrusted with the task of resolving the dispute must necessarily exercise, a judicial function, for, the process consists of ascertaining the facts relating to the election and applying the law to the facts so ascertained.
" A short description of the legislative project in some more detail may be pertinent, especially touching on the polling process in the booths and the transmission of ballot boxes from the polling stations to the returning officer 's ultimate counting station and the crucial prescriptions regarding annuoncements and recounts and declarations.
We do not pronounce upon the issues regarding the stage for and right of recount.
the validity of votes or other factual or legal disputes since they fall for decision by the Election Court where the appellant has filed an election petition by way of abundant caution.
A free and fair election based on universal adult franchise is the basic; the regulatory procedures vis a vis the repositories of functions and the distribution of legislative, executive and judicative roles in the total scheme, directed towards the holding of free elections, are the specifics.
Part XV of the Constitution plus the Representation of the People Act, 1950 (for short, the 1950 Act) and the Representation of the People Act, 1951 (for short, the Act), Rules framed there under, instructions issued and exercises prescribed, constitute the package of 286 electoral law governing the parliamentary and assembly elections in the country.
The super authority is the Election Commission, the kingpin is the returning officer, the minions are the presiding officers in the polling stations and the electoral engineering is in conformity with the elaborate legislative provisions.
The scheme is this.
The President of India (Under Section 14) ignites the general elections across the nation by calling upon the People, divided into several constituencies and registered in the electoral rolls, to choose their representatives to the Lok Sabha.
The constitutionally appointed authority, the Election Commission, takes over the whole conduct and supervision of the mammoth enterprise in volving a plethora of details and variety of activities, and starts off with the notification of the time table for the, several stages of the election (Section 30).
The assembly line operations then begin.
An administrative machinery and technology to execute these enormous and diverse jobs is fabricated by the Act, creating officers, powers and duties, delegation of functions and location of polling stations.
The precise exercise following upon the calendar for the poll, commencing from presentation of nomination papers, polling drill and telling of votes,, culminating in the declaration and report of results are covered by specific prescriptions in the Act and the rules.
The secrecy of the ballot, the authenticity of the voting paper and its later identifiability with reference to particular polling stations, have been thoughtfully provided for.
Myriad other matters necessary for smooth elections have been taken care of by several provisions of the Act.
The wide canvas so spread need not engage us sensitively, since such diffusion may weaken concentration on the few essential points concerned in this case.
One such aspect relates to repoll.
Adjournment of the poll at any polling station in certain emergencies is sanctioned by section 57 and fresh poll in specified vitiating contingencies is authorised by section 58.
The rules run into more particulars.
After the votes are cast comes their counting.
Since the simple plurality of votes clinches the verdict, as the critical moment approaches, the situation is apt to hot up, disturbances erupt and destruction of ballots disrupt.
If disturbance or destruction demolishes the prospect of counting the total votes, the number secured by each candidate and the ascertainment of the will of the majority, a re poll confined to disrupted polling stations is provided for.
Section 64A chalks out the conditions for and course of such repoll, spells out the power, and repository thereof and provides for kindred matters.
At this stage we may make a closer study of the provisions regarding repoll systematically and stagewise arranged in the Act.
It is not the case of either side that a total repoll of an entire constituency is specificated in the sections or the rules.
Reliance is placed for this wider power upon Article 324 of the Constitution by the Commission in its order, by the first respondent in his affidavit, by the learned Additional Solicitor General in his argument and by the third respondent through his counsel.
We may therefore have to study the scheme of.
article 324 and the provisions of the, Act together since they are integral to each other.
Indeed, if we may mix metaphors for emphasis, the legislation made pursuant to Article 327 and that part of the Constitution specially devoted to elections must be 287 viewed as one whole picture, must be heard as an orchestrated piece and must be interpreted as one package of provisions regulating perhaps the most stressful and strategic aspect of democracy in action so dear to the nation and so essential for its survival.
The lis and the issues Two prefatory points need to be mentioned as some reference was made to them at the bar.
Firstly, an election dispute is not like an ordinary lis between private parties.
The entire electorate is vicariously, not inertly, before the court.
(See ; , 616, 622).
We may, perhaps, call this species of cases collective litigation where judicial activism assures justice to the constituency, guardians the purity of the system and decides the rights of the candidates.
In this class of cases, where the common law tradition is partly departed from, the danger that the active judge may become, to some extent, the prisoner of his own prejudices exists; and so, notwithstanding his powers of initiative, the parties ' role in the formulation of the issues and in the presentation of evidence and argument should be substantially maintained and care has to be taken that the circle does not become a vicious one, as pointed out by J.A. Jolowicz in. 'Public Interest Parties and the Active Role of the Judge in Civil Litigation ' (sections p. 276).
Therefore, it is essential that courts, adjudicating upon election controversies, must play a verily active role, conscious all the time that every decision rendered by the Judge transcends private rights and defends the constituency and the democracy of the country.
Secondly, the pregnant problem of power and its responsible exercise is one of the perennial riddles of many a modern constitutional order.
Similarly, the periodical process of free and fair elections.
uninfluenced by the caprice, cowardices or partisanship of hierarchical authority holding it and unintimidated by the threat, tantrum or vandalism of strong arm tactics, exacts the embarrassing price of vigilant monitoring.
Democracy digs its grave where passions, tensions and violence, on an overpowering spree, upset results of peaceful polls, and the law of elections is guilty of sharp practice if it hastens to legitimate the fruits of lawlessness.
The judicial branch has a sensitive responsibility her to call to order lawless behaviour.
Forensic non action may boomerang, for the court and the law are functionally the bodyguards of the People against bumptious power, official or other.
We now enter the constitutional zone relating to the controversy in this case.
Although both sides have formulated the plural problems with some divergence, we may compress them into three cardinal questions : 1.Is article 329(b) a blanket ban on all manner of questions which may have impact on the ultimate result of the election, arising between two temporal termini viz., the notifi cation by the President calling for the election and the declaration of the result by the returning officer ? Is article 226 also covered by this embargo and.
if so, is section 100 broad enough to accommodate every kind of objection, constitutional, legal or factual, which may have the result of invalidation of an 288 election and the declaration of the petitioner as the returned candidate and direct the organisation of any steps necessary to give full relief ? 2.Can the Election Commission, clothed with the comprehensive functions under Article 324 of the Constitution, cancel the whole poll of a constituency after it has been held, but before the formal declaration of the result has been made, and direct a fresh poll without reference to the guidelines under sections 58 and 64(a) of the Act, or other legal prescription or legislative backing.
If such plenary power exists, is it exercisable on the basis of his inscrutable 'subjective satisfaction ' or only on a reviewable objective assessment reached on the basis of circumstances vitiating a free and fair election and warranting the stoppage of declaration of the result and directions of a fresh poll not merely of particular polling stations but of the total constituency ? 3.Assuming a constitutionally vested capacity tinder article 324 to direct re poll, is it exercisable only in conformity with natural justice and geared to the sole goal of a free, popular verdict if frustrated on the first occasion ? Or, is the Election Commission immune to the observance of the doctrine of natural justice on account of any recognised exceptions to the application of the said principle and unaccountable for his action even before the Election Court ? The juridical aspect of these triple questions alone can attract judicial jurisdiction.
However.
even if we confine ourselves to legal problematics, eschewing the political overtones, the words of Justice Holmes will haunt the Court : "We are quiet here, but it is the quiet of a storm centre.
" The judicature must, however.
be illumined in its approach by a legal sociological guidelines and a princi pled pragmatic insight in resolving, with jural tool and techniques s ,ind techniques. 'the various crises of human affairs ' as they reach the forensic stage and seek dispute resolution in terms of the rule of law.
Justice Cordozo felicitously set the perspective "The great generalities of the Constitution have at content and significance that vary from age to age." Chief Justice Hidayatullah perceptively articulated the insight "One must, of course, take note of the synthesized authoritative content or the moral meaning of the underlying ' principle of the, prescriptions of law, but not ignored the historic revolution of the, law itself or how it was connected in its changing moods with social requirements of a particular age.
(Judicial Methods, B. N. Rau Memorial Lecture) The old articles of the supreme lex meet new challenges of life, the old legal pillars suffer new stresses.
So we have to adopt the law and develop its latent capabilities if novel situations, as here, are encountered.
That is why in the reasoning we have adopted and the 289 perspective we have projected, not literal nor lexical but liberal and visional is our interpretation of the Articles of the Constitution and the provisions of the Act.
Lord Denning 's words are instructive "Law does not stand still.
It moves continually.
Once; this is recongnised, then the task of the Judge is put on a higher plane.
He must consciously seek to mould the law so as to serve the needs of the time.
He must not be a mere, mechanic, a mere working mason, laying brick on brick, without thought to the overall design.
He must be an archi tect thinking of the structure as a whole building for society a system of law which is strong, durable and just.
It is on his work that civilised society itself depends.
" The invulnerable barrier of Art.329 (b).
Right at the forefront stands in the way of the appellant 's progress the broad spectrum ban of Article 329(b) which, it is claimed for the respondents, is imperative and goal oriented.
Is this Great Wall of China, set up as a preliminary bar, so impregnable that it cannot be by passed even by article 226 ? That, in a sense, is the key question that governs the fate of this appeal.
Shri P. P. Rao for the appellant contended that, however, wide article 329(b) may be, it does not debar proceedings challenging, not the steps promoting election but dismantling it, taken by the Commission without the backing of legality.
He also urged that his client, who had been nearly successful in the poll and had been deprived of it by an illegal cancellation by the Commission, would be left in the cold without any remedy since the challenge to cancellation of the completed poll in the entire constituency was not covered by section 1 00 of the Act.
Many subsidiary pleas also were put forward but we will focus on the two inter related submissions bearing on article 329(b) and section 100 and search for a solution.
The problem may seem prickly but an imaginative application of principles and liberal interpretation of the constitution and the Act will avoid anomalies and assure justice.
if we may anticipate our view which will presently be explained, section 100 (1 ) (d) (iv) of the Act will take care of the, situation present here, being broad enough, as a residual provision, to accommodate, in expression 'non compliance ', every excess, transgression, breach or omission.
And the spen of the, ban under article 329(b) is measured by the sweep of section 100 of the Act.
We have to proceed heuristically now.
Article 329(b) reads Notwithstanding anything in this Constitution "(b) no election to either House of Parliament or to the House or either House of the Legislature of a State shall be called in question except by an election petition presented to such authority and in such manner as may be Provided for by or under any law made by the appropriate Legislature.
" Let us break down the prohibitory provision into its components.
The sole remedy for an aggrieved party, if he wants to challenge any election, is an election petition.
And this exclusion of all other remedies 290 includes constitutional remedies like article 226 because of the nonobstante clause.
If what is impugned is an election the ban operates provided the proceeding 'calls it in question ' or puts it in issue: not otherwise.
What is the high policy animating this inhibition '? Is there any interpretative alternative which will obviate irreparable injury and permit legal contests in between? How does section 100 (1) (d) (iv) of the Act integrate into the scheme? Let us read section 100 here : "Subject to the provisions of sub section (2) if the High Court is of opinion x x x (d)that the result of the election, in so far as it concerns a returned candidate, has been materially affected x x x (iv) by any non compliance with the provisions of the Constitution or of the Act or of any rules or orders made under this Act the High Court shall declare the election of the returned candidate to be void.
The companion provision, viz., section 98 also may be extracted at this,star, : "At the conclusion of the trial of an election petition the High Court shall make an order (a) dismissing the election petition; or (b) declaring the election all or any of the returned candidates to be void; or (e) declaring the election of all or any of the returned candidates to be void and the petitioner or any other candidate to have been duly elected.
" Now arises the need to sketch the scheme of section 1 00 in the setting of Art.329(b).
The troublesome word 'non compliance ' holds in its fold a teleologic signification which resolves the riddle of this case in, a way.
So we will address, ourselves to the meaning of meanings the values within the words and the 'project unfolded '.
This will be taken up one after the other.
At the first blush we get the comprehensive impression that every calling in question of an election save, at the end, by an election petition, is forbidden.
What, then, is an election ? What is 'calling in question ? Every step from start to finish of the total process constitutes 'election ', not merely the conclusion or culmination.
Can the cancella tion of the entire poll be called a step in the process and for the progress of an election, or is it a reverse step of undoing what has been done in the progress of the election, non step or anti step setting at nought the process and, therefore, not a step towards the goal and hence liberated from the coils of article 329(b) ? And, if this act or step were to be shielded by the constitutional provision, what is an aggrieved party to do 9 This takes us to the enquiry about the ambit of section 100 of the Act and the object of article 329 (b) read with article 324.
Such is the outline of the complex issue projected before us.
291 'The election philosophy and the principle in Ponnuswami Democracy is government by the people.
It is a continual participative operation, not a cataclysmic, periodic exercise.
The little man, in his multitude, marking his vote at the poll does a social audit of his Parliament plus political choice of his proxy.
Although the full flower of participative Government rarely blossoms, the minimum credential of popular government is appeal to the people after every term for a renewal of confidence.
we have adult franchise and general elections as constitutional compulsions. 'The right of election is the very essence of the constitution ' (Junius).
It needs little argument to hold that the heart of the Parliamentary system is free, and fair elections periodically held, based on adult franchise, although social and economic democracy may demand much more.
Ponnuswami is a landmark case in election laws and deals with the scope, amplitude, rationale and limitations of article 329(b).
its ratio has been consistently followed by this Court in several rulings through Durga Shankar Mehta (1) and Hari Vishnu Kamath and Khare (2) down to Indira Gandhi(3).
The factual setting in that case may throw some light on the decision itself.
The appellant 's nomination for election to the Madras Legislative Assembly was rejected by the Returning Officer and so he hurried to the High Court praying for a writ of certiorari to quash the order of rejection, without waiting for the entire elective process to run its full course and, at the end of it, when the results also were declared, to move the election tribunal for setting aside the result of the election conducted without his participation.
He thought that if the election proceeded without him irreparable damage, would have been caused and therefore sought to intercept the progress of the election by filing a writ petition.
The High Court dismissed it as unsustainable, thanks to article 329(b) and this court in appeal, affirmed that holding.
Fazal Ali, J. virtually spoke for the Court and explained the principle underlying article 329(b).
The ambit and spirit of the bar imposed by the Article was elucidated with reference to the principle that 'it does not require much argument to show that in a country with a democratic constitution in which the legislatures have to play a very important role, it will lead to serious consequences if the elections are unduly protracted or obstructed. ' In the view of the, learned Judge, immediate individual relief at an intermediate stage when the process of election is under way has to be sacrificed for the paramount public good of promoting the completion of elections.
Fazal Ali, J. ratiocinated on the ineptness of.
interlocutory legal bold ups.
He posed the issue and answered it thus : "The question now arises whether the law of elections in this country contemplates that there should be two attacks on matters connected with election proceedings, one while they are going on by invoking the extraordinary jurisdiction of the High Court under article 226 of the Constitution (the ordinary (1) [1955] 1 section C. R. 267 (2) ; (3) 6 1114SCI/77 292 jurisdiction of the courts having been expressly excluded), and another after they have been completed by means of an election petition.
In my opinion, to affirm such a position would be contrary to the scheme of Part XV of the Constitution and the Representation of the People Act, which, as I shall point out later, seems to.
be that any matter which has the effect of vitiating an election should be brought up only at the appropriate stage in an appropriate manner before a special tribunal and should not be brought up at an 'intermediate stage before any court.
It seems to me that under the election law, the only significance which the rejection of a nomination paper has consists in the fact that it can be used as a ground to Call the election in question.
Article 329(b) was apparently enacted to describe the manner in which end the stage at which this ground, and other grounds which may be raised under the law to call the election in question, could be urged.
I think it follows by necessary implication from the language of this provision that those grounds cannot be urged in any other manner, at any other stage and before any other court.
If the grounds on which an election can be called in question could be raised at an earlier stage and errors, if any are rectified, there will be no meaning in enacting a provision like Article 329(b) and in setting up a special tribunal.
Any other meaning ascribed to the words used in the article would lead to anomalies, which the Constitution could not have contemplated, one of them being that conflicting views may be expressed by the High Court at the pre polling stage and by the election tribunal, which is to be an, independent body, at the stage when the matter is brought before it.
Having thus explained the raison d 'etre of the provision, the Court proceeded to interpret the concept of election in the scheme of Part XV of the Constitution and the Representation of the People Act, 1951.
Articles 327 and 328 take care of the act of laws and rules making provisions with respect to all matters relating to or in connection with, elections. ' Election disputes were also to be provided for by laws made under Article 327.
The Court emphasised that Part XV of the Constitution was really a code in itself, providing the entire ground work for enacting the appropriate laws and setting up suitable machinery for the conduct of elections.
The scheme of the Act enacted by Parliament was also set out by Fazal Ali, J. ' "Part VI deals with disputes regarding elections and provides for the manner of presentation of election petitions, the constitution of election tribunals and the trial of election petitions part VII outlines the various corrupt and illegal practises which may affect the elections, and electoral offences.
Obviously, the Act is self contained enactment so far as elections are concerned, which means that whenever we have to ascertain the true position in regard to any matter connected made thereunder.
The provisions of the Act which are material to the present discussion are sections 60, 100, 105 and with elections, we have only to look at the Act and the rules 293 170, and the provisions of Chapter 11 of Part IV dealing with the form of election petitions , their contents and the reliefs which may be sought in them.
Section 80, which is drafted in almost the same language as article 329(b) provides that ,no election shall be called in question except by an election petition presented in accordance with the provisions of this Part '.
Section 1 00, as we have already seen, provides for the grounds on which an election may be called in question, one of which is the improper rejection of a nomination paper, Section 105 says that 'every order of the Tribunal made under this Act shall be final and conclusive.
Section 170 provides that 'no civil court shall have jurisdiction to question the legality of any action taken or of any decision given by the Returning Officer or by any other person appointed under this Act in connection with an election.
" There have been amendments to these provisions but the profile remains substantially the same.
After pointing out that the Act, in section 80, and the Constitution, in article 329(b), speak substantially the same language and inhibit other remedies for election grievances except through the election tribunal, the Court observed "That being so, I think it will be a fair inference from the provisions of the Representation of the People Act to state that the Act provides for only one remedy, that remedy being by an election petition to be presented after the election is over, and there is no remedy provided at any intermediate stage.
" There is a non obstante clause in Article 329 and, therefore, Article 22.6 stands pushed out where the dispute takes the form of calling in question an election, except in special situations pointed out but left unexplored in Ponnuswami.
The heart of the matter is contained in the conclusions summarised by the Court thus : "(1) Having regard to the important functions which the legislatures have to perform in democratic countries, it has always been recognised to be a matter of first importance that elections should be concluded as early as possible according to time schedule and all controversial matters and all disputes arising out of elections should be postponed till after the elections are over, so that the election proceedings may not be unduly retarded or protracted.
(2)In conformity with this principle, the scheme of the election law in this country as well as in England is that no significance should be attached to anything which does not affect the "election"; and if any irregularities are committed while it is in progress and they belong to the category or class which, under the law by which elections are governed, would have the effect of vitiating the "election" and enable the person effected to call it in question, they should be brought so before a special tribunal by means of an election petition 294 and not be made the subject of a dispute before any court while the election is in progress.
" After elaborately setting out the history in England and in India election legislation vis a vis dispute resolution, Fazal Ali J. stated "If the language used in article 329(b) is considered against this historical background, it should not be difficult to see why the framers of the Constitution framed that provi sion in its present form and chose the language which had been consistently used in certain earlier legislative provisions and which bad stood the test of time." Likewise the Court discussed the, connotation , of the expression election ' in Article 329 and observed : "That word has by long usage in connection with the process of selection of proper representatives in democratic institutions, acquired both a wide and a narrow meaning.
In the narrow sense, it is used to mean the final selection of a candidate which may embrace the result of the poll when there is polling or a particular candidate being returned unopposed when there is no poll.
In the wide, sense, the word is used to connote the entire process culminating in a candidate being declared elected.
it seems to me that the word "election " has been used in Part XV of the Constitution in the wide sense, that to say to connote the entire procedure, to be gone through to return a candidate to the legislature.
That the word "election" bears this wide meaning wheneverwe talk of elections in a democratic country, is borne out bythe fact that in most of the books on the subject and in several cases dealing with the matter, one of the questions mooted is, when the election begins The rainbow of operations, covered by the compendious expression election, thus commences from the initial notification and culminates in the declaration of the return of a candidate,.
The paramount policy of the Constitution framers in declaring that no election shall be called in question except the way it is provided for in Article 329 (b) and the Representation of the People Act, 1951, compels us to read, as Fazal Ali, J. did in Pannuswami, the Constitution and the Act together as an integral scheme.
The reason for postponement of election litigation to.
the post election stage is that elections poll not unduly be protracted or obstructed.
The speed and promptitude in getting due representation for the electors in the legislative bodies is the real reason suggested in the course of judgment.
Thus for everything is clear.
No litigative enterprise in the High Court or other court should be allowed to hold up the on going electoral process because the parliamentary representative for the constituence should be chosen promptly.
Article 329 therefore covers "electoral matters".
One interesting argument, urged without success in Ponnuswami elicited a reasoning from the Court which has some bearing on the question in the present appeal.
That argument was that if nomina 295 tion was part of election a dispute as to the validity of the nomination was a dispute relating to election and could be called in question, only after the whole election was over, before the election tribunal.
This meant that the Returning Officer could have no jurisdiction to decide the validity of a nomination, although section 36 of the Act conferred on him that jurisdiction.
The learned Judge dismissed this argument as without merit, despite the great dailectical ingenuity in the submission.
In this connection the learned Judge observed "Under section 36 of the Representation of the People Act, 1951, it is the duty of the Returning Officer to scrutinize the nomination papers to ensure that they comply with the requirements of, the Act and decide all objections which be made to any nomination.
It is clear that unless this duty is discharged properly, any number of candidates may stand for election without complying with the provisions of the Act and a great deal of confusion may ensue.
In discharging the statutory duty imposed on him, the Returning Officer does not call in question any election.
Scrutiny of nomination papers is only a stage, though an important stage, in the election process.
It is one of the essential duties to be performed before the election can be completed, and anything done towards the completion of the election proceeding can by no stretch of reasoning be described as questioning the election.
The fallacy of the argument lies in treating a single step taken in furtherance of an election as equivalent to election.
The decision of this appeal however turns not on the construction of the single word "election", but on the construction of the compendious expression no election shall be called in question" in this context and setting with due regard to the scheme of Part XV of the Constitution and the Representation of the People Act, 1951.
Evidently, the argument has no, bearing on this method of approach to the question posed in this appeal, which appears to me the only correct method.
" What emerges from this perspicacious reasoning, if we may say so with great respect, is that any decision sought and rendered will not amount to 'calling in question ' an election if it subserves the progress of the election and facilitates the completion of the election. 'Ale should not slur over the quite essential observation " Anything done towards the completion of the election proceeding can by no stretch of reasoning be described as questioning the election.
Likewise, it is fallacious to treat 'a single step taken in furtherance of an election as equivalent to election '.
Thus, there are two types of decisions, two types of challenges.
The first relates to proceedings which interfere with the progress of the election.
The second accelerates the completion of the election and acts in furtherance of an election.
So, the short question before us, in the light of the illumination derived from Ponnuswami, is as to whether the order for re poll of the Chief Election Commissioner is "anything done towards the completion of the election proceeding ' and whether the proceedings before the High Court facilitated the election process or halted its progress.
The question immediately arises as to whether 296 the relief sought in, the writ petition by the present appellant amounted to calling in question the election.
This, in turn, revolves round the point as to whether the cancellation of the poll and the reordering of fresh poll is 'part of election ' and challenging it is 'calling it in question.
The plenary bar of article 329 (b) rests on two principles : (1) The peremptory urgency of prompt engineering of the whole election process without intermediate interruptions by way of legal proceedings challenging the steps and stages in between the commencement and the conclusion.
(2) The provision of a special jurisdiction which can be invoked by an aggrieved party at the end of the election excludes other form, the right and remedy being creatures of statutes and controlled by the Constitution.
Durga Shankar Mehta(1) has affirmed this position and supplemented it by holding that, once the Election Tribunal has decided, the prohibition is extinguished and the Supreme Court 's over all power to interfere under article 136 springs into, action.
In Hari Vishnu(2) this Court upheld the rule in Ponnuswami excluding any proceeding, including one under article 226, during the on going process of election, understood in the comprehensive sense of notification down to declaration.
Beyond the declaration comes the election petition, but beyond the decision of the Tribunal the ban of article 329(b) does not bind.
If 'election ' bears the larger connotation, if 'callinng in question ' possesses a semantic sweep in plain English, if policy and principle are tools for interpretation of statutes, language permitting the conclusion is irresistible ' even though the argument contra may have emotional impact and ingenious appeal, that the catch all jurisdiction under article 226 cannot consider the correctness, legality or otherwise of the direction for cancellation integrated with re poll.
For, the prima facie purpose of such a re poll was to restore a detailed Poll process and to, complete it through the salvationary effort of a repoll.
Whether in fact or law, the order is validly made within his powers or violative of natural justice can be examined later by the appointed instrumentality, viz., the Election Tribunal.
That aspect will be explained presently.
We proceed on the footing that re poll in one polling station or it many polling stations for good reasons, is lawful.
This shows that re poll in many or all segments, all pervasive or isolated, can be lawful.
We are not considering whether the act was bad for other reasons.
We are concerned only to say that if the regular poll, for some reasons, has failed to reach the goal of choosing by plurality the returned candidate and to achieve this object a fresh poll (not a new election) is needed, it may still be a step in the election.
The deliverance of Dunkirk is part of the strategy of counter attack.
Wise or valid, is another matter.
On the assumption, but leaving the question of the validity of the direction for re poll soon for determination by the Election Tribunal, we hold that a writ petition challenging the cancellation coupled with re poll amounts to calling in question a step in 'election! and is there, fore barred by article 329(b).
If no re poll had been directed the legal perspective would have been very different.
The mere cancel (1) [1955] 1 S.C.R. 267.
(2) ; 297 lation would have then thwarted the course of the election and different considerations would have come into play.
We need not chase a hypothetical case.
Our conclusion is not a matter of textual interpretation only but a substantial assurance of justice by reading section 100 of the Act as covering the whole basket of grievances of the candidates.
Sri P. P. Rao contended that the Court should not deny relief to a party in the area of elections which are the life breath of democracy and people 's power.
We agree.
This dilemma does not arise in the wider view we take of section 100 (1) (d) (iv) of the Act.
Sri Rao 's attack on the order impugned is in substance based on alleged non compliance with a provision of the Constitution viz., article 324 but is neatly covered by the widely worded, residual catch all clause of section 100.
knowing the supreme significance of speedy elections in our system the framers of the Constitution have, by implication, postponed all election disputes to election petitions and tribunals.
In harmony with this scheme section 100 of the Act has been designedly drafted to embrace all conceivable infirmities which may be urged.
To make the project fool proof section 100(1) (d) (iv) has been added to absolve everything left over.
The Court has in earlier rulings pointed out that section 100 is exhaustive of all grievances regarding an election.
But what is banned is not anything whatsoever done or directed by the Commissioner but everything he does or directs in furtherance of the election, not contrariwise.
For example, after the President notifies the nation on the holding of elections under section 15 and the Commissioner publishes the calendar for the poll under section 30, if the latter orders returning officers to accept only one nomination or only those which come from one party as distinguished from other parties or independents, is that order immune from immediate attack.
We think not.
Because the Commissioner is preventing an election, not promoting it and the courts review of that order will facilitate the flow, not stop the stream.
Election, Wide or narrow be its connotation, means choice from a possible plurality monolithic politics not being our genius or reality, and if that concept is crippled by the Commissioner 's act, he holds no election at all.
A poll is part a vital part of the election but with the end of the poll the whole election IS not over.
Ballots have to be assembled, scrutinised, counted recount claims considered and result declared.
The declaration determines the election.
The conduct of the election thus ripens into the elector 's choice only when processed, screened and sanctified, every escalatory step upto the formalised finish being unified in purpose, forward in movement, fair and free in its temper.
Article 329(b) halts judicial intervention during this period, provided the act possesses the pre requisites of 'election ' in its semantic sweep.
That is to say, immunity is conferred only if the act impeached is done for the apparent object of furthering a free and fair election and the protective armour drops down if the act challenged is either unrelated to.
or thwarts or taints the course of the election.
Having held against the maintainability of the writ petition, we should have parted with the case finally.
But counsel for both the 298 candidates and, more particularly, the learned Additional Solicitor General, appearing for the Election Commission, submitted that the breadth, applitude and implications, the direction and depth of Article 324 and, equally important, the question of natural justice raised under Article 324 are of such public importance and largely fallow field going by prior pronouncements, and so strategic for our democracy and itspower process that this Court must decide the issue here and now.
Article 141 empowers and obligates this Court to declare the law forthe country when the occasion asks for it.
Counsel, otherwise opposing one another, insistently concurred in their request that for the working of the electoral machinery and understanding of the powers and duties vested in the functionaries constituting the infra structure, it is essential to sketch the ambit and import of article 324.
This point undoubtedly arises before us even in considering the prohibition under article 329 and has been argued fully.
In any view, the Election Triburial will be faced with this issue and the law must be laid down so that there may be no future error while disposing of the, election petition or when the Commission is called upon to act on later occasion.
This is the particular reason for our proceeding to decide what the content and parameters of article 324 are, contextually limited to situations analogous to the present.
We decide two questions under the relevant article, not argued, but as substantive pronouncements on the subject.
They are : (a) What in its comprehensive connotation does the conduct ' of elections mean or, for that matter, the superintendence, direction and control ' of elections ? (b) Since the text of the provision is silent about hearing before acting, is it permissible to import into article 324(1) an obligation to act in accord with natural justice ? Article 324, which we have set out earlier, is a plenary provision vesting the whole responsibility for national and State elections and, therefore, the necessary powers to discharge that function.
It is true that article 324 has to be read in the light of the constitutional scheme and the 1950 Act and the 1951 Act.
Sri Rao is right to the ex tent be insists that if competent legislative is enacted as visualized in Article 327 the Commission cannot shake himself free from the enacted prescriptions.
After all, as Mathew, J. has observed in Indira Gandhi : (supra) "In the opinion of some of the judges constituting the majority in Bharati 's case (supra), Rule of Law is a basic structure of the Constitution apart from democracy.
The rule of law postulates the pervasiveness of the spirit of law throughout the whole range of government in the sense of excluding arbitrary official action in any sphere." (p. 523) 299 And the supremacy of valid law over the Commission argues itself.
No one is an imperium in imperio in our constitutional order.
It is reasonable to hold that the Commissioner cannot defy the law armed by article 324.
Likewise, his functions are subject to the norms of fairness and he cannot act arbitrarily.
Unchecked power is alien to our system.
Even so, situations may arise which enacted law has not provided for.
Legislators are not prophets but pragmatists.
So it is that the Constitution has made comprehensive provision in article 324 to take care of surprise situations.
That power itself has to be exercised, not mindlessly nor mala fide, nor arbitrarily nor with partiality but in keeping with the guidelines of the rule of law and not stultifying the Presidential notification nor existing legislation.
More is not necessary to specify; less is insufficient to leave unsaid.
Article 324, in our view, operates in areas left unoccupied by legislation and the words 'superintendence, direction and control ' as well as 'conduct of all elections ' are the broadest terms.
Myriad maybes, too mystic to be precisely presaged, may call for prompt action to reach the goal of free and fair election.
It has been argued that this will create a constitutional despot beyond the pale of accountability; a Frankenstein 's monster who may manipulate the system into elected despotism instances of such phenomena are the tears of history.
To that the retort may be that the judicial branch, at the appropriate stage, with the potency of its benignant power and within the leading strings of legal guidelines, can call the bluff, quash the, action and bring order into the process.
Whether we make a triumph or travesty of democracy depends on the man as much as on the Great National Parchment.
Secondly, When a high functionary like the Commissioner is vested with wide powers the law expects him to act fairly and legally.
Article 324 is geared to the accomplishment of free and fair elections expeditiously.
Moreover, as held in Virendra(1) and Harishankar(2) discretion vested in a high functionary may be reasonably trusted to be used properly, not.
perversely.
If it is misused, certainly the Court has power to strike down the act.
This is well established and does not it is useful to remem "But the electorate lives in the hope that a sacred power will not so flagrantly be abused and the moving finger of history warns of the consequences that inevitably flow when absolute power has corrupted absolutely.
The fear of perversion is no test of power." lndira Nehru Gandhi vs Raj Narain(3).
The learned Additional Solicitor General brought to our notice rulings of this Court and of the High Courts which have held that article 324 was a plenary power which enabled the Commission to act even in the absence of specific legislation though not contrary to valid legislation.
Ordering a re poll for a whole constituency under compulsion of circumstances may be directed for the conduct of elections (1) ; (2) (3) at 657.
300 and can be saved by Aft.
324 provided it is bona fide necessary for the vindication of the free verdict of the electorate and the abandonment of the previous poll was because it failed to achieve that goal.
While we repel Sri Rao 's broadside attack on article 324 as confined to what the Act has conferred, we concede that even article 324 does not exalt the Commission into a law unto itself.
Broad authority 3 does not bar scrutiny into specific validity of the particular order.
Our conclusion on this limb of the contention is that Art, 324 is wide enough to supplement the powers under the Act, as here, but subject to the several conditions on its exercise we have set out.
Now we move on to a close up of the last submission bearing on the Commission 's duty to function within the leading strings of natural justice.
Indeed, natural justice is a pervasive facet of secular law where a spiritual touch enlivens legislation, administration and adjudication, to make fairness a creed of life.
It has many colours and shades, many forms and shapes and, save where valid law excludes, it applies when people are affected by acts of Authority.
It is the bone of healthy government, recognised from earliest times and not a mystic testament of judge made law.
Indeed, from the legendary days of Adam and of Kautilya 's Arthasastra the rule of law has had this stamp of natural justice which makes it social justice.
We need not go into these deeps for the present except to indicate that the, roots of natural justice and its foliage are noble and not newfangled.
Today its application must be sustained by current legislation, case law or other extant principle, not the hoary chords of legend and history.
Our jurisprudence has sanctioned its prevalence even like the Anglo American system.
The dichotomy between administrative and quasi judicial functions vis a vis the doctrine of natural justice is presumably obsolescent after Kraipak(1) in India and Schmit(2) in England.
Kraipak marks the watershed, if we may say so, in the application of natural justice to administrative proceedings.
Hegde, J., speaking for a bench of five judges observed, quoting for support Lord Parker in In re : H.K. (an infant) (3) "It is not necessary to examine these decisions as there is a great deal of fresh thinking on the subject.
The horizon of natural justice is constantly expanding." (p. 467) "The aim of the rules of natural justice is to secure jus tice or to put it negatively to prevent miscarriage of justice.
(1) (2) (3) , 630.
301 These rules can operate only in areas not covered by any law validly made.
In other words they do not supplant the law of the land but supplement it." (p. 468) "The validity of that limitation is not questioned.
If the purpose of the rules of natural justice is to prevent miscarriage of justice one fails to see why those rules should be made inapplicable to administrative inquiries.
Often times it is not easy to draw the line that demarcates administrative enquiries from quasi judicial enquiries.
Enquiries which were considered administrative at one time are now being considered as quasi judicial in character.
Arriving at a just decision is the aim of both quasi judicial enquiries as well as administrative enquiries.
An unjust decision in an administrative enquiry may have more far reaching effect than a de cision in a quasi judicial enquiry.
As observed by this Court in Suresh Koshy George vs The University of Kerala(") the rules of natural justice are not embodied rules.
What particular rule of natural justice should apply to a given case must depend to a great extent on the facts and circumstances of that case, the framework of the law under which the enquiry is held and the constitution of the Tribunal or body of persons appointed for that purpose.
Whenever,.
a complaint is made before a court that some principle of natural justice had been contravened the court has to decide whether the observance of that rule was necessary for a just decision on the facts of that case." (p. 469) It is an interesting sidelight that in America it has been held to be 'but fundamental fairness that the tight to an administrative hearing is given.
(See Boston University Law Review Vol.
53 p. 899).
Natural justice is being given access to the United Nations (See American Journal of International Law Vol.
67 p. 479).
It is no table that Mathew, J. observed in Indira Gandhi (supra) "If the amending body really exercised judicial power that power was exercised in violation of the principles of natural justice of audi alteram partem.
Even if a power is given to a body without specifying that the rules of natural justice should be, observed in exercising it, the nature of the, power would call for its observance." (p. 513) Lord Morris of Borthy Gest in his address before the Bentham :club concluded : "We can, I think, take pride in what has been done in recent periods and particularly in the field of administrative (1) 11969] 1 S.C.R. 317.
302 law by invoking and by applying those principles which we broadly classify under the designation of natural justice.
Many testing problems as to their application yet remain to be solved.
But affirm that the area of administrative action is but one area in which the principles are to be deployed.
Nor are they to be invoked only when procedural failures are shown.
Does natural justice qualify to be described as a "majestic" conception? I believe it does.
Is it just a rhetorical but vague phrase which can I be employed, when needed, to give a gloss of assurance ? I believe that it is very much more.
If it can be summarised as being fair play in action who could wish that it would ever be out of action ? It denotes that the law is not only to be guided by reason and by logic but that its purpose will not be fulfilled if it lacks more exalted inspiration." (Current Legal Problems 1973, Vol.
26 p. 16) It is fair to hold that subject to certain necessary limitations natural justice is now a brooding omnipresence although varying in its play.
Once we understand the soul of the rule as fairplay in action and it is so ' We must hold that it extends to both the fields.
After all, administrative power in a democratic set up is not allergic to fairness in action and discretionary executive justice cannot degenerate into unilateral injustice.
Nor is there ground to be frightened of delay, inconvenience and expense, if natural justice gains access.
For fairness itself is a flexible: pragmatic and relative concept, not a rigid, ritualistic or sophisticated abstraction.
It is not a bull in a china shop nor a bee in one 's bonnet.
Its essence is good conscience in a given situation: nothing more but nothing less.
The 'exceptions ' to the rules of natural justice are a misnomer or rather are but a shorthand form of expressing the idea that in those exclusionary cases nothing unfair can be inferred by not affording an opportunity to present or meet a case.
Text book excerpts and ratios from rulings can be heaped, but they all converge to the same point that audi alteram partem is the justice of the law without, of course, making law lifeless, absurd, stultifying, self defeating or plainly contrary to the commonsense of the situation.
Let us look at the jurisprudential aspects of natural justice, limited to the needs of the present case, as the doctrine has developed in the Indo Anglian systems.
We may state that the question of nullity does not arise here because we are on the construction of a constitutional clause.
Even otherwise, the rule of natural justice bears upon construction where a statute is silent save in that category where a legislation is charged with the vice of unreasonableness and consequential voidness.
Article 324, on the face of it, vests vast functions which may be powers or duties, essentially administrative and marginally even judicative or legislative.
All Party Hill Leaders Conference, Shillong vs Capt.
W. A. Satigma Ors.(1).
We are not fascinated by the logo (1) ; 303 machic exercise suggested by Sri P. P. Rao, reading 'functions ' in contradistinction to 'powers ' nor by the trichotomy of diversion of powers, fundamentally sound but flawsome in several situations if rigidly applied.
These submissions merely serve to draw the red herring across the trial.
We will now zero in on the crucial issue of natural justice vis a vis Article 324 where the function is so exercised that a candidate is substantially prejudiced even if be has not acquired a legal right nor suffered 'civil consequence ', whatever that may mean.
We proceed on the assumption that even if the cancellation of the poll in this case were an administrative act, that per se does not repel the application of the natural justice principle.
Kraipak nails the contrary argument.
Nor did the learned Additional Solicitor General contend that way, taking his stand all through, not on technicalities, easy victories or pleas for reconsideration of the good and progressive rules gained through this Court 's rulings in administrative law but on the foundational thesis that any construction that we may adopt must promote and be geared to the great goal of expeditious, unobstructed, despatch of free and fair elections and leaving grievances to Ice fully sorted out and solved later before the election tribunal set out by the Act.
To use a telling word familiar in officialese; 'Election Immediate '.
So now we are face to face with the naked issue of natural justice and its pro tem exclusion on grounds of necessity and non stultification of the on going election.
The Commission claims that a direction for re poll is an 'emergency ' exception.
The rules of natural justice are rooted in all legal systems, not any 'new theology ', and are manifested in the twin principles of nemo judes in sua caues and audi alteram partem.
We are not concerned here with the former since no case of bias has been urged.
The grievance ventilated is that being condemned unheard.
Sporadic applications or catalogue of instances cannot make for a scientific statement of the law and so we have to weave consistent criteria for application and principles for carving out exceptions.
If the rule is sound and not negatived by statute, we should not devalue it nor hesitate to hold every functionary who effects others ' right to it.
The audi alteram partem rule has a few facets two of which are (a) notice of the case to be met; and (b) opportunity to explain.
Let us study how far the situation on hand can co exist with canons of natural justice.
When natural justice is universally respected, the standards vary with situations, contracting into a brief, even post decisional opportunity, or expanding into trial type trappings.
Ridge vs Baldwin(1) is a leading case which restored light to an area 'benighted by the narrow conceptualism of the previous decade to borrow Professor Clark 's expression.
(Natural Justice; Substance and Shadow 'Public Law ' Joumal Spring 1975).
Good administration demands fairplay in action and this simple desideratum is the fount of natural justice.
We have already said that the classification of functions as judicial ' or 'administrative ' is a stultifying shibboleth, discarded in India as in England.
Today, in our jurisprudence, the (1) ; 304 advances made by natural justice far exceed old frontiers and if judicial creativity belights penumbral areas it is only for improving the quality of government by injecting fairplay into its wheels.
The learned Additional Solicitor General welcomed the dramatic pace of enlargement in the application of natural justice.
But he argued for inhibiting its spread into forbidden spaces lost the basic values of article 329 be nullified.
In short, his point is that where utmost promp titude is needed and that is the raison d 'etre of exclusion of intermediate legal proceedings in election matters natural justice may be impractical and may paralyse, thus balking the object of expeditious completion.
He drew further inspiration from another factor to validate the exclusion of natural justice from the Commission 's actions, except where specifically stipulated by statutes.
He pointed out what we have earlier mentioned that an election litigation is one in which the whole constituency of several lakhs of people is involved and, if the Election Commission were under an obligation to hear affected parties it may, logically, have to give notice to lakhs of people and not merely to candidates.
This will make an ass of the law and, therefore, that is not the law.
This reductio ad absurdum also has to be examined.
Law cannot be divorced from life and so it is that the life of the law is not logic but experience.
If, by the experiential test, importing the right to be heard will paralyse the process, law will exclude it.
It has been said that no army can be commanded by a debating society, but it is also true that the House of Commons did debate, during the days of debacle and disaster, agony and crisis of the Second World War, the life and death aspects of the supreme command by the then British Prime Minister 'to the distress of all our friends and to the delight of all our foes ' too historic to be lost on jurisprudence.
Law lives not in a world of abstractions but in a cosmos of concreteness and to give up something good must be limited to extreme cases.
If to condemn unheard is wrong, it is wrong except where it is overbome by dire social or haphazardsolutions should be eschewed.
Normally, natural justice involves the irritating inconvenience for men in authority, of having to hear both sides since notice and opportunity are its very marrow.
And this principle is so integral to good government, the onus is on him who urges exclusion to make out why.
Lord Denning expressed the paramout policy consideratlon behind this rule of public law (while dealing with the nemo judex aspect) with expressiveness.
"Justice must be rooted in confidence: and confidence is destroyed when right minded people go away thinking 'the judge was biased '."We may adapt it to the audi alteram situation by the altered statement : "Justice must be felt to be just by the community if democratic legality is to animate the rule of law.
And if the invisible audience sees a man 's case disposed of unheard, a chorus of 'noconfidence ' will be heard to say, 'that man had no chance to defend his stance '.
" That is why Tuckor LJ in Russol vs Duke of Norfolk(1) (1) ,118.
305 emphasised that 'whatever standard of natural justice is adopted, one A, essential is that the person concerned should have a reasonable opportunity of presenting his case '.
What is reasonable in given circumstances is 'in the domain of practicability; not formalised rigidity.
Lord Upjohn in Fernando(1) observed that 'while great urgency may rightly limit such opportunity timeously : perhaps severely there can never be a denial of that opportunity if the principles of natural justice are applicable '.
It is untenable heresy, in our view, to look jaw the victim or act behind his back by tempting invocation of urgency, unless the clearest case of public injury flowing from the least delay is selfevident.
Even in such cases a remedial hearing as soon as urgent action has been taken is the next best.
Our objection is not to circumscription dictated by circumstances, but to annihilation as an easy escape from a benignant, albeit inconvenient obligation.
The procedural pre condition of fair hearing, however minimal, even post decisional, has relevance to administrative and judicial gentlemanliness.
The Election Commission is an institution of central importance and enjoys far reaching powers and the greater the power to affect others ' right or liabilities the more necessary the need to hear.
We may not be taken to say that situational modifications to notice and hearing are altogether impermissible.
They are, as the learned Additional Solicitor General rightly stressed.
The glory of the law is not that sweeping rules are laid down but that it tailors principles to practical needs, doctors remedies to suit the patient promotes, not freezes.
Life 's processes, if we may mix metaphors.
Tucker L.J. drove home this point when he observed in the Duke of Norfolk case (supra) "There are no words which are of universal application to very kind of inquiry.
The requirements of natural justice must depend on the circumstances of the case, the nature of the inquiry, the rules under which the tribunal is acting the subject matter that is being dealth with, and so forth".
This circumstantial flexibility of fair bearing has been underscored in Wiseman vs Borneman(1) by Lord Reid when he said he would be "sorry to see this fundamental general principle degenerate into a series of hard and fast rules." Lord Denning, with lovely realism and principled pragmatism, set out the rule in Selvaraien(3) "The fundamental rule is that, if a person may be subjected to pains or penalties, or be exposed to prosecution or proceedings.
or deprived of remedies or redress, or in some such way adversely affected by the investigation and report, when he should be told the case made against him and be afforded a fair opportunity of answering it.
The investigation body is, however, the master of its own procedure.
It need not (2) (3) ,19.
306 hold a hearing.
It can do everything in writing.
It need not allow lawyers.
,It need not put every detail of the case against a man.
Suffice it if the broad grounds are given.
It neednot name its informants.
It can give the substance only.
Moreover it need not do everything itself.
It can employ secretaries and assistants to do all the preliminary work and leave much to them.
But, in the end, the investigating body itself must come to its own decision and make its own report.
" Courts must be tempered by the thought while compromise on principle is unprincipled, applied administrative law in modern complexities of government must realistic, not academic.
The myriad maybes and the diverse urgencies are live factors.
Natural justice should not destroy administrative order by insisting on the impossible.
This general discussion takes its to four specific submissions made by the learned Additional Solicitor General.
He argued that the Election Commission, a high constitutional functionary, was charged with conducting elections with celerity to bring the new House into being and the tardy process of notice and hearing would thwart this imperative.
So no natural justice.
Secondly, be submitted that there was no final determination to the prejudice of any party by directing a re poll since the Election Court had the last word on every objectionable order and so the Commission 's order was more or less provi sional.
So no natural justice.
Thirdly, he took up the position that no candidate could claim anything more than an expectation or apes and no right having crystallised till official declaration of the result, there was no room for complaint of civil consequence.
WI tat was condemned was the poll, not any candidate.
So no natural justice.
Finally, he reminded us of the far flung futility of giving a hearing to a numerous constituency which too was interested in proper elections like the candidates.
So no natural justice.
Schmidt was relied on and Wisemen(1) as well as Pearlberg(2) were cited in support of these propositions.
We may add to these weighty rulings the decision of the House of Lords in Pearlberg.
The decision of this Court in the ruling in Bihar School Examination Board vs Subhas Chandra Sinha & Ors.
(3), where a whole university examinations was cancelled without hearing any of the candidates but was up held against the alleged vice of non hearing, was relied on.
We must admit that the law, in certain amber areas of natural justice.
, has been unclear.
Vagueness haunts this zone but that is no argument to shut down.
If it is twilit, we must delight.
So we will play down the guidelines but guard ourselves against any decision on the facts of this case.
That is left for the Election Court in the light of the law applicable.
(1) (2) 307 Nobody will deny that the Election Commission in our democratic scheme is a central figure and a high functionary.
Discretion vested in him will ordinarily be used wisely, not rashly, although to echo Lord Camden wide discretion is fraught with tyrannical potential even in high personages, absent legal norms and institutional checks, and relaxation of legal canalisation on generous 'VIP ' assumptions may boomrang.
Natural justice is one such check on exercise of power.
But the chemistry of natural justice is confused in certain aspects.
, especially in relation to the fourfold exceptions put forward by the respondents.
So let us examine them each.
Speed in action versus soundness of judgment is the first dilemma.
Ponnuswamy has emphasised what is implicit in Article 329(b) that once the process of election has started, it should not be interrupted since the tempo may slow down and the early constitution of an elected parliament may be halted.
Therefore, think twice before obligating a hearing at a critical stage when a quick repoll is the call.
The point is well taken.
A fair hearing with fun notice to both or others may surely protract; and notice does mean communication of materials since no one can meet an unknown ground.
Otherwise hearing becomes hollow, the right becomes a ritual.
Should the cardinal principle of 'hearing ' as condition for decision making be martyred for the cause of administrative, immediacy ? We think not.
The full panoply may not be there but a manageable minimum may make do.
In Wiseman vs Bornenwn(1) there was a hint of the competitive claims of hurry and hearing.
Lord Reid said : 'Even where the decision has to be reached by a body acting judicially, there must be a balance between the need for expedition and the need to give fall opportunity to the defendant to see material against him (emphasis added).
We agree that the elaborate and sophisticated methodology of a formalised hearing may be injurious to promptitude no essential in ,in election under way.
Even so, natural justice is pragmatically flexible and is amenable to capsulation under the compulsive pressure of circumstances.
To burke it altogether may not be a stroke of fairness except in very exceptional circumstances.
Even in Wiseman where all that was sought to be done was to see if there was a prima facie case to proceed with a tax case where, inevitably, a fuller bearing would be extended at a later stage of the proceedings, Lord Reid.
Lord Morris of Borthy Gest and Lord Wilborforce suggested "that there might he exceptional cases where to decide upon it ex parte would be unfair, and it would be the duty of the tribunal to take appropriate steps to eliminate unfairness "(Lord Denning M. R., in Manward vs Bornenam(2) summarised the observations of the law Lords in this form).
No doctrinaire approach is desirable but the Court must be anxious to salvage the cardinal rule to the extent permissible in a given case.
After all, it is not obligatory that counsel should be allowed to appear nor is it compulsory that oral evidence should be adduced.
Indeed, it is not even imperative that written statements should be called for Disclosure of the, prominent circumstances and asking for an immediate (1) [1967] 3 All F.R. 1945.
(2) 7 1114 SCI/77 308 explanation orally or otherwise may, in many cases be sufficient compliance.
It is even conceivable that an urgent meeting with the concerned parties summoned at an hours notice, or in a crisis even a telephone call, may suffice.
If all that is not possible as in the cue of a fleeing person whose passport has to be impounded lest he, should evades the course of justice or a dangerous nuisance needs immediate abatement, the action may be taken followed immediately by a hearing for the purpose of sustaining or setting aside the action to the extent feasible.
It is quite on the cards that the Election Commission if pressed by circumstances, may give a short hearing.
In any view, it is not easy to appreciate whether before further steps got under may he could not have afforded an opportunity of hearing the parties,and revoke the earlier directions.
We do not wish to disclose our mind on what, in the critical circumstances, should have been done, for a fair play of fair hearing.
This is a matter pre eminently for the elec tion tribunal to judge, having before him the vivified totality of all the factors.
All that we need emphasize is that the content of natural justice is a dependent variable, not an easy casualty.
The learned Additional Solicitor General urged that even assuming that under ordinary circumstances hearing should be granted, in the scheme of article 324 and in the situation of urgency confronting the Election Commission it was not necessary.
Here we must demur.
Reasons follow.
It was argued, based on rulings relating to natural justice, that unless civil consequences ensued, hearing was not necessary.
A civil right being adversely affected is a sine qua non for the invocation of the audi alteram partem rule.
This submission was supported by observations in Rain Gopal(1) and Col. Sinha (2).
Of course, we agree that if only spiritual censure is the penalty, temporal laws may not take cognisance of such consequences since human law operates in the material field although its vitality vicariously depends on its morality.
But what is a civil consequence, let us ask ourselves,; by passing verbal boobytraps ? 'Civil consequence ' undoubtedly cover infraction of not merely property or personal rights but of civil liberties, material deprivations and non pecuniary damages.
In its comprehensive connotation, everything that affects a citizen in his civil life inflicts a civil consequence.
Civil is defined by Black (Law Dictionary 4th Edn.)at p.311.
"Ordinally, pertaining or appropriate to a member of a civitas of free political community; natural or proper to a citizen.
Also, relating to the community, or to the policy and government of the citizens and subjects of a state.
The word is derived from the Latin civilie, a citizen.
In law, it has various significations." (1) ; (2) [1971] 1 S.C.R. 791.
309 'Civil Rights ' are such as belong to every citizen of the State or country, or, in a wider senes, to all its inhabitants, and are not connected with the organisation or administration of government.
They include the rights of property, marriage protection by the laws, freedom of contract, trial by jury, etc.
Or, as otherwise defined, civil rights are rights appertaining to a person in virtue of his citizenship in a state or community.
Rights capable or being enforced or redressed in a civil action.
Also a term applied to certain rights secured to citizens of the United States by the thirteenth and fourteenth amendments to the constitution, and by various act, , of congress made in pursuance thereof.
(p. 1487 Blacks Legal Dictionary) The interest of a candidate at an election to Parliament regulated by the Constitution and the laws comes within this gravitational orbit.
The most valuable right in a democratic policy is the 'little man 's ' little pencil marking, assenting or dissenting, called his vote.
A democratic right, if denied, inflicts civil consequences.
Likewise, the little man 's right, in a representative, system of government, to rise to Prime, Ministersbip or Presidentship by use of the right to be candidate, cannot be wished away by calling it of no civil moment.
If civics mean anything to a self governing citizenry, if participatory democracy is not to be scuttled by the law, we shall not be, captivated by catchwords.
The straightforward conclusion is that every Indian has a right to elect and be elected and this is a constitutional as distinguished from a common law right and is entitled to cognizance by courts subject to statutory regulation.
We may also notice the further refinement urged that a right accrues to a candidate only when he is declared returned and until then it is incipient inchoate and intangible for legal assertion in the twilight zone of expectancy, as it were.
This too, in our view, is legicidal sophistry.
Our system of 'ordered ' rights cannot disclaim cognizance of orderly processes as the right means to a right end.
Our jurisprudence is not so jejune as to ignore the concern with the means as with the end with the journey as with the destination.
Every candi date, to put it cryptically, has an interest or right to fair and free and legally run election.
To draw lots and decide who wins, if announced as the electoral methodology, affects his right, apart from his luckless rejection at the end.
A vested interest in the prescribed process is a pro cessual right actionable if breached, the Constitution permitting.
What is inchoate, viewed from the end, may be complete, viewed midstream.
It is a subtle fallacy to confuse between the two.
Victory is still an expectation qua mwde is a right to the statutory procedure.
The appel lant has a right to have the election conducted nor according to humour or hubris but according to lay and justice.
And so natural justice cannot be stumped out on this score.
In the region of public law locus standi and person aggrieved, right and interest have a broader import.
in the present case, the Election Commission contends that a hearing has been given although the appellant retorts that a vacuous mecting where nothing was disclosed and he was summarily told off would be strange electoral justice.
We express no opinion on the factum or 310 adequacy of the hearing but hold that where a candidate has reached the end of the battle and the whole poll is upset, he has a right to notice and to be heard, the quantum and quality being conditioned by the concatenation of circumstances.
The rulings cited, bearing on the touchstone of civil consequences, do not contradict the view we have propounded.
Col. Sinha merely holds and we respectfully agree that the lowering of retirement age does not deprive a government servant 's rights, it being clear that every servant has to quit on the prescribed age being attained.
Even Binapani(1) concedes that the State has the authority to retire a servant on superannuation.
The situation here is different.
We are not in the province of substantive rights but procedural rights statutorily regulated.
Sometimes processual protections are too precious to be negotiable, temporised with or whittled down.
Ram Gopal for the same reason is inapplicable.
A tempoary servant has only a temporary tenure terminable legally without injury.
Even he, if punished, has procedural rights in the zone of natural justice, but not when the contract of employment is legally extinguished.
Interest and right are generous conceptions in this, jurisdiction, not narrow orthodoxies as in traditional systems.
We move on to a consideration of the argument prolix plurality making hearing impracticable and therefore expendable.
Attractively ingenious and seemingly precedented, but, argumentum ab inconvenienti has its limitations and cannot override established procedure.
Maybe, argumentum ab impossibili has greater force,.
But here neither applies for it is a misconception to equate candidates who have fought to the bitter finish,with the hundreds of thousands of voters who are interested in electoral proprieties.
In law and life,, degrees of difference may, at a substantial stage, spell difference in kind or dimensions.
Is there an.
impossible plurality which frustrates the feasibility of notice and hearing if candidates alone need be notified ? In Subhash Chander Sinha(2) Hidayatullah, CJ, speaking for the Court repelled the plea of natural justice when a whole examination was cancelled by the concerned university authorities.
The reasons given are instructive.
The learned Judge said that "the mention of fairplay does not come very well from the respondents who were grossly guilty of breach of fairplay themselves at the examinations.
" The court examined the grounds for cancellation of examinations and satisfied itself that there was undoubted abundance of evidence that students generally bad outside assistance in answering questions.
The teamed Judge went on further to say : "This is not a case of any particular individual who is being charged with, adoption of unfair means but of the conduct of all the examinees or at least a vast majority of them at a particular centre.
If it is not a question of charging anyone individually with unfair means but to condemn the examination as ineffective for the purpose it was hold, must (1) ; (2) ; 311 the Board give an opportunity to all the candidates to represent their cases? We think not.
It was not necessary for the Board to give an opportunity to the candidates if the examinations as a whole were being cancelled.
The Board had not charged any one with unfair means so that he could claim to defend himself.
The examination was vitiated by adoption of unfair means on a mass scale.
In these circumstances it would be wrong to insist that the Board must hold a detailed inquiry into the matter and examine each individual case to satisfy itself which of the candidates had not adopted unfair means.
The examination as a whole had to, go. " (967 968) x x x x x If at a centre the whole body of students receive assistance and manage to secure success in the neighbourhood of 100% when others at other centres are successful only at an average of 50%, it is obvious that the university or the Board must do something in the matter.
It cannot hold a detailed quasi judicial inquiry with, a right to its alumni to plead and lead evidence etc.
before the results are withheld or the examinations cancelled.
If there is sufficient material on which it can be demonstrated that the university was right in its conclusion that the examinations ought to be cancelled than academic standards require that the university 's appreciation of the problem must be respected.
It would not do for the Court to say that he should have examined all the candidates or even their representatives with a view to ascertaining whether they had received assistance or not.
To do this would encourage, indiscipline if not also perjury." (968 969) These propositions are relied on by the learned Additional SolicitorGeneral who seeks to approximate the present situation of cancellation of the poll to the cancellation of an examination.
His argument is that one has to launch on a public enquiry allowing a large number of people to participate in the hearing if the cancellation of the poll itself is to be subjected to natural justice.
He further said that no candidate was condemned but the poll process was condemned.
He continued to find a parallel by stating that like the university being responsible for the good conduct of examinations, the Election Commission was responsible for the proper holding of the poll.
We do not consider the ratio in Subhash Chander (supra) as applicable.
In fact, the candidates concerned stand on a different footing from the electorate in general.
They have acquired a very vital stake in polling going on properly to a prompt conclusion.
And when that is upset there may be a vicarious concern for the constituency, why, for that matter, for the entire country, since the success of democracy depends on country wide elections being held periodically and properly.
Such interest is too remote and recondite, too feeble and attenuated.
to be taken note of in a cancellation proceed ing.
What really marks the difference is the diffusion and dilution.
The 312 candidates.
on the other hand, are the spearheads, the combatants, the claimants to victory.
They have set themselves up as nominated candidate organised the campaign and galvanised the electorate for the crown in event of polling and counting.
Their interest and claim are not indifferent but immediate, not weak but vital.
They are more than the members of the public.
They are parties to the electoral dispute.
In this sense, they stand on a better footing and cannot be denied the right to be heard or noticed.
Even in the case of university examinations it is not a universal rule that notice need not be given.
Ghanshyam Das Gupta 's(1) case illustrates this aspect.
Even there, when an examination result of three candidates was cancelled the, Court imported natural justice.
It was said that even if the enquiry involved a large number of persons, the committee should frame proper regulations for the conduct of such enquiries but not deny the opportunity.
That case was distinguished in Subhash Chander the differentia being that in one case the right exercised was of the examining body to cancel its own examinations since it was satisfied that the examination was not properly conducted.
It may be a parallel in electoral situations if the Election Commission cancels a poll because it is satisfied that the procedure adopted has gone away on a wholesale basis.
Supposing wrong ballot papers in large numbers have been supplied or it has come to the notice of the Commission that in the constituency counterfeit ballots had been copiously current and used on a large scale, then without reference to who among the candidates was more prejudiced, the poll might have been set aside.
It all depends on the circumstances and is incapable of natural justice to argue that the whole constituency must be given a hearing.
That is an ineffectual over kill.
Lastly, it was contended by the learned Additional Solicitor General, taking his cue from Wiseman that the Election Commission 's direction for a re poll has only a provisional consequence since the election court was the ultimate matter of the destiny of the poll, having power to review the decision of the Commission.
It is true that Wiseman deals with the assessment of the evidence at a preliminary state merely to ascertain whether there is a prima facie case.
The proceeding bad still later stages where the effected party would enjoy a full opportunity.
Lord Reid said plainly that there was a difference : "It is very unusual for there to be a judicial determination of the question whether there is a prima facie case there is nothing inherently unjust in reaching such a decision (i.e., a prima facie decision) in the absence of the other party." Lord Wilberforce however took the view that there was 'a residual duty of fairness '.
Lord Denning in Pealberg vs Party,(2) added in parenthesis "Although the tribunal.
in determining whether there is a prima facie case, is itself the custodian of fairness, nevertheless its discretion is open to review." (PP. 737 738) (1) [1962] Supp 3 S.C.R. 236.
(2) ,737.
313 Buckley, L.J. made the point about natural justice and administrative action.
"I do not forget the fact that it has been said, that the rules of natural justice may apply to cases where the act in question is more properly described as administrative than or quasi judicial : See Ridge vs Baldwin(1) and t vs Secretary of State for Home Affairs." (p. 747) The Indian parallel would be an argument for notice and hearing from a police officer when he investigated and proceeded to lay a chargesheet because he thought that a case to be tried by the court had been made out.
The present case stands on a totally different footing.
What the Election Commission does is not the ascertain whether a prima facie case exists or an ex parte order, subject to modification by him is to be made.
If that were so Pearlberg would have been an effective answer.
For, Lord Denning luminously illustrates the effect "I would go so far with him as to say that in reaching a prima facie decision, there is a duty on any tribunal to act fairly; but fairness depends on the task in hand.
Take an application to a court by statute, or by the rules, or, as a matter of practice, is made ex parte.
The Court itself is a custodian of fairness.
If the matter is so urgent that an order should be made forthwith, before hearing the other side, as in the case of an interim injunction or a stay of execution the court will make the order straight away.
We do it every day, we are always ready, of course, to hear the other side if they apply to discharge the order.
But still the order is made ex parte without bearing them.
It is a prima facie decision.
I agree that before some other tribunal a prima facie decision may be a little different.
The party affected by it may not be able to apply to set it aside,.
The case must go forward to a final decision.
Here, again, I think the tribunal itself is under what Lord Wilberforce described as a residual duty of fairness." (1971 A C. 297, 320) When Pearlberg(3) reached the House of Lords the Law Lords considered the question again.
Lord Hailsham of St. Marylebone L.C. observed : "The third factor which affects mind is the consideration that the decision, once made, does not make any final determination of the rights of the taxpayer.
It simply enables the inspector to, raise an assessment, by satisfying the commissioner that there are reasonable grounds for suspecting loss of tax resulting from neglect, fraud, or wilful default, that is (1) ; (2) (3) 314 that there is a prima facie probability that there has been neglect, etc., and that the Crown may have lost by it.
When the assessment is made,, the taxpayer can appeal against it, and, on the appeal, may raise any question (inter alia) which would have been relevant on the application for leave, except that the leave given should be discharged." (p.539) x x x x x "The doctrine of natural justice has come in for increasing consideration in recent years, and the courts generally, and your Lordships ' House in particular, have, I think rightly, advanced its frontiers considerably.
But at the same time they have taken an increasingly sophisticated view of what it requires in individual cases." (p. 540) Viscount Dilhorne observed in that case "I agree with Lord Donovan 's view (Wiseman vs Borneman , 316) that it cannot be said that the rules of natural justice do not apply to a judicial determination of the question whether there is a prima facie case, but I do not think they apply with the same force or as much force as they do to decide decisions which determine the rights of persons." (p. 546) Lord Pearson 's comment ran thus "A tribunal to whom judicial or quasi judicial functions are entrusted is held to be required, to apply those principles in performing those functions unless there is a provision to the contrary.
But where some person or body is entrusted by Parliament with administrative or executive functions there is no presumption that compliance with the principles of natural justice is required, although, as 'Parliament ' not to be presumed to act unfairly ', the courts, may be able in suitable cases (perhaps always) to imply an obligation to act with fairness.
Fairness, however, does not necessarily require a plurality of bearings or representations and counter representations.
If there were too much elaboration of procedural safeguards, nothing could be done simply and quickly and cheaply.
Administrative or executive efficiency and economy should not be too readily sacrificed.
The disadvantage of a plurality of hearings even in the judicial sphere was cogently pointed out in the majority judgment in Cozens vs North Doven Hospital Management Committee(1).
(p. 547) (1) , 343, 346 347.
315 Lord Salmon put the matter pithily "No one suggests that it is unfair to launch a criminal prosecution without first hearing the accused." (p. 550) Indeed, in Malloch(1) E. Lord Wilberforce observed : "A limited right of appeal on the merits affords no argument against the existence of a right to a precedent hearing, and, if that is denied, to have the. decision declared void." (Foot note 30, Public Law Spring 1975 Stevens p. 50 from Natural Justice Substance and Shadow by D. H. Clark).
After all, the Election Court can exercise only a limited power of review and must give regard to the Commission 's discretion.
And the trouble and cost of instituting such proceedings would deter all but the most determined of parties aggrieved, and even the latter could derive no help from legal principle in predicting whether at the end of the day the court would not condone their summary treatment on a subjective appraisal of the demerits of the case they had been denied the opportunity to present.
The public interest would be ill served by judicially fostered uncertainty as to the value to be set upon procedural fair play as a canon of good administration.
And further the Wiseman law Lords regarded the cutting out of 'hearing ' as quite unpalatable but in the circumstances harmless since most of the assessees know the grounds and their declaration was one mode of explanation.
We consider it a valid point to insist on observance of natural justice in the area of administrative decision making so as to avoid devaluation of this principle by 'administrators already alarmingly insensitive to the rationale of audi alteram partem ': "In his lecture on "The Mission of the Law ' Professor H. W. R. Wade takes the principle that no man should suffer 'without being given a hearing as a cardinal example of a principle 'recognised as being indispensable to justice,, but which (has) not yet won complete recognition in the world of administration. .
The goal of administrative justice can never be attained by necessarily sporadic and ex post facto judicial review.
The essential mission of the law in this field is to win acceptance by administrators of the principle that to hear a men before he is penalised is an integral part of the decision making process.
A measure of the importance of resisting the incipient abnegation by the courts of the firm rule that branch of audi alteram partem invalidates, is that if it gains ground the mission of the law is doomed to fail to the detriment of all." (P. 60 : Public Law Spring 1975 Stevens Natural Justice : Substance and shadow) Our constitutional order pays more than lip service to the rule of reasonable administrative process.
Our people are not yet conscious of (1) , 1598.
316 their rights; our administrative apparatus has a hard of hearing heritage.
Therefore a creative play of fairplay, irksome to some but good in the long run, must be accepted as part of our administrative law.
Lord Hailsham L.C. in Pearlbeg presaged : "The doctrine of natural justice has come in for increasing consideration in recent years, and the courts generally, and (the House of Lords) in particular, have advanced its frontiers considerably.
But at the same time they have taken an increasingly sophisticated view of what is required in individual cases.
(P. 63, Public Law Spring 1975 supra) And in India this case is neither the inaugural nor the valedictory of natural justice.
Moreover, Sri Rao 's plea that when the Commission cancels, viz., declares the poll void it is performing more than an administrative function merits, attention, although we do not pause to decide it.
We consider that in the vital area of elections where the people 's faith in the democratic process is hypersensitive it is republican realism to keep alive audi alteram even in emergencies, 'even amidst the clash of arms '.
Its protsan shades apart we recognise that 'hearing ' need not be an elaborate ritual and may, in situations of quick despatch, be minimal, even formal, nevertheless real.
In this light, the Election Court will approach the problem.
To scuttle the ship is not to save the cargo; to jettison may be.
Fair hearing is thus a postulate of decision making cancelling a poll, although fair abridgement of that process is permissible.
It can be fair without the rules of evidence or forms of trial.
It cannot be fair if apprising the affected and appraising the representations is absent.
The philosophy behind natural justice is, in one sense, participatory justice in the process of democratic rule of law.
We have been told that wherever the Parliament has intended a hearing it has said so in the Act and the rules and inferentially where it has not specificated it is otiose.
There is no such sequitur.
The silence of a statute has no exclusionary effect except where it flows from necessary implication.
article 324 vests a wide power and where some direct consequence on candidates emanates from its exercise, we must read this functional obligation.
There was much argument about the; guidelines in section 58 and 64A being applicable to an order for constituency wide repoll.
It may be wholesome to be guided; but it is not illegal not to do so, provided homage to natural justice is otherwise paid.
Likewise, Shri P. P. Rao pressed that the Chief Election Commissioner ' was arbitrary in ordering a re poll beyond Fazilka segment or postal ballots.
Even the 3rd respondent had not asked for it; not was there any material to warrant it since all the ballots of all the other segments were still available to be sorted out and recounted.
A whole re poll is not a joke.
It is almost an irreparable punishment to the constituency and the candidates.
The sound and fury, the mammoth campaigns and rallies, the whistle story, 317 speeches and frenzy of slogans, the white heat of tantrums, the expensiveness of the human resources and a hundred other traumatic consequences must be remembered before an easy re poll is directed, urges Shri Rao.
We note the point but leave its impact open for the Election Court to assess when judging whether the, impugned orders was scary, arbitrary, whimsical or arrived at by omitting material considerations.
Independently of natural justice, judicial review extends to an examination of the order as to its being perverse, irrational, bereft of application of the mind or without any evidentiary backing.
If two views are possible, the Court cannot interpose its view.
If no view is possible the Court must strike down.
We have projected the panorama of administrative law at this length so that the area may not be befogged at the trial before the Election Court and for action in future by the Election Commission.
We have held that article 329(b) is a bar for intermediate legal proceedings calling in question the steps in the election outside the machinery for deciding election disputes.
We have further held that article 226 also suffers such eclipse.
Before the notification under section 14 and beyond the declaration under r. 64 of Conduct of Election Rules, 1961 are not forbidden ground.
In between is, provided, the step challenged is taken in furtherance of not to halt or hamper the progress of the election.
We have clarified that what may seem to be counter to the match of the election process may in fact be one to clear the way to a free, and fair verdict of the electorate.
It depends.
Taking the Election Commission at his word (the Election Court has the power to examine the validity of his word), we proceed on the prima facie view that writ petition is not sustainable.
If it turned out that the, Election Commission acted bizarre fashion or in indiscreet haste, it forebodes ill for the Republic.
For if the salt lose their savour, wherewith shall they be salted ? Alan Barth in his 'Prophets with Honor ', quotes Justice Felix Frankfurter regarding the standard for a judicial decision thus : "Mr. Doolay 's the Supreme Court follows the iliction returns ', expressed the wit of cynicism, not the demand of principle.
A Court which yields to the popular will thereby licensee itself to practice despotism, for there can be no assurance that it will not on another occasion indulge its own will.
Courts can fulfil their responsibility in a democratic society only to the extent that they succeed in shaping their judgments by rational standards, and rational standards are both impersonal and communicable." (Quotation from American Federation of Labour vs American Sash and Door Co. '335 U.S. of Alan Berth 's book published by Light & Life Publishers, New Delhi) The above observation would equally apply to the Election Commission.
Many incidental points were debated but we have ignored those micro questions and confined ourselves to macro determinations.
It is for the Election Court, not for us, to rule on those variegated matters.
318 Certain obvious questions will claim the Election Court 's attention.
Did the Commission violate the election, rules or canons of fairness ? Was the play, in short, according to the script or did the dramatis personae act defiantly, contrary to the text ? After all, democratic elections may be likened to a drama, with a solemn script and responsible actors, officials and popular, each playing his part, with roles for heroes but not for villains, save where the text is travestied and unscheduled anti heroes intervene turning the promising project for the smooth registration of the collective will of the people into a tragic plot against it.
Every corrupt practice, partisan official action, basic breach of rules or deviance from the fundamental of electoral fairplay is a danger signal for the nation 's democratic destiny.
We view this case with the seriousness of John Adams ' warning : " 'Remember ', said John Adams, 'remember ', democracy never lasts long.
It soon wastes, exhausts and murders itself.
There never was a democracy that did not commit suicide." (Quoted from M. Hidayatullah in "Democracy in India and the Judicial Process" Lajpat Rai Memorial Lectures : P. 16) Only one issue remains.
Is, the provision in section 100 read with section 90 sufficient to afford full relief to the appellant if the finding is in violation or mat exercise of, powers under article 324 ? Sri Rao says 'NO ' while the opposition says 'YES '.
Lot us follow the appellant 's apprehension for a while to test its tenability.
He says that the Commissioner has no power to cancel the election to a whole constituency.
Therefore, the impugned order is beyond his authority and in excess of his functions under article 324.
Moreover, even if such power exists it has been exercised illegally, arbitrarily and in violation of the implied obligation of audi alteran partem.
In substance, his complaint is that under guise of article 324 the Commissioner has acted beyond its boundaries, in breach of its content and oblivious of its underlying duties.
Such a mal exercise clearly tantamounts to non adherence to the norms and limitations of article 324 and, if true, it is a noncompliance with that provision of the Constitution.
It falls within section 100(1) (d) (iv).
A generous, purposeoriented, literally informed statutory interpretation spreads the wings of 'non compliance ' wide enough to bring in all contraventions, excesses, breaches and subversions.
We derive support for this approach from Durga Mehta.
The Court there considered the same words, in the same sections, in the same statute.
Section 100(2) (c) interpreted in that case re incamates as s,.
100(1) (d) (iv) later.
Everything is identical.
And Mukherjee, J. explained.
"It is argued on behalf of the respondent that the expression "non compliance ' as used in sub section (2)(c) would suggest the idea of not acting according to any rule or command and that the expression is not quite appropriate in describing a mere lack of qualification.
This, we think, would 319 be a narrow way of looking at the thing.
When a person is incapable of being chosen as a member of a State Assembly under the provisions of the Constitution itself but has nevertheless been returned as such at an election, it can be said without impropriety that there has been non compliance with the provisions of the Constitution materially affecting the result of the election.
There is no material difference between "non compliance" and "non observance" or "breach" and this item in clause (c) of sub section (2) may be taken as a residuary provision contemplating cases where there has been infraction of the provisions of the Constitution or of the Act but which have not been specifically enumerated in the other portions of the clause.
" Lexical significations are not the last work in statutory construction.
We hold that it is perfectly permissible for the Election Court to decide the question as one falling under section 1 00 ( 1 ) (d) (iv) A presumatic view of the Act and article 324 helps discern an organic synthesis.
Law sustains, not fails.
A kindred matter viz., the scope of sec.
100 and sec.
98 has to be examined, parties having expressed anxious difference on the implied powers of the Election Court.
Indeed, it is a necessary part of our decision but we may deal with it even here.
Sri Rao 's consternation is that, if his writ petition is dismissed as not maintainable and his election petition is dismissed on the ground that the Election Court had no power to examine the cancellation of poll now that a fresh poll has taken place, he will be in the unhappy position of having to forfeit a nearvictory because a gross illegality triumphs irremediably.
If this were true the hopes of the rule of law turn into dupes of the people.
We have given careful thought to this tragic possibility and are convincedindeed, the learned Solicitor General has argued for upholding, not subverting the rule of law and agrees that the Election Court has all the powers necessary to grant all or any of the reliefs set out in sec.
98 and to direct the Commissioner to take such ancillary steps as will render complete justice to the appellant.
Section 98, which we have read earlier, contemplates three possibilities when an election petition is tried.
Part VI of the Act deals with the complex of provisions calculated to resolve election disputes.
A match past this Part discloses the need to file an election petition (section 60) the jurisdiction to try which is vested in the High Court (80A).
Regulatory of the further processes on presentation of a petition are sees.
81 to 96.
If a candidate whose return is challenged has a case invalidating the challenger 's election he may set it up subject to the provision in sec.
Then comes the finale in sec.
The High Court has three options by way of conclusive determinations.
It may (a) dismiss the petition (b) declare the election void; and (c) go further to declare the petitioner duly elected.
Side stepping certain species of orders that may be passed under section 99 we have to explore the gamut of implied powers when the grant of power is wide and needs incidental exercises to execute the substantive power.
320 A few more sections exist which we may omit as being not germane to the present controversy.
What is that controversy ? Let us project it with special reference to the present case,.
Hero the, poll proceeded peacefully, the counting was almost complete, the, ballots of most stations are available and postal votes plus the votes of one, or two polling stations may alone be missing.
Sri P. P. Rao asks and whenever counsel in court or speaker on a podium asks rhetorical questions be sure he is ready with an answer in his favour : If the court holds that the cancellation by the Commissioner of the whole poll is illegal what relief can it give me since a fresh election based on that demolition has been already held '? If the court holds that since most of the ballots are intact, repoll at one or two places is enough how can even the court hold such limited repoll.
If the Court wants to grant the appellant the relief that lie is duly elected how can the intervening processes lying within the competence of the Commissioner be commandered by the Court ? The solution to this disturbing string of interrogations is simple given a creative reading of implied powers writ invisibly yet viably into the larger jurisdiction under sec.
Law transcends legalism when life is baffled by surprise situations.
In this larger view end in accordance with the well established doctrine of implied powers we think the Court contend if justified, shall do, by its command, all that is necessary to repair the injury and make the remedy realisable.
Courts are not luminous angels beating by their golden wings in the void but operational authority sanctioning everything to fulfil the trust of the rule of law.
That the less is the inarticulate part of the larger is the jurisprudence of power.
Both Sri Sorabjee and Sri Phadke agree to this proposition and Sri Rao, in the light of the election petition filed and is pending, cannot but assent to it.
By way of abundant caution or otherwise, the appellant has challenged, in his election petition, the declaration of the 3rd respondent as the returned candidate.
He has also rayed for his being declared the duly elected candidate.
There is no dispute there cannot be. that the cornerstone of the second constituency wide poll High Court for any good reason then the second poll falls and the 3rd respondent too with it.
This question of the soundness of the cancellation of the entire poll is within the court,s power under section 98 of the Act.
All are agreed on this.
In that eventuality, what are the follow up steps? Everything necessary to resurrect reconstruct and lead on to a consummation of the originalprocess.
Maybe, to give effective relief by way of completion of the broken election the Commissioner may have to be directed to hold fresh poll and report back together with the ballots.
A recount of all or some may perhaps be required.
Other steps suggested by other developments may be desired.
If anything integrally linked up with and necessitated by the obligation to grant full relief has to be undertaken or ordered to be done by the election machinery, all that is within the orbit of the Election Court 's power.
Black 's Law Dictionary explains the proposition thus "Implied powers are such as are necessary to make available and carry into effect those powers which are expressly 321 granted or conferred, and which must therefore be presumed to have been within the intention of the constitutional or legislative grant.
(p. 1334 Black 's Legal Dictionary 4th Edn.) This understanding accords with justice and reason and has the support of Sutherland.
The learned Additional Solicitor General also cited the case in Metajog Dobey vs H. C. Bhari ; at p. 937 and Commissioner of Commercial taxes,& Ors vs R. section Jhaver & ors.
; at p. 154/155 to substantiate his thesis that the doctrine of implied powers clothes the Commissioner with vast incidental powers.
Hi illustrated his point by quoting from Sutherland (Frank E. Horack Jr., Vol. 3) "Necessary implications.
Where a statute confers powers or duties in general terms, all powers and duties incidental and necessary to make such legislation effective are included by implication.
Thus it has been stated, "An express statutory grant of power or the imposition of a definite duty carries with it by implication, in the absence of a limitation, authority to employ all the means that are usually employed and that are necessary to the exercise of the power or the performance of the duty. .
That which is clearly implied is as much a part of a law as that which is expressed.
" The reason behind the rule is to be found in the fact that legislation is enacted to establish broad or general standards.
Matters of minor detail are frequently omitted from legislative enactments, and "if these could not be supplied by implication the drafting of legislation would be an interminable process and the true intent of the legislature likely to be defeated.
The rule whereby a statute,, is by necessary implication extended has been most frequently applied in the construction of laws relegating powers to public officers and administrative agencies.
The powers thus granted involve a multitude of functions that are discoverable only through practical experience.
x x x A municipality, empowered, by statute to construct sewers for the preservation of the public health, interest and convenience, was permitted to construct a protecting wall and pumping plant which were necessary for the proper working of the sewer.
but were essential to public health.
A country school superintendent, who was by statute given general supervisory power over a special election, was permitted to issue absentee, ballots.
The power to arrest has been held to include the power to take finger prints, and take into custody non residents who were exempted from the provisions of a licensing statute.
" 322 Having regard to statutory setting and comprehensive jurisdiction of the Election Court we are satisfied that it is within its powers to, direct a re poll of particular polling stations to be conducted by the specialised agency under the Election Commission and report the results and ballots to the Court.
Even a re poll of postal ballots, since those names are known, can be ordered taking care to preserve the secrecy of the vote.
The Court may, if necessary, after setting aside the election of R. 3 (if there are good grounds therefore keep the case pending, issue directions for getting available votes, order recount and or partial re poll, keep the election petition pending and pass final orders holding the appellant elected if only if valid grounds are established.
Such being the wide ranging scope of implied powers we are in agreement with the learned Additional Solicitor General that all the reliefs the appellant claims are within the Court 's powers to grant and Sri Rao 's alarm is unfounded.
Diffusion, even more elaborate discussion, tends to blur the precision of the conclusion in a judgment and so it is meet that we, synopsize the formulations.
Of course, the condensed statement we make is for convenience, not for exclusion of the relevance or attenuation of the binding impact of the detailed argumentation.
For this limited purpose, we set down our holdings 1 (a) article 329(b) is a blanket ban on litigative challenges to electoral steps taken by the Election Commission and its officers for carrying forward the process of election to its culmination in the formal declaration of the result.
(b) Election, in this context, has a very wide connotation commencing from the Presidential notification calling upon the electorate to elect and culminating in the final declaration of the returned candidate. (a) The Constitution, contemplates a free and fair election and vests comprehensive responsibilities of superintendence, direction and control of the conduct of elections in the Election Commission.
This responsibility may cover powers, duties and functions of many sorts, administrative or other, depending on the circumstances.
(b) Two limitations at least are laid on its plenary character in the exercise thereof.
Firstly, when Parliament or any State Legislature has made valid law, relating to or in connection with elections, the Commission shall act in conformity with, not in violation of such provisions but where such law is silent article 324 is a reservoir of power to, act for the avowed purpose of, not divorced from pushing forward a free and fair election with expedition.
Secondly, the Commission shall be responsible to the rule of law, act bona fide and be amenable to the norms of natural justice in so far as conformance to such canons can reasonably and realistically be required of it as fairplay in action in a most important area of the constitutional order, viz., elections.
Fairness does import an obligation to see that no 323 wrongdoer candidate benefits by his own wrong.
To put the matter beyond doubt, natural justice enlivens and applies to the specific case of order for total repoll, although.
not in full penoply but in full penoply but in flexible practicability.
Whether it has been compiled with is left open for the Tribunal 's adjudication.
The conspectus of provisions bearing on the subject of elections clearly expresses the rule that there is a remedy for every wrong done during the election in progress although it is postponed to the post election stage and procedure as predicated in article 329(b) and the 1951 Act.
The Election Tribunal has, under the various provisions of the Act, large enough powers to give relief to an injured candidates if he makes out a case and such processual amplitude of power extends to directions to the Election Commission or other appropriate agency to hold a poll, to bring up the ballots or do other thing necessary for fulfilment of the jurisdiction to undo illegality and injustice and do complete justice within the parameters set by the "existing law.
In sum, a pragmatic modus vivendi between the Commission 's paramount constitutional responsibility vis a vis elections and the rule of law vibrant with fair acting by every authority and remedy for every right breached, is reached.
We conclude stating that the bar of article 329(b) is as wide as the door of.
section 100 read with section 98.
The writ petition is dismissible but every relief (given factual proof) now prayed for in the pending election petition is within reach.
On this view of the law ubi jus ibi remeditum is vindicated, election injustice is avoided, and the constituency is allowed to speak effectively.
In the light of and conditioned by the law we have laid down, we dismiss the appeal.
Where the dispute which spirals to this Court is calculated to get a clarification of tile legal calculus in an area of national moment, the parties are the occasion but the people are the beneficiaries, and so costs must not be visited on t particular person.
Each party Will bear his own costs.
A word of mood for counsel.
Shri Soli Sorabjee, did, with imaginative, yet emphatic, clarity and pragmatic, yet persuasive, advocacy, belight the twilit yet sensitive, zones of the electoral law; Shri P. P. Rao did, with feeling for justice and wrestling with law, drive home the calamities of our system if right did not speak to remedy; and Shri Phadke did, without overlapping argument, but with unsparing vigour, bringing out the, legal dynamics of quick elections and comprehensive corrections.
We record our appreciation to the bar whose help goes a long way for the bench to do justice, GOSWAMI, J.
This appeal by special leave is directed against the judgment of the Delhi High Court dismissing the writ application of the appellant under Article 226 of the Constitution.
8 1114SCI/77 324 By a notification of February 10, 1977, made under section 14 of the Representation of the People Act, 1951, (briefly the Act), the President called upon the Parliamentary Constituencies to elect members to the House of the People, in accordance with the provisions of the Act and the rules and orders made thereunder.
Simultaneously, a notification was issued by the Chief Election Commissioner with a calendar of dates for different Parliamentary Constituencies in the country.
In this appeal we are concerned with No. 13 Ferozepore Parliamentary Constituency in the State of Punjab where the poll was scheduled to be held on March 16, 1977, and March 23 was fixed as the date before which the election shall be completed.
Counting, according to the schedule, was to commence on March , 20, 1977 and it actually continued on March 21, 1977.
This Parliamentary Constituency consisted of nine Assembly Constituencies including the Fazilka and Zira Assembly segments.
We may now briefly state the appellants ' case so far as it is material : The poll in the entire Parliamentary Constituency was peacefully over on March 16, 1977.
Counting in five Assembly segments was completed on March 20, 1977, and in the remaining four it was completed on March 21.
The Assistant Returning Officers made entries in the result sheets in form 20 and announced the number of votes received by each candidate in the Assembly segments.
No recounting was asked for by any candidate or his polling agent in any segment.
Copies of the result sheets in Form 20 were handed over to the candidates or to their polling agents.
The ballot papers and the result sheets of all the nine Assembly segments were transmitted by the Assistant Returning Officers concerned to the Returning Officer at the Headquarters.
According to the result sheets the appellant, who was the Congress candidate, secured 1,96,016 votes, excluding postal ballots, as 'against his nearest rival candidate respondent No. 3, belonging to the Akali Party, who secured 1,94,095 votes, excluding postal ballots.
The margin of votes between the appellant and respondent No. 3 at that stage was 1921.
There were 769 postal ballots,.
As per programme, counting of postal ballot papers was started by the Returning Officer (respondent No. 2) at 3.00 P.M. on March 21.
248 ballot papers out of 769 were rejected in the counting.
At this stage, it is said, respondent No. 3 and his son incited an unruly mob of his supporters to raid the office of the Returning Officer as a result of which a grave situation was created in which many officers received injuries. 'The Returning Officer was abused and was threatened that his son and other members of his family would be murdered.
All the postal ballot papers, except those which had been rejected, were destroyed by the mob.
Some ballot papers of Fazilka Assembly segment are also said to have been destroyed by the mob in the course of their transit to the office of the Returning Officer.
The Assistant Returning Officer of the Zira Assembly segment, on his way to the office of the Returning Officer, was attacked by the mob and some of the envelopes containing ballot papers, paper seal accounts and presiding Officers ' diaries were snatched away from him.
However the result sheets in Form 20 of all the Assembly segments in which the 325 counting had been completed by March 21, 1977, could be preserved and were deposited in Gorvernment Treasury, Ferozepore.
In view of the violent situation created in the office of the Returning Officer, be was prevented from ascertaining the result of the postal ballot papers and declaring the result of the election.
He was made to sign a written report about the happenings to the Chief Election Commissioner (respondent No. 1).
The above, briefly, is the version of the appellant.
Deputy Commissioners are usually appointed 'as Returning Officers and originally Shri G. B. section Gosal, who was the Deputy Commissioner, was nominated as the Returning Officer of the aforesaid constituency, as per notification dated January 29, 1977.
It appear s on February 8, 1977, Shri Gosal was transferred and Shri Gurbachan Singh, a close relation of the appellant, was appointed as the Deputy Commissioner in place of Shri Gosal.
Shri Gurbachan Singh (respondent No. 2) thus became the Returning Officer.
There were complaints and allegations against him and after being apprised of the same the Chief Election Commissioner of (respondent No. 1) appointed Shri I. K. K. Menon, Under Secretary, Election Commission, as an Observer to be present at Ferozepore from March 16 till March 21 on which date the result was expected to be declared.
On March 22, 1977, the Chief Election Commissioner received a wireless message from the Returning Officer which may be quoted "Mob about sixteen thousand by over powering the police attacked the counting hall where postal ballot papers were being counted.
Police could not control the mob being out numbered.
Part of postal ballot papers excepting partly rejected ballot papers and other election material destroyed by the mob.
Lot of damage to property done. 'The undersigned was forced under duress to give in writing the following : 'The counting of 13 Parliamentary Ferozepore Constituency has been adjourned due to certain circumstances which have been mentioned in the application presented by Shri Mohinder Singh Sayanwala regarding repoll of the constituency and on the polling station in which the ballot boxes have been r to be tampered with.
This will be finally decided on receipt of instructions from the Election Commission 'and the result will be announced thereafter '.
Counting adjourned and result postponed till receipt of further instructions from Election Commission.
Incident happened in the presence of Observer at Ferozepore.
Mob also destroyed the ballot papers and other election material and steel trunks of Fazilka Assembly segment at Ferozepore after the counting part of election material of Zira Assembly segment was also snatched and destroyed by the mob at Ferozepore".
On the same day the Chief Election Commissioner received a written report from the Observer.
The Observer also "orally apprised the Chief Election Commissioner of the various incidents at the time of 326 poll and counting in various Assembly segments".
No other report from the Returning Officer was, however, received on that day.
On the materials mentioned above which he could gather on March 22, 1977, the Chief Election Commissioner passed the impugned order on the same day.
It may even be appropriate to quote the same : "Election Commission of India New Delhi Dated 22 March, 1977 Chaitra, 1, 1899 (SAKA) NOTIFICATION S.O.
Whereas the Election Commission has received reports from the Returning Officer of 13 Ferozepur Parliamentary Constituency that the counting on 21 March, 1977 was seriously disturbed by violence; that the ballot papers of some of the assembly segments of the parliamentary constituency have been destroyed by violence, that as a consequence it is not possible to complete the counting of the votes in the constituency and the declaration of the result cannot be made with any degree of certainty; And whereas the Commission is satisfied that taking all circum 'stances into account, the poll in the constituency has been vitiated to such an extent as to effect the result of the election; Now, therefore, the Commission, in exercise of the powers vested in it under article 324 of the Constitution, Section 153 of the Representation of the People Act, 1951 and all other powers enabling it so.
to do, cancels poll already taken in the constituency and extends the time for the completion of the election upto 30 April, 1977. x x x x x The appellant approached the Chief Election Commissioner to revoke the impugned order and to declare the result of the election, but without success.
That led to the writ application in the High Court with prayer to issue (1) a writ of certiorari calling forth the records for the purpose of quashing the impugned order; and (2) 'a writ of mandamus directing the Chief Election Commissioner and the Returning Officer to declare the result of the election; (3) alternatively, a writ of mandamus directing the Chief Election Commissioner to act strictly in accordance with the provision of section 64A(2) thus confining its directions in regard to postal ballot papers only.
The appellant made three contentions before the High Court.
Firstly, that the Election Commission had no jurisdiction to order 327 re poll of the entire Parliamentary Constituency.
Secondly, the impugned order was violative of the principles of natural justice as no opportunity of a hearing was afforded to the appellant before passing the order.
Thirdly, 'that the High Court under Article 226 of the Constitution was competent to go into the matter notwithstanding the provisions of Article 329(b) of the Constitution.
The application was resisted by the Chief Election Commissioner (respondent No. 1) and respondent No 3, the rival candidate.
A preliminary objection was raised by respondents 1 to 3 with regard to the maintainability of the writ 'application on the ground that Article 329(b) of the Constitution was a bar to the High Courts entertaining it.
Another objection was taken that the writ petition was not maintainable in view of the amended provisions of Article 226 of the Constitution.
The High Court dismissed the writ application.
The High Court held that Article 324 confers "plenary executive powers" on the Election Commission and there were no limitations on the functions contemplated in Article 324.
The High Court observed that the law framed under Article 327 or Article 328 was in aid of the plenary powers already conferred on the Election Commission under Article 324, and where the law so made under Article 327 or Article 328 omitted to provide for a contingency or a situation, the said plenary executive power relating to conduct of elections conferred upon the Election Commission by Article 324(1) of the Constitution would become available to it and the, Election Commission would be entitled to pass necessary orders in the interest of free and fair elections.
The High Court also held that the Returning Officer could not deprive the candidates of the rights of recount available to them tinder rule 63 of the Conduct of Election Rules, 1961, and after going into the facts observed that "it became impossible for the Returning Officer to comply with the provisions of rules 63(2) to 63(6)".
Repelling the contention of the appellant that the Commission could not travel beyond the Act and the rules by simply relying on its powers under the Constitution, the High Court observed "that calling upon of the parliamentary constituencies to elect members has to be in accordance with the provisions of the Act and the Rules but it does not mean that the conduct of elections by the Commission has to be held only under the Act or the Rules.
The Election Commission who is vested with the power of conducting the elections has still to hold the elections in accordance with the Act and the Rules as well as under the Constitution".
The High Court further held that the principles of natural justice were not specifically provided for in Article 324 but were "totally excluded while passing the impugned order".
The High Court further observed that even if the principles of natural justice were impliedly to be observed before passing the impugned order the appellant was "heard not only before the issue of the notification but in any case after the notification".
The High Court also 'held that it bad no jurisdiction to entertain the writ petition in view.
of the bar contained in Article 329(b) of the Constitution.
This appeal has come up for hearing before this ' Constitution Bench on a reference by a Two Judge Bench as substantial questions of 328 law have arisen as to the, interpretation of the Constitution, in particular Article 324 and Article 329(b) of the Constitution.
We should,.
therefore, immediately address ourselves to that aspect of the matter.
What is the scope and ambit of Article 324 of the Constitution ? The Constitution of our country ushered in a Democratic Republic for the free people of India.
The founders of the Constitution took solemn care to devote a special chapter to Elections niched safely in Part XV of the Constitution.
Originally there were only six articles in this Part opening with Article 324.
The penultimate Article in the chapter, as it stands, is Article 329 which puts a ban on interference by courts in electoral matters.
We are not concerned in this appeal with the newly added Article 329A which is the last Article to close the ' chapter.
Elections supply the visa viva to a democracy.
It was, therefore, deliberately and advisedly thought to be of paramount importance that the high 'and independent office of the Election Commission should be created under the Constitution to be in complete charge of the entire electoral process commencing with the issue of the notification, by the 'President to the final declaration of the result.
We are not concerned with the other duties of the Election Commission in this appeal.
Article 324 came to the notice of this Court for the first time in N. P. Ponnuswami vs Returning Officer, Namakkal Constituency and Others(1).
This Court observed "Broadly speaking, before an election machinery can be brought into operation, there are three requisites which require to be attended to, namely, (1) there should be 'a set of laws and rules making provisions with respect to all matters relating to, or in connection with,, elections, and it should be decided as to how these laws and rules are to be made; (2) there should be an executive charged with the duty of securing the due conduct of elections; and (3) there should be a judical tribunal to deal with disputes arising out of or in connection with elections.
Articles 327 and 328 deal with the first of these requisites, article 324 with the second and article 329 with the third requisite".
Further below this Court observed as follows "Obviously, the Act is a self contained enactment so far as elections are concerned, which means that whenever we have to ascertain the true position in regard to any matter connected with elections, we have only to look at the Act and the rules made thereunder".
Lower down this Court further observed "It is now well recognised that there a right or liability is created by a statute which gives a special remedy for (1)[1952] S.C.R. 218. 329 enforcing it, the remedy provided by that statute only must be availed of".
x x x x the Representation of the People Act to state that the Act provides for only one remedy, that remedy being by an election petition to be presented after the election is over, and there is no remedy provided at any intermediate stage".
Ponnuswami 's case (supra) had to deal with a matter arising out of rejection of a nomination paper which was the subject matter of a writ application under Article 226 of the Constitution which the High Court bad dismissed.
With regard to the construction of Article 329(b) it was held that "the more reasonable view seems to be that article 329 covers all electoral matters" '.
This Court put forth its conclusions in that decision as follows : "(1) Having regard to the important functions which the legislatures have to perform in democratic countries, it has always been recognised to be a matter of first importance that elections should be concluded as early as possible according to time schedule and all controversial matters and all disputes arising out of elections should be postponed till after the elections are over, so that the election proceedings may not be unduly retarded or protracted.
(2) In conformity with this principle, the scheme of the election law in this country as well as in England is that no significance should be attached to anything which does not affect the 'election '; and if any irregu larities are committed while it is in progress and they belong to the category or class which, under the law by which elections are governed, would have the effect of vitiating the 'election ' and enable the person affected to call it in question, they should be brought up before a special tribunal by means of an election petition and not be made the subject of a dispute before any court while the election is in progress".
This Court also explained the connotation of the word "election" in very wide terms as follows: " It seems to me that the word 'election ' has been used in Part XV of the Constitution in the wide sense, that is to say, to connote the entire procedure to be gone through to return a candidate to the legislature.
The use of the expression 'conduct of election ' in article 324 specifically points to the wide meaning, and that meaning can also be read consistently into the other provisions which occur in Part XV including article 328(b)".
330 This Court further observed that been appropriately used with reference to the entire process which consists of several stages and embraces many steps.
some of which may have an important bearing on the result of the process.
x x x x x If the grounds on which an election can be called in question could be raised at an earlier stage and efforts, if any, are rectified, there will be no meaning in enacting a provision like article 329 (b) and in setting up a special tribunal.
Any other meaning ascribed to the words used in the article would lead to anomalies, which the Constitution could not have contemplated, one of them being that conflicting views may be expressed by the High Court at the pre polling stage and by the election tribunal, which is to be an independent body, at the stage when the matter is brought up before it.
" The above decision in locus classicus on the subject and the parties before us seek to derives support from it for their contentions.
The important question that arises for consideration is as to the amplitude of powers and the width of the functions which the Election Commission may exercise under Article 324 of the Constitution.
According to Mr. Rao, appearing on behalf of the appellants, there is no question of exercising any powers under Article 324 of the Constitution which, in terms, refers to "functions ' under sub Article (6),.
We are however, unable to accept this submission since functions include powers as well as duties (see Stroud 's Judicial Dictionary, p. 1196).
It is incomprehensible, that a person or body can discharge any functions without exercising powers.
Powers and duties are integrated with function.
Article 324(1) vests in the Election Commission the superintendence, direction and control of the preparation of the electoral rolls for, and the conduct of, all elections to Parliament and to the Legislature of every State and of elections to the offices of the President and Vice President held under the Constitution.
Article 324(1) is thus pattern of our polity, isto be exercised in accordance with law.
That is why Articles 327 and328 provide for making of provisions with respect to all matters relating to or in connected with elections for the Union Legislatures and for the State Legislatures respectively.
When appropriate laws are made under Article 327 by Parliament as well as under Article 328 by the State Legislatures, the Commission has to act in conformity with those laws and the other legal provisions made thereunder.
Even so, both Articles 327 and 328 are " subject to the provisions" of the Constitution which include Article 324 and Article 329.
Since the conduct of all elections to the various legislative bodies and to the offices of the President and the Vice President is vestedunder Article 324(1) in the Election Commission, the framers 331 of the Constitution took care to leaving scope for exercise of residuary power by the Commission, in its own right, as a creature of the Constitution, in the infinite variety of situations that may emerge from time to time in such a large democracy as ours.
Every contingency could not be foreseen, or anticipated with precision.
That is why there is no hedging in Article 324.
The Commission may be required to cope with some situation which may not be provided for in the enacted laws and the rules.
That to be the raison d 'etre for the opening clause in Articles 327 and 328 which leaves the exercise of powers under Article 324 operative and effective when it is reasonably called for in a vacuous area.
There is, however, no doubt whatsoever that the Election Commission will have to conform to the existing laws and rules in exercising its powers and performing its manifold duties for the conduct of free and fair elections.
The Election Commission is a high powered and independent body which is irremovable from office except in accordance with the provisions of the Constitution relating to the removal of Judges of the Supreme Court and is intended by the framers of the Constitution to be kept completely free from any pulls and pressures that may be brought through political influence in a democracy run on party system.
Once the appointment is made by the President.
the Election Commission remains insulated from extraneous influences, and that cannot be achieved unless it has an amplitude of powers in the conduct of elections of course in accordance with the exising laws.
But where these are absent, and yet a situation has to be tackled, the Chief Election Commissioner has not to fold his hands and pray to God for divine inspiration to enable him to exercise his functions and to perform his duties or to look to any external authority for the grant of powers to deal with the situation.
He must lawfully exercise his power independently, in all matters relating to the conduct of elections, and see, that the election process is completed properly, in a free and fair manner. "An express statutory grant of power or the imposition of a definite duty carries with it by implica tion, in the absence of a limitation, authority to employ all the means that are usually employed and that are necessary to the exercise of the power or the performance of the duty.
That which is clearly implied is as much a part of a law as that which is expressed.
"(1) The Chief Election commissioner has thus to pass appropriate orders on receipt of reports from the returning officer with regard to any situation arising in the course of an election and power cannot be denied to him to pass appropriate orders.
Moreover, the power has to be exercised with promptitude.
Whether an order passed is wrong.
arbitrary or is otherwise invalid, relates to the mode of exercising the power and does not touch upon the existence of the power in him if it is there either under the Act or the rules made in that behalf, or under Article 324(1).
Apart from the several functions envisaged by the two Acts and the rules made thereunder, where the Election Commission is required to make necessary orders or directions, are there any other functions or the Commission ? Even if the answer to the question may be found 332 elsewhere, reference may be, made to section 19A of the Act which, in terms, refers to functions not only under the Representation of the People Act, 1950 and the Representation of the People Act, 1951, or under the rules made thereunder, but also under the Constitution.
The Commission is, therefore, entitled to exercise certain powers under Article 324 itself, on its own right, in an area not covered by the Acts and the rules.
Whether the power is exercised in an arbitrary or capricious manner is a completely different question.
Mr. Rao submits, referring to sections 58 and 64A of the Act, that the Chief Election Commissioner has no power to cancel the poll in the entire constituency.
He submits that this is a case of complete lack of power and not merely illegal or irregular exercise of power.
He points out that there is a clear provision under section 58 of the Act for reordering of poll at a polling station.
Similarly under section 64A there is provision for declaring the poll at a polling station void when the Election Commission is satisfied that there is destruction or loss etc.
of ballet papers before counting.
Counsel submits that while law has provided for situations specified in section 58 with regard to loss or destruction of ballot boxes and under section 64A with regard to loss and destruction of ballot papers before counting of votes, no provision has been made for such an unusual exercise of power as the cancellation of the poll in the entire constituency after it has already been completed peacefully.
It is therefore has argued that this is a case of complete lack of power of the Commission to pass the impugned order.
It is clear even from section 58 and section 64A that the legislature envisaged the necessity for the cancellation of poll and ordering of repoll in particular polling stations where situation may warrant such a course.
When provision is made in the Act to deal with situations arising in a particular polling stage it cannot be said that if a general situation arises whereby numerous polling stations may wit ness serious mal practices affecting the purity of the electoral process, that power can be denied to the Election Commission to take an appropriate decision.
The fact that a particular Chief Election Commissioner may take certain decisions unlawfully, arbitrarily or with ulterior motive or in mala fide exercise of power, is not the test in such a case.
The question always relates to the existence of power and not the mode of exercise of power.
Although section 58 and section 64A mention "a polling station" or "a place fixed for the poll" it may, where necessary, embrace multiple polling stations.
Both under section 58 and under section 64A the poll that was taken at a particular polling station can be voided and fresh poll can be ordered by the Commission.
These two sections naturally envisage a particular situation in a polling station or a place fixed for the poll and cannot be said to be exhaustive.
The provisions in sections 5 8 and 64A cannot therefore be said to rule out the making of an order to deal with a similar situation if it arises in several polling stations or even sometimes as a general feature in a substantially large area.
It is, therefore, not possible to accept the contention that the Election Commission has no power to make the impugned order for a repoll in the entire constituency.
333 Mr. Rao submits that once the Presidential notification has been made, it is left to the President alone to amend or alter the notification and power, in an appropriate case, may be exercised by the President in which case the action of the President wilt be on the advice of the Cabinet which will be responsible to the Legislature.
He submits that it was not the intention of the Constitution makers in the entire scheme of the electoral provisions to entrust such an extraordinary power to the Election Commission.
He, further submits that in an appropriate case the President may also promulgate an ordinance under Article 123(i) of the Constitution cancelling the poll in the entire constituency.
The contention that the President can revoke, alter or amend the notification under section 14 of the Act or that he can promulgate an ordinance in an appropriate case does not however answer the question.
The question will have to be decided on the scope and ambit of power under Article 324(1) of the Constitution which vests the conduct of elections in the Election Commission.
It is true that in exercise of powers under Article 324(1) the Election Commission cannot do something impinging upon the power of the President in making the notification under section 14 of the Act.
But after the notification has been issued by the President, the entire electoral process is in the charge of the Election Commission and the Commission is exclusively responsible for the conduct of the, election without reference to any outside agency.
We do not find any limitation in Article 324(1) from which it can be held that where the law made under Article 32 / or the relevant rules made thereunder do not provide for the mechanism of dealing with a certain extraordinary situation, the hands of the Election Commission are tied and it cannot independently decide for itself what to do in a matter relating to an election.
We are clearly of opinion that the Election Commission is competent in an appropriate case to order repoll of an entire constituency where necessary.
it will be an exercise of power within the ambit of its functions tinder Article 324, The submission that there is complete lack of power to make the impugned order under Article 324 is devoid of substance.
The ancillary question which arises for consideration is that when the Election Commission amended its notification and extended the time for completion of the election by ordering a fresh poll, is it an order during the course of the process of 'election ' as that term is understood ? As already pointed out, it is well settled that election covers the entire process from the issue of the notification under section 14 to the declaration of the result under section 66 of the Act.
When a Poll that has already taken place has been cancelled and a fresh poll has been ordered, the order therefor, with the amended date is passed as an integral part of the electoral process.
We are not concerned with the question whether the impugned order is right or wrong or invalid on any account.
Even if it is a wrong order it does not cease to be an order passed by a competent authority charged with the conduct of elections with the aim and object of completing the elections.
Although that is not always decisive, the impugned order itself shows that it has been passed in the exercise of power under Article 324 (1) and 334 section 153 of the Act.
That is also the correct position.
Such an order, relating, as it does, to election within the width of the expression as interpreted by this Court, cannot be questioned except by an election petition under the Act.
What do the appellants seek in the writ application ? Oneof their prayers is for declaration of the result on the basis of thePoll which has been cancelled.
This is nothing short of seeking to establish the validity of a very important stage in the election process, namely, the poll which has taken place, and which was countermanded by the impugned order.
If the appellants succeed, the result may, if possible, be declared on the basis of that poll, or some other suitable orders may be passed.
If they fail, a fresh poll will take place and the election will be declared on the basis of the fresh poll.
This is, in effect, a vital issue which relates to questioning of the election since the election will be complete only after the fresh poll on the basis of which the declaration of the result will be made.
In other words, there are no two elections as there is only one continuing process of election.
If, therefore, during the process of election, at an intermediate or final stage, the entire poll has been wrongly cancelled and a fresh poll has been wrongly ordered, that is a matter which may be agitated after declaration of the result on the basis of the fresh poll, by questioning the election in the appropriate forum by means of an election petition in accordance with law.
The appellants, then, will not be without a remedy to question every step in the electoral process and every order that has been passed in the process of the election includ ing the countermanding of the earlier poll.
In other words, when the appellants question the election after declaration of the result on the basis of the fresh poll, the election court will be able to entertain their objection with regard to the order of the Election Commission countermanding the earlier poll, and the whole matter will be at large.
If, for example, the election court comes to the conclusion that the earlier poll has been wrongly cancelled, or the impugned order of the Election Commission is otherwise invalid, it will be entitled to set aside the election on the basis of the fresh Poll and will have power to breathe life into the countermanded poll and to make appropriate directions and orders in accordance with law.
There is, therefore, no foundation for a grievance that the appellants will be without any remedy if their writ application is dismissed.
It has in fact been fairly conceded by counsel for the other side that the election court will be able to grant all appropriate reliefs and that the dismissal of the writ petition will not prejudice the appellants.
Indeed it has been brought to our notice that an election petition has been filed by the appellants, ex abundanti cautela, in the High Court of Punjab and Haryana, challenging the election which has since been completed on the basis of a fresh poll ordered by the Election Commis sion.
The High Court of Punjab and Haryana will therefore be free to decide that petition in accordance with law.
It is submitted by Mr. Rao that in Ponnuswami (supra) the question was of improper rejection of nomination paper which is clearly covered by section 100(1)(c) of the Act.
Counsel submits ' that 335 the only ground which can be said to be raised in the election petition, in the, present case, is section 100(1) (d) (iv), namely, non compliance with the provisions of the Constitution or of the Representation of the People Act, 1951, or of any rules or orders made under that Act.
Ac cording to counsel, there is no non compliance with Article 324 of the Constitution as the Election Commission has no power whatsoever to pass the impugned order under Article 324 of the Constitution.
That, according to him, is not "non compliance with the provisions of the Constitution" within the meaning of section 100(1)(d)(iv).
We are unable to accept this submission for the reasons already given.
We Election Commission has passed the order professedly under Article 324 and section 153 of the Act.
We have already held that the order is within the scope and ambit of Article 324 of the Constitution.
It, therefore.
necessarily follows that if there is any illegality intile exercise of the power under Article 324 or under any provision ofthe Act, there is no reason why section 100(1)(d)(iv) should not be attracted to it.
If exercise of a power is competent either underthe provisions of ' the Constitution or under any other provision of law, any infirmity in the exercise of that power is, in truth and substance, on account of noncompliance with the provisions of law, since law demands of exercise of power by its repository, as in a faithful trust, in a proper.
regular, fair reasonable manner.
(See also Durga Shankar Mehta vs Thakur Raghueraj Singh and Others) (1).
The above being the legal position, Article 329(b) rules out the maintainability of the writ application.
Article 329(b) provides that ,.notwithstanding anything in this Constitution. no election to either house of Parliament. shall be called in question except by an election petition presented to such authority and in such manner as may be provided for by or under any law made by the appropriate Legislature.
" It is undisputed that an election can be challenged only under the provisions of the Act.
Indeed section 80 of the Act provides that "no election shall be called in question except by an election petition presented in accordance with the provisions of" Part VI of the Act.
We find that all the substantial reliefs which the appellants seek in the writ application, including the declaration of the election to be void and the declaration of appellant No. 1 to be duly elected, can be claimed in the election petition.
It will be within the power of the High Court.
as the election court, to give all appropriate reliefs to do complete justice between the parties.
In doing so it will be open to the High Court to pass any ancillary or consequential order to enable it to grant the necessary relief provided under the Act.
The writ application is therefore barred under Article 329(b) of the Constitution and the High Court rightly dismissed it on that ground.
In view of our conclusion that the High Court had no jurisdiction to entertain the writ application under Article 226 of the Constitution ' it will not be correct for us, in an appeal against the order of the High Court in that proceeding, to enter into any other controversy, on the merits, either on law or on facts, and to pronounce finally on the same.
The pre eminent position conferred by the Constitution on 336 this Court under Article 141 of the Constitution does not envisage that this Court should lay down the law, in an appeal like this, on any matter which is required to be decided by the election court on a full trial of the election petition, without the benefit of the opinion of the Punjab and Haryana, High Court which has the exclusive jurisdiction under section 80A of the Act to try the election petition.
Moreover, a statutory right to appeal to this Court has been provided under section 1 1 6A, on any question, whether of law or fact, from every order made by the High Court in the dispute.
So, in view of the scheme, of Part VI of the Act, the Delhi High Court could not haveembarked upon an enquiry on any part of the merits of the dispute.
Thus it could not have examined the question whether the impugnedorder was made by the Election Commission in breach of a rule of natural justice.
That is a matter relating to the merits of the controversy and it is appropriately for the election court to try and decide it after recording any evidence that may be led at the trial.
It may be that if we pronounce on the question of the applicability of the rule of natural justice, the High Court will be relieved of its duty to that extent.
But it has to be remembered that even for the purpose of deciding that question, the parties may choose to produce evidence, oral or documentary, in the, trial court.
We therefore refrain from expressing any opinion in this appeal on the question of the violation of any rule of natural justice by the Election Commission in passing the impugned order.
At the same time we would like to make it quite clear that any observation, on a question of law or fact made 'in the impugned judgment of the Delhi High Court, bearing on the trial of the election petition pending in the Punjab and Haryana High Court, will stand vacatted and will not come in the way of that trial.
That High Court will thus be free to decide the petition according to the law.
We would also like to make it quite clear, with all respect to the learned Judges who have delivered a separate judgment, that we may not be taken to have agreed with the views expressed therein about the applicability of audi alteram partem or on the applicability of the guidelines in sections 58 and 64A to the facts and circumstances of this case, or the desirabi lity of ordering a repoll in the whole constituency, or the ordering of a repoll of postal ballots etc.
Election, is a long, elaborate and complicated process and, as far as we can see, the rule of audi alteram partem, which is in itself a fluid rule, cannot be placed in a strait jacket for purposes of the instant case.
It has also to be remembered that the impugned order of the Election Commission could not be said to be a final pronouncement on the rights of the parties as it was in the nature of an order covering an unforeseen eventuality which bad arisen at one stage of the election.
The aggrieved party had all along a statutory right to call the entire election in question, including the Commission 's order, by an election petition under section 80 of the Act, for the trial of which an elaborate procedure has been laid down in the Act.
Then, as has been stated, there is also a right of appeal under the scales in considering at the trial of the election petition whether there may not be sufficient justification to negative the existence of 337 any implied duty on the part of the Commission, at that stage, to hear any party before taking its decision to order or not to order a report.
We do not therefore think it necessary or desirable to foreclose a controversy like this by any general observations and will leave any issue that may arise from it for trial and adjudication by the election court.
Being not altogether certain of all the facts and circumstances that may be made available, in the appropriate forum, it may be a premature exercise by this Court even to lay down guidelines when there is no hide boand formula of rules of natural justice to operate in all cases and at all times when a decision has to be made.
Justice and fair play have often to be harmonised with exigencies of situations in the light of accumulated totality of circumstances in a given case having regard to the question of prejudice not to the mere combatants in an electoral contest but to the real and larger issue of completion of free and fair election with rigorous promptitude.
Not being adequately informed of all the facts and circumstances, this Court will not make the task of the election court difficult and embarrassing by suggesting guidelines in a rather twilight zone.
As we find no merit in this appeal, it is dismissed but, in the circumstances of the case, there will be no order as to the costs in this Court.
P.B. R. Appeal dismissed.
| IN-Abs | Article 329(b) of the Constitution provides that notwithstanding anything in the Constitution no election to either House of Parliament or to the House, or either House of the Legislature of a State shall be called in question except by an election petition presented to such authority and in such manner as may be provided for by or under any law made by the appropriate legislature.
Section 100(1)(d)(iv) of the Representation of the People Act, 1951 provides that if the High Court is of the opinion that the result of the election so far as it concerns a returned candidate has been materially affected by any non compliance with the provisions of the Constitution or of this Act or of any rules or orders made under this Act the High Court shall declare the election of the returned candidate to be void.
The appellant and the third respondent were candidates for election in a Parliamentary constituency.
The appellant alleged that when at the last hour of counting it appeared that he had all but won the election, at the instance of respondent No. 3 mob violence broke out and postal ballot papers and ballot boxes from certain Assembly segments, while being brought for counting, were destroyed and the Returning officer was forced to postpone the declaration of the result.
The Returning Officer reported the happening by wireless to the Chief Election Commissioner.
An officer of the Election Commission who was deputed to be an observer at the counting stage gave a written report to the Commission in addition to an oral report about the incidents which marred the last stages of the counting.
The appellant met the Chief Election Commissioner and requested him to declare the result.
Eventually, however, the Chief Election Commissioner issued a notification stating that the counting in the constituency was seriously disturbed by violence and that ballot papers of some of the assembly segments had been destroyed by violence, as a consequence of which it was not possible to complete the counting of votes in the constituency and declare the result with any degree of certainty.
The notification further stated that taking all circumstances into account, the Commission was satisfied that the poll had been vitiated to such an extent as to affect the result of the election.
In exercise of the powers under article 324 of the Constitution it cancelled the poll already held and ordered a re poll in the entire constituency.
In a petition under article 226 of the Constitution the appellant alleged that the action of the Chief Election Commissioner in ordering repoll in the whole constituency was arbitrary and violative of any vestige of fairness.
The respondents in reply urged that the High Court had no Jurisdiction to entertain the writ petition in view of article 329(b) and that the Commission 's action was well within its powers under article 324.
273 The High Court dismissed the writ petition holding that it had no jurisdiction to entertain the writ petition.
Yet on merits it held that article 324 does not impose any limitation on the function contemplated under that article; that principles of natural justice were not specifically provided for in that article but were totally excluded while passing the impugned order and that even if the principles of natural justice were impliedly to be observed before passing the impugned order the appellant was heard not only before the issue of the notification but in any case after the notification.
In the repoll the appellant did not participate though his name appeared on the ballot and respondent No. 3 was declared elected.
On the question of application of principles of natural justice it was contended on behalf of the respondents that the tardy process of notice and hearing would thwart the conducting of elections with speed that unless civil consequences ensued, hearing was not necessary and that the right accrues to a candidate only when he is declared elected and lastly the decision of the Election Commission is only provisional and that it is he the election court which is the final authority on the subject.
HELD: The catch alljurisdiction under article 226 cannot consider the correctness, legality or otherwiseof the direction for cancellation integrated with repoll.
[269 D] 1(a) Article 329(b) is a blanket ban on litigative challenge to electoral steps taken by the Election Commission for carrying forward the process of election to its culmination in the formal declaration of the result.
[322 D] (b) The sole remedy for an aggrieved party, if he wants to challenge any election, is an election petition.
This exclusion of all other remedies includes constitutional remedies like article 226 because of the non obstante clause in article 329(b).
If what is impugned is an election the ban operates provided the proceeding "calls it in question" or puts it 'm issue : not otherwise.
[289 E F] (c)Part XV of the Constitution is a Code in itself, providing the entire groundwork for enacting the appropriate laws and setting up suitable machine for the conduct of elections.
Articles 327 and 328 take care of the set of laws and rules making provisions with respect to all matters relating to or in connection with elections.
Election disputes are also to be provided for by laws made under article 327. 'Be Representation of the People Act, 1951 is a self contained enactment so far as elections are concerned.
Section 80 which speaks substantially the same language as article 329(b) provides that no election shall be called in question except by an election petition presented in accordance with the provisions of Part IV of the Act.
The Act provides for only one remedy and that remedy being by an election petition to be presented after the election is over, there is no remedy provided at any of the intermediate stages.
[292 C D; F G 293 B C] Smt.
Indira Gandhi vs Raj Narain , 504 505 referred to.
(d)The compendious expression "election" commences from the initial notification and culminates in the declaration of the return of a candidate.
The paramount policy of the Constitution framers in declaring that no election shall be called in question except the way it is provided for in article 329(b) and the Representation of the People Act, 1951 necessitates the reading of the Constitution and the Act together as an integral scheme.
The reason for postponment of election litigation to the post election stage is that elections shall not unduly be protracted or obstructed.
[294 D E] (e)No litigative enterprise in the High Court or other court should be allowed to hold up the on going electoral process because the parliamentary representative for the constituency should be chosen promptly.
Article 329 therefore covers "electoral matters".
[294 F] (f)The plenary bar of article 329(b) rests on two principles : (1) the peremptory urgency of prompt engineering of the whole election process without intermediate interruptions by way of legal Proceedings challenging the 274 steps and stages in between the commencement and the conclusion; and (2) the provision of a special jurisdiction which can be invoked by an aggrieved party at the end of the election excludes other forms, the right and remedy being creatures of statutes and controlled by the Constitution.
[295 H, 296 ] Durga Shankar Mehta [1955] 1 SCR 267 referred to.
(g)If the regular poll for some reasons has failed to reach the goal of choosing by plurality the returned candidates and to achieve this object a fresh poll (not a new election) is needed, it may still be a step in the election.[296 E F] (h)A writ petition challenging the cancellation coupled with repoll amounts to calling in question a step in 'election ' and is, therefore, barred by article 329(b).
[296 G] (i)Knowing the supreme significance of speedy elections in our system the framers of the Constitution have, by implication, postponed all election disputes to election petitions and tribunals.
In harmony with this scheme section 100 has been designedly drafted to embrace all conceivable infirmities which may be urged.
To make the project fool proof section 100(1)(d)(iv) has been added to absolve everything left over.
Section 100 is exhaustive of all grievances regarding an election.
What is banned is not anything whatsoever ,done or directed by the Election Commissioner but everything he does or directs in furtherance of the election, not contrarywise.
[297 B, C, D] (j)It is perfectly permissible for the Election Court to decide the question as one falling under section 100(1)(d)(iv).
The Election Court has all the powers necessary to grant all or only any of the reliefs set out in section 98 and to direct the Commissioner to take such ancillary steps as will render complete justice to the appellant.
[319 C, E] (k)It is within the powers of the Election Court to direct a repoll of particular polling stations to be conducted by the specialised agency under the Election Commission and report the results and ballots to the Court.
Even a repoll of postal ballots can be ordered In view of the wide ranging scope of implied powers of the Court, the appellant 's claims are within the Courts powers to grant.
[322 A B] 2(a) Article 324 does not exalt the Election Commission into a law unto itself.
The Article is wide enough to supplement the powers under the Act subject to the several conditions on its exercise.
[300 A B] (b)The Election Commissioner 's functions are subject to the norms of fairness and he cannot act arbitrarily.
The Constitution has made comprehensive provision in article 324 to take care of surprise situations.
That power has to be exercised in keeping with the guidelines of the rule of law without stultifying the Presidential notification or existing legislation.
It operates in areas left unoccupied by legislation and the words "Superintendence, direction and control" as well as "conduct of all elections" are in the broadest terms.[299 A, B C] (c)If imparting the right to be heard will paralyse the process, the law will exclude it.
In any case it is untenable heresy to lockjaw the victim or act behind his back by invoking urgency, unless the clearest case of public injury flowing from the least delay is evident.
The Election Commission is an institution of central importance and enjoys far reaching powers and the greater the power to affect other 's rights or liabilities the more necessary is the need to hear.
[304 D, G H, 305 B C] (d)It is well established that when a high functionary like the Commissioner is vested with wide powers, the law expects him to act fairly and legally.
Discretion vested in a high functionary may be reasonably trusted to be used properly, not perversely.
If it is misused certainly the Court has power to strike down the act.
[299 D E] Virendra ; and Harishankar [1955] 1 1104 SCR referred to.
(e)Article 324 vests vast functions which may be powers or duties, essentially administrative and marginally even judicative or legislative.
_ [302 H] 275 (f)The dichotomy between administrative and quasi judicial functions vis a vis the doctrine of natural justice is presumably obsolescent after Kraipak which marks the water shed in the application of natural justice to administrative proceedings.
The rules of natural justice are rooted in all legal sys tems, and are not any 'new theology.
They are manifested in the twin principles of nemo index in sua causa and audi alteram partem.
It has been pointed out that the aim of natural justice is to secure justice, or, to put it negatively to prevent miscarriage of justice.
These rights can operate only in areas not covered by any law validly made; they do not supplant the law of the land but supplement it.
The rules of natural justice are not embodied rules.
What particular rule of natural justice should apply to a given case must depend to a great extent on the facts and circumstances of that case, the framework of the law under which the inquiry is held and the constitution of the tribunal or body of per sons appointed for that purpose.
Whenever a complaint is made before a court that some principle of natural justice has been contravened, the court has to decide whether the observation of that rule was necessary for a just decision on the facts of that case.
Further, even if a power is given to a body without Specifying that rules of natural justice should be observed in exercising it, the nature of the power would call for its observance.
[300 F G, 301 B D, 303 D] Kraipak , In re: H.K. (an infant) and Ridge vs Baldwin ; referred to.
(g)Even where the decision has to be reached by a body acting judicially, there must be a balance between the need for expedition and the need to give full opportunity to the defendant to see the material against him.
There might be exceptional cases where to decide a case exparte would be unfair and it would be the duty of the Tribunal to take appropriate steps to eliminate unfairness.
Even so no doctrinaire approach is desirable but the court must be anxious to salvage the cardinal rule to the extent permissible in a given case.
[307 D, E] 3(a) Civil consequences cover infraction of not merely property or personal rights but of civil liberties, material deprivations and non peciiniary damages.
In its comprehensive connotation, everything that affects a citizen in his civil life inflicts a civil consequence.
The interest of a candidate at an election to Parliament regulated by the Constitution and the laws comes within its gravitational orbit.
A democratic right, if denied inflicts civil consequences.
Every Indian has a right to elect and he elected and this is a constitutional as distinguished from a common law right, and is entitled to cognizance by courts subject to statutory regulation.
C, E] (b)A vested interest in the prescribed process is a processual right, actionable if breached.
The appellant has a right to have the election conducted not according to humour or hubris but according to law and justice.
So natural justice cannot be stumped out on the score.
In the region of public, law locus standi and person aggrieved, right and interest have a broader import.
[309 G, H] (c)In the instant case the Election Commission claims that a hearing had.
been given but the appellant retorts that all that he had was vacuous meeting where nothing was disclosed.
But in law degrees of difference may at a, substantial stage spell difference in kind or dimensions.
[309 H, 310 A] (d)The case of Subhash Chander in which this Court held that it was not necessary to give an opportunity to the candidates for an examination as to why the whole examination should not be cancelled because the examination was vitiated by adoption of unfair means on a mass scale.
But the ratio of that decision has no application to this case.
The candidates in an election who have acquired a very vital stake in the polling going on properly stand on a different footing from the electorate in general.
The interest of the electorate is too remote and recondite, too feeble and attenuate to be taken note of in a cancellation proceeding.
What really marks the difference is the diffusion and dilution.
The candidates in an election are really the spearheads, the combatants.
They have set themselves up as nominated candidates organised the campaign and galvanised the electorate for the polling and counting.
Their interest and claim are not indifferent but immediate.
They are the 5 1114SCI 77 276 parties in the electoral dispute.
In this sense they stand on a better footing and cannot be deniedthe right to be heard.
In Ghanshyamdas Gupta in which the examinationresult of three candidates was cancelled this Court imported principles ofnatural justice.
This case may have a parallel in electoral situations.
if the Election Commission cancelled the poll it was because it was satsfied that the procedure adopted had gone awry on a wholesale basis.
Therefore, it all depends on the circumstances and is incapable of generalisation.
In a situation like the present it is a far cry from natural justice to argue that the whole constituency must be given a hearing.
[310 F, H, 311 G H, 312 A, D, E,] Col. Singhi [1971] 1 SCR 791, Binapani ; , Ram Gopal ; ; Subhash Chander Singh ; field inapplicable.
Ghanshyam Das Gupta [1962] Supp.
3 SCR 36 followed.
4(a) Whether the action of the Election Commission in ordering repoll beyond certain segments of the constituency where the ballot boxes were destroyed was really necessary or not is for the Election Court to assess when judging whether the impugned order was arbitrary, whimsical or was arrived at by extraneous considerations.
[316 H, 317 A B] (b) Independently of natural justice, judicial review extends to an examination of the order as to its being perverse, irrational, bereft of application of the mind or without any evidentiary backing.
If two views are possible, the Court cannot interpose its view.
If no view is possible the Court must strike down.
[317 B] (c)The philosophy behind natural justice is participatory justice in the process of democratic rule of law.
In the vital area of election where people 's faith in the, democratic process is hypersensitive it is realism to keep alive audi alteram even in emergencies.
Hearing need not be an elaborate ritual.
In situations of quick despatch, it may be minimal, even formal.
Fair hearing is a postulate of decision making, although fair abridgement of that process is permissible.
It can be fair without the rules of evidence or forms of trial.
[316 D F] (d)The silence of a statute has no exclusionary effect except where it flows from necessary implication.
Article 324 vests a wide power and where some direct consequence on candidates emanates from its exercise this functional obligation must be read into it.
[316 F] Observations (a)When a statutory functionary makes an order based on certain grounds, its validity must be judged by the reasons so mentioned and cannot be supplemented by fresh reasons in the shape of affidavit or otherwise.
Otherwise, an order bad in the beginning may, by the time it comes to court on account of a challenge, gets validated by additional grounds later brought out.
[283 B C] (b)An obiter binds none, not even the author and obliteration of findings rendered in supererogation must allay the appellant 's apprehensions.
The High Court should have abstained from its generosity.
[284 C] (Per Goswami and Shinghal, JJ.
concurring) (1) The appellants ' argument that since article 324(6) refers to "functions" and not "powers", there can be no question of the Election Commission exerrising any power under that Article, is without force.
The term "functions" includes powers as well as duties.
It is incomprehensible that a person or body can discharge any functions without exercising powers.
Powers and duties are integrated with functions.
[330 D E] 2(a) It is well established that an express statutory grant of power or the imposition of a definite duty carrie with it by implication, in the absence of a limitation, authority to employ all the means that are usually employed and that are necessary to the exercise of the power or the performance of the duty.
That which is clearly implied is as much a part of a law as that which is expressed.
[331 E F] 277 (b)In a democratic set up power has to be exercised in accordance with law.
Since the conduct of all elections is vested under article 324(1) in the Election Commission, the framers of the Constitution took care to leaving scope for exercise of residuary power by the Election Commission, in the infinite variety of situations that may emerge from time to time.
Yet, every contingency could not be foreseen and provided for with precision.
The Commission may be required to cope with some situation, which may not be provided for in the enacted laws and rules.
The Election Commission, which is a high powered and independent body, cannot exercise its functions or perform its duties unless it has an amplitude of powers.
Where a law is absent, the Commission is not to look to any external authority for the grant of powers to deal with the situation but must exercise its power independently and see that the election process is completed in a free and fair manner.
Moreover, the power has to be exercised with promptitude.[330 G, H, 331 A B, C E, G] N.P. Ponnuswami vs Returning Officer, Nanakkal Constituency and Others, ; followed.
(c) Section 19A of the Act, in terms, refers to the functions not only under the Representation of the People Act, 1950 and representation of the People Act, 1951 or the rules made thereunder, but also under the Constitution.
Apart from the several functions envisaged by the two Acts and the rules, the Commission is entitled to exercise certain powers under article 324 itself on its own right in an area not covered by the Acts and rules.
[332 A B] (d)Whether an order passed is wrong, arbitrary or is otherwise invalid, relates to the mode of exercising the power and does not touch upon the existence of the power in an authority if it is there either under the Act or the rules or under article 324(1).
[331 G] 3(a) The contention that the Election Commission had no power to make the impugned order for a repoll in the entire constituency.
is without substance.
[332 H] (b) Both under s.58 and under section 64A the poll that was taken on a particular polling station can be voided and a fresh poll can be ordered, by the Commission.
These sections cannot be said to be exhaustive.
It cannot be said that they rule out the making of an order to deal with a similar situation if it arises in several polling stations or sometimes as a general feature in a substantially large area.
Although these two sections mention "a polling station" or "a place fixed for the poll" it may, where necessary embrace multiple polling stations.
[332 G H] (c)The Election Commission is competent, in an appropriate case, to order repoll of an entire constituency.
If it does that it will be an exercise of power within the ambit of its functions under article 324.
Although in cxercise of powers under article 324(1) the Election Commission cannot do some thing impinging upon the power of the President in making a notification under section 14 of the Act, after the notification has been issued by the President, the entire electoral process is in the charge of the Commission.
The Commission is exclusively responsible for the conduct of the election without reference to any outside agency.
There are no limitations under article 324(1).
J333 C E] 4.The writ petition is not maintainable.
Since the election covers the entireprocess from the issue of the notification under section 14 to the declaration of theresult under s.66 of the Act, when a poll that has already taken place has been cancelled and a fresh poll has been ordered, the order is passed as an integral part of the electoral process.
The impugned order has been passed in exercise of the power under article 324(1) and section 153 of the Act.
Such an order cannot be questioned except by an election petition under the Act.
[333 G H, 334 A] 5(a) There is no foundation for a grievance that the appellants will be without any remedy, if their writ application is dismissed.
If during the process of election at an intermediate or final stage.
the entire poll has been wrongly cancelled and a fresh poll has been wrongly ordered, that is a matter which can be agitated after the declaration of the result on the basis of the 278 fresh poll, by questioning the election in the appropriate, forum.
The appellants will not be without a remedy to question every step in the electoral process and every order that has been passed in the process of the election includ ing the countermanding of the earlier poll.
The Court will be able to entertain their objection with regard to the order of the Election Commission countermanding the earlier poll and the whole matter will be at large.
[334 B F] (b)The Election Commission has passed the order professedly under article 324 and section 153 of the Act.
If there is any illegality in the exercise of the power under this Article or under any provision of the Act, there is no reason why section 100(1)(d)(iv) should not be attracted.
If exercise of power is competent either under the provisions of the Constitution or under any other provision of law, any infirmity in the exercise of that power is on account of noncompliance with the provisions of law, since law demands exercise, of power by its repository in a proper, regular, fair and reasonable manner.
[335 B D] Durga Shankar Mehra vs Thakur Raghuraj Singh and others, [1955] 1 SCR 267 referred to.
(c)The writ petition is barred under article 329 (b) of the Constitution and the High Court has rightly dismissed it on that ground.
Both article 329(b) and section 80 of the Act provide that no election shall be called in question except by an election petition.
All reliefs claimed by the appellant in the writ petition can be claimed in the election petition and the High Court is competent to give all appropriate reliefs to do complete justice between the parties.
It will be open to the High Court to pass any ancillary or conse quential order to enable it to grant the necessary relief provided under the Act.
[335 D G] 6.It will not be correct for this Court, in this appeal, to pronounce its judgment finally on merits either on law or on facts.
The pre eminent position conferred by the Constitution on this Court under Article 141 of the Constitution does not envisage that this Court should lay down the law, in an appeal like this, on any matter which is required to be decided by ' the election court on a full trial of the election petition, without the benefit of the opinion of the Punjab and Haryana High Court which has the exclusive jurisdiction under section 80A of the Act to try the election petition.
[335 H, 363 A]
|
minal Appeal Nos.
1091 1 1 of 1977.
From the Judgment and Order dated 28 5 1975 of the Calcutta High Court in Criminal Revision Nos. 304, 371 and 318/75 respectively.
A.P. Chatterjee, G. C. Chatterjee and Mrs. Mukti Moitra for the Appellants in all the appeals.
A.K. Sen, Miss Uma Bannerjee and section Swarup for Respondent in Crl.
A. No. 6 1 1 of 1 9 7 7.
The Judgment of the Court was delivered by GOSWAMI, J.
These appeals by certificate are from the common judgment of the Calcutta High Court of 28th May, 1975 disposing of three Criminal Misc.
Revisions Nos. 304, 318 and 371 of 1975.
There is a common question of law and will be disposed of by this judgment.
Briefly the facts are as follows A complaint was made against the accused by Shri J. F. C. Mc.
Mohan, Dock Manager, Calcutta Port Commissioners, to the, South Port Police Station alleging offences under Sections 120 B/420/379/ 466/468/471.
I.P.C. against several accused including the respondents who happened to, be public servants at the material time.
The State Government issued a Notification No. 3165 J on 8 4 1970 under Section 4 of the West Bengal Criminal Law Amendment (Special Courts) Act (hereinafter referred to as, the Act) allotting the said case for trial to the Third Additional Special Court, Calcutta constituted under the provisions of the said Act for trial of the offences mentioned in the schedule to that Act.
There is no dispute about the particular order of allotment of the case to the, Special Court under the said Act.
Following the Notification of April 8, 1970 the State of West Bengal through Ranajit Roy, Sub Inspector of Police, filed a complaint before the Third Additional Special Court, Calcutta on 11 9 1970 detailing all the allegations against the accused and indicating the material facts that transpired in the course of the investigation of the case.
The Special Court, Judge after perusal of the complaint and hearing the Public Prosecutor took cognizance of the case under Sections 409/109 and 409/34, I.P.C. which are offences mentioned in the schedule of the 384 Act.
The learned Judge thereupon issued processes against the respondent and other accused.
In due course trial commenced.
, The, prosecution after examining 70 witnesses closed its case on May 2, 1974.
The Court framed charges against four accused including the respondent and discharged the remaining two accused by a lengthy order with.
reasons on 26 2 1975.
Charges were framed under various sections including Sections 409 & 420 read with 120 B, I.P.C. The respondent moved the Calcutta High Court in revision for quashing the trial on March 25, 1975.
The High Court allowed the Petition on 28th of May, 1975 and granted certificate to appeal to this Court under Article 134(1) (c) of the Constitution on March 26, 1976.
Hence these appeals.
The High Court accepted the contention of the respondent that no legal and valid cognizance of the offence war, taken by the learned Judge,.
Special Court and, therefore, the entire proceedings became vitiated and hence were quashed.
The, High Court in disposing of the matter in this way followed two earlier Division Bench decisions of the said Court in Sudhir Chandra Bhattacharjee vs The State, Criminal Appeals Nos. 23 to 26 of 1961 decided on 29th March, 1967 and Shyama Saran Das Gupta vs The State, decided on 11th April, 1975.
The question that falls for decision in these appeals, relates to the cognizance of the offence& by the Special Judge under the Act.
As the preamble shows, the Act provides for the more speedy trial and more effective punishment of certain offence& specified in the schedule thereto.
Section 4(1) of the Act provides that notwithstanding anything contained in the Code of Criminal Procedure 1898 or in any other law, the offences specified in the schedule shall be triable by Special Courts only : Provided that when trying any case a Special Court may also try any offence other than an offence, specified in the schedule, with which the accused may under the Code of Criminal Procedure, 1898, be charged with the same trial.
There is, however, no dispute that the offences charged are exclusively triable by the Special Court.
Section 5 of the Act which is material for our purpose may be read "A Special Court may take cognizance of offence in the manner laid down in clauses (a) & (b) of subsection (1) of Section 190 of Code of Criminal Procedure, 1899 without the accused being committed to his Court for trial, and its trying the accused persons, shall follow the procedure proscribed by the Code of Criminal Procedure, 1898, for the trial of warrant cases by Magistrates, instituted otherwise than on a police report.
" This Section underwent some changes by two amendments in 1956 and ' 1960.
Prior to theamendments, Section 5(1) did not contain the words "in the mannerlaid down in clauses (a) & (b) of subsection (1) of the Code of Procedure, 1898" and the words "instituted otherwise than on a police report.
" We are not concerned in these appeals with, the amendment of 1956 by which the words "instituted otherwise man an a police report were inserted.
385 It may be of interest to note that in a case under the unamended Section before the Special Court this Court had to deal with the question of cognizance canvassed before it in Ajit Kumar Palit vs State of West Bengal(1).
This Court held on the terms of the provisions of the unamended section 5(1) of the Act as follows : "The word "cognizance" has no esoteric or mystic significance in criminal law or procedure.
It merely means become aware of and when used with reference to a Court or Judge, to take notice of judicially.
It was stated in Gopal Marwari vs Emperor(2) by the learned Judges of the Patna High Court in a passage quoted with approval by this Court in R. R. Chari vs State of Uttar Pradesh (s) that the word, 'cognizance ' was used in the Code to indicate the point when the Magistrate or Judge.
takes judicial notice of an offence, and that it was a word of indefinite import, and is not perhaps always used in exactly the same sense.
As observed in Emperor vs Sourindra Mohan Chuckerbutty ( 4) "taking cognizance does not involve any formal action; or indeed action of any kind, but occurs as soon as a Magistrate, as such, applies his, mind to the suspected commission of an offence. .
It appears to us therefore that as soon as a special judge receives the orders of allotment of the case passed by the, State Government it becomes vested with jurisdiction to try the case and when it receives the record from the Government it can apply its mind and issue notice to the accused and thus start the trial of the proceedings assigned to it by the State Government.
" The above decision of this Court could have concluded the matter, but it is pointed out by Mr. A. K. Sen, appearing on behalf of the respondent that in view of the amendment of Section 5(1) of the Act by the West Bengal Act XXIV of 1960 introducing the words "in, the manner laid down in clauses (a) and (b) of subsection (1) of Section 190 of the Code of Criminal Procedure, 1898", the legal position has completely changed.
He submits that it is now obligatory for the Special Judge to examine the complainant under Section 200, Cr.
P.C. prior to taking cognizance of the offence.
Since in the present case, proceeds the argument of Mr. Sen, the Special Judge took cognizance merely on the complaint of the Sub Inspector of Police, without proceeding in accordance with Section 200, Cr.
P.C., the entire proceedings are vitiated.
We are unable to accede to the above submission of Mr. Sen.
It is true that the amendment has introduced the manner of taking cognizance in accordance with Section 190(1) (a) & (b), Cr.
P.C. appearing in Chapter XV of the Criminal Procedure Code, 1 898, but the legislature in this amendment.
at the same time, has advisedly omitted to include (1) [1963] Supp.
(1) S.C.R., 953 at 965 966.
(2) A.I.R. 1943 Pat.
(3) ; , 320.
(4) Cal.
412, 416.
386 Section 200, Cr.
P.C. and the other provisions of the next Chapter which is Chapter XVI dealing with "complaints to Magistrates".
It is clear that under Section 4(2) of the, Act, the, allotment by, the State Government to the Special Judge of a case involving of scheduled offences vests the necessary jurisdiction ill the Special Judge to proceed to trial and is, therefore, equivalent to that Court 's taking cognizance of the offence (See Ajit Kumar Palit 's case (Supra).
Because of the amendment of Section 5 (2) in 1960, it may be now open to the Special Judge to apply his judicial mind to the complaint apart from allotment of the case in order to come to a decision as to whether he is satisfied on the materials laid before him at that stage to take cognizance of the offence and proceed to trial: If he chooses to examine the complainant or any witnesses before issuing process against any accused, there is nothing in law to prevent him from doing so.
If he doe not do so and is satisfied on perusal of the complaint after allotment of the case by the Government that an offence has been disclosed against definite persons, no valid objection could be taken against his taking cognizance on the written complaint without complying with the provision of Section 200,Cr.
P.C. No, grievance can be made then that the Special Judge has not examined the complainant under Section 200, Cr.
P.C. prior to issuing of process.
Section 200, Cr.
P.C., in terms, comes into play after taking cognizance of an offence by a Magistrate (See Gopal Das Sindhi and others vs State of Assam and another(1).
There is, therefore, no merit in the submission that taking cognizance, of the offence in this case is invalid for which the whole trial is vitiated.
The words "in the manner laid down in clauses (a) and (b) of Subsection (1) of Section 190 of the Criminal Procedure Code, 1898" do not automatically introduce the provisions of Section 200, Cr.
P.C. of Chapter XVI, nor do the above words in Section 5 (2) of the Act mandatorily compel the Special Judge to resort to the provisions of Chapter XVI.
Apart from this, Chapter XVI in terms refers to "complaints to Magistrates" and thereby excludes Special Judges who are to, be guided, by the special provisions of the, special Act in the matters provided therein.
There, is nothing in Section 5(1) of the Act even after the amendment in 1960 to compel the Special Judge to comply with the provisions of Section 200, Cr.
The objection of the respondents to the trial is on the score of the invalidity of the cognizance taken by the Special Judge on perusal of the written complaint after allotment of the case by the Government for the sole reason that the complainant had not been examined under Section 200, Cr.
P.C. prior to issuing of process.
The objection is clearly untenable for the reasons given above.
The appeals are therefore allowed and the judgment of the High Court is set aside.
Since the case is an old one, trial before the Special Judge shall be expedited.
S.R. (1) A.I.R. 1961 S.C., 986,988 & 989.
Appeals allowed.
| IN-Abs | A criminal case arising out of a complaint made against the accused including the respondents who happened to be public servants at the material time, for the alleged offences section 120 B/379/466/468/471 I.P.C. was allotted by the State Government through a notification &o. 3165 J dt. 8 4 70 to the Third Additional Special Court, Calcutta constituted under the provisions of the West Bengal Criminal Law Amendment (Special Courts) Act.
Following the notification, the appellant State through Ranjit Roy, Sub Inspector of Police filed a complaint before the Special Court on 11 9 70 detailing all the allegations against the accused and including the material facts that transpired in the course of the investigation of the case.
The Special Court Judge after perusal of the complaint and hearing the Public Prosecutor, took cognizance of the case section 409/109 and 409/34 I.P.C. which are offences mentioned in the Schedule of the Act, and issued processes to the accused.
In the trial after examining 70 witnesses, the prosecution closed its case on May 2, 1974.
The court framed charges against four accused including the respondents and discharged the remaining two accused by its order dated 26 2 1975.
Charges were framed under various sections including SS. 409 and 420 read with section 120 B I.P.C. The revision petitions moved by the respondents for quashing the trial on March 25, 1975, were accepted by the Calcutta High Court following its earlier decisions dated 29 3 1967 and 11 4 1975.
The High Court held that no legal and valid cognizance of the offence was taken by the learned Judge, Special Court and, therefore.
the entire proceedings became vitiated.
Allowing the appeal by certificate the Court.
HELD : (1) It is not obligatory for the Special Judge to examine complainant under section 200 Cr. P. C.
Under section 4(2) of the West Bengal Criminal Law Amendment (Special Courts) Act, the allotment by the State Government to the Special Judge of a case involving of scheduled offences vests the neces sary jurisdiction in the Special Judge to proceed to trial and is, therefore, equivalent to that courts ' taking cognizance of the offence.
[385 G, 386 A B] Ajit Kumar Palit vs State of West Bengal [1963] Supp.
(1) SCR 953 @ 965 966, followed.
(2)Section 200 of the Criminal Procedure Code in terms, comes into play after taking cognizance of an offence by a Magistrate.
[386 D] Gopal Das Sindhi & Ors.
vs State of Assam & Anr.
AIR 1961 SC 986, 988 and 989, referred to.
(3)There is nothing in section 5(1) of the Act even after the amendment in 1960 to compel the Special Judge to comply with the provisions of section 200 Cr.
The words "in the manner laid down in clauses (a) and (b) of sub section
(1) of section 190 of the Criminal Procedure Code 1898" do not automatically introduce the provisions of section 200 Cr. P. C. of Chapter XVI, nor do the above words in section 5(2) of the Act, mandatorily compel the Special Judge to resort to the provisions of Chapter XVI.
The legislature in the above amendment has advisedly omitted to include section 200 Cr. P. C. and the other provisions in Chapter XVI of the Criminal Procedure Code.
[385 H, 386 A, E, F] (4)Because of the amendment of section 5(2) in 1960, it may now be open to the Special Judge to apply his judicial mind to the complaint apart from 383 allotment of the case in order to come to a decision as to whether he is satisfied on the materials laid before him at that stage to take cognizance of the offence and proceed to trial.
If he chooses to examine the complainant or any witness before issuing process against any accused, there is nothing in law to prevent him from doing so.
If he does not do so and is satisfied on perusal of the complaint after allotment of the case by the Government that an offence has been disclosed against definite persons, no valid objection could be taken against his taking cognizance on the written complaint without complying with the provisions of section 200 Criminal Procedure Code.
No grievance can be made then that the Special Judge has not examined the complainant under section 200, Cr. P. C. period to issuing of process.
[386 B D] Sudhir Chandra Bhattacharjee vs The State Crl.
Appeals Nos. 23 26 of 1961 (decided on 29th March 1967, Calcutta) and Shyama Saran Das Gupta vs The State (decided on 11th April 1975, Calcutta) over ruled.
|
il Appeal No. 724 of 1976.
Appeal by Special Leave from the, Judgment and Order dated 13th Dec. 1974 of the Calcutta High Court in Appeal from Original Order No. 240 of 1973.
AND Civil Appeals.
2488 2497 (NT) 1972 (From the Judgment and Order dated the 31st March, 1970 of the Andhra Pradesh High Court in Writ Petitions Nos.3005, 3006, 3085, 3086, 3088, 3090, 4232, 4243 and 4244 of 1969.
Sachin Chowdhary, B. Sen, section section Bose, K. K. Chakraborty, A. G. Manzes, J. B. Dadachanji and k. J. John for the Appellant in C.A. 724/76.
L. N. Sinha, D. N. Mukherjee, G. section Chatterjee and A. K. Ganguli for respondents 1 to 4 in C.A. 724/76.
B. Kanta Rao for the Appellants in C.As 2488 97 of 1972.
Soli J. Sorabjee, Addl.(In 2488 97) 72, P. Parameshwara Rao A. K. Ganguli and T. V. section Narasimhachari for the Respondents in CAs.2488 97/72.
A. Subba Rao for the Intervener.
The following Judgment were delivered BEG, C.J.
I am in general agreement with my learned brother Chandrachud who has discussed all the authorities so admirably and comprehensively.
I, however, would like to add a few observations stating the general conclusion, as I see it, emerging from an application of general principles and accumulation of case law on the subject of what may be called "statutory" or "compulsory" sales.
Are they sales at all so as to be exigible to sales tax or purchase tax under the relevant statutory provisions ?
The term 'sale? is defined as follows in Eenjamin on Sale (Eighth Edn.) : "To constitute a valid sale there must be a concurrences of the following elements, namely : (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 is true that a considerable part of the field over which what are called 'sales ' take place under either 'regulatory orders or levy orders passed or directions given under statutory provisions is restricted and controlled by these orders and directions.
If, what is called a "sale" 438 is, in substance, mere obedience to a specific order, in which the so called "price" is only a compensation for the compulsory passing of property in goods to which an order relates, at an amount fixed by the authority making the order, the individual transaction may not be a ,,sale" although the compensation is determined on some generally fixed principle and called "price".
This was, for example, the position in New India Sugar Mills vs Commissioner of Sales Tax, Bihar(1).
That was a case of a delivery according to an order given by the Govt. which could amount to a compulsory levy by an executive order although there was no legislative "levy order" involved in that case.
On the other hand,, in Commissioner, Sales Tax, U.P. vs Ram Bilas Ram Gopal,(2) the order under consideration was actually called a levy order, but the case was distinguishable from New India Sugar Mills vs Commissioner of Sales Tax, Bihar (supra) on facts.
It was held in the case of Ram Bilas (supra) that the core of what is required for a "sale" was not destroyed by the so called "levy" order which was legislative.
It is true that passages from the judgement of Pathak, J., in the case of Ram Bilas Ram Gopal (supra) were cited and specifically disapproved by a Bench of this Court in Chittar Mal Narain vs Commissioner of Sales Tax(3).
But, perhaps the view of this Court in Chittar Mal Narain, Das (supra) goes too far in this respect.
It is not really the nomenclature of the order involved, but the substance of the transaction under consideration which matters in such cases.
In the first typo of case mentioned above the substance of the concept of a sale, as found under our Law, itself disappears because the transaction is nothing more than the execution of an order.
Deprivation of property for a compensation, which may even be described as "price", does not amount to, a sale when all that is done is to, carry out an order so that the transaction is substantially a compulsory acquisition.
On the other hand, a merely regulatory law, even if it circumscribes the area of free choice, does not take away the basic character or core of sale from the transaction.
Such a law, which governs a class, may oblige sellers to deal only with parties holding licences who may buy particular or allotted quantities of goods at specified prices, but an essential element of choice is still left to the parties between whom agreements take place.
The agreement, despite considerable compulsive elements regulating or restricting the area of free choice, may still retain the basic character of a transaction of sale.
This was the position in Indian Steel and Wire Products Ltd. vs State of Madras(4).Andhra Sugar Ltd. vs State of Andhra Pradesh(5) and State of Rajasthan vs Karam Chand Thapar(6): There might be borderline cases in which it may be difficult to draw the line.
(1) ; : [1963] (Supp) 2 SCR 459.
(2) AIR 1970 All 518.
(3) [1971] 1 S.C.R. 671.
(4) ; (5) ; (6) A.I.R. 1969 S.C. 343.
439 In the former type of case, the binding character of the, transaction arises from the order directed to particular parties asking them to deliver specified goods and not from a general order or law applicable to a class.
In the latter type of cases, the legal tie (vinculum juris) which binds the parties to perform their obligations remains contractual.
The regulatory law merely adds other obligations, such as the one to enter into such a tie between the parties indicated there.
Although the regulatory law might specify the terms, such as price, or parties, the regulation is subsidiary to the essential character of the transaction which is consensual and contractual.
The basis of a contract is : "consensus adem".
The parties to the contract must agree upon the same thing in the 'same sense.
Agreement on mutuality of consideration, ordinarily arising from an offer and acceptance, imparts to it enforceability in Courts of law.
Mere regulation or restriction of the field of choice does not take away the contractual or essentially consensual binding core or character of the transaction.
I may be forgiven for citing a passage from my judgment in Commissioner of State Tax vs Ram Bilas Ram Gopal,(supra) to indicate the setting of such transactions "It appears to me to be necessary to distinguish between a restriction in the area of choice of parties and the transaction itself in order to, determine the true character of the transaction.
Limitation of the field of choice is a necessary concomitant of a controlled or mixed economy which ours is.
Absolute freedom of contract or unregulated operation of the laws of supply and demand, which an apotheosis of the lais sez faire doctrine demanded, led really to a shrinking of the area of freedom in the economic sphere, producing gross inequalities in bargaining powers and recurrent crises.
Therefore, a regulated or a socialistic economy seeks to regulate the play of forces operating on the economic arena so that economic freedom of all concerned, including employers and employees, is preserved and so that the interests of consumers are also not sacrificed by any exploitation of conditions in which there is scarcity of goods,.
I think that the regulation or restriction of the area of choice, cannot be held to take away the legal character of the transactions which take place within the legally restricted field.
It is too late in the day, when so much of the nation 's social and economic activities are guided and governed by control orders, allotment orders, and statutory contracts, to contend that mere State regulation of the economic sphere of life results in the destruction of the nature of the transactions which take place within that sphere." (P. 524) In Roman Law the contract of sale was classed as a "consensual" contract.
The consent could, no doubt, be express or implied.
I find that Hidayatullah J., in his very learned dissenting judgment in New India Sugar Mills Case (supra), where some Roman Law is referred to, thought that even in a case of a 'specific order directing delivery of 440 goods there could be an implied consent so as to constitute a safe.
I find it, with great respect, difficult to go so far as that.
What could be implied, upon the facts of a particular case, must still be a consent to a proposal if the transaction is to be construed as a "sale".
Mere compliance with an order may imply an acceptance of an order but acceptance of a proposal to purchase or sell are of a juristically different genus.
It is, however, not necessary for us, in this case, to accept the correctness of the minority view of Hidayatullah, J. in New India Sugar Mills case (supra).
The transactions before us are sales on an application of the ratio decidendi of Indian Steel and Wire Products Ltd 's case (supra) and other cases decided on similar grounds.
The difficulty arises from the fact that, although the ingredients of a "sale," as defined in Benjamin 's treatise on "Sale? ', may seem to be satisfied even if delivery of goods is in obedience to "an order to deliver them for a consideration, fixed or to be fixed if we stretch mutual assent to cover assent resulting from orders given, yet, it is difficult to see how such a transaction would be based on a contractual tie.
According to Sec.4(3) of our , a sale results only from a contract which presupposes a minimal area of freedom of choice where the ordinary mechanism of proposal and acceptance operates.
For the reasons indicated above, while I agree with the answer given by my learned brother Chandrachud to the question before us and also practically with all the views expressed by my learned brother, yet, I hesitate to hold that the majority opinion expressed by Shah J., in New India Sugar Mills case (supra), is erroneous.
I think the case is distinguishable.
Ibis, however, makes no difference to the common conclusion reached by us on the facts of the cases before us.
These appeals have been placed for hearing before a seven Judge Bench in order to set at rest, to the extent foreseeable, the controversy whether what is conveniently, though somewhat loosely, called a 'compulsory sale? is exigible to sales tax.
When essential goods are in short supply, various types of Orders are issued under the with a view to making the goods available to the consumer at a fair price.
Such Orders sometimes provide that a person in need of an essential commodity like cement, cotton, coal or iron and steel must apply to the prescribed authority for a permit for obtaining the commodity.
Those wanting to engage in the business of supplying the commodity are also required to possess a dealer 's licence.
The permit holder can obtain the supply of goods, to the extent of the quantity specified in the permit, from the named dealer only and at a controlled price.
The dealer who is asked to supply the stated quantity of goods at the particular permit holder has no option but to supply the stated quantity of goods at the controlled price.
The question for our consideration not easy to decide, is whether such a transaction amounts to a sale in the language of the law.
We will refer to the facts of civil appeal 724 of 1976, in which a company called M/s Vishnu Agencies (Pvt.) Ltd., is the appellant.
It carries on business as an agent and distributor of cement in the 441 State of West Bengal and is a registered dealer under the Bengal Finance (Sales Tax) Act, 1941, referred to hereinafter as the Bengal Sales Tax Act.
Cement being a controlled commodity, its distribution is regulated by the West Bengal Cement Control Act, 26 of 1948, referred to hereinafter as the Cement Control Act, and by the Orders made under section 3 (2) of that Act.
Section (3) (1) of the Cement Control Act provides, inter alia, for regulation of production, supply and distribution of cement for ensuring equitable supply and distribution thereof at a fair price.
By the Cement Control Order, 1948 framed under the Cement Control Act, no sale, or purchase of cement can be made, except in accordance with the conditions contained in the written order issued by the Director of Consumer Goods, West Bengal or the Regional Honorary Adviser to the Government of India at Calcutta or by officers authorised by them, at prices not exceeding the notified price.
The appellant is a licensed stockist of cement and is permitted to stock cement in its godown, to be supplied to persons in whose favour allotment orders are issued, at the price stipulated and in accordance with the conditions of permit issued by the authorities concerned.
The authorities designated under the Cement Control Order issue permits under which a specified quantity of cement is allotted to a named permit holder, to be delivered by a named dealer at the price mentioned in the permit.
A permit is generally valid for 15 days and as soon as the price of cement allotted in favour of an allottee is deposited with the dealer, he is bound to deliver to the former the specified quantity of cement at the specified price.
A specimen order issued in favour of an allottee, under which the appellant had to supply 10 metric tons of cement at Rs. 144.58 per M.T., exclusive of sales tax, reads thus "LICENCE FOR CEMENT The quantities of cement detailed below are hereby allotted to M/s. Marble & Cement products Co. Pvt. Ltd., 2, Braboume Road, Calcutta 1 to be supplied by M/s. Vishnu Agencies Pvt. Ltd., 3, Chittaranjan Avenue, Calcutta 13, on conditions detailed below.
The price of material involved must be deposited with the Stockist within 15 days and the actual delivery must be taken within 15 days from the date of issue of the permit.
The licence is issued only for the purpose of Mfg. of Mosaic Tiles at 188, Netaji Subhas Road, Calcutta 40.
Under no circumstances will the validity of the permit be extended beyond the period of 15 days from the date of its issue.
Cement Total Tonnge Country Cement at Rs. 144.58 Ton Cwt.per M.T. exclusive of section T. 10 M/T (Ten M/T only)" 442 The appellant supplied cement to various allottees from time to time in pursuance of the allotment orders issued by appropriate authorities and in accordance with the terms of the licence obtained by it for dealing in cement.
The appellant was assessed to sales tax by the first respondent, the Commercial Tax Officer,, Sealdah Charge, in respect of these transactions.
It paid the tax but discovered on perusal of the decision of this Court in New India Sugar Mills Ltd. vs Commissioner of Sales Tax(1) that the transactions were not exigible to sales tax.
Pleading that the payment was made under a mistake of law, it filed appeals against the orders of assessment passed by respondent 1.
It contended in appeals before the Assistant Commissioner of Commercial Taxes that by virtue of the provisions of the Cement Control Act and the Cement Control Order, no volition or bargaining power was left to it and since there was no element of mutual consent aggreement between it and the allottees, the transactions were not sales within the meaning of the Sales Tax Act.
The appellant further contended that if the transactions were treated as sales, the definition of "sale" in the Sales Tax Act was ultra vires the legislative competency of the Provincial Legislature under the Government of India Act, 1935 and of the State Legislature under the Constitution.
The appellate authority rejected the first contention and upheld the assessments.
It did not, as it could not, go into the second contention regarding legislative competence.
The appellant adopted the statutory remedies open to it but since the arrears, of tax were mounting up and had already exceeded a sum of rupees eight lacs, it filed a writ petition in the Calcutta High Court praying that the various assessment orders referred to in the petition be quashed and a writ of prohibition be issued directing the sales tax authorities to refrain from making any further assessments for the purpose of sales tax on the transactions between the appellant and the allottees.
A learned single Judge of the High Court allowed the writ petition and issued a writ of mandamus restraining the respondents from imposing sales tax on the transactions.
between the appellant and the allottees.
That judgment having been set aside in appeal by a Division Bench of the High Court by its judgment dated December 13, 1974, the appellant has filed appeal No. 724 of 1976 by special leave.
Civil appeals No. 2488 to 2497 of 1972 raise a similar question under the Andhra Pradesh Paddy Procurement (Levy) Orders, under which paddy growers in the State are under an obligation to sell the paddy to licensed agents appointed by the State Government at the prices fixed by it.
The High Court of Andhra Pradesh by its judgment dated March 31, 1970 has taken the, same view as the Calcutta High Court, namely, that the transactions amount to sales and are taxable under the Sales Tax Act.
Counsel appearing in the Andhra Pradesh appeals agree that the decision in the Calcutta case will govern those appeals also.
(1) [1963] Supp. 2 S.C.R. 459.
443 Since the crux of the appellant 's contention is that the measures adopted to control the supply of cement leave no consensual option to the parties to bargain, it is necessary first to notice the relevant provisions of law bearing on the matter.
The West Bengal Cement Control Act, 26 of 1948, was enacted in order to "confer powers to control the production, supply and distribution of, and trade and com merce in, cement in West Bengal."
Section 3(1) of the Act empowers the Provincial Government to provide, by order in the Official Gazette, for regulating the supply and distribution of cement and trade and commerce therein.
Section 3(2) provides by clauses (b) to (o) that an order made under sub section (1) may provide for regulating or controlling the prices at which cement may be purchased or sold and for prescribing the conditions of sale thereof, regulating by licences, permits or otherwise, the storage, transport, movement, possession, distribution, disposal, acquisition, use of consumption of cement; prohibiting the withholding from sale of cement ordinarily kept for sale; and for requiring any person holding stock of cement to sell the whole or specified part of the stock at such prices and to such persons or classes of persons or in such circumstances, as may be specified in the order.
If any person contravenes an order made under section 3, he is punishable under section 6 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 con tranvention, may direct that a property in respect of which the Court is satisfied that the order been contravened shall be forfeited to the Government.
In exercise of the powers erred by section 3(1) read with clauses (b) to (h) of section (2) of the Act, an Order which may conveniently be called the Cement Control Order was promulgated by the Governor on August 18, 1948.
The relevant clauses of that Order contain the following provisions.
By paragraph 1, no person shall after the commencement of the order sell or store for sale any cement unless he holds a licence and except in accordance with the conditions specified in such licence obtained from the Director of Consumer Goods, West Bengal, or any officer authorised by him in writing in this behalf.
By paragraph 2, no person shall dispose of or agree to dispose of any cement except in accordance with the conditions contained in a written order of the Director of Consumer Goods, West Bengal or the authorities specified in the paragraph.
By paragraph 3, no person shall acquire or agree to acquire any cement from any person except in accordance with the conditions contained in a written order of the Director of Consumer Goods, West Bengal, or the authorities specified in the paragraph.
By paragraph 4, no person shall sell cement at a "higher than notified price".
By Paragraph 8, no person or stockist who has any stock of cement in his possession and to whom a written order has been issued under paragraph 2 shall refuse to sell the same, "at a price not exceeding the notified price", 'and the seller shall deliver the cement to the buyer "within a reasonable time after the payment of price".
By paragraph 8A, every stockist or every person employed by him shall, if so re 3 1146 SCI/77 444 quested by the person acquiring cement from him under a written order issued under paragraph 3, weigh the cement in his presence or in the presence of his authorised representative at the time of delivery.
We are not concerned with the amendments made by the Govern ment of West Bengal to the, Cement Control Order on December 30, 1965 by which, inter alia paragraphs 2, 3, 4, 8 and 8A of that Order were deleted.
The,appeal from the decision of the Calcutta High Court is limited to the transactions between the appellant and the allottees from the years 1957 to 1960.
As regards the batch of appeals from Andhra Pradesh, the levy of tax was challenged by three sets of persons, the procuring agents, the rice millers and the retailers with the difference that the procuring agents were assessed to purchase tax, while the others to sales tax under the Andhra Pradesh General Sales Tax Act, 1957.
By virtue of the provisions of the, Andhra Pradesh Paddy Procurement (Levy) Orders, the paddy growers can sell their paddy to licensed procuring age nts appointed by the State Government only and at the prices fixed by the Government.
The agriculturist has the choice to select his own procuring agent but he cannot sell paddy to a private purchaser.
The procuring agents in their turn have to supply paddy to the rice millers at controlled prices.
The millers, after converting paddy into rice, have to declare their stocks to the Civil Supplies Department.
Pursuant to the Orders issued by the Department, the rice millers have to supply a requisite quantity of rice to the wholesale or retail dealers at prices fixed by the Department.
Orders for such supply by the millers are passed by the authorities under the A.P. Procurement (Levy) and Restriction on Sale Order, 1967.
Under this Order, every miller carrying on rice milling operations is required to sell to the agent or officer duly authorised by, the Government the minimum quantities fixed by the Government at the notified price; and no miller or other person who gets his paddy milled in any price mill can move or otherwise dispose of the, rice recovered by milling at such rice mill except in accordance with the, directions of the Collector.
A breach of these provisions is liable to be punished under section 7 of the and the goods are liable to be forfeited under section 6A of that Act.
The A.P. sales tax authorities levied purchase tax on the purchase of paddy made by the procuring agents from the agriculturists and they levied sales tax on the transactions relating to the sup of rice by the millers to the wholesale and retail dealers and on the supply made, by the retailers to their customers.
The case as regards the sales tax imposed on the transactions between the retail dealers and the consumers stood on an altogether different footing, but the writ petitions filed by the procuring agents and rice millers raised questions similar to those involved in the writ petition filed in the Calcutta High Court.
These then are the provisions of the respective Orders passed by the Governments of West Bengal and Andhra Pradesh.
445 We may now notice the provisions of the Sales Tax Acts.
Section 2(g) of the Bengal Finance (Sales Tax) Act, 6 of 1941, defines a sale" to mean "any transfer of property in goods for cash or deferred payment or other valuable consideration, including a transfer of ,property in goods involved in the execution of a contract, but does not include a mortgage, hypothecation, charge or pledge.
" Section 2 (1) provides that the word "turnover" used in relation to any period means "the aggregate of the sale prices or parts of sale prices receivable, or if a dealer so elects, actually received by the dealer. .
By clause (h) of section 2, "sale price" is defined to mean the amount payable to a dealer as valuable consideration for "the sale of any goods".
By section 4(1), every dealer whose gross turnover during the year immediately preceding the commencement of the Act exceeded the taxable quantum is liable to pay tax under the Act on all "sales" effected after the date notified by the State Government.
Section 2(n) of the Andhra Pradesh General Sales Tax Act 1957 defines a "sale" as "every transfer of the property in goods by one person to another in the course of trade or commerce, for cash, or for deferred payment or for any other valuable consideration.
Section 5 of that Act is the charging section.
According to these definitions of 'sale ' in the West Bengal and Andhra Pradesh Sales Tax Act, transactions between the appellants on one hand and the allottees or nominees on the other are patently ,sales because indisputably, in one case the property in cement and in the other, property in paddy and rice was transferred for cash consideration by the appellants; and in so far as the West Bengal case is concerned, property in the goods did not pass to the transferees by way of mortgage, hypothecation, charge or pledge.
But that is over simplification.
To counteract what appears on the surface plain enough, learned counsel for the appellants have advanced a two fold contention.
They contend, in the first place, ' that the word 'sale ' in the Sales Tax Acts passed by the Provincial or State legislatures must receive the same meaning as in the ; or else, the definition of sale in these Sales 'Tax Acts will be beyond the legislative competence of the Provincial and ' State legislatures.
Secondly, the appellants contend that since under the , there can be no sale without a contract of sale and since the parties in these matters had no volition of their own but were compelled by law to supply and receive the goods at prices fixed under the Control Orders by the prescribed authorities, the transactions between them are not sales properly so palled and therefore are not exigible to sales tax.
For examining the validity of the first contention, it is necessary to turn to the appropriate entries in the legislative lists of the Constitution Acts, for the contention is founded on the premise that the word sale ' which occurs in those entries must receive the same meaning as in the since the expression "sale of goods" was, at the time when the Government of India Act was enacted, a term of well recognised legal import in the general law relating to sale 446 of goods and in the legislative practice relating to that topic both in England and in India.
Entry 48 in the Provincial List, List II of Schedule VII to the Government of India Act, 1935 relates to; "Taxes on the sale of goods.
" Entry 54 of List II, of the Seventh Schedule to the Constitution reads to say: "Taxes on the sale or purchase of goods other than newspapers, subject to the provisions of entry 92A of the Union List but we may refer to it in order to complete the picture.
It refers to: "Taxes on the sale or purchase of goods other than newspapers, where such sale or purchase takes place in the course, of inter State trade or commerce."
The contention of the appellants that the expression 'sale of goods ' in entry 48 in the Provincial List of the, Act of 1935 and in entry 54 in the State List of the constitution must receive the same meaning as in the is repelled on behalf of the State Governments with the argument that constitutional provisions which confer legislative powers must receive a broad and liberal construction and therefore the expression 'sale of goods ' in entry 48 and its successor, entry 54, should not be construed in the narrow sense in which that expression is used in the but in a broad sense.
The principle that in interpreting a constituent or organic statute, that construction most beneficial to the widest possible amplitude of its powers must be adopted has been examined over the years by various courts, including this Court, and is too firmly established to merit reconsideration.
Some of the leading cases on this point are the Privy Council decisions in British Coal Corporation vs king(1), Edwards vs A. G. for Canada(2) and James vs Commonwealth of Australia("); the Australian decisions in Morgan vs Deputy Federal Commissioner of Land Tax, N.S.W.(4) and Broken Hill South Ltd. vs Commissioner of Taxation (N.S.W.) (5) ; the Federal Court decisions in In re the Central Provinces and Berar Act No. XIV of 1938(6) and United Provinces vs Atiqa Begum;(7) and the decisions of this Court in Navinchandra Mafatlal vs The Commissioner of Income tax, Bombay City(8) and The State of Madras vs Gannon Dunkerley & Co. (Madras), Ltd. (9)
These decisions have taken the view that a constitution must not be construed in a narrow and pedantic sense, that a board and liberal spirit should inspire those whose duty it is to interpret it, that a Constitution of a Government is a living and organic thing which of all instruments has the greatest claim to be construed ut res magis valeat quam pereat, that the legislature in selecting subjects of taxation is entitled to take things as it finds them in remum natura and that it is not proper that a Court should deny to such a legislature the right of solving taxation problems unfettered by a priori legal categories which often derive from the exercise of legislative power in the same constitutional unit.
(1) (6) (2) ; (7) (3) (8) (4) [1912] 15 C.L.R.661.
(9) [1959].S.C.R. 379.
(5) 447 On a careful examination of various decisions bearing on the point this Court speaking through Venkatarama Aiyar J. in Gannon Dunkerley (supra) upheld the contention of the State of Madras that the words "sale of goods" in Entry 48 which occur in the Constitution Act and confer legislative powers on the State Legislature in respect of a topic relating to taxation must be interpreted not in a restricted but broad sense.
But as observed by the learned Judge in that case, this conclusion opens up questions as to what that sense is, whether popular or legal, and what its connotation is, either in the one sense or ' the other.
After considering text book definitions contained in Blackstone, Benjamin on Sale, Halsbury 's Laws of England, Chalmer 's , Corpus Juris, Williston on Sales and the Concise Oxford Dictionary, the Court held that the expression 'sale of goods ' in Entry 48 cannot be construed in its popular sense and that it must be interpreted in its legal sense.
Whereas in popular parlance a sale is said to take place when the bargain is settled between the parties though property in the goods may not pass at that stage, as where the contract relates to future or unascertained goods, the essense of 'sale ' in the legal sense is the transfer of the property in a thing from one person to another for a price.
The Court then proceeded to determine, the connotation of the expression 'sale of goods ' in the legal sense and held, having regard lo the evolution of the law relating to sale of goods, the scheme of the Indian Contract Act and the provisions of the , which repealed Chapter VII of the Indian Contract Act relating to sale of goods, that according to the law both of England and of India, in order to constitute a sale it is necessary that there should be an agreement between the parties for the purpose of transferring title to the goods, which pre supposes capacity to contract, that the contract must be supported by valuable consideration and that as a result of the transaction property must actually pass in the goods.
"Unless all these elements are present, there can be no sale," Basing itself on this position, the Court finally concluded in Gannon Dunkerley (supra) that the expression 'sale of goods ' was, at the, time when the Government of India Act was enacted, a term of wellrecognised legal import in the general law relating to sale of goods and in the legislative practice relating to that topic both in England and in India and therefore that expression, occurring in entry 48, must be interpreted in the sense which it bears in the .
In coming to this conclusion, the Court relied upon the, American decisions in United States vs Wong Kim Ark, South Carolina vs United States(2 ) and Ex Parte Grossman(3); the Privy Council decisions in L 'Union St. Jacques De Montreal vs Be Lisle (4) , Royal Bank of Canada vs Larue,(5) The Labour Relations Board of (1) ; (2) ; (3) ; (4) [1874] L.R. 6 P.C.31.(5) 448 Saskatochewan vs John East Iron Works Ltd.(1); Croft vs Dunphy(2), and Wallace Brothers and Co. Ltd. vs Commissioner of Income tax, Bombay City and Bombay Suburban District;(3) the decision of the Federal Court in In re The Central Provinces and Berar Act No. XIV of 1938; (supra); and the decisions of this Court in The State of Bombay vs F. N. Balsara(4) and The Sales Tax Officer, Pilibhit vs Messrs Budh Prakash Jai Prakash(5).
In a nutshell, these decisions have taken the view that the Constitution must be interpreted in the light of the common law, the principles and history of which were familiarly known to the framers of the Constitution, that the language of the Constitution cannot be understood without reference to the common law, that to determine the extent of the grants of power, the Court must place itself in the position of the men who framed and ' adopted the Constitution and inquire what they must have understood to be the meaning and scope of those grants, that when a power is conferred to legislate on a particular topic it is important, in determining the scope of the power, to have regard to what is ordinarily treated as embarced within that topic in legislative practice and particularly in the legislative practice of the State which has conferred that power, that the object of doing so is emphatically not to seek a pattern to which a due exercise of the power must conform, but to ascertain the general conception involved in the words of the Act, and finally, that Parliament must be presumed to have had Indian legislative practice in mind and unless the context otherwise clearly requires, not to have conferred a legislative power intended to be interpreted in a sense not understood by those to whom the Act was to apply.
The view expressed in Gannon Dunkerley (supra) that the, words "sale of goods" in entry 48 must be interpreted in the sense which they bear in the an$ that the, meaning of those words should not be left to fluctuate with the definition of 'sale in laws relating to sales of goods which might be in force for the, time being may, with respect, bear further consideration but that may have to await a more suitable occasion.
It will then be necessary to examine whether the words "sale of goods" which occur in entry 48 should not be construed so as to extend the competence of the legislature to enacting laws in respect of matters which might be unknown in 19 3 5 when the Government of India Act was passed but which may have come into existence later, as a result of a social and economic evolution.
In Attorney General vs Edison Telephone, Company of London(,,) a question arose whether the Edison Telephone Company London, infringed by installation of telephones, the, exclusive privilege, of transmitting telegrams which was conferred; upon the Postmaster General under an Act of 1869.
The decision depended on the meaning of the (1) (2) (3) [1948] L.R. 75 I.A. 86.(4) ; (5) ; (6) 449 word "telegraph" in the Acts of 1863 and 1869.
The company contended that since telephones were unknown at the time when these Acts were passed, the definition of 'telegraph ' could not comprehend 'telephones.
That contention was negatived by an English Court.
In the Regulation and Control of Radio Communication in Canada, In re(1) a similar question arose as to whether 'broadcasting" was covered by the expression "telegraph and other works and undertakings" in section 92(10) (a) of the Constitution Act of 1867.
The Privy Council answered the question in the affirmative and was apparently not impressed by the contention that broadcasting was not known as a means of communication at the time when the Constitution Act was passed.
These decisions proceed on the principle that if after the enactment of a legislation, new facts and situations arise which could not have been in the contemplation of the legislature, statutory provisions can justifiably be applied to those facts and situations so long as the words of the statute are in a broad sense capable of containing them.
This principle, according to the view expressed in Gannon Dunkerley, (supra) did not apply to the interpretation of Entry 48, a view which in our opinion is capable of further scrutiny.
It is, however, unnecessary in these appeals to investigate the matter any further because, the position which emerges after putting on the words of Entry 48 the same meaning which those words ' bear in the is that in order to constitute a sale, it is necessary that there should be an agreement between the parties.
In other words, the effect of the construction which the Court put on the words of Entry 48 in Gannon Dunkerley (supra) is that a sale is necessarily a consensual transaction and if the parties have no volition or option to bargain, there can be no sale.
For the present purposes, this view may be assumed to reflect the correct legal position but even so, the transactions which are the subject matter of these appeals will amount to sales.
Applying the ratio of Gannon Dunkerley, (supra) the true question for decision, therefore, is whether in the context of the Control Orders issued by the Government of West Bengal for regulating the supply and distribution of cement, the transactions under which the, appellant supplied cement to persons who were issued permits by the authorities to obtain the commodity from the appellant, involved an element of volition or consensuality.
If they did, the transactions would amount to sales, but not otherwise.
It is undeniable that under paragraph 2 of the West Bengal Order of 1948, which we have for convenience designated as the Cement Control Order, no person can dispose of or agree to dispose of any cement except in accordance with the conditions contained in a written order of the Director of Consumer Goods or the authorities specified in that paragraph.
That is a limitation on the dealer 's right to supply cement.
Correspondingly by paragraph 3, no person can acquire or agree to acquire cement from any person except in accordance with the conditions contained in a written order of the Director of Consumer Goods or the authorities specified in that paragraph.
That is a limitation on the consumer 's right to obtain cement.
Paragraph 4 puts a restriction on the price which a dealer (1) 45 0 may charge for the commodity by providing that no person shall sell cement at a price higher than the notified price.
Paragraph 8 imposes on the dealer the obligation to supply cement by providing that no person or stockist who has any stock of cement in his possession and to whom a written order has been issued under paragraph 2 shall refuse to sell the same at a price not exceeding the notified price person who contravenes the provisions of the Cement Control Order is punishable under section 6 of the West Bengal Cement Control Act, 1948 with imprisonment for a term which may extend to three years These limitations on the normal right of dealers and consumers to supply and obtain the goods, the obligations imposed on the parties and the penalties prescribed by the Control Order do not, in our opinion, militate against the position that eventually, the parties must be deemed to have completed the transactions under an agreement by which one party bound itself to supply the stated quantity of goods to the other at a price not higher than the notified price and the other party consented to accept the goods on the terms and conditions mentioned in the permit or the order of allotment issued in its favour by the concerned authority.
Offer and acceptance need not always be in an elementary form, nor indeed does the Law of Contract or of Sale of Goods require that consent to a contract must be express.
It is commonplace that offer and acceptance can be spelt out from the conduct of the parties which covers not only their acts but omissions as well.
Indeed, on occasions, silence can be more eloquent than eloquence itself.
Just as correspondence between the parties can constitute or disclose an offer and acceptance, so can their conduct.
This is because, law does not require offer and acceptance to conform to any set pattern formula.
In order, therefore, to determine whether there was any agreement or consensuality between the parties, we must have regard to their conduct at or about the time when the goods changed hands.
In the first place, it is not obligatory on a trader to deal in cement nor on any one to acquire it.
The primary fact, therefore, is that the decision of the trader to deal in an essential commodity is volitional.
Such volition carries with it the willingness to trade in the, commodity strictly on the terms of Control Orders.
The consumer too, who is under no legal compulsion to acquire or possess cement, decides as a matter of ' his volition to obtain it on the terms of the permit or the order of allotment issued in his favour.
That brings the two parties together, one of whom is willing to supply the essential commodity and the other to receive it.
When the allottee presents his permit to the dealer, he signifies his willingness to obtain the commodity from the dealer on the terms stated in the permit.
His conduct reflects his consent.
And when, upon the presentation of the permit, the dealer acts upon it, he impliedly agrees to supply the commodity to the allottee on the terms by which he has voluntarily bound himself to trade in the commodity his conduct too reflects his consent.
Thus, though both parties are bound to comply with the legal requirements governing the transaction, they agree as between themselves to enter into the transaction on statutory terms, 451 one agreeing to supply the commodity to the other on those terms and the other agreeing to accept it from him on the very terms.
It is therefore not correct to say that the transactions between the appellant and the allottees are not consensual.
They, with their free consent, agreed to enter into the transactions.
We are also of the opinion that though the terms of the transaction are mostly predetermined by law, it cannot be said that there is no area at all in which there is no scope, for the parties to bargain.
The West Bengal Cement Control Act, 1948 empowers the Government by section 3 to regulate or control the prices at which cement may be purchased or sold.
The Cement Control Order, 1948 provides by paragraph 4 that no person shall sell cement at a "higher than notified price", leaving it open to the parties to charge and pay a price which is less than the notified price, the notified price being the maximum price which may lawfully be charged.
Paragraph 8 of the Order points in the same direction by providing that no dealer Who has a stock of cement in his possession shall refuse to sell the same "at a price not exceeding the notified price", leaving it open to him to charge a lesser price, which the allottee would be only too agreeable to pay.
Paragraph 8 further provides that the dealer shall deliver the cement "within a reasonable time" after the payment of price.
Evidently, within the bounds of reasonableness, it would be open to the parties to fix the time of delivery.
Paragraph 8A which confers on the allottee the right to ask for weighment of goods also shows that he may reject the goods on the ground that they are short in weight just as indeed, he would have the undoubted right to reject them on the ground that they are not of the requisite quality.
The circumstance that in these areas, though minimal, the parties to the transactions have the freedom to bargain militates against the view that the transactions are not consensual.
While on this aspect, we may usefully draw attention to two important decisions of this Court, the first of which is Indian Steel & Wire Products Ltd. vs State of Madras(1).
The appellant therein supplies certain steel products to various persons in Madras at the instance of the Steel Controller exercising powers under the Iron and Steel '(Control of Production and Distribution) Order, 1941.
The State of Madras assessed the turnover of the appellant to sales tax upon which, the appellant contended that the deliveries of steel products were made under compulsion of law since it was the controller who determined the persons to whom the goods were to be supplied, the price at which they were to be supplied, the manner in which they were to be transported and the mode in which the payment of the price was to be made.
Since every facet of the transaction was prescribed by the controller, so it was argued, there was no agreement between the parties and therefore the transaction could not be considered as a sale.
Rejecting this contention, it was observed by Hegde J., who spoke for the Constitution Bench, that though the controller fixed the base price of the steel products and determined the (1) ; 452 buyers, the parties were stiff 'free to decide the other terms of the bargain, as for example, the time and date of delivery and the time and mode of payment and therefore it could not be said that there was no agreement between the parties to sell and buy the goods.
It was held that though the area within which it was possible for the parties to bargain was greatly relieved on account of the Iron and Steel Control Order, it was not correct to contend that because law imposes restrictions on freedom of contract, there could be no contract at all.
"So long as mutual assent is not completely excluded in any dealing, in law it is a contract.
" The second decision is reported in Andhra Sugar Ltd. vs State of Andhra Pradesh(1).
In that case, the occupier of a sugar factory had to buy sugarcane from cane growers in conformity with the directions.
of the Cane Commissioner issued under the Andhra Pradesh (Regulation of Supply and Purchase) Act, 1961.
Under section 21 of that Act, sales and purchase of sugarcane were exempt from tax under the Andhra Pradesh General Sales Tax Act, 1957, but under section 2(1), of the Act of 1961, the State Government had power by notification, to levy a tax "on the purchase of cane required for use, consumption or sale in a sugar factory".
Various sugar factories in the State filed writ petitions under Article 32 of the Constitution challenging the validity of section 21 mainly on the ground that since they were compelled by law to buy cane from the cane growers, their purchases were not made under agreements and were not taxable under entry 54, List 11 of the Seventh Schedule to the Constitution having regard to the decision in Gannon Dunkerley (supra).
The writ petitions were decided by a Constitution Bench of this Court which delivered its un animous judgment through Bachawat J.
It is necessary in the first place to state that though it was argued on behalf of the State Government in that case that the occupier of the factory had some option of not buying the sugarcane from the grower and had some freedom of bargaining about the terms and conditions of the agreement, that point was not pursued any further and the writ petitions proceeded on the basis that there was no option left for any bargain in the transaction.
After referring to the definition of "contract of sale of goods" in section 4(1) of the Indian , and the relevant provisions of the Contract Act relating to offer and acceptance, the Court observed that under section 10 of the Contract Act, an agreements are contracts if they are made by the free consent of the parties competent to contract, for a lawful consideration and with a lawful object, and are not by the Act expressly declared to be void.
Section 13 of the Contract Act defines "consent" and section 14 says that consent is said to be free when it is not caused by coercion, undue influence, fraud, misrepresentation or mistake as defined in sections 15 to 22.
In the background of those provisions, the Court observed that 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.
But if be made an offer, the occupier of the factory was bound to accept it and the consent of the occupier not being caused by coercion, undue influence, fraud, misrepresentation or mistake was "free (1) ; 453 consent as defined in section 14 of the Contract Act, even though he was obliged by law to enter into the agreement.
"The compulsion of law is not coercion as defined in section 15 of the Act" and "in the eye of the law, the agreement is freely made.
" Since the, parties were competent to contract, the agreement was made for a lawful consideration and with a lawful object, the agreement was not void under any provision of law and it was enforceable at law, the Court held that the purchases of sugarcane were taxable by the State legislature under Entry 54, List 11 of the Seventh Schedule of the Constitution.
Strong reliance was placed by the factory owners in Andhra Sugars (supra) on the majority ' judgment of Kapur and Shah JJ in New India Sugar Mills Ltd. vs Commissioner of Sales Tax (supra) to which we must refer here.
The "admitted course of dealing" between the parties in that case was that the Governments of various consuming States used to intimate to the Sugar Controller of India, from time to time, their requirements of sugar and similarly, the factory owners used to send to the Sugar Controller of India statements of stocks of sugar held by them.
On a consideration of the requests received from the State Governments and the statements of stock received from the factories, the Sugar Controller used to make allotment of sugar allotment order was addressed by the Sugar Controller to the factory owner directing him to supply sugar to the State Government in question in accordance with the despatch instructions received from the competent officer of the State Government.
A copy of the allotment order was simultaneously sent to the State Government concerned on receipt of which the competent authority of the State Government sent to the factory concerned detailed instructions about the destinations to which the sugar was to be despatched as also the quantities of sugar to be despatched to each place.
The Madras Government which, under this arrangement, received its quota of sugar from the New India Sugar Mills, also laid down the ' procedure of payment.
The Patna High Court having held that the supply of sugar by the mills to the Province of Madras was liable to be taxed under the Bihar Sales Tax Act, 1947, the mills filed an, appeal to this Court which was decided by a Bench of three learned Judges.
Kapur and Shah J. held that since the mills were compelled to carry out the directions of the Controller and since they had no volition in the matter of supply of sugar to the State of Madras, there was no offer by them to the State Government and no acceptance by the latter.
Shah J., speaking for the majority observed that a contract of sale between the seller and the buyer is a prerequisite to a sale and since there was no such contract, the transaction in question which the Bihar Sales Tax authorities sought to tax was not exigible to sales tax.
Hidayatullah J. who 'delivered a dissenting opinion observed after reviewing the position both under the English and the Indian Law, that though it was true that consent makes a contract of sale, such consent "may be express or implied and it cannot be said that unless the offer and acceptance are there in an elementary form, there can be no taxable sale.
" Taking the view that on obtaining the necessary permit, the sugar mills on the one hand and the Government of 454 Madras on the other agreed to "sell" and "purchase" sugar could admit of no doubt, the learned Judge said that when the Province of Madras after receiving the permit, telegraphed instructions to despatch sugar and the mills despatched it, "a contract emerged and consent must be implied on both sides though not expressed antecedently to the permit.
" The Controller brought the seller and the purchaser together, gave them permission to supply and receive sugar leading thereby to an implied contract of sale between the parties.
The learned Judge accepted that there was an element of compulsion in both selling and buying, perhaps more for the supplier than for the receiver, but, according to him, "a compelled sale is nevertheless a sale" and "sales often take place without volition of party.
" The learned Judge summed up the matter pithily thus : "So long as the parties trade under controls at fixed price and accept these as any other law of the realm because they must, the contract is at the fixed price both sides having or deemed to have agreed to ' such a price.
Consent under the law of contract need not be express, it can be im plied. .
The present is just another example of an implied contract with an implied offer and implied acceptance by the parties.
" Adverting to the construction of the legislat ive entry 48 of List 11, VII Schedule to the Government of India Act, 1935, the learned Judge observed that the entry had to be interpreted in a liberal spirit and not cut down by narrow technical consideration.
"The entry in other words should not be shorn of all its content to leave a mere husk of legislative power.
For the purposes of legislation such as on sales tax it is only necessary to see whether there is a sale, express or implied. .
The entry has its meaning and within its meaning there is a plenary power.
If a sale express or implied is found to exist then the tax must follow."
We are of the opinion that the true position in law is as is set out in the dissenting judgment of Hidayatullah J., and that, the view expressed by Kapur and Shah JJ in the majority judgment, with deference, cannot be considered as good law.
Bachawat J. in Andhra Sugar (supra) was, with respect, right in cautioning that the majority judgment of Kapur and Shah JJ in New India Sugar Mills (supra) "should not be treated as an authority for the proposition that there can be no contract of sale under compulsion of a statute.
" (pages 715 716).
Rather than saying what, in view of the growing uncertainty of the true legal position on the question, we: are constrained to say, namely, that the majority judgment in New India Sugar Mills (supra) is not good law, Bachawat J. preferred to adopt the not unfamiliar manner of confining the majority decision to "the special facts of that case."
The majority judgment in New India Sugar Mills (supra) is based predominantly on the decision of this Court in Gannon Dunkerley (supra) to which we have referred at length in another context.
In fact, Shah J. observes at page 459 of the report after discussing the judgment in Gannon Dunkerley (supra) that "the ratio decidendi of that decision must govern this case.
" The decision in Gannon Dunkerley (supra) really turned on a different point, the question for consideration therein being whether the value of the materials used in the execution 455 of building contracts could be included within the taxable turnover of the company.
It was contended on behalf of the company that the power of the Madras Legislature to impose a tax on sales under entry 48, List 11 of Schedule VII of the government of India Act, 1935 did not extend to unposing a tax on the value of materials used in construction works, as there was no transaction of sale in respect of those goods, and that the provisions introduced in the Madras General Sales Tax Act, 1939, by the Madras General Sales Fax (Amendment) Act, 1947, authorising the imposition of such tax were ultra vires.
Venkatarama Aiyar J. posed the question thus : "The sole question for determination in this appeal is whether the provisions of the Madras General Sales Tax Act are ultra vires, in so far as they seek to impose a tax on the supply of materials in execution of works contract treating it as a sale of goods by the contractor. ".
The Court accepted that building materials were 'goods ' and limited the inquiry to whether there was "a sale of those materials within the meaning of that word in entry 48".
Reference was then made to Benjamin on Sale in which it is said that in order to constitute a 'sale, four elements must concur "(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 (c) a price in money paid or promised." (Vide 8th Edn., p. 3).
On the strength of this statement and on a consideration of the provisions of the Contract Act and the it was concluded that "according to the law both of England and of India, in order to constitute a sale it is necessary that there should be an agreement between the parties for the purpose of transferring title to goods".
The Court then proceeded to examine the true nature of a building contract and held "It has been already stated that, both tinder the common law and the statute law relating to sale of goods in England and in India, to constitute A transaction of sale there should be an agreement, express or implied, relating to goods to be completed by passing of title in those goods.
It is of the essence of this concept that both the agreement and the sale, should relate to the same subject matter.
Where the goods delivered under the contract are not the goods contracted for,, the purchaser has got a right to reject them, or to accept them and claim damages for breach of warranty.
Under the law, therefore, there cannot be an agreement relating to one kind of property and a sale as regards another.
We are accordingly of opinion that on the true interpretation of the expression`sale of goods ' there must be an agreement between the parties for the sale of the very goods in which eventually property passes.
In a building contract, the agreement between the parties is that the contractor should construct a building according to the specifications contained in the agreement, and in consideration therefor receive payment as provided therein, and as will presently be shown there is in such An agreement neither a contract to sell the materials used in the construction, nor does property pass therein as movables.
It is therefore impossible to maintain that there 456 is implicit in a building contract a sale of materials as understood in law." (pages 413 414)
The final conclusion on the point involved in the appeal was expressed thus "To sum up, the expression 'sale of goods ' in Entry 48 is a nomen juris, its essential ingredients being an agreement to sell movables for a price and property passing therein pursuant to that agreement.
In a building contract which is, as in the present case, one entire and indivisible and that is its norm, there is no sale of goods, and it is not within the competence of the Provincial Legislature under Entry 48 to impose a tax on the supply of the materials used in such a contract treating it as a sale." (pages 425 426) Thus, the, two reasons given by the Court in support of its conclusion were, firstly, that in a building contract there was no agreement, express or implied, to sell 'goods ' and secondly, that property in the building materials does not pass in the materials regarded a; 'goods ' but it passes as part of immovable property.
In New India Sugar Mills (supra) the commodity with which Court was concerned was sugar and was delivered as sugar just as in the instant case the commodity with which we are concerned is cement which was delivered as cement.
That meets the first reason in Gannon Dunkerley (supra).
As regards the second, it is quite clear that the tax was demanded after the commodity had changed hands or putting it in the words of the Sale of Goods law, after property in it had passed.
With great respect therefore, the majority in New India Sugar Mills (supra) was in error in saying that "the ratio decidendi of that decision (Gannon Dunkerley) must govern this case '.
The question before us which was the very question involved in New India Sugar Mills (supra) viz., whether a transaction effected in accordance with the obligatory terms of a statute can amount to a 'sale did not arise in Gannon Dunkerley.
Just as the, majority Judges in New India Sugar Mills (supra) applied to the case before them the ratio of Gannon Dunkerley, (supra) the Court in the latter case applied the ratio of the House of Lords decision in Kirkness vs John Hudson and Co. Ltd.(1) observing categorically that "the derision in Kirkness must be hold to conclude the matter" (P. 412).
We think it necessary to lay particular emphasis on this aspect because it shows how the question for decision in Gannon Dunkerley (supra) was basically different from the question in New India Sugar Mills (supra) or in, the appeals before us.
In Kirkness (supra), railway wagons belonging to the respondent company were taken over by the Transport Commission compulsorily it) exercise of the powers conferred by section 29 of the Transport Act, 1947, and compensation was paid therefor.
The question was whether this amount was liable to income tax on the footing of sale of the wagons by the company.
The contention on behalf of the revenue if was that compulsory acquisition being treated as sale under the English law, the taking over of the wagons and payment of compensation (1) 457 therefor must also be regarded as sale for purpose of income tax and therefore, the company was liable to a balancing charge under section 17 of the Income tax Act, 1945.
The case turned on the meaning of the word sale ' for the purposes of the Excess Profits Tax legislation and the income tax Act, 1945 (8 & 9 Geo. 6, c. 3).
Lord Morton in his dissenting speech found it "impossible to say that the only construction which can fairly be given to the word 'sold ' in section 17(1) (a) of the Income Tax Act, 1945, is to limit it to a transaction in which the element of mutual assent is present." But the majority of the House came to A different conclusion, and held that the element of bargain was essential to constitute a sale ' and to describe compulsory taking over of property as a sale was a misuse of that word.
We are not concerned in these appeals with 'Compulsory acquisition ' of goods nor indeed, was the Court concerned with it in Gannon Dunkerley (supra).
The majority in New India Sugar Mills (supra) was right in saying that the decision in Kirkness (supra) and the "observations made therein have little relevance in determining the limits of the, legislative power of the Provincial legislature under the Government of, India Act, 1935, and the interpretation of statutes enacted in exercise of that power.
" In fact, if we may say so with great respect ', the observation in Gannon Dunkerley (supra) that the decision in Kirkness (supra) concluded the question before the Court seems to us somewhat wide of the mark.
Since Kirkness (supra) involved an altogether different point, we would have avoided referring to it put the reliance upon it 'in Gannon Dunkerley (supra) may lead to a misunderstanding regarding its true ratio which needs to be clarified.
Besides Kirkness (supra) has been referred to in various decisions and has been considered as an authority for apparently conflicting propositions, which too made it necessary to understand the decision in a proper perspective.
It is not the decision in Kirkness (supra) but another English decision which may with advantage be noticed.
That is the decision of the Court of Appeal in Ridge Nominees Ltd. vs Inland Revenue Commissioners.(1) The question in that case was whether a transfer of shares executed under section 209 of the Companies Act, 1948 on behalf of a stockholder who declined to accept the offer of purchase was required to be stamped as a transfer on sale.
Under section 209, the transferee company was entitled in certain circumstances to give a notice to a dissenting shareholder that it desired to acquire his shares.
Upon such notice being given, the transferee company became entitled to acquire the shares of the dissenting shareholder at a particular price.
If the dissenting shareholder did not transfer the shares, then subsection (3) provided for the execution of a transfer on behalf of the shareholder by a person appointed by the transferee company.
In the First Schedule to the Stamp Act, 1891 was included the item "Conveyance or transfer on sale of any property. .
In the light of this entry under which stamp duty was payable, the question which the Court had to consider was whether a transfer executed on behalf of a dissenting shareholderwasa"transferonsale".
Theanswerdepended upon whether there could be a sale even though the essential element (1) 45 8 of mutual assent was totally absent.
Lord Evershed M.R. observed in his judgnient that what the Companies Act had done, by file machinery it had created, was that in truth it brought into being a transaction which ex facie in all its essential characteristics and effect was a transfer on sale.
Donovan L.J. in his concurring judgment said that when the legislature by section 209 of the C Act empowered the trans feree company to appoint an agent on behalf of a dissenting shareholder 3 for thempurpose of executing a transfer of his shares against a price to be paid to the transferor company and held in trust for the dis senting shareholder, it was clearly shring his dissent and putting him in the same position as if he had.
For the purpose of considering whether the transaction amounted to a sale, one must, according to the learned Judge, regard the dissent of the shareholder as overriden by an assent which the statute imposed upon him, fictional though it may be.
Danckwerts L.J., also by a concurring judgment, said that a sale may not always require the consensual element and that there may, in truth, be a compulsory sale of property in which the owner is compelled to part with Ws property for a price, against his will.
We will proceed to refer to the Other decisions of this Court bearing on the point under discussion.
In State of Rajasthan vs M/s Karam Chand Thapper & Bros. Ltd.(1) the respondent assessee which was registered as a dealer under the Rajasthan Sales Tax Act, 1954, entered into a contract with the Equitable Cod Company under which it acquired monopoly rights to supply coal in_Rajasthan as an agent of the Coal Company.
The respondent supplied coal to the State of Rajasthan under an agreement with it and that transaction was included in the respondent 's turnover by the Sales Tax Officer, Jaipur.
The High Court of Rajasthan allowed the respondents writ petition against the order of assessment on the,, ground, inter alia, that the supply of coal by the respondent to the State of Rajasthan did not constitute salt as the, supply was controlled by a statutory order, namely, the Colliery Control Order, 1945.
In appeal to this Court by the State of Rajasthan, it was held that under the Colliery Control Order, coal could be supplied under a contract and the effect of the Control Order was only to superimpose upon the agreement between the parties the rate fixed by the Control Order.
The four elements required to constitute a sale, namely, competency of parties, mutual assent of the parties, passing of property in the goods supplied to the purchaser, and lastly, payment or promise of payment of price were all present to render the turnover liable to sales tax" Shah J. who spoke for the Court relied upon the judgments in Indian Steel and Wire Products, (supra) and Andhra Sugar (supra) observing that in these two cases the Court had held that "when goods, supply of which is controlled by statutory orders, are delivered pursuant to a contract of & The, the principle of the case in M/s New India Suqar Mills Ltd. case (supra) has no application. "
The Court distinguished the decision in New India Sugar Mills (supra) on the ground that it was founded on a different principle since the condition requiring mutual assent of the parties was lacking in that case.
(1) [1969].
1 S.C.R. 861.
459 In Chhitter Mal Narain Das vs Commissioner of Sales Tax(1) the appellants 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 High Court held in a reference made to it under the Sales Tax Act that the transaction amounted to a sale And was exigible to sales tax.
In appeal to this Court it was held by a Bench consisting of Shah and Hegde JJ that clause 3 of the U.P. Procurement (Levy) Order, 1959 sets up a machinery for compulsory acquisition by the State Government of stocks of wheat belonging to the licensed dealers, that the Order contains a bald injunction to supply wheat of the specified quantity day after day, that it did not envisage any consensual arrangement and that the Order did not even require the State Government to enter into an informal contract with the supplier.
Delivering the judgment of the Bench, Shah J. observed that the 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 in the prescribed manner.
It was observed that the decision in Indian Steel and Wire Products (supra) 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 Control Order may be regarded as a sale.
This decision is clearly distinguishable since the provisions of the Wheat Procurement Order were construed by the Court as being in the nature of compulsory acquisition of property obliging the dealer to supply wheat from day to day.
Cases of compulsory acquisition of property by the State stand on a different footing since there is no question in such cases of offer and acceptance nor of consent, either express or implied.
We would, however, like to clarify that though compulsory acquisition of property would exclude the element of mutual assent which is vital to a sale, the learned Judges were, with respect, not right in holding in Chitter Mal(1) that even if in respect of the place of delivery and the place of payment of price, there could be a consensual arrangement the transaction will not amount to a sale (p. 677).
The true position in law is as stated above, namely, that so long as mutual assent, express or implied, is not totally excluded the transaction will amount to a sale.
The ultimate decision in Chitter Mal (supra) can be justified only on the view that clause 3 of the Wheat Procurement Order envisages compulsory acquisition of wheat by the State Government from the licensed dealer.
Viewed from this angle, we cannot endorse the Court 's criticism of the Full Bench decision of the Allahabad High Court in Commissioner, Sales Tax U.P. vs Ram Bilas Ram Gopal(2) which held while construing clause 3 that so long as there was freedom to bargain in some areas the transaction could amount to a sale though effected under compulsion of a statute.
Looking at the scheme of the U.P. Wheat Procurement Order, particularly clause 3 thereof this Court in Chitter Mal (supra) seems to have concluded that the transaction was, in truth and substance, in the nature of compulsory acquisition, with no real freedom to bargain in any area.
Shall J. expressed the Court 's interpretation of clause 3 in no uncertain terms by saying that "it did not envisage, any consensual arrangement." In Salar Jung Sugar Mills Ltd. vs State of Mysore, (supra) which was decided by a Bench of seven learned Judges, the appellants were subjected to levy of tax on purchase of sugarcane after the inclusion of sugarcane in the Third Schedule to the; Mysore Sales Tax Act, 1957.
They challenged the levy on the ground that on account of the Central and State Control Orders applicable to the transactions, there was no mutual assent between them and the growers of sugarcane in regard to supply of sugarcane by the latter and since there was no purchase and sale of sugarcane, they were not dealers within the meaning of section 2(k) of the Mysore Sales Tax Act.
After referring to the cases which we have considered above, it was held by the Court that the decisions relating to 'compulsory sales? establish that statutory orders regulating.
the supply and distribution of goods do not absolutely impinge on the freedom of contact.
In spite of the fact that under the relevant Control Orders the parties, the minimum price and the minimum quantity of supply were, determined or regulated, the Court held that the Control Orders left to the parties the option in regard to a higher quantity then was stipulated in the Orders, It higher price than the minimum as also the form and manner of payment.
A factory could reject goods after inspection which indicated not only freedom in the formation but also in the performance of the contract.
A combination of all these factors, according to Ray J. who spoke for a unanimous Court, indicated with unerring accuracy that the parties entered into agreement with mutual assent and with volition for transfer of ' goods in consideration of price.
The transactions were accordingly held as amounting to sales within the meaning of section 2(t) of the, Mysore Sales Tax Act.
In coming to this conclusion the Court relied on the statement in Benjamin on Sale, 8th ed.
page 68 that though a contract of sale requires mutual assent, "The assent need not as a general rule be express" and that, it may be implied from the language of or conduct of parties and indeed it may even be inferred from the silence on the part of parties in certain cases.
As an instance, the Court referred to the common case of a person buying rationed articles from a ration shop. "The parties, the price, the shop, the supply and the acceptance of goods in accordance with the provisions of the Ration Order ,ire all regulated.
" All the same, said the Court, when the customer presents the ration card to the shopkeeper, the shopkeeper delivers the rationed articles, the customer accepts the articles and pays their price "there is indisputably a sale".
In State of Tamil Nadu vs Cement Distributors Private Ltd.() the principal question which arose for decision was whether producers who supplied cement to the State Trading Corporation or its agents in gunny bass in pursuance of the directions given by the Government were liable to pay sales tax on the turnover relating to the price of gunny bags.
In some of the connected appeals the question also arose whether the (1) ; 461 selling agents of the, State Trading Corporation were liable to, pay sales lax in respect of the price of the gunny bags in which, they sold cement to, the consumers.
As regards the question whether the transactions between producers and the State Trading Corporation in so far as the supply of cement was concerned amounted Lo sales within the meaning of the Madras General Sales Tax Act, 1959, Hegde, J. who spoke for the three Judge Bench observed that there was "no dispute" that those transactions could not amount to sales in view of the Cement Control Order, 1958.
On the question whether the gunny bags, in which the cement was supplied, can be considered to have been sold it was observed that there was "no dispute ' that if the price of gunny bags was held to have been wholly controlled, then the supply of gunny bags also could not be considered as sales.
This position was held to have been concluded by the decisions in New India Sugar Mills Ltd. (supra) and Chittar Mal Narain Das (supra).
The only question which the Court considered was whether, in fact, the price of the gunny bags in which cement was supplied to the State Trading Corporation was controlled by the Cement Control Order of 1958.
On that question it was held that since the Central Government had fixed the actual price of the gunny bags also, the supply of gunny bags did not amount to sales.
In the first place, the, decision proceeds on a concession in so far as the supply of cement is concerned as is shown by the statement that there was "no dispute ' that "the same cannot be considered as sales".
As regards the other question concerning gunny bags, the Court did not allow the Advocate General of Tamil Nadu to contend that since tinder clause 6(4) of the Cement Control Order the Central Government could have fixed the maximum and not the actual price of gunny bags, was scope for bargaining between the parties.
That question not having been raised in the High Court or in the appeal memo filed in this Court and the Central Government not having put in its appearance in this Court, permission was declined to raise the questions Thus the decision is not an authority for the, proposition for which the appellant contends.
Besides the judgment rests partly on the decision in New India Sugar Mills (Supra) which we have dissented from and partly on Chitter Mal (supra) which, by reason of the 'compulsory acquisition ' inferred therein, was distinguishable.
In oil and Natural Gas Commission vs State of Bihar(1) a three Judge Bench speaking through Ray CJ.held, following the judgment in Salar Jung Sugar Mills Ltd., (supra) that the supplies of crude oil by the Oil and Natural Gas Commission to a refinery of the Indian Oil Corporation amounted to sales, even though the supplies were made pursuant to the directions and orders of the Central Government and the Commission had no volition in the matter.
Law presumes assent of parties, it was observed, when there is transfer of goods from one party to the other.
This resume of cases, long as it is, may yet bear highlighting the true principle underlying the decisions of this Court which have (1) ; 462 taken the view that a transaction which is effected in compliance with the obligatory terms of a statute may nevertheless be a safe in the eye of law.
The Indian Contract Act which was passed in 1872 contained provisions in its seventh chapter comprising sections 76 to 123 relating to sale of goods which were repealed on the enactment of a comprehensive law of sale of goods in 1930.
The Contract Act drew inspiration from the English law of contract which is almost entirely the creation of English courts and whose growth is marked by features which are peculiar to the social and economic history of England.
Historically the English law of contract is largely founded upon the action on the case for assumpsit, where the essence of the matter was the undertaking.
The necessity for acceptance of the undertaking or the promise led the earlier writers on legal theories to lay particular emphasis on the consensual nature of contractual obligations.
It was out of the importance, which political philosophers of the eighteenth century gave to human liberty that the doctrine was evolved that every person should be free to pursue his own interest in the way he thinks best and therefore law ought to give effect to the will of the parties as expressed in their agreement.
Adam Smith in his famous work on "The Wealth of Nations" propounded in 1776 the view that the freedom of contract must as far as possible be left unimpaired.
Gradually, as would appear from Friedman 's statement in Law in a Changing Society (1959), ch.4 freedom of contract the freedom to contract on whatever terms might seem most advantageous to the individuals become a cornerstone of nineteenth centuary laissez faire economics.
Champions of individualist social philosophy who protested against legal and social restrictions in order to advance the policies of expansion and exploitation pursued by I industry and commerce won their battle and "freedom of contract was one of the trophies of victory" (see Anson 's Law of Contract, 23rd Ed. page 3).
The freedom and sanctity of contract thus became "the necessary instruments of laissez faire, and it was the function of the courts to foster the one and to vindicate the other.
Where a man sowed, there he should be able to reap".
is Cheshire and Fifoot 's Law of Contract, 8th Ed. page 19).
it is significant that the maxim itself laissez faire, laissez passer which derived from eightenth century France has been commonly attributed to Gournay, at first a merchant and later one of the intendants of commerce and a friend of Turgot.
Turgot attributes the phrase laissez nous faire to another merchant, Legendre, who is said to have used it in impressing upon Colbert the desire on the part of the mercantile community for non interference by the state .
When Colbert asked a meeting of French businessmen what the state might do to assist them, Legendre pointedly replied, "laissez nous faire" The underlying assumption of the laissez faire doctrine turns on an optimistic view of the nature of the universe and on the conception of a "natural order ' or system of economic harmonies which will prevail and work out to mankind 's advantag e in the absence of positive regulation.
(see International Encyclo paedia of the Social Sciences, 1968 Ed.
edited by David L. Sills, Vol. 8, page 546 and Encyclopaedia of the Social Sciences edited by Edwin R. A. Seligman, Vol.
IX, pages 15 16).
463 Towards the close of the nineteenth century it came to be realised that private enterprises, in order to be socially just, had to ensure economic equality.
"The very freedom on contract with its corollary, the freedom to complete, was merging into the freedom to combine; and in the last resort competition and combination were, incompatible.
Individualism was yield ing to monopoly, where strange things might well be done in the name of liberty.
The twentieth century has seen its progressive erosion on the one hand by opposed theory and on the other by conflicting practice.
The background of the law, social, political and economic, has changed Laissez fare as an ideal has been supplanted by, 'social security '; and social security suggests status rather than contract.
The State may thus compel persons to make contracts, as where, by a series of Road Traffic Acts from 1930 to 1960, a motorist must insure against third party risks; it may, as by the Rent Restriction Acts, prevent one party to a contract from enforcing his right under it; or it may empower a tribunal either to reduce or to in crease the rent payable under a lease.
In many instances a statute prescribes the contents of the contract.
The Moneylenders Act 1927 dictates the terms of any loan caught by its provisions; the Carriage of Goods by Sea Act 1924, contains six pages of rules to be incorporated in every contract for 'the carriage of goods by sea from any port in Great Britain or Northern Ireland to any other port; ' the Hire Purchase Act 1965, inserts into hire purchase contracts a number of terms which the parties are forbidden to exclude; successive Landlord and Tenant Acts from 1927 to 1954 contain provisions expressed to apply ,notwithstanding any agreement to the contrary '.
The erosion of contract by statute continues briskly; and there are no immediate signs of a reaction." (Cheshire and Fifoot 's Law of Contract, 8th Ed.
pages 21 22).
In the words of Anson, "Freedom of contract is a reasonable social ideal only to the extent that equality of bargaining power between contracting parties can be assumed, and no injury is done to the economic interests of the community at large.
In the more complicated social and industrial conditions of a collectivist society it has ceased to have much idealistic attraction.
It is now realised that economic equality Often does not exist in any real sense, and that individual interests have to be made to subserve those of the cornmunity.
Hence there has been a fundamental change both in our social outlook and in the policy of the legislature towards contract, and the law today interferes at numerous points with the freedom of the parties to make what contract they like . . 464 " This intervention is especially necessary today when most contracts entered into by ordinary people are not the result of individual negotiation.
It is not possible for a private person to settle the terms of his agreement with the British Railways Board or with the local electricity authority.
The 'standard form contract is the rule.
He must either accept the terms of this contract in toto, or go without.
Since, however, it is not feasible to deprive oneself of such necessary services, the individual is compelled to accept on those terms.
In view of this fact, it is quite clear that freedom of contract is now largely an illusion." (Anson 's Law of Contract, 23rd Ed. pages 3 4).
Anson is perhaps over optimistic in saying that there has been a fundamental change in social outlook and in the legislative policy towards contract.
Anyway, with the high ideals of the Preamble and the directive principles of our Constitution there has to be such a fundamental change, in judicial outlook.
Instances given in Cheshire and Anson have their parallels in India too, wherein freedom of contract has largely become an illusion.
The policy of our Parliament in regard to contracts, including those involved in sale of goods, has still to reflect recognition of the necessity for a change, which could be done by a suitable modification of the definition of 'sale of goods.
It all began with the reliance in Gannon Dunkerley (supra) (pages 396 398) on the statement in the 8th Edition (1950) of Benjamin on Sale that to constitute a valid tale there must be a concurrence of four elements, one of which is "mutual assent".
That statement is a reproduction of what the celebrated author had said in the 2nd and last edition prepared by himself in 1873.
The majority judgment in New India Sugar Mills (supra) (page 467) also derives, sustenance from the same passage in Benjamin 's 8th edition.
But as observed by Hidayatullah J. in his dissenting judgment in that case, consent may be express or implied and offer and acceptance need not be in an elementary form (page 510).
It is interesting that the General Editor of the 1974 edition of 'Benjarnin 's Sale of Goods" says in the preface that the editors decided to produce an entirely new work partly because commercial institutions, modes of transport and of payment, forms of contract, types, of goods, market areas and marketing methods, and the extent of legislative and governmental regulation and intervention, had changed considerably since 1868, when the 1st edition of the book was published.
The formulations in Benjamin 's 2nd edition, relating to the conditions of a valid 'sale ' of goods, which are reproduced in the 8th edition evidently require modi fication in the light of regulatory measures of social control.
Hidayatullah J., in his minority judgment referred to above struck the new path; and Bachawat J.Who spoke for the Court in Andhra Sugars (supra) went a step ahead by declaring that "the contract is a contract of sales and purchase of cane, though the buyer is obliged to give his assent under compulsion of a statute".
The concept of freedom of contract, as observed by Hedge J. in Indian Steel and 4 6 5 Wire Products, (supra) has undergone a great deal of change even in those countries where it was considered as one of the basic economic requirements of a democratic life.
Thus, in Ridge Nominees Ltd., (supra) the Court of Appeal, while rejecting the argument that there was no sale because the essential element of mutual assent was lacking, held that the dissent of the shareholder was overridden by an assent which the statute imposed on him, fictional though it may be, that a sale may not always require the consensual element mentioned in Benjamin on Sale, 8th Edition, page 2, and that there may in truth be a compulsory sale of property with which the owner is compelled to part for a price against his will.
(pages 405 406).
Decisions in case of 'compulsory acquisition, where such acquisition is patent as in Kirkness (supra) or is inferred as in Chitter Mal (supra) fall in a separate and distinct class.
The observations of Lord Reid in Kirkness (supra) that 'sale ' is a women juris the name of a particular consensual contract have therefore to be under stood in the context in which they were made, namely, that compulsory acquisition cannot amount to sale.
In Gannon Dunkerley, (supra) Venkatarama Aiyar J. was influenced largely by these observations (see pages 411, 412 and 425) and by the definition of 'sale ' in Benjamin 's 8th edition ' Gannon Dunkerley _(supra) involved an altogether different point and is not an authority for the proposition that there cannot at all be a contract of sale, if the parties to a transaction are obliged to comply with the terms of a statute.
Since we are putting in a nutshell what we have discussed earlier, we would like to reiterate in the interest of uniformity and certainty of law that, with great deference the majority decision in New India Sugar Mills (supra) is not good law.
The true legal position is as is stated in the minority judgment in that case and in Indian Steel and Wire Products, (supra) Andhra Sugars, (supra) Salar Jung Sugar Mills (supra) and Oil and Natural Gas Commission.
To the extent to which Cement Distributors Pvt.Ltd. (supra) is inconsistent with these judgments, it is also, with respect, not good law.
The conclusion which therefore emerges is that the transactions between the appellant, M/s. Vishnu Agencies (Pvt.) Ltd., and the allottees are sales within the meaning of section 2(g) of the Bengal Finance (Sales Tax) Act, 1941.
For the same reasons, transactions between the growers and procuring agents as also those between the rice millers on one hand and the wholesalers or retailers on the other are sales within the meaning of section 2(n) of the Andhra Pradesh General Sales Tax Act, 1957.
The turnover is accordingly 'exigible to sale tax or purchase tax as the case may be.
The appeals are accordingly dismissed with costs, with one hearing fee.
P.B.R. Appeals dismissed.
| IN-Abs | The Cement Control Order promulgated under the West Bengal Cement Control Act, 1948 prohibits storage for sale and sale by a seller and purchase by a consumer of cement except in accordance with the conditions specified in a licence issued by a designated officer.
It also provides that no person shall sell cement at a higher than the notified price and no person to whom a written order has been issued shall refuse to sell cement "at a price not exceeding the notified price".
Any contravention of the order becomes punishable with imprisonment or fine or both.
Under the A.P. Procurement (Levy and Restriction on Sale) Order, 1967, (Civil Appeals Nos. 2488 to 2497 of 1972) every miller carrying on rice milling operation is required to sell to the agent or an officer duly authorised by the Government minimum quantities of rice fixed by the Government at the notified price, and no miller or other person who gets his paddy milled in any rice mill can move or otherwise dispose of the rice recovered by milling at such rice mill except in accordance with the directions of the Collector.
Breach of these provisions becomes punishable.
It was contended in this Court on behalf of the appellants that the word ,sale" in the Bengal Finance Sales Tax Act, 1941, must receive the same meaning as in the since the expression "sale of goods" was, at the time when the Government of India Act, 1935 was enacted, a term of well recognised legal import in the general law relating to sale goods and in the legislative practice relating to that topic both in England and in India and (2) since under the there can be no sale without a contract of sale and since the parties had no volition but were compelled by law to supply the goods at prices fixed under the Control Orders by the authorities the transactions were not sales and so were not exigible to tax.
Disssing the appeals.
HELD : Per curiam Sale of cement by the allottees to the permit holders and the transactions between the growers and procuring agents as well as those between the rice millers on the one band and the wholesalers or retailers on the other, are sales exigible to sales tax in the respective States.
[465 F G] Per Beg.
C.J, The transactions in the instant cases are sales and are exigible to tax on the ratio of Indian Steel and Wire Products Ltd. Andhra Sugar Ltd. and Karam, Chand Thapar.
In cases like New India Sugar Mills, the substance of the concept of a side itself disappears because the transaction is nothing more than the execution of an order.
Deprivation of property for a compensation called price does not amount to a sale when all that is done is to carry out an order so that 434 the transaction is substantially a compulsory acquisition.
On the other hand, a merely regulatory law, even if it circumscribes the area of free choice, does not take away the basic character or core of sale from the transaction.
Such a law which governs a class obliges a seller to deal only with parties holding licences who may buy particular or allotted quantities of goods at specified prices, but an essential element of choice is still left to the parties between whom agreements take place.
The agreement despite considerable compulsive elements regulating or restricting the area of his choice, may still retain the basic character of a transaction of sale.
In the former type of case, the binding character of the transaction arises from the order directed to particular parties asking them to deliver specified goods and not from a general order or law applicable to a class.
In the latter type of cases, the legal tie which binds the parties, to perform their obligations remains contractual.
The regulatory law merely adds other obligations, such as the one to enter into such a tie between the parties.
Although the regulatory law might specify the terms, such as price, the regulation is subsidiary to the essential character of the transaction which is consensual and contractual.
The parties to the contract must agree upon the same thing in the same sense.
Agreement on mutuality of consideration, ordinarily arising from an offer and acceptance, imparts to it enforceability in courts of law.
Mere regulation or restriction of the field of choice does not take away the contractual or essentially consensual binding core or character of the transaction.
[438B D, EG, 439A C, 440B] New India Sugar Mills vs Commissioner of Sales Tax, Bihar, ; ; [1963] Supp. 2 SCR 459 explained.
Commissioner, Sales tax, U.P. vs Ram Bilas Ram Gopal, AIR 1970 All 518, Chittar Mal Narain vs Commissioner of Sales Tax, [1971] 1 SCR 671, Indian Steel and Wire Products Ltd. vs State of Madras; , , Andhra Sugar Ltd. vs State of Andhra Pradesh ; and State of Rajasthan vs Karam Chand Thapar, AIR 1969 SC 343 referred to.
[Per Chandrachud, Bhagwati, Krishna Iyer, Untwalia, Murtaza Fazal Ali and Kailasam, JJ.] According to the definitions of "Sale" in the two Acts the transactions between the appellants and the allottees or nominees are patently sales because in one case the property in cement and in the other property in the paddy and rice was transferred for cash consideration by the appellants.
[445D] 1.
When essential goods are in short supply, various types of Orders are issued under the with a view to making the goods available to the consumer at a fair price.
Such Orders sometimes provide that a person in need of an essential commodity like cement, cotton, coal or iron and steel must apply to the prescribed authority for a permit for obtaining the commodity.
Those wanting to engage in the business of supplying the commodity are also required to possess a dealer 's licence.
The permit holder can obtain the supply of goods, to the extent of the quantity specified in the permit, from the named dealer only and at a controlled price.
The dealer who is asked to supply the stated quantity to the particular permit holder has no option but to supply the stated quantity of goods at the controlled price.
[440 E G] 2.
In State of Madras vs Gannon Dunkerley & Co. Ltd., ; after considering a variety of authorities on the subject, this Court held that the expression sale of goods in Entry 48 List 11 Government of India Act, 1935 cannot be construed in its popular sense and that it must be interpreted in its legal sense.
Whereas in popular parlance a sale is said to take place when the bargain is settled between the parties through property in the goods may not pass at that stage, as where the contract relates to future or unascertained goods, the essence of sale in the legal sense is the transfer of property in a thing from one person to another for a price.
It was further held that according to the law both of England and India in order to constitute a sale, it is necessary that there should be an agreement between the parties for the purpose of transferring title to the goods which pre supposes capacity to contract, supported by valuable consideration and that as a result of the transaction property must actually pass 435 in the goods.
"Unless all these elements are present, there can 'be no sale.
" The effect of the construction which the Court put on the words of Entry 48 in Gannon Dunkerley is that a sale is necessarily a consensual transaction and if the parties have no volition or option to bargain, there can be no sale.
If this view is assumed to reflect the correct legal Position, the transactions in these cases will amount to sales.
[447B C, D F, 449D E] 3.
Offer and acceptance need not always be in an elementary form, nor does the law of contract or of sale of goods require that consent to a contract must be express.
Offer and acceptance can be spelt out from the conduct of the parties which covers not only their acts but omissions as well.
On occasions, silence can be more eloquent than eloquence itself.
Just as correspondence between the parties can constitute or disclose an offer and acceptance, so can their conduct.
This is because law does not require offer and acceptance to conform to any set pattern or formula.
[450D E] 4.
In the instant case, it is not correct to say that the transactions between the dealer and the consumer were not consensual.
The limitations imposed by the Control Order on the normal right of the dealers and consumers to supply and obtain goods, the obligations imposed on the parties and the penalties prescribed by the order do not militate against the position that eventually, the parties must be deemed to have completed the transactions under an agreement by which one party bound itself to supply the stated quantity of goods to the other at a price not higher than the notified price and the other party consented to accept the goods on the terms and conditions mentioned in the permit or the order of allotment issued in its favour by the concerned authority.
in order, to determine whether there was any agreement or consensuality between the parties regard must be had to their conduct at or about the time when the goods changed hands.
In the first place, it is not obligatory on a trader to deal in cement nor on the consumer to acquire it.
The primary fact is that the decision of the trader to deal in an essential commodity is volitional.
Such volition carries with it the willingness to trade strictly on the terms of the Control Order.
The consumer who is under no legal compulsion to acquire or Possess cement, decides as a matter of his volition to obtain it on the terms of the permit or the order of allotment issued in his favour.
That brings the two parties together, one of whom is willing to supply the essential commodity and the other to receive it.
When the allottee presents his permit to the dealer, he signifies his willingness to obtain the commodity from the dealer on the terms stated in the permit.
His conduct reflects his consent.
And when, upon the presentation of the permit the dealer acts upon it, he impliedly agrees to supply the commodity to the allottee on the terms by which he has voluntarily bound himself to trade in the commodity.
His conduct too reflects his consent.
Thus, though both parties are bound to comply with the legal requirements governing the transaction, they agree as between themselves to enter into the tranaction on statutory terms, one agreeing to supply the commodity to the other on those terms and the other agreeing to accept from him on the very terms.
[449E H, 450C, E H,451A] 5.
Secondly, though the terms of the transaction are mostly predetermined by law, it cannot be said that there is no area at all for bargain.
The conditions provided in the order that cement shall not be sold at a higher than the notified price and that no dealer shall refuse to sell it at a price not exceeding the notified price leaving it open to the individuals to charge and pay a price which is less than the notified price or charge a lesser price.
Within the bounds of reasonableness, it would be open to the parties to fix the time of delivery.
The consumer has a right to ask for weighment of goods which shows that he may reject the goods if found short in weight or are not of the requisite quality.
The consumer has a right to ask for weighment of goods which shows that he tions have the freedom to bargain militates against the view that the transactions are not consensual.
[451 AE] 6.
In New India Sugar Mills Ltd. the question was whether sugar supplied by the mills on the orders of the Sugar Controller was exigible to tax.
The majority held that a contract of sale between the buyer and the seller, which is a pre requisite to a sale, being absent the transaction was not exigible to sales 436 tax.
But the principle on which the problem should be approached was set out in the dissenting judgment which said that consent may be express or implied and that it could not be said that unless offer and acceptance were present in an elementary form, there could be no taxable sale.
Taking the view that on obtaining the necessary permit the seller on the one hand and the buyer on the other agreed to sell and purchase sugar it was pointed out that when the buyer, after receiving the permit, telegraphed instructions to despatch sugar and the seller despatched it, 'a contract emerged and consent must be implied on both sides though not expressed antecendently to the permit".
So long as the parties trade under controls at fixed price and accept these as any other law of the realm, the contract is at the fixed price, both sides having or deemed to have agreed to such a price.
Consent under the law of contract need not be express; it could be implied.
[453B G; 454A C] 7.In coming to its conclusion the majority in New India Sugar Mills followed the decision of this Court in Gannon Dunkerley that in a building contract there was no agreement express or implied to sell goods and secondly that property in the building materials does not pass in the materials regarded as goods" but it passes as part of immovable property.
The majority in New India Sugar Mills was in error in saying that the ratio govern that case because the questions involved in both different.
In New India Sugar Mills the commodity with concerned was sugar and was delivered as sugar just as in commodity is cement, which was delivered as cement Dunkerley tax was demanded after the commodity had after property in it had passed.
The question in this case which was question involved in New India Sugar Mills namely decidendi of Gannon Dunkerley must cases were altogether which the Court was the instant case the Secondly, in Gannon changed hands, that is, the very whether a transaction effected in accordance with the obligatory terms of a statute can amount to a sale, did not arise in Gannon Dunkerley, Gannon Dunkerley is not an authority for the proposition that there cannot at all be a contract of sale if the parties to a transaction are obliged to comply with the terms of a statute.
[456C E] 8.
In Gannon Dunkerley this Court was influenced largely by the observations in the 8th edn. of Benjamin on "Sale? ' that to constitute a valid sale there must be a concurrence of four elements, one of which is "mutual assent".
The majority judgment in New India Sugar Mills also derived sustenance from the same passage in Benjamin 's 8th edn.
Gannon Dunkerley involved an altogether different point and is not an authority for the proposition that there cannot at all be a contract of sale if the parties to a transaction are obliged to comply with the terms of a statute.
[464E F , 465C D] 9.
With the high ideals of the Preamble and the directive principles of our Constitution, there has to be a fundamental change in the judicial outlook.
Freedom of contract has largely become an illusion.
The policy of the Parliament in regard to the contracts including those involved in sale of goods, has still to reflect recognition of the necessity for a change, which could be done by a suitable modification of the definition of sale of goods.
[464C D] Majority decision in New India Sugar Mills vs Commissioner of Sales Tax, Bihar, ; ; [1963] Supp. 2 SCR 459 overruled.
Minority opinion in India Steel & Wire Products vs State of Madras ; , Andhra Sugar Ltd. vs State of Andhra Pradesh, ; , Salar Jung Sugar Mills Ltd. vs State of Mysore [1972] 2 SCR 228 and Oil and Natural Gas Commission vs State of Bihar ; approved.
State of Tamil Nadu vs Cement Distributors Pvt. Ltd. ; partly approved.
Chhitter Mal Nazrain Das.
vs Commissioner of Sales Tax [1971] 1 SCR 671 explained.
State of Madras vs Gannon Dunkerley ; explained and distinguished.
Kirkness vs John Hudson and Co. Ltd. held inapplicable.
Ridge No miness Ltd. vs Inland Revenue Commissioners referred to.
Commissioner, Sales Tax U.P. vs Ram Bilas Ram Gopal AIR 1970 Allahabad 318 referred to.
|
Petition No. 7962 of 1977.
(Application for Intervention) Civil Appeal No. 1347(N) of 1977 Shankar Das Ghosh, J. B. Dadachanji, K. J. John and Shri Narain for the Appellants in the Appeal and Opp.
party in CMP.
7962/77.
A. K. Sen, R. P. Bhatt, E. C. Agrawala, section section Khanduja and section Sahni for Respondents Nos.
1 6. 425 Niren De and section V. Tambvekar for the applicant/Interveners (Bharat Refineries).
The Judgment of the Court was delivered by DESAI, J.
This miscellaneous petition by Interveners raises a short but interesting question in the field of Company Law.
Briefly stated, the facts leading to the present miscellaneous petition are that Company Petition.
No. 85 of 1975 was filed by Jairam Das Gupta and others (for short 'Gupta Group ') in the Calcutta High Court under sections 397 398 of the , complaining of oppression by the majority, and praying for various reliefs.
Respondents in this petition were Cosmosteels Private Limited (for short 'the Company ') and three others who would be referred to in this judgment as 'Jain Group.
By an order made by the Company Judge on 21st April 1977 the Board of Directors of the Company was superseded and one Mr. Sachin Sinha, Advocate, was appointed as Administrator to discharge various functions set out in the order.
The Court also appointed Mr. N. Chakraborty, a Chartered Accountant and Auditor to investigate into the accounts of the Company and one Mr. ' A. K. Dey, Engineer and Surveyor for valuation of the assets of the Company and further the Auditor and the Surveyor after investigation of the accounts and evaluation of the assets of the Company were to determine the break up value of the shares as on the date of the petition and on the determination of such break up value the Administrator was to call upon the Jain Group to purchase the shares belonging to the Gupta Group within a period of three months from the date of service of notice failing which the Administrator was directed to purchase the shares of the Gupta Group for the Company at the break up value determined as hereinabove mentioned.
A further, ,direction was given that if the Company was required to purchase the shares of Gupta Group on the failure of the Jain Group, the capital of the Company would protanto stand reduced.
There were also some other directions which are, not relevant for the purpose of this judgment.
Against this Order made by the Company Judge, the Jain Group and the Company preferred an appeal under the Letters Patent and certain interim reliefs were sought.
On an undertaking given on behalf of the Jain Group, the order superseding the Board of Directors and payment of Rs. 7 lacs to certain parties was stayed but the order directing valuation of the shares was not stayed and the proceeding for valuation was to go on.
The Company was restrained by an injunction of the Court from creating any encumbrance on the assets of the Company and dealing with or disposing of its assets or spending any of its money except in usual course of business with a certain ceiling fixed.
This, interim relief was modified by the order made on 25th April 1977 by which the Company was directed to carry out the order for payment of Rs. 7 lacs to the persons named in the order under appeal within a fortnight from the date of the order failing which the Administrator appointed by the learned trial Judge was to take over possession for the purpose of making payment of Rs. 7 lacs.
The direction for investigation of the accounts of the Company was stayed and simultaneously the proceeding for evaluation was also 426 stayed.
This order dated 25th April 1977 was, challenged in Special Leave Petition No. 2042 of 1977 preferred by the Company and the Jain Group.
3801/77 was moved on behalf of the appellants, for certain interim reliefs.
This Court by an order dated 12th May 1977 granted stay of the, order of the Division Bench dated 25th April 1977 directing refund of Rs. 7 lacs by the Company and in default by the Administrator.
The order of injunction granted by the learned trial Judge and confirmed by the Division Bench was kept alive subject to the same condition about not encumbering the assets of the ' Company.
The appellants then sought liberty to amend the Special Leave Petition by including a prayer for special leave against the order of the learned Company Judge dated 21st April 1977 which was granted by the Court and also special leave to appeal was granted.
The appeal came to be numbered as Civil Appeal No. 1347(N) of 1977.
The parties settled the dispute as per the consent terms and requested this Court to make an order in terms of the consent terms.
The Court accordingly made an order on 31st May 1977 disposing of the appeal in terms of the consent terms.
The only term relevant for the present purpose is the one by which the Company was directed to purchase 1300 shares held by the Gupta Group.
The price of the shares was to be determined by Messrs. Price Water House and Peet, Chartered Accountants and Auditors, as on the date of the filing of the petition under sections 397 398 on the basis of the existing as also contingent and anticipated debts, liabilities, claims, payments and receipts of the Company.
The Chartered Accountants were to determine the value of the shares after examining accounts and calling for necessary explanations and after giving opportunity to both the groups to be heard in the matter and the determination of the value by the Chartered Accountants was to be final and binding and not open to any challenge by either side on any group whatsoever.
On the value being so determined the Company had to purchase the shares and on such purchase, the share capital of the Company was to stand reduced protanto.
After the appeal was thus disposed of on 31st May 1977, the interveners filed the present miscellaneous petition on 22nd August 1977 requesting the Court to permit them to intervene in the proceedings pending in Civil Appeal No. 1347 of 1977 and to postpone the purchase of shares by the Company until such time as the Company adopts proceedings in a competent Court by following the procedure laid down by the , and particularly sections 100 to 104 for reduction of the share capital.
In the alternative there was a prayer for safeguarding the claims of interveners by modifying the order dated 31st May 1977.
The interveners claim to be the creditors of the Company to the tune of Rs. 40 lacs.
They say that the 'Cosmos Pioneer ', an Oil tanker belonged to the Company.
By a Tanker Time Charter Party executed on 21st November 1972 between the Company on the one hand and Burmah, Shell Oil Storage and Distribution Co. of India Ltd., and ESSO Eastern Inc., on the other the vessel 'Cosmos pioneer, was chartered in Indian Coastal waters for carriage of petroleum products.
Pursuant to this contract the vessel was loaded at Bombay Port on, 42 7 15th June.
1973 for carrying cargo to the port of Kandla.
On the voyage the vessel ran aground and was stranded on 18th June 1973 and the vessel and the cargo were abandoned.
Intervener No. 2 is the underwriter with whom the charterers had effected an insurance, covering the marine adventure of the aforesaid cargo and presumably on payment of the loss the underwriter has been subrogated.
The interveners have filed two suits being Suit No. 729/74 by the inter vener/petitioners and another suit No. 933/76 by Bharat Refineries Ltd. and Hindustan Petroleum Corporation against the Company and the total amount sought to be recovered in the two suits comes to Rs. 40 lacs.
Both the suits are pending.
The interveners say that they are thus creditors of the Company and before any reduction in the share capital of the Company is effected, the creditors are entitled to notice because by the reduction they are likely to be adversely affected.
There was some dispute before us whether there was any subs tance in the claims of the.
interveners and whether they could be said to be creditors of the Company but for the purpose of this judgment we will proceed on the assumption that they are creditors of the Company.
But even on this assumption, can it be said that the order of this Court dated 31st May 1977 directing the Company to purchase the shares of the Gupta Group and providing that consequent upon this purchase, the share capital of the Company would protanto be reduced, is bad for want of notice to the, interveners and other creditors of the Company ? Section 77 prohibits the Company from buying its own shares unless the consequent reduction of capital is effected and sanctioned in pursuance of sections 100 to 104 or section 402.
This section places an embargo on the Company purchasing its own shares so as,, to become its own member but the embargo is lifted if the Company reduces its share capital protanto.
It is clear that this section envisages that on purchase by a Company of its own shares, reduction of its share capital may be effected and sanctioned in either of two different modes : (i) according to the procedure prescribed in sections 100 to 104; or (ii) under section 402, depending upon the circumstances in which reduction becomes necessary.
Sections 100 to 104 specifically prescribe the procedure for reduction of share capital where the Articles of the Company permit and the Company adopts a special resolution which can only become effective on thee Court according sanction to it.
On the, other hand, reduction of share capital may have to be done pursuant to a direction of the Court requiring the Company to purchase the shares of a group of members while granting relief under section 402.
Both the procedures by which reduction of Capital of a Company may be ' effected are distinct and separate and stand apart from each other.
It would not, therefore, be correct to say that whenever it becomes necessary to reduce the capital of a Company the reduction can be brought about only by following the procedure prescribed in sections 100 to 104.
There is another independent procedure prescribed in section 402 and recognised by section 77, by which reduction of the share capital of a Company can be effected.
But both these 2 1146 SCI/77 428 procedures have one feature in common, namely, that there is Court 's intervention before the Company can reduce its share capital, and this is of vital importance from the stand point of creditors of the Company.
Sections 100 to 104 provide a detailed procedure for reduction of share capital.
Without being exhaustive section 100 mentions three modes of reduction of share capital, viz., (i) extinction or reduction of the liability on any of the shares in respect of share capital not paid up, (ii) cancellation of any paid up share capital which is lost or is unrepresented by available assets, and (iii) paying off any paid up share capital.
Section 101 provides that a Company which has adopted a special resolution for reduction of share capital has to move the Court by a petition for an order confirming the reduction.
A detailed procedure is prescribed which the Court should ordinarily follow before confirming the resolution.
This procedure has to be followed where the proposed reduction of share capital involves either the dimunition of liability in respect of unpaid share capital or payment to any shareholder of any paid up share capital and in any other case if the Court so directs.
But even in first mentioned two cases, sub section (3) confers a discretion on the Court to dispense with the procedure if the Court having regard to any special circumstances, thinks proper to do so.
The procedure envisages a Est of creditors to be settled and a notice to be published which will enable the creditors whose names are included in the Est to object to the reduction and a provision has to be made in respect of dissenting creditors.
Sections 397 and 398 enable the minority shareholders to move the Court for relief against oppression by majority shareholders.
In a petition under sections 397 and 398, section 402 confers power upon the Court to grant relief against oppression, inter alia, by providing for the purchase of shares of any of the members of the Company by other members thereof or by the Company and in the case of purchase of its shares by the Company, the consequent reduction of the share capital of the Company.
Rule 90 of the Companies (Court) Rules, 1959, provides that where an order under sections 397 and 398 involves reduction of capital, the provisions of the Act and the Rules relating to such matter shall apply as the Court may direct.
The question is: whether when on a direction given by the Court, while granting relief against oppression to the minority shareholders of the Company, to the Company to purchase the shares of some of its members which would ipso facto bring about reduction of the share capital because a Company cannot be its own member, is it obligatory to serve a notice upon all the creditors of the Company ? It was conceded that the procedure prescribed in sections 100 to 104 is not required to be followed where reduction of share capital is necessitated by the direction given by the Court in a petition under sections 397 and 398.
Section 77 leaves no room for doubt that reduction of a share capital may have to be brought about in two different situations by two different modes.
Undoubtedly, where the Company has passed a resolution for reduction of its share capital and has submitted it to the Court for confirmation the procedure prescribed by sections 100 429 to 104 will have to be followed, if they are attracted.
On the other hand, where the Court, while disposing of a petition under sections 397 and 398, gives a direction to the Company to purchase shares of its own members, a consequent reduction of the share capital is bound to ensue, but before granting such a direction it is not necessary to give notice of the consequent reduction of the share capital to the creditors of the company.
No such requirement is laid down by the Act.
Two procedures ultimately bringing about reduction of the share capital are distinct and separate and stand apart from each other and one, or the other may be resorted to according to the situation.
That is the clearest effect of the disjunctive or in section 77.
The scheme of sections 397 and 406 appears to constitute a code by itself for granting relief to oppressed minority shareholders and for granting appropriate relief, a power of widest amplitude, inter alia, lifting the ban on company purchasing its shares under Court 's direction, is conferred on the Court.
When the Court exercises this power by directing a purchase of its shares by the Company, it would necessarily involve reduction of the capital of the Company.
Is such power of the Court subject to a resolution to be adopted by the members of the Company which, when passed with statutory majority, has to be submitted to Court for confirmation ? No canon of construction would permit such an interpretation in which the statutory power of the Court for its exercise depends upon the vote of the members of the Company.
This would inevitably be the situation if reduction of share capital can only be brought about by resorting to the procedure prescribed in sections 100 to 104.
Additionally it would cause inordinate delay and the very purpose of granting relief against oppression would stand self defeated Viewed from a slightly different angle, it would be impossible to carry out the directions given under section 402 for reduction of share capital if the procedure under sections 100 to 104 is required to be followed.
Under sections 100 to 104 the Company has to first adopt a special resolution for reduction of share ,capital if its articles so permit.
After such a resolution is adopted winch, of necessity must be passed by majority, and it being a special resolution, by a statutory majority, it will have to be submitted for con firmation to the Court.
Now, when minority shareholders complain of oppression by majority and seek relief against oppression from the Court under sections 397 and 398 and the Court in a petition of this nature considers it fair and just to direct the Company to purchase the shares ,of the minority shareholders to relieve oppression, if the procedure prescribed by sections 100 too 104 is required to be followed, the resolution will have to be first adopted by the members of the Company but that would be well nigh impossible because the very majority against whom relief is sought would be able to veto a at the threshold and the power conferred on the Court would be frustrated.
That could never have been the intention of the Legislature Therefore, it is not conceivable that when a direction for purchase of shares is given by the Court under section 402 and consequent reduction in share capital is to be effected the Procedure, prescribed for reduction of share capital in sections 100 to 1 04 should be required to be followed in ,Order to make the direction effective.
430 A very serious apprehension was voiced by Mr. De that if the Court directs the Company to purchase the shares of some of its.
members while granting relief against oppression, the Company would part with its funds which would jeopardise the security of the creditors of the Company and that if such a direction for reduction of share capital can be, given by the Court behind the back of the creditors, the Creditors would be adversely affected and therefore, it was contended that, even though, while giving direction under section 402 directing the Company to purchase the shares of its members, it is not obligatory upon the Court to give notice to the creditors, such notice ought to be given in the interests of the creditors.
This apprehension is, in our opinion, unfounded.
Even when the Court is moved to confirm the resolution for reduction of share capital under sections 100 to 104,.
the Court may in its discretion dispense with the procedure prescribed in that group of sections [devide section 101(3)].
Undoubtedly, the Court would use the discretion only upon proof of special circumstances as contemplated by section 101(3), but when such discretion is used, the creditors would have no opportunity to object to the reduction.
The opportunity to object would thus depend upon the Court exercising its discretion one way or the other.
It may be noticed that until the Company submits its resolution for reduction of share capital to the Court, the creditors have no say in the matter and, therefore, the Court is empowered to ascertain the wishes of the creditors by following the procedure prescribed in sections 101 to 104.
The object behind prescribed this procedure requiring save in special circumstances as contemplated in section 101,(3), the Court to give notice to the creditors is that the members of the Company may not unilaterally act to the detriment of the creditors behind 'their back.
If such a procedure were not prescribed, the Court might, unaware of all the facts, be persuaded by the members to confirm the resolution and that might cause serious prejudice to the creditors.
But such a situation would not be likely to arise in a petition under sections 397 and 398.
In such a petition the Court would be better in a position to have all the relevant facts and circumstances before it and it would be the Court which would decide whether to direct purchase of shares of the members by the Company.
Before giving such a direction the Court would certainly keep in view all the relevant facts and circumstances, including the interest of the creditors.
Even I the petition is being disposed of on a compromise between the parties, yet the Court, before sanctioning the compromise, would certainly satisfy itself that the direction proposed to be given by it pursuant to the consent terms, would not adversely affect or jeopardise the interest of the creditors.
Therefore, it cannot be said that merely because section 402 does not envisage consent of the creditors before the Court gives direction for reduction of share capital consequent upon purchase of shares of some of the members by the Company, there is no safeguard for the creditors.
But quite apart from that, it is clear on the facts of this case that the apprehension of Mr. De is not well founded.
The order of the Court dated 31st May 1977 clearly provides that the Chartered Accountants and Auditors will determine the value of the shares as on 431 the date of filing of the petition under sections 397 and 398 on the basis of the existing as also contingent and anticipated debts, liabilities claims, demands and receipts of the Company (underlining is ours) and for the purpose of determining the value, they will be at liberty to examine the accounts of the Company for the last five years.
There fore, while ascertaining the break up value of the shares on the date of filing of the petition under sections 397 and 398, the Chartered Accountants and Auditors will have to take into account the assets of the Company as also the existing, contingent and anticipated debts, liabilities, claims, demands, etc.
This would indisputably include the claims made by the interveners in the two suits filed by them to the extent to which they appear genuine and well founded.
They need not, therefore, have the slightest apprehension that their interests are not safeguarded by the direction given by the Court.
It must also be made distinctly clear that the order of the Court does not fix any minimum price at which the shares shall be purchased by the company.
The order makes it clear that if the value of the shares is more than Rs. 65 per share, the Company will have to pay the balance and if it is less than Rs. 65 per share the Gupta Group who have to sell the shares, will have to refund the, difference between the price of the shares calculated at the rate of Rs. 65/ per share and the rate determined by the Chartered Accountants and Auditors within four weeks from the date of such determination.
This pragmatic and flexible approach clearly safeguards the interests of the creditors including the interveners.
There could have been a legitimate apprehension if some minimum price were fixed at which the company was bound to purchase the shares.
Then it could have been plausibly argued that if such minimum price were higher than the real value of the shares, the company would have to part with some of its funds jeopardising the security of the creditors.
Such not being the position, there is no scope for apprehension on behalf of the interveners that the reduction of share capital to be effected under the Court 's direction without reference or notice to creditors would adversely affect their interests.
We may also point out that a right to notice by reason of any rule of natural justice, which a party may establish, must depend for its existence upon proof of an interest which is bound to be injured by not hearing the party claiming to be entitled to a notice and to be heard before an order is passed.
If the duty to give notice and to hear a party is not mandatory, the actual order passed on a matter must be shown to have injuriously affected the interest of the party which was given no notice of the matter.
The facts discussed above by us show that no interest of the interveners, on whose behalf we have heard Mr. De at length, has been injured by not hearing them before the order was passed.
They have not shown us how the order could be different if they had been heard by issuing notices to them under the inherent powers of the Court under rule 9 of the Company (Court) Rules, 1959, even though there was no statutory duty to hear them.
Hence, we hold that the order passed by this Court on 31st May 1977 is not vitiated on such a ground.
432 It was also urged that the Court was in error in making the order without notice to the Central Government.
Section 400 provides.
that the Court shall give notice of every application made to it under sections 397 or 398 to the Central Government and shall take into consideration the representation, if any, made to it by that Government before passing a final order under that section.
It was urged that before this Court made the final order dated 31st May 1977, the record does not show that any notice was given to the Central Government and, therefore, also the order is vitiated.
We see no merit in this contention.
Undoubtedly, when a petition is made to the Court under Ss. 397 and 398 it is obligatory upon the Court to give notice of the peti tion to the Central Government and it would be open to the Central Government to make a representation and if any such representation is made, the Court would have to take it into consideration before passing the final order in the proceeding.
But section 400 does not envisage afresh notice to be issued at the appellate stage.
The present petition under sections 397 and 398 was made to the Calcutta High Court and it was not disputed that before the learned single Judge finally disposed of the petition inter alia directing purchase of shares of the Gupta Group by the Company, notice was issued to the Central Government.
as envisaged by section 400.
The Central Government apparently did not appear and make any representation.
The matter came before this Court initially against the interim order made by the appellate Bench of the Calcutta High Court in the appeal against the order of the learned single Judge, but subsequently special leave was obtained for appealing against the order of the learned single Judge also and it was after this special leave was granted that this Court made the final order.
Therefore, there was no question of issuing fresh notice to the Central Government under section 400 and the contention must be negatived.
Accordingly, we find no merits in the Civil Miscellaneous Petition and it must be rejected.
Before parting with this case we would like to point out that, unfortunately, though Suit Nos.
729/74 and 933/76 have been filed ' by the interveners in the High Court at Bombay as far back as 1974,the written statements in these suits have not been filed though more than 3 years have elapsed.
The decision in the suits may have a bearing on the value of shares to be determined under the directions of this Court dated 31st May 1977.
We, therefore, direct that Suit Nos. 729/74 and 933/76 may be expedited and they may be heard and disposed of without delay at any rate, within a period of six months.
| IN-Abs | In Appeal No. 1347(N) 1977 by special leave against the interlocutory orders dated 21 4 1977 of the Company Judge of the Calcutta High Court in the company petition No. 85/75, filed by the respondents sections 397/398 of the Companies Act, '1956, complaining of oppression by majority and praying for certain reliefs against the appellants and also the orders dated 25 4 1977 of the Division Bench against that order, this Court made an order on 31 5 1977, in terms of an agreement reached between the par ties.
By one such term the company was directed to purchase 1300 shares held by the respondents petitioners.
The price of the shares was to be determined by Messrs. Price Water House and Peet, Chartered Accountants and Auditors, as on the date of the filing of the petition sections 397 398, on the basis of the existing as also contingent and anticipated debts, liabilities, claims, payments and receipts of the ' company.
The Chartered Accountants were to determine the value of the shares after examining accounts and calling for necessary explanations and after giving opportunity to both the groups to be heard in the matter and the determination of the value by the Chartered Accountants was to be final and binding and not open to any challenge by either side on any ground whatsoever.
After such determination of the value the company has to purchase the shares, and, on such purchase, the share capital of the company was to stand reduced protanto.
The order made it ;fear that if the value of the shares is more than Rs. 65/ per share, the company will have to pay the balance, and, if it is less than Rs. 65/ per share, the respondents who have to sell the shares, will have to refund the difference between.
the price of the shares calculated at the rate of Rs. 65/ per share and the rate determined by the Chartered Accountants and Auditors within four weeks from the date of determination.
After the appeal was thus disposed of, the interveners, claiming to be the creditors of the company to the extent of 40 lakhs, in their petition dated 22 8 1977 requested the Court (i) to permit them to be heard and (ii) to postpone the purchase of shares by the company until such time as the company adopts proceedings in a competent court by following the procedure laid down by the , particularly in Sections 100 to 104 for reduction of the share capital.
In the alternative they prayed for safeguarding their interests by modifying the Court 's order dated 31 5 1977.
Rejecting the petition to interfere with its order dated 31 5 1977, the Court, after hearing the interveners, HELD : (i) Section 77 envisages that, on the purchase by a company of its own shares, reduction of its share capital may be effected and sanctioned in either of two different modes : (i) according to the procedure prescribed in Sections 100 to 104; or (ii) under section 402, depending upon the circumstances in which reduction becomes necessary.
[427E F] (ii) Section 77 of the prohibits the company from buying its own shares unless the consequent reduction of capital is effected and sanctioned in pursuance of Sections 100 to 104 or Section 402.
It places an embargo on the company purchasing its own shares so as to become its own member, but the embrago is lifted, if the company reduces its share capital protanto.
[427E] 423 (iii) Section 77 leaves no room for doubt that reduction of share capital may have to be brought about in two different situations by two different modes.
Undoubtedly, where the company has passed a resolution for reduction of its share capital and has submitted it to the Court for confirmation, the procedure prescribed by Sections 100 to 104 will have to be followed, if they are attracted.
On the other hand, where the Court, while disposing of a petition under Ss. 397 and 398, gives a direction to the company to purchase shares of its own members, consequent reduction of the share capital is bound to ensue, and, before making such a direction it is not always necessary to give notice of the consequent reduction of the share capital to the creditors of the company.
No such requirement is laid down by the Act.
The two procedures ultimately bringing about reduction of the share capital are distinct and separate and stand apart from each other; and one or the other may be resorted to according to the situation.
That is the clearest effect of the disjunctive 'or ' in section 77.
[428H, 429AB] (iv) Where the reduction of share capital is necessitated by directions given by the Court in it petition under sections 397 and 398, the procedure prescribed in Sections 100 to 104 is not required to be followed in order to make the direction effective.
[428G] (v) It would not be correct to say that, whenever it becomes necessary to reduce the capital of a company, the reduction can be brought about only by following the procedure prescribed in Ss. 100 to 104.
Sections 100 to 104 specifically prescribe the procedure for reduction of share capital where the Articles of the company permit and the company adopts a special resolution which can only become effective on the Court according sanction to it.
Reduction of share capital may also take pursuant to a direction of the Court requiring the company to purchase the shares of a group of members while granting relief u/s 402.
Both the procedures, by which reduction of capital of a company may be effected, are.
distinct and separate and stand apart from each other.
[427F H] (vi) The scheme of Ss. 397 to 406 is to constitute a code by itself for granting relief to oppressed minority shareholders and for granting appropriate relief, a power of widest amplitude, inter alia, lifting the ban on company purchasing its share under Court 's direction, is conferred on the Court.
When the Court exercises this power by directing a purchase of its shares by the company, it would necessarily involve reduction of the capital of the company.
Such a power of the Court is not subject to a resolution to be adopted by the members of the company which, when passed with, statutory majority, has to be submitted to Court for confirmation.
No canon of construction would permit such an interpretation in which the statutory power of the Court for its exercise depends upon the vote of the members of the company.
[428C E] (vii) If reduction of share capital can only be brought about by resorting to the procedure prescribed in Ss. 100 to 104, it would cause inordinate delay and the very purpose of granting relief against oppression would stand self defeated.
[428E F] (viii) When minority shareholders complain of oppression by majority and seek relief against oppression from the Court under Ss. 397 and 398 and the Court, in a petition of this nature, considers it fair and just to direct the com pany to purchase the shares of the minority shareholders to relieve oppression, if the procedure prescribed by Ss. 100 to 104 is required to be followed, the resolution will have to be first adopted by the members of the company, but that would be well nigh impossible because the very majority against whom relief is sought would be able to veto it at the threshold and the power conferred on the Court would be frustrated.
That could never have been the intention of the Legislature.
[428F H] (ix) The object_behind prescribing this procedure requiring, in special circumstances as contemplated in Section 101(3), the court to give notice to the creditors is that the members of the company may not unilaterally act to the detriment of the creditors behind their back.
If such a procedure were not prescribed, the Court might, unaware of all the facts, be persuaded by the members to confirm the resolution and that might cause, serious prejudice to the creditors.
But such a situation would not be likely to arise in a petition 424 under Ss. 397 and 398.
In such a petition the Court would be in a better position to have all the relevant facts and circumstances before it and it would be the Court which would decide whether to direct purchase of shares of the members by the company.
Before giving such a direction, the Court Would certainly, keep in view all the relevant facts and circumstances, including the interest of the creditors.
Even if the petition is being disposed ' of on a compromise between the parties, yet the Court, before sanctioning the compromise, would certainly satisfy itself that the direction proposed to be given by it pursuant to the consent terms, would not adversely affect or jeopardise the interest of the creditors.
Therefore, it cannot be said that merely because section 402 does not envisage consent of the creditors before the Court gives direction for reduction of share capital consequent upon purchase of shares of some of the members by the company.
there is no safeguard for the creditors.
[430EH] In the instant case, there is no scope for apprehension on behalf of the interveners that the reduction of share capital to be effected under the Court 's direction, without reference or notice to creditors, would adversly affect their interests because : (1) As per the order of the Court dated 31st May, 1977 while ascertaining the break up value of the shares on the date of filing the petition under Sections 397 and 398, the Chartered Accountants and Auditors will have to take into account the assets of the company as also the existing, contingent and anticipated debts, liabilities, claims, and demands etc., as revealed in the accounts of the company for the last five years, which would indisputably include the claims made by the interveners in the two suits filed by them to the extent to which they appear genuine and well founded and.
(ii) the order of the Court did not fix any minimum price at which the shares shall be purchased by the company.
[431A C, D] (x) A right to notice by reason of any rule of natural justice, which a party may establish, must depend for its existence upon proof of an interest which is bound to be injured by not hearing the party claiming to be entitled to a notice and to be heard before an order is passed.
If the duty to give notice and to hear a party is not mandatory, the actual order passed on a matter must be shown to have injuriously affected the interest of the party which was to be given no notice, of the matter.
[431G] In the instant case, after hearing the intervener , it was found that no interest of theirs has been injured by not hearing them before the order was passed.
The order passed by this Court on 31st May, 1977, is not vitiated on the ground of non issue of notices to them under the inherent powers of the Court under Rule 9 of the Company (Court) Rules, 1959, even though there was no statutory duty to hear them.
[431H. 432A] (xi) Undoubtedly, when a petition is made to the Court under Ss. 397 and 398, it is obligatory upon the Court to give notice u/s 400 of the petition to the Central Government and it would be open to the Central Government to make a representation and if any such representation is made, the Court would have to take it into consideration before passing the final order in the proceeding.
But Section 400 does not envisage a fresh notice to be issued at the appellate stage.
[432C D] (The Court directed to expedite the suit Nos.
729/74 and 933/76 filed by the interveners in the Bombay High Court and dispose off within a period of six months).
|
Appeal No. 1984 of 1968.
(Appeal by Special Leave from Judgment and Decree dated 4.12.1967 of the Allahabad High Court in Second Appeal No. 3224 of 1963 ) S.C. Manchanda, M.L. Chitravanshi and M.V. Goswami, for the appellants.
J.P. Goyal, V.C. Prashar and Shreepal Singh, for respond ents.
The Judgment of the Court was delivered by BEG, C. J.
This is the defendant 's appeal by special leave against the judgment and decree of the Allahabad High Court decreeing the suit of the plaintiff respondent for partition and separate possession of 2/3 share of House No. 397 in Katra, Allahabad.
The plaintiff claimed to be the sole heir of the auction purchaser of the house in Octo ber, 1937, at a Court sale in execution of a mortgage de cree.
The house had been mortgaged by Sharda Prasad repre senting the line of one son of Kalyan Chand, the common ancestor and original owner, and Sheo Shankar and Sangam Lal representing the line of another son of Kalyan Chand.
Kripa Shanker, now represented by the two appellants, his widow and son, was said to be a minor, and although, his brothers acted on his behalf, the defendants alleged that the loan and the mortgage were not binding upon him for want of legal necessity.
Shital Prasad, a son of Kalyan Chand, was not a party to the mortgage deed.
Hence, Sital Prasad 's share could not be said to have been sold.
On 12th Septem ber, 1938, symbolical possession was taken by the auction purchaser, and, again in 1946, in proceeding for execution of a decree.
But, the house continued to be in the occupa tion of Kripa Shanker, the husband of the appellant Raj Rani and the father of the appellant Kali Charan.
Devika Rani, widow of Shital prasad, who had filed a suit in 1937 for the declaration of her rights to 1/3 of the house, after her objections under Order XXI, Rule 100 of the Code of Civil Procedure had been dismissed, and obtained a decree from the appellate Court on 22nd 20 January, 1941, with the result that Shital Prasad 's 1/3 share went out, had not been impleaded in the suit now before us.
In 1945, the respondent auction purchaser (now represented by son, Respondent No. 1 ) had filed a suit against Kripa Shanker and another for a declaration of his rights in respect of 2/3 share in another house and the ejectment of Kripa Shanker and Prayag Das from that house.
Although that suit was in respect of another house, the defendants alleged that, in that suit, the auction purchaser had said that the house in dispute in the case now before us was also in possession of Kripa Shanker as a trespasser.
Kripaa Shanker died in 1953 leaving the appellants in pos session as his heirs.
The suit now before us was filed on 10th August, 1959.
It was alleged there that, although the auction purchaser had obtained possession of the whole house, yet, Smt.
Devika Rani, the widow of Shital Prasad having continued in possession over 1/3 share, her claim to that portion had been accepted so that it was no longer in dispute.
But, it was alleged that the auction purchaser has been in posses sion over 2/3 part of the house together with Devika Rani who had 1/3 share in the house.
It was also alleged that, after the death of Devika Rani, one Sankata Prasad, defend ant No. 3, had started giving himself out as the owner of 1/3 share, on the basis of a giftdeed of 1953 ' in his fa vour, and that defendant No. 1, Raj Rani, had been giving out that Sankata Prasad had executed a sale deed in favour of Kripa Shanker, defendant No. 2.
In para 8 of the plant, however, it is alleged: "The defendants had no concern with the 2/3 share in the said house themselves or through any other person nor were they ever in possession or in occupa tion of any part of above owners".
It is also alleged in the plaint that the plaintiff auction purchaser 's son had been, and, before him the auction purchaser had been in possession of the house.
Furthermore it is alleged that "Raj Rani had, in collusion with Sankata Prasad, defendant No. 3, Obtained a false sale deed in favour of defendant No. 2 in respect of the 1/3 share of the said house and misled some tenants in the said house and illegally prevented them from paying to the plaintiff his share in the rent".
The plaintiff, therefore, claimed to be entitled to recover the rents also of amounts wrongly realised by the defendants 1 and 2, the appellants before us.
In paragraph 10 of the plaint, it Was stated that the defendants did not pay any taxes to the Municipal Board which had to file suit for their recovery which were decreed.
The plaintiff, howev er, alleged that he had paid up the decretal amounts in excess of the 2/3 share which belonged to the plaintiff.
The plaintiff also alleged that he was being obstructed in looking after the house and realising rents.
Hence, accord ing to the plaintiff, he had to serve a notice dated 23rd April, 1959, asking the defendants to partition the proper ty.
The plaintiff alleged that the cause of action "accrued to the plaintiff firstly in 1956 and after that on the end of each month when the defendants illegally received plain tiff 's share in the rent from the tenants and did not pay to the plaintiff and then on 15 11 58.
When the plaintiff has to pay excess amount to the Municipal Board on account of the defendants and the on 23 4 59 and, lastly, in May, 1959, when the defendants refused to partition the plaintiff 's share in the said house, within the juris diction of this Court and this Court has the jurisdiction to try this suit".
The defendants appellants had denied any concern with the mortgage.
Apparently, their case was that as the husband of Raj Rani, appellant No. 1 and the father of Kali Charan, appellant No. 2, was a minor at the time of the alleged mortgage and his brother, not having borrowed the money for any legal, necessary, could not bind Kripa.
Shan ker or his heirs.
Furthermore, the defendants pleaded that, even if the house ' had been sold in execution of the mort gage decree, the defendants appellants "have been openly denying the rights of the plaintiff and had been ' in adverse possession and occupation of the property for more than 12 years so that even if the plaintiff or his predecessors had any right, it had been extinguished by the operation of law of limitation".
The first question, on pleadings set out above, for the trial.
Court to determine was: has the plaintiff come with a plea of dispossession by the defendants so that Article 142 of the old Limitation Act was applicable to.
The case, or, had the defendants, having set up the plea of adverse pos session, to establish an ouster in order to discharge their burden of proof under Article 144 of the Limitation Act ? In view of section 3 of the old Limitation Act, it was incumbent on the Court to determine whether the Suit was filed within time, even if the plea of limitation had not been taken, when the question had been raised.
Section 3 (1) provided: "3 (1).
Subject to the provision contained in sections 4 to 24 (inclusive), every suit instituted, appeal preferred, and application made after the prescribed period shall be dismissed, although limitation has not been set up as a defence." The correct procedure for the Court to adopt was not only to frame an issue on the question of limitation but to determine whether it was governed by Article 142 or by Article 144 of the Limitation Act.
The trial Court did frame an issue indicating that Article 142 was applicable.
This was issue No. 2 framed as follows: "Whether the suit is within limitation"? The trial Court observed: "It is also.
true that if the suit of the plaintiff is not established to be within limitation, that is to say that, if the possession of the plain tiff is not even within 12 years, the suit must fail as the rights of the plaintiffs would be deemed to have been extinguished by the adverse possession of defendants 1 and 2, or their Predecessor in interest, namely, Kripa Shankar".
All this shows that the trial 'Court was applying Article 142 of the old Limitation Act.
We do not, however, find any finding given by the trial Court on ' the question whether, and, if so when and how, the plaintiff was in actual or constructive pos session of any part of the house.
If Article 142 applied, it meant that the plaintiff had admitted dispossession.
If this was the case, the following finding by the trial Court on the trial of the plaintiff seems to us to be premature: 22 "Now it will be noted that there has not been any partition between the plaintiff on the one hand and the other one third share holder Smt.
Deoka or her successor in interest on the other hand.
Deoka was admittedly a relation of Kripa Shanker and there is nothing unusual if Smt.
Deoka had allowed Kripa Shanker to continue to live in the suit premises under the protection of her 1/3 share.
The consistent Municipal receipts, the litigation with tenants, and over all the title deeds of the plaintiff; they all go to lend support to the plaintiff 's case".
In the first appeal against that judgment, it was again not decided anywhere what Article of the Limitation Act applied to the case.
It appears to us that the appellate Court had also not come to the grips with the real question to be determined.
It said: "It was alleged that Kripa Shanker had taken possession over the house.
The learned counsel for the appellant argued that these documents showed that Kripa Shanker was in possession over the entire house and that Bhagwan Das never obtained actual possession over it and only symbolical possession was delivered to him in this suit, It must be borne in mind that Bhagwan Das was owner to only 2/3rd share and 1/3rd belonged to Mst.
Deoki, who was real aunt of Kripa Shanker, and unless Bhagwan Das had got his share parti tioned, he could not obtain actual possession over any portion of the house and as such only symbolical possession was delivered to him.
The question only is whether he remained in joint possession or not ? It is contended from the side of the appellants that he was not in possession and Kripa Shanker was in adverse possession at least from 1945, and that this suit was filed in 1959, that is after more than 12 years when the defendant appellants had already perfected their title by adverse possession.
This symbolical possession was delivered on 21st of November, 1946.
This suit was filed in 1959 that is more than 12 years after and, therefore, there is force in the contention that it must be proved that Bhagwan Das was in joint possession.
Bhag wan Das was a co sharer along with Mst.
Deoki.
Deoki 's share ultimately came to the defendant appellant in 1957 and as such in 1957 the defendant appellant became co sharer with the plaintiff respondent.
In 1957, 12 years had not passed and even if it is assumed that Bhagwan Das or the plaintiff respondent was not in joint possession, their right had not ceased in 1957.
It was observed by the Supreme Court of India in the case P. Laxmi Reddy vs L. Laxmi Reddy (in 1957 A.I.R. Supreme Court 314), 'the burden of making out ouster is on the person claiming to displace the lawful title Of co heir by his adverse possession '.
" If the plaintiff 's assertion was that the defendants had dispossessed him it did not matter whether the defendants represented a 23 co sharer or not.
In that event, the plaintiff 's case would certainly be deemed to be one in which the assertion of dispossession was there.
In the case before us, it appears that the rights of Kripa Shanker, on the plaintiff 's asser tion that he had been a party to the mortgage, had come to an end by the sale of his rights in the property and deliv ery of possession to the auction purchaser.
His heirs could only be in adverse possession and not holding through Kripa Shanker on the plaintiff 's own assertions.
In fact, they have not claimed to be holding through Kripa Shanker.
In any event, the allegations in the plaint appear to us to amount to an allegation that, by asserting their own owner ship and inducing the tenants not to pay rents to the plain tiff, the defendants had dispossessed the plaintiff.
In such a case, even if a defendant in actual possession could be deemed to be initially a co sharer, the plaintiff would be really asserting that the co sharer had dispossessed or ousted him.
Hence an ouster having been admitted in the plaint, the burden would lie 'upon the plaintiff of proving his Case that the ouster had taken place within twelve years.
On any other view, the distinction between articles 142 and 144 of the former Limitation Act, which is important in this case, would vanish.
In a case between co sharers, Bindhyachal Chand & Ors.
vs Ram Gharib Chand & Ors,(1) a "Full Bench of the Allahabad High Court had examined the difficulties which arise when a co sharer sues another on the allegation that he had been dispossessed.
Sulaiman, C.J., pointed out that article 144 was a residuary article Which applied to suits for posses sion of immovable property which could not fall elsewhere.
As regards the distinction between articles 142 and 144, he observed (at p. 997): "No doubt in many cases the distinction is very fine,and the line of demarcation be tween dispossession and adverse possession is thin.
But, the question in each case is one of burden of proof, and it is incumbent on the plaintiff, when he admits his disposses sion, to establish his possession within twelve years".
He went on to point out (at p. 998): "Ordinarily, the possession of one co owner, who is entitled to joint possession of the whole property, is refer able to his title, and he cannot ask the Court to presumethat his possession was illegal or adverse to the other co owner.
It follows that if one co owner is in actual possession of the joint property, and the other co owner is either absent or is not in actual possession, the latter would still be in constructive possession of his property through his co owner.
There would be prima facie no case, where the possession of one co owner was illegal and was necessarily adverse to that of the other co owner.
The presumption would be that they are both in joint possession.
But, it cannot be denied that one co owner can dispossess another (1)A.I.R.1934 All.
3 240SCI/77 24 co owner and can exercise adverse possession over a joint property.
If, therefore, the plaintiff, a co owner, admitsthat he has been dispossessed and that, at any rate, for a short period prior to the suit, the possession of his co owner was adverse to him, then he cannot fall back on a mere presumption of joint possession in his favour and succeed without showing any other circumstances whatsoever".
The following observations of the learned Chief Justice are also useful (at p. 998): "Personally speaking, I do not think that the plaintiff can by cleverly drafting his plaint evade the burden of proof which article 142 casts upon one who is suing for pos session on the ground of dispossession.
When a plaintiff falsely alleges that he is in possession and wants a relief, to which the owner in possession is entitled, e.g., for partition, injunction, joint possession, etc., and it is found that he was in fact not in possession but had been dispossessed, techni cally speaking, the suit would fail under section 42, Specific Relief Act and would be dismissed on the ground that he had omitted to ask for a consequential relief and had failed to prove his case.
But, a Court may allow him to change his ground and give him a decree for possession, treating his claim as one for recovery of possession on the basis of dispos session, provided he succeeds in showing that his dispossession took place within 12 years".
It seems to us that, in the case now before us, the High Court, on a second appeal to it, also failed to determine the crucial question of actual or even constructive pos session of the plaintiff within twelve years.
It said: "The argument advanced before me is that after the decree in suit No. 57 of 1945 the possession of Kripa Shanker became adverse and, as the suit for partition was not fried with 12 years of the date of the decree, the suit was barred by limitation.
A large number of authorities were cited before me on the point.
It was urged that if a member of an undivided Hindu family sells his undivided share and the alience does not bring a suit for partition and possession over his share within 12 years of the date of the alienation the possession of the alienor and all the other coparceners would be adverse and the suit for partition after the expiry of 12 years from the date of the alienation would be barred by time.
Some of the authorities cited by the learned counsel for the appellant, to which I do not consider it necessary to refer, would seem to support his contention.
Learned counsel for the respondent, however, has cited before me the latest case of the Supreme Court in Manikayala Rao vs Narashnhaswami (AIR The case relied upon by the High Court is distinguishable on two grounds: firstly, it was not a case where the plaintiff, on the pleadings in the plaint could be fairly said to have admitted dispossession 25 or ouster by setting up that the alleged co sharer in possession was denying the rights of the plaintiff; and, secondly, delivery of symbolical possession there was said to have interrupted adverse possession which could, there fore, not be continuously for twelve years.
In the case before us, even if a symbolic delivery of possession to a co sharer could be said to have interrupted any adverse possession, that interruption took place beyond 12 years.
Hence, it was the duty of the plaintiff to have shown by cogent evidence how, by receipt of rent or an admission by the defendants or otherwise, he or his predecessorin interest could be deemed to be in actual or constructive possession as an owner or as a co sharer with the defendants over the house in dispute.
We may observe that the difficulty in deciding the question whether article 142 or article 144, Limitation Act applies to a case which really depends upon an interpreta tion of the pleadings, was sought to be removed in the Limitation Act of 1963 by a more clarified position in article 64 and 65 of Limitation Act of 1963.
The reasons given for this change were: "Article 142 and 144 of the existing Act have given rise to a good deal of confusion with respect to suits for possession by owners of property.
Article 64 as proposed replaces article 142, but is restricted to suit based on possessory title so that an owner of property does not lose his right to the property unless the defendant in possession is able to prove adverse possession".
In other words, in cases governed by the former Limitation Act, at any rate, a plaintiff admitting dispossession, in suits based on title, had to prove that he was in actual or constructive possession within twelve years.
Hence, the change in law.
We do not, however, propose to examine or lay down here the exact position under the amended law of limitation under the act of 1963.
The result is that, in the case before us, the plaintiff had to, prove that he was he actual or constructive posses sion within twelve years.
It would be enough if he estab lishes that he was in constructive possession within twelve years by receipt of rent or otherwise.
There is no finding to that effect given by the High Court or by the Subordinate Court.
We, therefore, allow this appeal, set aside the judg ments and orders of the High Court and of the first appel late Court.
We send the case back to the first appellate Court, which is the final Court of facts, to determine, on the evidence already on record, whether the plaintiff was in actual or constructive possession within twelve years of the filing of the suit.
If the plaintiff can establish that, the suit will have to be decreed.
Otherwise, the suit must fail.
The costs will abide the results.
S.R. Appeal allowed and case remanded.
| IN-Abs | The suit property of one Kalyan Chand in the joint possession of Shital Prasad (son 1/3), Bansidar (great grandson 1/3) and Sheo Shankar Sangamlal and Kripa Shankar (1/9+1/9+1/9 grandsons) was mortgaged by Sheo Shanker, Sangamlal and Bansidhar acting on their own behalf and allegedly on behalf of Kripa Shankar (who was a minor then).
Shital Prasad was not a party to the mortgage.
When the whole house was sold in Court auction on 3 10 1937, in realisation of the mortgage money decreed, one Bhagwandas father of Kailash Chand (Respondent No. 1) purchased the said house and took symbolical possession on 12.9.1938. 'The residential portion of the house was in occupation of Kripa Shankar (Appellant 's husband) and Devika Rani w/o Shital Prasad who established her right to 1/3 share by a decree obtained on 22 1 1941.
Another suit filed by Bhag wandas for a declaration and possession over 2/3 share for ejecting Kripa Shankar was decreed on 27 8 1945, and, again symbolical possession was obtained on 21 11 46 under O.21 r.96 C.P.C. Kripa Shankar died in 1953 leaving behind the appellants Raj Rani (wife) and Kali Charan (son).
Respond ent No. 1 son of the auction purchaser Bhagwan Das filed a suit No. 475/1959 on or about 10 8 1959 for partition and possession over 2/3 share of the portion in addition 'to certain claims of rents illegally collected and the amount of tax unpaid by the appellants.
The plaint allegations were: (i) The auction purchaser has been in possession over 2/3 part of the house with Devika Rani who had 1/3 share in the house; (ii) The defendants had no concern with 2/3 share in the said 'house themselves or through any other person were not in possession or in occupation of any part of the above said house at any time as owners; (iii) The plaintiff was being obstructed in looking after the house and realis ing rents and that the defendant had misled some tenants and realised the rents due to him.
The appellant defendants took the plea (i) the mortgage was not valid as the amount was not borrowed for legal necessity; (ii) Even if the house "had been sold in execution of the mortgage, they have been openly denying the rights of the plaintiff and had been in adverse possession and occupation of the property for more than 12 years so that, even if the plaintiff or his prede cessors had any right, it had been extinguished by the operation of law limitation.
The Trial Court decreed the suit and the first appellate court confirmed it.
The second appeal filed in the High Court was also dismissed.
Allowing the appeal by special leave, the Court, HELD: (1) The High Court in a second appeal and the Subordi nate courts failed to determine the crucial question of actual or even constructive possession of the plaintiff within twelve years and give a finding to that effect.
[24E] (2) The plaintiff had to Drove that he was in actual or constructive possession within twelve years.
It would be enough if he establishes that he was in constructive posses sion within twelve years by receipts of rent or otherwise.
[25F] (3) A decision on the question whether article 142 Limita tion Act applies to a case, really depends upon an interpre tation of the pleadings.
In cases governed by the former Limitation Act, at any rate, a plaintiff admitting dispos session in suits based on title, had to Drove that he was in actual or constructive possession within twelve years.
[25C E] 19 (4) The allegations in the plaint amount to an allega tion that by asserting their ownership and inducing the tenants not to pay rents to the plaintiffs, the defendants had dispossessed the plaintiff.
In such a case, even if a defendant in actual possession could be deemed to be ini tially a co sharer, the plaintiff would be really asserting that the co sharer had dispossessed or ousted him.
Hence an ouster having been admitted in the plaint the burden would lie upon the plaintiff of proving his case that the ouster had taken place within twelve years as article 142 of the old Limitation Act applied to such a case.
In the instant case, even if the symbolic delivery of possession to a co sharer could be said to have interrupted any adverse possession, that interruption took place beyond twelve years [23B C] Bindhyachal.
Chand & Ors.
vs Ram Gharib Chand & Ors.
AIR [1934] All.
referred to.
Manikyala Rao vs Narasimhaswami ; , distin guished.
Appeal allowed and case remanded to first Appellate court to determine whether plaintiff was in possession within the period of limitation.
|
il Appeals Nos. 245 and 202 of 1953.
Appeal under Article 132(1) of the Constitution of India from the judgment and order dated the 27th January 1953 of the Calcutta High Court in Matter No. 139 of 1952.
Ranadeb Chaudhry, Anil Kumar Das Gupta and Sukumar Ghose, for the appellant.
S.M. Bose, Advocate General, ' for West Bengal (B. Sen and P. K. Bose, with him) for the respondent.
December 23.
The Judgment of the Court was delivered by JAGANNADHADAS J.
This is an appeal by leave of the High Court of Calcutta under article 132(1) of the Constitution.
The appellant before us was the 1333 Registrar and Accountant General of the High Court at Calcutta on its Original Side.
He was appointed to the post by the Chief Justice of the High Court on the 4th March, 1948 and confirmed therein on the 15th of November, 1948.
He was dismissed therefrom with effect from the 1st September, 1951, by an order of the Chief Justice dated the 3rd September, 1951.
There were various charges against him and Mr. Justice Das Gupta was deputed by order of the Chief Justice dated the 28th May, 1651, to make an ' enquiry and submit a report.
Mr. Justice Das Gupta made a full enquiry and submitted his report on the 11th August, 1951, in which he exonerated the appellant in respect of some of the charges but found him guilty in respect of the other charges.
The learned Judge expressed his conclusion as follows: "Mr. Bose (the appellant) must be held to be guilty of misconduct and dishonest conduct and (that) he is unfit to hold the office of Registrar of the Original Side of this Court".
The Chief Justice issued to the appellant a notice on the 16th August, 1951, intimating that be agreed with the report after careful consideration thereof and asking him to show cause why he should Dot be dismissed from his post.
The appellant was given a hearing by the Chief Justice on the 31st August, 1951.
The order dated the 3rd September, 1951, of the Chief Justice dismissing the appellant from his office, a copy of which was served on him, runs as follows: "A full and thorough enquiry was held by Mr. Justice K. C. Das Gupta into the charges made against Sri P. K. Bose the Registrar of the Original Side of this Court.
Sri P. K. Bose was represented by eminent Counsel and every opportunity was given to him to meet the charges and put forward his explanation and defence.
The learned Judge however in a full and very carefully considered report found Sri P. K. Bose guilty of serious charges involving moral turpitude and dishonesty and further he was of opinion that Sri P. K. Bose was by reason thereof unfit to hold the said office of Registrar.
I considered this report and the evidence most 1334 anxiously and found myself in entire agreement with the learned Judge.
Sri P. K. Bose was, in my view, clearly guilty of the matter comprised in the charges specified by ' Mr. Justice K. C. Das Gupta.
I considered that prima facie the conduct of Sri P. K. Bose warranted dismissal and I therefore gave him notice under article 311(2) of the Constitution of India to show cause against the action proposed against him, namely, dismissal.
On the 31st august, 1951, Sri P.K. Bose showed cause before me and I heard Sri Sachin Chaudhuri his counsel and Sri P. K. Bose personally.
In all the circumstances this is not a case in which I can properly show any leniency.
Sri P. K. Bose has abused the trust and confidence reposed in him and has been found guilty of serious malpractices and dishonesty.
Conduct such as this of an officer of the status of the Registrar of the Original Side of this Court is unpardonable and must be dealt with severely.
I there fore dismiss Sri P. K. Bose from his office as Registrar of the Original Side of the Court, the dismissal to take effect from the 1st September, 1951.
Let a copy of this order be served on Sri P. K. Bose".
On the 25th January, 1952, the appellant submitted a petition to the Governor of West Bengal for cancellation of the above order.
He received intimation dated the 9th July, 1952, that the "Governor declines to interfere on his behalf".
Thereupon he filed an application to the Chief Justice for review of the prior order of dismissal.
It may be mentioned that it was Chief Justice, Sir Arthur Trevor Harries, who had initiated the proceedings against the appellant and passed the order of dismissal.
He retired in June, 1952.
The application for review was made to the successor Chief Justice, Shri P. B. Chakravarti, on the 11th September, 1952.
This application was rejected on the 16th September, 1952.
Thereafter on the 24th November, 1952, i.e., more than an year after the order of dismissal, a writ application was filed on the Original Side of the High Court under article 226 of the Constitution against the Hon 'ble 1335 the Chief Justice of the High Court "for calling upon him to bring up the records of the proceedings relating to his dismissal in order that justice may be done by quashing or otherwise dealing with the said proceedings and the said order dated the 3rd September, 1951, purporting to terminate his services and for directions being given to the Chief Justice to desist from giving effect to or acting in any manner under the said order".
On the presentation of the application the learned Judge on the Original Side, Mr. Justice Bose, issued a rule nisi calling upon the Hon 'ble the Chief Justice to show cause why an order in the nature of a writ as asked for should not be made.
This order was duly served and on its return the learned Judge made an order referring the hearing of the application to a Special Bench of three Judges as per the rules of the Court.
Accordingly the petition was, under the directions of the Chief Justice, heard by three learned Judges of the High Court, who after elaborate hearing and consideration of the points urged on behalf of the appellant dismissed the application.
Leave to appeal to this Court was, however, granted by them under article 132(1) on the ground that the case involves substantial questions of law relating to interpretation of the Constitution.
The main points that have been urged by the appellant before us, as before the High Court, are that (1)the Chief Justice of the High Court had no power under the law to dismiss him; (2)even if he had the power, he could not delegate the enquiry into the charges, to another Judge but should have enquired into the same himself; and (3)in any case the order of dismissal could not have been passed in the absence of previous consultation with the Public Service Commission of the State as provided under article 320 of the Constitution.
On behalf of the respondent, i.e., the Hon 'ble the Chief Justice of the High Court at Calcutta, the learned Advocate General of West Bengal has 1336 appeared before us.
In addition to controverting the correctness of the above contentions raised on behalf of the appellant, he strongly urged that (1)no writ could issue from the High Court against its own Chief Justice; (2)the order of the Chief Justice, the validity of which is being challenged, is a purely administrative order against which no application for writ is maintainable; and (3)this was not a case in which having regard to all the circumstances, any application by way of a writ should have been entertained.
The points urged on behalf of the appellant may first be taken up.
The most important out of them is the one relating to the authority of the Chief Justice to pass the order of dismissal as against the appellant.
It is beyond dispute that the Chief Justice is the authority for appointing the appellant.
It was in fact the Chief Justice who appointed the appellant and confirmed him.
But it is strongly urged that he had not the power to dismiss.
This argument is based on the assumption that the appellant falls within the category of public servants who are governed by the Civil Services (Classification, Control and Appeal) Rules, (hereinafter referred to as the Civil Services Rules) of the year 1930 as amended from time to time and that the said rules continue to apply, to an officer holding the post which he did, even after the Government of India Act, 1935, and later the Constitution of India of 1950 successively came into force.
I the argument recognises the fact that dismissal is a matter which falls within conditions of service of a public servant as held by the Privy Council in North West Frontier Province vs Suraj Narain Anand(1) and that the power of making rules relating to conditions of service of the staff of the High Courts is vested in the Chief Justice of the Court under section 242(4) taken with section 241 of the Government of India Act, 1935, as also under article 229(2) of the Constitution of India, 1950.
But (1) [1948] L.R. 75 I.A. 843.
1337 it is said that no such rules have been framed by the Chief Justice, and that therefore by virtue of section 276 of the Government of India Act, 1935, and article 313 of the Constitution, the Civil Services Rules continued to apply to him, It is necessary to examine the correctness of these assumptions.
The Civil Services Rules were framed by the Secretary of State in Council under powers vested in him by section 96 B(2) of the Government of India Act, 1915, as amended in 1919.
These rules were framed on the 19th June, 1930, and published on the 21st June, 1930.
It is desirable therefore to consider the position relating to the staff of the High Courts before that date.
It is not disputed that the said position was governed by the Letters Patent of the High Court.
Clause 8 of the Letters Patent of 1865 as amended in 1919, which continues to be operative, as also clause 4 thereof, are relevant for the present purpose.
They are as follows: "8.
We do hereby authorize and empower the Chief Justice of the said High Court of Judicature at Fort William in Bengal, from time to time, as occasion may require, and subject to any rules and restrictions which may be prescribed by the Governor General in Council, to appoint so many and such clerks and other ministerial officers as shall be found necessary for the administration of justice, and the due execution of all the powers and authorities granted and committed to the said High Court by these Our Letters Patent.
And it is Our further will and pleasure and We do hereby for Us, Our heirs and successors give grant, direct, and appoint, that all and every the officers and clerks to be appointed as aforesaid shall have and receive respectively such reasonable salaries as the Chief Justice shall, from time to time, appoint for each office and place respectively, and as the Governor General in Council shall approve of.
Provided always, and it is Our will and pleasure, that all and every the officers and clerks to be appointed as aforesaid shall be resident within the limits of the jurisdiction of the said Court, so long as they shall hold their respective offices; but 1338 this proviso shall not interfere with or prejudice the right of any officer or clerk to avail himself of leave of absence under any rules prescribed by the Governor General in Council, and to absent himself from the said limits during the term of such leave, in accordance with the said rules".
We do hereby appoint and ordain, that every clerk and ministerial officer of the said High Court of Judicature at Fort William in Bengal, appointed by virtue of the said Letters Patent of the Fourteenth of May, One thousand eight hundred and sixty two, shall continue to hold and enjoy his office and employment, with the salary thereunto annexed, until he be removed from such office and employment; and he shall be subject to the like power of removal, regulations, and provisions if he were appointed by virtue of these Letters Patent".
It will be noticed that clause 8 specifically vests in the Chief Justice the power of appointment, but makes no mention of the power of removal or of making regulations or provisions.
But it is obvious from the last portion of clause 4 that such power was taken to be implicit under clause 8 and presumably as arising from the power of appointment.
It may be mentioned that under clause 10 of the Charter of the Supreme Court of Calcutta issued in 1774, the said Court also was in specific terms "authorized and empowered from time to time, as occasion may require, to appoint so many and such clerks and other ministerial officers as shall be found necessary for the administration of justice".
The power of removal or of taking other disciplinary action as regards such appointees was not in terms granted.
But there is historical evidence to show that the power of appointment conferred under the Charter was always understood as comprising the above powers.
Sir Charles Wood, the then Secretary of State for India in paragraph 10 of his dispatch to the Governor General dated the 17th May, 1862, (on the formation of the new High Courts) stated as follows: "The Supreme Court exercises an authority entirely independent of the Government in respect of 1339 its ministerial officers".
It is this power and authority along with other judicial power and authority that was succeeded to by the High Courts (on their formation in supersession of the Supreme and Sadar Courts) by virtue of section 9 of the Indian High Courts Act, in the following terms.
"Each of the High Courts to be established under the Act shall have and exercise all jurisdiction and every power and authority whatsoever in any manner vested in any of the Courts . . . abolished under this Act . . " Thus it is clear that both under the Charter of the Supreme Court as well as under the Letters Patent of the High Court, the power of appointment was throughout understood as vesting in the High Court or the Chief Justice, the complete administrative and disciplinary control over its staff, including the power of dismissal.
There can be no doubt that this position continued at least until the Government of India Act, 1915.
Now, section 106 of the Government of India Act, 1915, in terms continued the above by providing that the jurisdiction of the High Court would "include all such powers and authority over and in relation to the administration of justice including power to appoint clerks and other ministerial officers of the Court as are vested in them by Letters Patent".
It follows that the position continued to be the same even under the Government of India Act, 1915, at any rate up to 1930, when the Civil Services Rules came into operation.
All the powers under the Letters Patent were, however, subject to alteration by competent legislative authority by virtue of clause 44 of the Letters Patent.
Clause 8 of the Letters Patent itself provided that the power of appointment of the Chief Justice was to be "subject to rules and restrictions which may be prescribed by the Governor General in Council".
Now, the Civil Services Rules were made by the Secretary of State in Council under section 96 B of the Government of India Act, 1915.
It is the case of the appellant that though the 169 1340 Civil Services Rules framed by virtue of delegated power under the Act could not override the specific power of appointment vested in the Chief Justice by virtue of section 106 thereof, they would override the alleged implications of that power such as the power of dismissal and power to frame rules relating to conditions of service in so far as they are specifically provided for under the Civil Services Rules.
It is further urged that the said situation continues up to date by virtue of section 276 of the Government of India Act, 1935 and article 313 of the Constitution, Now, the appellant is a person who was appointed in 1948 and dismissed in 1951.
It is, therefore, desirable in the first instance to examine the situation under the Government of India Act, 1935 and under the Constitution of 1950 on the assumption that the Civil Services Rules made a change in the prior situation so far as the High Court staff is concerned and applied thereto between 1930 and 1935.
Under the Government of India Act, 1935, the position relating to the Civil Services of the Crown in India is contained in a number of general provisions in Chapter 11 of Part X thereof Section 240(1) reiterates what was first statutorily declared by section 96 B of the 1915 Act, viz., that except as expressly provided by the Act every, person who is a member of a civil service of the Crown in India, or holds any civil post under the Crown in India, holds office during His Majesty 's pleasure.
Section 241 provides for the recruitment and conditions of service of such persons and prescribes the various authorities who can make the appointments and frame the rules relating to conditions of service.
Section 242(4), in so far as it is relevant for the present purpose, provides that section 241 in its application to appointments to and to persons serving on the staff attached to a High Court shall have effect as if, in the case of a High Court, for any reference to the Governor in paragraph (b) of section (1), in paragraph (a) of sub section (2) and in sub section (5), there was substituted a reference to the Chief Justice of the Court.
Making the necessary substitutions as prescribed 1341 above, the statutory provisions in the Government of India Act, 1935, relating to recruitment and conditions of service of the staff of the High Court may be read as follows: "(1) Appointments to the Civil Services and civil posts under the Crown in India in relation to the staff attached to the High Court shall be made by the Chief Justice or such person as he may direct.
(2)The conditions of service of persons serving.
His Majesty in relation to the staff attached to the High Court shall be made by the Chief Justice of the High Court or by some person or persons authorised by him to make the rules for the purpose.
Provided that (a)the Governor may in his discretion require that in such cases as he may in his discretion direct no person not already attached to the court shall be appointed to any office connected with the Court save after consultation with the Provincial Public Service Commission; (b)rules made under sub section (2) by a Chief Justice shall,, so far as they relate to salaries, allowances, leave or pensions, require the approval of the Governor".
These sections, while keeping intact the power of ap pointment of the members of the staff of the High Court with the Chief Justice as contained in the Letters Patent, provide, statutorily for the first time and in express terms what was implicit in clause 8 of the Letters Patent, viz., that the power to regulate and frame rules relating to conditions of service governing such staff is also vested in the Chief Justice subject however to two limitations indicated by the provisos mentioned above.
The corresponding provisions in the present Constitution relating to the powers of the Chief Justice in relation to the recruitment and service conditions of the staff of the High Court are almost identical and are contained in article 229.
They are as follows: "229.
(1) Appointments of officers and servants of a High Court shall be made by the Chief Justice of 1342 the Court or such other Judge or officer of the Court as he may direct: Provided that the Governor of the State in which the High Court has its principal seat may by rule require that in such cases as may be specified in the rule no person not already attached to the Court shall be appointed to any office connected with the Court save after consultation with the State Public Service Commission.
(2)Subject to the provisions of any law made by the Legislature of the State, the conditions of service of officers and servants of a High Court shall be such as may be prescribed by rules made by the Chief Justice of the Court or by some other Judge or officer of the Court authorised by the Chief Justice to make rules for the purpose: Provided that the rules made under this clause, shall, so far as they relate to salaries, allowances, leave or pensions, require the approval of the Governor of the State in which the Court has its principal seat".
It does not appear from the record that any rules have been made by the Chief Justice of the Calcutta High Court, at any rate, in so far as they may be applicable to the Registrar of the Original Side of the High Court.
On the assumption, therefore, that the Civil Services Rules applied to the case of a person in his position between 1930 and 1935, it has got to be seen whether they continue to be so applicable.
The relevant provisions in this behalf are section 276 of the Government of India Act, 1935, and article 313 of the Constitution.
They are as follows: "Section 276: Until other provision is made under the appropriate provisions of this Part of this Act, any rules made under the Government of India Act relating to the Civil Services of, or civil posts under, the Crown in India which were in force immediately before the commencement of Part III of this Act, shall, notwithstanding the repeal of that Act, continue in force so far as consistent with this Act, and shall be deemed to be rules made under the appropriate provisions of this Act".
1343 "Article 313: Until other provision is made in this behalf under this Constitution, all the laws in force immediately before the commencement of this Constitution and applicable to any public service or any post which continues to exist after the commencement of this Constitution, as an all India service or as service or post under the Union or a State shall continue in force so far as consistent with the provi sions of this Constitution".
Now, it has to be observed that the continuance, under section 276 of the Government of India Act, 1935, of the Civil Services Rules, could only be in so far as such continuance may be consistent with the new Act.
Further in their application to the High Court staff, the rules are to be deemed to be rules made under the appropriate provisions of the Act.
The rules, therefore, must be deemed to be rules made by the Chief Justice consistently with the scheme and the provisions of the Act relating to the High Court staff which specifically vest in him the powers of appointment and of the regulation of conditions of service including the power of dismissal.
Such continuance, therefore, can only operate by a process of adaptation implicitly Authorised by the very terms of section 276.
It would follow that, in their continued application to the High Court staff, the word "Governor" has to be read as substituted by the word "Chief Justice" wherever necessary in the same way as section 242(4) of the Act requires the provisions of section 241 to be read as though any reference to the Governor therein is substituted by a reference to the Chief Justice of the High Court.
The continued application of the Civil Services Rules without such adaptation would result in the anomalous position, that although the 1935 Act specifically vests in the Chief Justice the power of appointment and of framing rules regulating conditions of service including the power of dismissal and hence thereby indicates the Chief Justice as the authority having the power to exercise disciplinary control, be has no such disciplinary control merely because he did not choose to make any fresh rules and was content with the continued appli 1344 cation of the old rules.
Now, the relevant provision in the Civil Services Rules which deals with disciplinary action including dismissal is rule 52 thereof.
That rule shows that "the Governor General in Council or Local Government of a Governor 's Province may impose any of the penalties specified in rule 49 (which includes dismissal) on any person included in any of the classes I to 5 specified in rule 14 who is serving under the administrative control of the Governor General in Council or the Local Government, as the case may be".
This rule, if it originally applied to the High Court staff, must after 1935 be read by substituting "Chief Justice" in the place of "the Local Government" wherever it occurs therein and making other consequential alterations.
Thus read, there can be no doubt that as from the commencement of the Government of India Act, 1935, the power of dismissal of a member of the High Court staff including, a person in the position of the appellant, Would vest in the Chief Justice.
This would be so even apart from the normal implication of the power of appointment specifically recognised under the Act.
It follows that even on the assumption that Civil Services Rules applied between 1930 and 1935 to the High Court staff their continuance after 1935 makes a change in the dismissing authority and the power of dismissal is vested in the Chief Justice.
That being the correct position prior to 1950, the Constitution has made no change in this respect and article 313 would also continue rule 52 of the Civil Services Rules as above adapted.
It would, therefore, follow that, at any rate, from the time of passing of the Government of India Act, 1935, as also under the Constitu tion, the power of dismissal vests in the Chief Justice notwithstanding that no specific rules have been made in this behalf by the Chief Justice.
It must be mentioned, at this stage, that so far as the power of dismissal is concerned, the position under the Constitution of 1950 is not open to any argument or doubt.
Article 229(1) which in terms vests the power of appointment in the Chief Justice is equally effective to vest in him the power of dis 1345 missal.
This results from section 16 of the General Clauses Act which by virtue of article 367(1) of the Constitution applies to the construction of the word "appointment" in article 229(1).
Section 16 of the General Clauses Act clearly provides that the power of "appointment" includes the power "to suspend or dismiss".
In view of the clear conclusion we have arrived at as above, we do not consider it necessary to deal with the arguments addressed to us on both sides as to the applicability or otherwise of the Civil Services Rules to the High Court staff, including a person in the position of the appellant, and we express no opinion thereon.
The main contention, therefore, of the appellant as to the competency of the Chief Justice to pass the order of dismissal against him fails.
The further subordinate objections that have been raised remain to be considered.
The first objection that has been urged is that even if the Chief Justice had the power to dismiss, he was not, in exercise of that power, competent to delegate to another Judge the enquiry into the charges but should have made the enquiry himself.
This contention proceeds on a misapprehension of the nature of the power.
As pointed out in Barnard vs National Dock Labour Board(1) at page 40, it is true that "no judicial tribunal can delegate its functions unless it is enabled to do so expressly or by necessary implication".
But the exercise of the power to appoint or dismiss an officer is the exercise not of a judicial power but of an administrative power.
It is nonetheless so, by reason of the fact that an opportunity to show cause and an enquiry simulating judicial standards have to precede the exercise thereof It is well recognised that a statutory functionary exercising such a power cannot be said to have delegated his functions merely by deputing a responsible and competent official to enquire and report.
That is the ordinary mode of exercise of any administrative power.
What cannot be delegated except where the law specifically so provides is the ultimate responsibility for the exercise (1) ; , 40.
1846 of such power.
As pointed out by the House of Lords in Board of Education vs Rice(1), a functionary who has to decide an administrative matter, of the nature involved in this case, can obtain the material on which he is to act in such manner as may be feasible and convenient, provided only the affected party "has a fair opportunity to correct or contradict any relevant and prejudicial material".
The following passage from the speech of Lord Chancellor in Local Government Board V. Arlidge (2) is apposite and in structive.
"My Lords, I concur in this view of the position of an administrative body to which the decision of a question in dispute between parties has been entrusted.
The result of its enquiry must, as I have said, be taken, in the absence of directions in the statute to the contrary, to be intended to be reached by its ordinary procedure.
In the case of the Local Government Board it is not doubtful what this pro cedure is.
The Minister at the head of the Board is directly responsible to Parliament like other Ministers.
He is responsible not only for what he himself does but for all that is done in his department.
The volume of work entrusted to him is very great and he cannot do the great bulk of it himself.
He is expected to obtain his materials vicariously through his officials, and he has discharged his duty if he sees that they obtain these materials for him properly.
To try to extend his duty beyond this and to insist that he and other members of the Board should do everything personally would be to impair his efficiency.
Unlike a Judge in a Court he is not only at liberty but is compelled to rely on the assistance of his staff".
In view of the above clear statement of the law the objection to the validity of the dismissal on the ground that the delegation of the enquiry amounts to the delegation of the power itself is without any substance and must be rejected.
The second objection that has been taken is that even if the power of dismissal is vested in the Chief Justice, the appellant was entitled to the protection (1) , 182.
(2) ,133. 1347 of article 320(3)(c) of the Constitution.
It is urged that the dismissal in the absence of consultation with the Public Service Commission of the State was invalid.
There can be no doubt that members of the staff in other Government departments of the Union or the State are normally entitled to the protection of the three constitutional safeguards provided in articles 311(1), 311(2) and 320(3) (c).
Article 320(3) (e) so far as it is relevant for the present purpose, runs as follows: "The Union Public Service Commission or the State Public Service Commission, as the case may be, shall be consulted on all disciplinary matters affecting a person serving under the Government of India or the Government of a State in a civil capacity, including memorials or petitions relating to such matters".
The phrase "all disciplinary matters affecting a person" is sufficiently comprehensive to include any kind of disciplinary action proposed to be taken in respect of a particular person.
The question for consideration, therefore, is whether a person belonging to the staff of a High Court is within the scope of the phrase (Ca person serving under the Government of India or the Government of a State in a civil capacity".
The learned Judges of the High Court were of the opinion that article 320(3) can have no application to the present case.
In their view the provisions of article 320(3) would be inconsistent with the power vested in the Chief Justice of a High Court under article 229, as regards the appointment of officers and ser vants of a High Court and hence also of dismissal or removal and as regards the framing of rules prescribing conditions of service of such officers or servants.
They also point out that the proviso to article 229(1) indicates the requirement that the State Public Service Commission should be consulted only in respect of the specific cases of future appointments and that too if the Governor of the State so requires by rule.
They take this and the fact that under the Constitution the provisions relating to High Court staff are taken out of Part XIV relating to the services, as imply 170 1348 ing, that in the exercise of the powers vested in the Chief Justice under article 229, consultation with the State Public Service Commission in respect of any other matter must be taken to have been excluded.
This reasoning is not without force.
Undoubtedly there is much to be said for the view that article 320(3) taken as a whole is inconsistent with article 229.
But it is possible to treat the requirement of prior consultation under article 320(3) (c) which relates to disciplinary action against individual Government employees and which is in the nature of an important constitutional safeguard for individual government employees as standing on a somewhat different footing from that under article 320(3) (a) or (b), which relate to general matters relating to recruitments, appointments, etc.
Prior consultation in respect of individual cases may not be considered necessarily inconsistent with the actual exercise of the overriding power of the Chief Justice in such cases.
While, therefore, recognising the force of the view taken by the High Court, it appears desirable to consider the requirement under article 320(3)(c) taken by itself with reference to the actual terms thereof, in view of the importance of this provision as a constitutional safeguard in cases to which it applies.
A scrutiny of the provisions in Chapter I of Part XIV of the Constitution relating to the services shows that the various articles in this Chapter designate the services to which the articles relate by a variety of terminology.
Under article 309, the appropriate Legislature is vested with the power to regulate recruitment and conditions of service "of persons appointed to public services and posts in connection with the affairs of the Union or of any State".
Under article 310 "every person who is a member of a civil service of the Union or holds any civil, post under a State" holds office during the pleasure of the President or, as the case may be, of the Governor or of the Rajpramukh of the State.
Under article 311 the two constitutional safeguards, viz., (1) of not being liable to be dismissed or removed or reduced in rank until he has been given a reasonable opportunity 1349 of showing cause against the action proposed to be taken in regard to him, and (2) of not being liable to be dismissed or removed by ail authority subordinate to that by which he was appointed, are available to "a person who is a member of a civil service of the Union or of a civil service of a State, or holds a civil post under the Union or a State".
Under article 320(3)(c) however, the requirement of con sultation with the appropriate Public Service Commission on disciplinary matters is available to "a person serving under the Government of India or the Government of a State in a civil capacity".
A close scrutiny of the terminology so used shows a marked departure in the language of article 320 (3) (c) from that in articles 310 and 311.
Officers and members of the staff attached to a High Court clearly fall within the scope of the phrase "persons appointed to public services and posts in connection with the affairs of the State" and also of the phrase "a person who is a member of a civil service of a State" as used in articles 3lO and 311.
The salaries of these persons are paid out of the State funds as appears from article 229(3) which provides that the administrative expenses of a High Court including all salaries, allowances and pensions payable to or in respect of officers and servants of the High Court, are chargeable upon the Consolidated Fund of a State.
The item relating to such administrative expenses has to form part of the annual financial statement to be presented to the State Legislative Assembly under article 202 and estimates thereof can form the subject matter of the discussion in the Legislature under article 203(1).
They must, therefore, be taken "to hold posts in connection with the affairs of the State and to be members of the civil service of the State".
But can it be said that members of the High Court staff are "persons serving under the Government of a State in a civil capacity" which is the phrase used in article 320(3) (c).
The use of different terminology in the various articles was not likely to have been accidental.
It is to be noticed that even article 320 in its various clauses uses different phrases.
Article 320(1) refers to "appoint 1350 ments to the services of the Union and the services of the State" and the proviso to article 320(3) refers to "services and posts in connection with the affairs of the Union and to services and posts in connection with the affairs of the State".
It appears, therefore, not unlikely that in using somewhat different phraseology, the intention was to demarcate the staff of the High Courts from the other civil services of the Union or the State.
The phrase "persons serving under the Government of India or the Government of a State" seems to have reference to such persons in respect of whom the administrative control is vested in the respective executive Governments functioning in the name of the President or of the Governor or of a Rajpramukh.
The officers and staff of the High Court cannot be said to fall within the scope of the above phrase because in respect of them the administrative control is clearly vested in the Chief Justice, who under the Constitution, has the power of appointment and removal and of making rules for the con ditions of services.
Articles 53, 77, 154 and 166 of the Constitution show that while the executive power of the Union or the State is vested, respectively, in the President or the Governor and that executive action is to be taken in their respective names, such action is the action of the Government of India or the Government of a State.
But the administrative action of the Chief Justice is outside the scope of these articles.
It appears therefore that in using the phrase "Government of India and Government of a State" in article 320(3) (c), the Constitution had in view the above mentioned demarcation.
A close comparison of the terminology used in the corresponding provisions of the Government of India Act of 1935 also seems to confirm this demarcation.
Section 290 (1) of the said Act refers to "every person who is a member of a civil service of the Crown in India or holds any civil post under the Crown in India" while section 266(3)(c) relates to "a person serving His Majesty in a civil capacity in India".
A perusal of the main paragraph of sub section (3) of section 266 clearly shows that it has reference to three cate 1351 gories of services (1) Secretary of States services, (2) Federal services under the Governor General, and (3) Provincial Services under the Governor.
In the context of this section, the comprehensive phrase "serving His Majesty" seems to have been used as comprising only the above three services and should be exclusive of the staff of the High Court.
The fact that different phrases have been used in the relevant sections of the Government of India Act and the Constitution,,, relating to the constitutional safeguards in this behalf appears to be meant to emphasise the differentiation of the services of the High Court from other services, and to place the matter beyond any doubt as regards the non applicability thereto of this constitutional protection.
It may be noticed that while the constitutional safeguards under article 311 are available to every person in the civil service, the safeguard in article 320(3)(c) is one capable of being taken away by regulations to be made by the President or Governor.
The Constitution itself appears, therefore, to have classed this safeguard on a different footing.
This may well have been intended not to apply to the High Courts.
Therefore both on the ground that article 320(3)(c) would be contrary to the implication of article 229 and on the ground that the language thereof is not applicable to the High Court staff, we are of the opinion that for the dismissal of the appellant by the Chief Justice, prior consultation with the Public Service Commission was not necessary.
We accordingly hold that the appellant was not entitled to the protection under article 320(3)(c).
It follows that none of the three contentions raised on behalf of the appellant, i.e., (1) as to the power of the Chief Justice to dismiss him, (2) as to his competence to delegate the enquiry to Mr. Justice Das Gupta, and (3) as to his obligation to consult the State Public Service Commission, have been substantiated.
This application must accordingly fail on the merits.
This would be enough to dispose of the case against the appellant.
The learned Judges of the High Court have also dealt at some length with the question as 1352 to the maintainability of an application for a writ in a case of this kind and of the availability of any remedy by way of a writ against the action of the Chief Justice, whether administrative or judicial.
Arguments in this behalf have also been strongly urged before us by the learned Advocate General of West Bengal.
In the view, however, that we have taken as to the contentions raised before us regarding the validity of the order of dismissal, we do not feel called upon to enter into the discussion relating to the availability of the writ.
We express no opinion on the questions so raised.
We consider it, however, desirable to say that our view that the exercise of power of dismissal of a civil servant is the exercise of administrative power may not necessarily preclude the availability of remedy under article 226 of the Constitution in an appropriate case.
That is a question on which we express no opinion one way or the other in this case.
In the result the appeal must be dismissed with costs.
Along with this appeal, the appellant filed an application to this Court for leave under article 136 to appeal against the orders dated the 3rd September, 1951, and 16th September, 1952, dismissing him from service and declining to review it.
In view of our judgment just delivered, that application must also be rejected.
| IN-Abs | The appellant was appointed in March 1948 by the Chief Justice of the Calcutta High Court as Registrar and Accountant General of the High Court on its original side and confirmed therein in November 1948.
He was dismissed from that post with effect from 1st September 1951 by the Chief Justice by his order dated 3rd September 1951.
There were various charges against the appellant and Mr. Justice Das Gupta was deputed by the Chief Justice to make an enquiry and submit a report.
Mr. Justice Das Gupta made a full enquiry and submitted a report in which he exonerated the appellant in respect of some of the charges but found him guilty in respect of other charges.
His conclusion was that the appellant must be held guilty of misconduct and dishonest conduct and that he was unfit to hold the office of Registrar of the Original Side of the Calcutta High Court.
The Chief Justice issued notice to the appellant intimating that he agreed with the report and asked him to show cause why he should not be dismissed from his post.
After be was given an opportunity to show cause, the appellant was dismissed by an order of the Chief Justice.
The appellant 's petition to the Governor for the cancellation of the above order was dismissed.
Subsequently his application for review to the Chief Justice of the prior order of dismissal and a writ petition under article 226 of the Constitution filed in the High Court in respect of his dismissal were also dismissed one after the other.
The appellant obtained leave to appeal to the Supreme Court.
The three main points for consideration by the Supreme Court were: 1.
Whether the Chief Justice of the High Court had no power to dismiss the appellant; 2.
Even if the Chief Justice had such power whether be could not delegate the enquiry into the charges to another Judge but should have made the enquiry himself; and 168 1332 3.
Whether the order of dismissal by the Chief Justice could have been passed without previous consultation with the Public Services Commission as provided by article 320 of the Constitution.
Held (1) that the Chief Justice was competent to dismiss the appellant because both by virtue of the provisions of clause 8 of the Letters Patent of the Calcutta High Court read with clause 4 of the same as well as articles 229(1), 313 and 367(1) of the Constitution read with section 16 of the General Clauses Act, the power of appointment includes the power of dismissal; (2) the objection to the validity of dismissal on the ground that the delegation of enquiry amounted to a delegation of power is without substance because the exercise of power to appoint or dismiss an officer is the exercise not of a judicial power but of an administrative power and it is well settled that a statutory functionary exercising such a power cannot be said to have delegated his function merely because he has deputed a responsible and competent official to enquire and report; and (3) it was not necessary to have the previous consultation with the Public Service Commission for the dismissal of the appellant by the Chief Justice because article 320(3) of the Constitution taken as a whole is inconsistent with article 229 of the Constitution and also because the language thereof is not applicable to the High Court Staff.
North West Frontier Province vs Suraj Narain Anand ([1948] L.R. 75 I.A. 343), Barnard vs National Dock Labour Board, ([1953] 2 Q.B. 18, 40), Board of Education vs Bice ([1911] A.C. 179), and Local Government Board vs Arlidge ([1915] A.C. 120), referred to.
|
iminal Appeal Nos.
216 218 of 1976.
Appeals by Special Leave from the Judgments and Orders dated the 12 2 1975, 17 2 1975 and 8 7 1975 in Crl.
Revision Petitions Nos. 383, 294/74 and Crl.
Petition No. 570/75 respectively and CRIMINAL APPEAL Nos.
204/76, 32/78 AND 307/77 Appeals by Special Leave from the Judgments and Order dated the 15 7 1975, 12/13 11 1975 and 18 11 1975 in Crl.
Appln.
No. 678/75, Crl.
Appeal No. 311/74 and Crl.
A. No. 325/74 respectively and 823 CRIMINAL APPEAL Nos.
278/76, 408 410/77, 429, 372/77, 33 36/78.
Appeals by Special Leave from the Judgments and Order dated the 19 4 1976, 24 12 76, 7 12 76, 17 1 77, 30 11 76, 22 11 76, 19 5 76, 8 2 77 in Crl.
Revision No. 53/75, 294/74, 258/76, 1707/ 76, 86/76, 212/76, 82/75; 231/76 and 1603/76 & 239/76 respectively.
section V. Gupte, Attorney General of India (In C.A. 216), K. R. Nambiar for the Appellant in C.As. 216 and 217/76.
N. Sudhakaran for Appellant in Crl.
A. 218/76.
V. section Desai, (in CA. 204), H. R. Khanna and M. N. Shroff for the Appellant in Crl.
A. 204/76, 307/77 and 32/78.
section V. Gupte, Attorney General of India (In CA. 278), B. P. Maheshwari, N. K. Jain, Suresh Sethi and Randhir Jain for the Appellant in Crl.
A.278/76, 408 410, 429, 372 of 1977 and 33 36 of 1978.
D.Mukherjee and section K. Sabharwal for Respondent in Crl.
A. 34/78.
A.S. Nambiar for Respondent in Crl.
A. 216/76.
M. C. Bhandare, B. P. Singh and A. K. Srivastava for Respondent No. 1 in Crl.
A No., 278/76.
Vepa Sarathy and P. K. Pillai fort Respondent No. 1 in Crl.
A.35/ 78.
Veena Devi Khanna and V. N. Ganpule for Respondent No. 1 in Crl.
A. No. 36/78.
D. P. Mukherjee for Intervener in Cr.
A. No. 278.
Ganatra (V. B.), 1.
N. Shroff and H. section Parihar, for the Intervener in Crl.
A. No. 204 and R. 1 in Crl.
A. No. 307.
The Judgment of the Court was delivered by UNTWALIA J.
.
In these appeals by special leave the common and important question of law which falls for our determination is whether the non compliance with the requirement of Rule 22 of the Prevention of Food Adulteration Rules, 1955 hereinafter called the Rules, framed under The hereinafter to be referred to as the Act, vitiates the trial or the conviction recorded under section 16(1)(a)(i) of the Act.
In Rajal Das Guru Nanal Pamanant vs The States of Maharashtra(1) the conviction of the appellant was set aside on the ground : "The Public Analyst did not have the quantities mentioned in the Rules for analysis,.
The appellant rightly contends that non compliance with the quantity to be supplied caused not only infraction of the provisions but also injustice.
The quantities mentioned are required for correct analysis.
Shortage in quantity for analysis is not permitted by the Statute.
" This larger Bench was constituted for examining the correctness of the above view.
(1) [1975] 2S.C.R.886 =A.I.R. 1975 S.C. 189.
824 We shall, at the outset, notice the scheme of the Act with reference to the relevant provisions of the Act and the Rules.
The Act was very substantially amended by Act 34 of 1976.
We will however, for the purpose of these appeals be referring to die pro.visions of the Act as they stood before the said amendment.
When an article of food shall be deemed to be adulterated has been mentioned and defined in section 2 (i) of the Act.
It is not seriously in dispute in any of these appeals that the articles of food sold to the Food Inspectors by the dealers were found to be adulterated within the meaning of one or the other sub clause of clause (i) of section 2 of the Act.
Of course, the type and extent of adulteration did vary.
In some cases it was of a serious nature in others it was of a technical nature and in some it was as a result of misunderstanding as to nature of the article sold, as for example, whether it was Vanaspati or Ghee.
As usual, according to clause (xii) the word "prescribed" in the Act means prescribed by rules made under the Act.
Clause (xiv) defines the "sample" to mean ."a sample of any article of food taken under the provisions of this Act or of any rules made thereunder.
" A Central Committee for food standards has been constituted by the Central Government in accordance with section 3 to advise on matters arising out of the administration of the Act and to carry out the other functions assigned to it.
Section 7 provides that no person shall manufacture for sale, store, sell or distribute any adulterated food.
Public Analysts are appointed under section 8.
Food Inspec tors appointed under section 9 have been conferred the powers enumerated in section 10.
A Food Inspector has got power to take a sample of any article of food from any person selling such article under section 10(1) (a) (i) and to send such sample for analysis to the Public Analyst for the local area within which such sample has been taken as provided for in clause (b).
The procedure to be followed by Food.
Inspectors is provided for in section 11.
Under sub section (1), Food Inspector taking a sample of food for analysis has to give notice.
to the person from whom he has taken the sample, separate the sample then and there into three parts, mark and seal or fasten up each part in such a manner as its nature permits, deliver one of the parts to the person from whom the sample has been taken, send another part for analysis to the Public Analyst and retain the third part for production in any legal proceedings or for analysis by the Director of the Central Food Laboratory.
Sub section (2) says : "If the person from whom the sample has been taken.
declines to accept one of the parts, the food inspector shall send intimation to the public analyst of such refusal and thereupon the public analyst receiving a sample for analysis shall divide it into two parts and shall seal or fasten up one of those parts and shall cause it, either upon receipt of the sample or when he delivers his report, to be delivered to the food inspector who shall retain it for production in case legal proceedings are taken.
" Now sub section (3) should also be to read as a whole.
825 "When a sample of any article of food is taken under sub section (1) or sub section (2) of section 10, the food inspector shall send a sample of it in accordance with the rules prescribed for sampling to the public analyst for the local area concerned.
" Any purchaser of any article of food other than a food inspector can also get the food purchased by him analysed in accordance with section 12.
Section 13 deals with the report of the Public Analyst and makes it, in certain cases, subject to the over riding effect of the report of the Director of the Central Food Laboratory.
Sub section (5) of section 13 says that any document purporting to be a report signed by a public analyst, unless it has been superseded under subsection (3) by a certificate of the Director of the Central Food Laboratory, may be used as evidence of the facts stated therein in any proceeding under the Act.
It shall be final and conclusive evidence of the facts, stated therein.
Of course, if necessary, the Public Analyst can be called as a witness, in accordance with the Code of Criminal Procedure, to depose about certain facts in relation to his report either at the instance of the prosecution or the accused.
Even the Court may summon him as its witness if the justice of the case so requires.
And until and unless the report of the Public Analyst is demolished, shaken or becomes doubtful, it is final and conclusive evidence of the facts stated therein.
A person can be convicted under section 16 (1 ) (a) (i) merely on the basis of the report of the Public Analyst.
His report, therefore, has got a great sanctity for protecting the general public and their health against use and consumption of adulterated food.
On the other hand, it has great significance and importance for the protection of a citizen as he can be convicted under the Act only on its basis.
Amongst the Rules, the relevant ones for our purpose are Rules 14 to 22A contained in Chapter V the heading of which is "Sealing, Fastening and Despatch of Samples.
" The manner of sending sample for analysis is provided in Rule 14 and the method of labelling and addressing the bottles or containers is to be found in Rule 15.
Rule 16 deals with the manner of packing and sealing the samples.
How a container of a sample is to be sent to the Public Analyst is mentioned in Rule 17.
The precaution of sending the memorandum and impression of seal is provided for in Rule 18.
Rules 19, 20 and 21 deal with preservatives to be added to certain types, of samples.
The important Rule 22 with which we are mainly concerned in these appeals specifies the quantity of sample to be sent to the Public Analyst and says "The quantity of sample of food to be sent to the Public Analyst or Director for analysis shall be as specified below.
" Items 1 to 22 _gives a list of various articles of food.
The residuary item is 23 which includes all foods not specified in items 1 to 22.
In the last column of this list as against the quantity to be supplied,the heading is "Approximate quantity to be supplied.
" The first question which was mooted before us was whether Rule of the Rules is directory or mandatory.
Attention of the Bench deciding Pamanani 's case (supra) was not called to this aspect of the 826 matter.
It seems to have been assumed, however, that the Rule is mandatory.
Rules of interpretation for determining whether a particular provision is directory or mandatory are well known.
Even in regard to Rule 22, many High Courts of India had taken the view that the Rule was directory or recommendatory as the use of the word approximate ' in one of the columns of the Rule indicates.
The object of the Rule, according to the said decisions, was to secure evidence as to whether the article of food sold was adulterated or not.
If the quantity sent by the Food Inspector to the Public Analyst was sufficient for analysis and caused no prejudice to the accused, then the mere fact of his sending a lesser quantity than that prescribed could not vitiate the evidentiary value of the report of the Public Analyst of the conviction based thereupon; vide State of Bombay vs Ramanlal Jamnadas Gandhi(1); Nagar Swatha Adhikari, Nagar Mahapalika, Agra vs Ant Ram(2) Public Prosecutor vs Basheer Sahib(3); Public Prosecutor, Andhra Pradesh vs Pasara Rama Rao(4); Public Prosecutor vs Ediga Venkata Swami(5); Food Inspector, Quilon vs Koyakutty(6) and Food Inspector, Calicut vs T. Karunakaran & others.
(7 ) No decision of any High Court taking a contrary view was brought to our notice.
In the Bombay decision mentioned above, it was also observed, and rightly, that, whether the Rule is recommendatory or mandatory, it should be observed by the Food Inspectors concerned.
We may add that the decisions of the Courts holding that the Rule is merely directory and if the quantity sent by the Food Inspector is sufficient for the purpose of analysis, the report of the Public Analyst should not be thrown out merely on the ground of the breach of the Rule, are not meant to give a charter or a licence to the Food Inspectors for violating ' the Rule.
They must remember that even directory Rules are meant to be observed and substantially complied with.
A Food Inspector committing a breach of the Rule may be departmentally answerable to the higher authorities.
He should, therefore, always be cautious in complying with the Rules as far as possible and should not send a lesser quantity of sample than prescribed to the Public Analyst unless there be a sufficient reason for doing so.
In the eleventh edition of the well known treatise, Maxwell on Interpretation of Statutes.
are to be found at page 362 onwards certain guidelines laid down for determining whether a particular Statute or Statutory Rule is imperative or directory.
"Where, indeed, the whole aim and object of the legislature would be plainly deflated if the command to do the thing in a particular manner did not imply a prohibition to do it in any other manner, no doubt can be entertained as to the intention"; that is to say, such a requirement would be imperative. ' At page 364 it is stated : "The general rule is, that an absolute enactment must be obeyed or fulfilled exactly, but it is sufficient if a directory enactment be obeyed or fulfilled substantially." (1) I.L.R. [1960] Bombay, 404.
(2) A.I.R. 1966 Allahabad, 32.
(3) A.I.R. 1966 Madras 325.
(4) A.I.R. 1967 Andhra Pradesh 49.
(5) A.I.R. 1967 Andhra Pradesh, 131.
(6) 1972 Kerala Law Times, 464.
(7) 1973 Kerala Law Times, 595.
827 A few principles may now be extracted with advantage from the seventh edition of Craies on Statute Law Page 62: When a statute is passed for the purpose of enabling something to be done, and prescribed the formalities which are to attend its performance, those prescribed formalities which are essential to the validity of the thing when done are called imperative or absoute; but those which are not essential, and may be disregarded without invalidating the thing to be done, are called directory".
Page 262 "It is the duty of courts of justice to try to get at the real intention of the, legislature by carefully attending to the whole scope of the statute to be construed. .
that in each case you must look to the subject matter, consider the importance of the provision and the relation of that provision to the general object intended to be secured by the Act, and upon a review of the case in that aspect decide whether the enactment is what is called imperative or only directory.
" It is not necessary to refer to the numerous decided cases on this point.
Applying the statutory principles extracted above, it would be noticed that the use of the word 'shall ' in sub section (3) of section 11 and in Rule 22 would, on its face, indicate that an imperative duty has been cast upon the Food Inspector to send a sample in accordance with the prescribed Rules.
But it is well known that the mere use of the word 'shall ' does not invariably lead to this result.
The whole purpose and the context of the provision has to be kept in view for deciding the issue.
The object of the Act is to obtain the conviction of a person dealing in adulterated food.
It was brought to our notice by counsel on either side that the quantities of various samples of food to be sent to the Public Analyst as fixed from time to time have varied.
As observed by this Court in the case of State of Uttar Pradesh vs Kartar Singh(1) the standards of food are fixed after consultation with the Committee constituted under section 3 of the Act.
The quan tities of samples are also fixed from time to.
time by the Government presumably in consultation with the Committee and on the basis of the Experts ' opinions.
By and large, it appears,, as was stated before us by the.
learned Attorney general with reference to the various tests and the quantities required therefor from the Manual of Methods of Tests and Analysis for food, that generally the quantities fixed are more than double the quantity required for analysis by the Public Analyst.
As, for example, the total quantity required for the various tests of Ghee is approximately 55 gms.
But the quantity prescribed in Rule 22 is 150 gms.
The purpose of prescribing more than double the quantity required for analysis.
is that a Food Inspector while taking a sample of food for analysis in accordance with section 11 is not aware at the threshold whether the person from whom the sample has been taken would decline to accept one of the three parts.
It is to (1) [1964]6 S.C.R. 679. 828 guard against such an eventuality that the quantity prescribed is more than double because if the person declines to accept one part of the sample, then, as mentioned in sub section (2), the Food Inspector has to send an intimation to the Public Analyst of such refusal and thereupon the letter has to divide the 1/3rd part sent to him into two: parts.
The half of the one third is retained for further tests, if necessary, or for production in case legal proceedings are taken.
It would thus be seen that the whole object of section 11 and Rule 22 is to find out by ,a correct anaysis, subject to further.
verifications and tests by the Director of the Central Laboratory or otherwise, as to whether the sample of food is adulterated or not.
If the quantity sent to the Public Analyst, even though it is less than that prescribed, is sufficient and enables the Public Analyst to make a correct analysis, then merely because the quantity sent was not in strict compliance with the Rule will not result in the nullification of the report and obliterate its evidentiary value.
If the quantity sent is less, it is for the Public Analyst to see whether it is sufficient for his analysis or not.
if he finds it insufficient, there is an end of the matter.
If, however, he finds it sufficient, but due to one reason or the other, either because of further tests or otherwise,, it is shown that the report of the Public Analyst based upon the short quantity sent to him is not trustworthy or beyond doubt, the case may fail.
In other words, if the object is frustrated by the sending of the short quantity by the Food Inspector to the Public Analyst, it is obvious, that the case may end in acquittal.
But if the object is not frustrated and is, squarely and justifiably achieved without any shadow of doubt, then it will endanger public health to acquit offenders on technical grounds which have no substance.
To quote the words of Sir George Rankin, C. J. from the decision of the Calcutta High Court in Chandra Nath Bagchi vs Nabadwip Chandra Dutt and others(1) at page 478, it would be merely piling unreason upon technicality.
" In our considered judgment the Rule is directory and not mandatory.
But we must hasten to reiterate what we have said above that, even so, Food Inspectors should take care to see that they comply with the Rule as far as possible.
We may also advert to one more aspect of the wording of the Rule to find out whether it is directory or mandatory and that is the use of the word 'approximate ' in the second column of the list.
The use of this term does indicate the directory nature 'of the Rule but does not necessarily militate against the view that the Rule is mandatory.
The expression 'approximate quantity ' is meant to convey that the quantity to be supplied must be in the close vicinity of the quantity specified So long it is so, there is no infraction of the Rule at all.
But the question of non compliance with the Rule comes in when the quantity supplied is not in close vicinity of the quantity specified and appreciably below it.
Even so, if the quantity supplied is sufficient and enables the Public Analyst to do his duty of making a correct analysis,, it should be inferred that the Rule has been substantially complied with, as the purpose of the Rule has been achieved.
(1)A.I.R. 1931 Calcutta 476.
829 In Pamanani 's case (supra) the Court seems to have, been Over whelmed by a sense of injustice when the High Court, which had acquitted the manufacturer, convicted the appellant, a grocer although facts of the case did indicate that the real culprit was the manufacturer.
Technically, the grocer could not succeed in getting protection under section 19 (2) (a) of the Act.
It is in this background, we are inclined.
to think that the Court 's sense of justice weighed heavily in favour of the grocer and prompted it to say "that non compliance with the quantity to be supplied caused 'not only infraction of the provisions but also injustices".
How did it cause injustice? There is not elaboration in the judgment.
There is no indication of the basis for saying "The quantities mentioned are required for correct analysis.
" A lesser quantity also could enable the Analyst to make a correct analysis.
That being so, the inference, from the two premises stated above, that "Shortage in quantity for analysis is not permitted by the statute", if we may say so, with great respect, is not a correct statement of the law.
We may, in passing, note that the Rules have now been amended and Rule 22B has been added in 1977 which reads as follows "22B Quantity of sample sent to be considered as sufficient Notwithstanding anything contained in Rule 22, the quantity of sample sent for analysis shall be considered as sufficient unless the public analyst or the Director reports to the contrary.
" In our opinion, the new Rule has been added for the purpose of clarifying the law and not by way of amending it.
The law, as we have enunciated it, was so even without Rule 22B and it is stated here, to place it beyond any debate or doubt.
We may usefully refer to a recent decision dated July 6, 1976 of the Supreme Court of the United States of America in the cases of W. T. Stone, Warden, Petitioner, 74 1055 vs Lloyad Charles Powell and Charles L. Wolff, Jr., Warden, Petitioner, 72 1222 vs David L. Rice wherein the majority of the Court made a conspicuous departure from its previous decision of about half a century in the application of the exclusionary Rule of evidence.
The prosecution relied upon evidence obtained by searches and seizures Which were said to be unconstitutional and unlawful.
The issue was of considerable importance in the administration of criminal justice.
Mr. Justice Powell in his leading majority judgment dissenting from the earlier view said "Upon examination, we conclude, in light of the nature and purpose of the Fourth Amendmen t exclusionary rule, that this view is unjustified.
We hold, therefore, that where the State has provided an opportunity for full and fair litigation of a Fourth Amendment claim, the Constitution does not require that a State prisoner be granted federal habeas corpus relief on the ground that evidence obtained in an unconstitutional search or seizure was introduced at his trial." 830 A very wholesome principle was adverted to by the learned Judge when he said : "Application of the rule thus deflects the truth finding process and often frees the guilty.
The disparity in partiCular cases between the error committed by the police officer and the windfall afforded a guilty defendant by application of the rule is contrary to the idea of proportionality that is essential to the concept of justice.
Thus, although the rule is thought to deter unlawful police activity in part through the nurturing of respect for Fourth Amendment values, if applied indiscriminately it may well have the opposite effect of generating disrespect for the law and administration of justice.
" Chief Justice Burger in his concurring opinion said "To vindicate the continued existence of this judge made rule, it is incumbent upon those who seek its retention and surely its extension to demonstrate that it serves its declared deterrent purpose and to show that the results outweigh the rule 's heavy costs to rational enforcement of the criminal law.
See, e.g. Killough vs United States, ; (1962).The burden rightly rests upon those, who ask society to ignore trustworthy evidence of guilt, at the expense of setting obviously guilty criminals free to ply their trade.
" We may now briefly deal with some of the submissions made on behalf of the respondents in support of the decision of this Court in Pamanani 's case.
It was argued with reference to Mothods in food Analysis, second edition by Maynard A. Joslyn, that the sample must be a representative sample.
It is with that view that the quantity was prescribed in Rule 22 and should not be permitted to be tampered with in any manner.
We are not impressed by this argument at all.
A representative sample has got a different connotation, meaning and purpose in commercial transactions.
If for instance, an average price is to be fixed for a huge quantity of, say, wheat lying in bulk in different storages, then samples must be taken from all the storages to make them a representative sample of the entire quantity for the fixation of the average price.
Taking sample from one storage will not be sufficient.
In our statute the ingredient of the offence is, as mentioned in the 7th section of the Act, manufacturing for sale, storing, selling or distributing any adulterated food.
If the food sold to the Inspector is proved to be adulterated, it is.
immaterial whether the sample purchased by him is a representative sample or not of the entire stock in possession of the person.
A person who. stores or sells such sample is liable to be punished under section 16 (1) (a) (i) of the Act.
Reliance was placed upon the case of Dwerryhouse vs United Co operative Dairies, Ltd. (1) The question for consideration in that case was the scope and ambit of certain sections of the Food and Drugs Act, 1955.
The Justice had come to.
the conclusion on the facts of the (1) [1962] 1 All England Law Reports, 936.
831 case that no sample under the Act had been procured and decided that section 108 did not prevent their hearing the, case and that the supplier was entitled.
to the defence laid down by section 94(4) of the Act.
On a case stated by Justices for the county of Chester, Lord Parker, C.J. said at page 941 "I think that they were wrong in holding that the respondent was entitled to the statutory defence laid down in section 94(4) of the Act.
That defence is only open in respect of a sample of milk taken.
I cannot think that one can give a sample of milk any other meaning than a sample of milk procured under the Act, which are the words used in section 108 (1) (a) (i).
Indeed, sub section
(4) of section 94 appears in a section which is dealing particularly with the sampling of milk, and subsequent proceedings, and I am quite satisfied, therefore, that if, as I think, no sample was procured under the Act, sub section
(4) does not come into operation.
" On a consideration of the various relevant provisions of the English Statute for the application of section 1108(1) and section 94(4) it was found necessary that the sample should have been procured under the said Act.
Since it was not so, both the said provisions were held to be inapplicable.
In the context of our Statute the decision is of no help to the respnodents.
Reliance was also placed upon the case of Skeate vs Moore(1).
In that case the report of the Public Analyst showed that the aggregate of meat in the two pies represented a smaller percentage of meat than was required to be contained in one meat pie under the Meat Pie and Sausage Roll Regulations, 1967.
He did not find separately the meat content of each of the two pies sent to him.
Under Regulation 5, a meat content of each pie was necessary to be found out.
The proceeding had to be "in respect of an article of substance sampled.
" They were found to relate to part only of the sample taken.
And in that view of the matter the conviction was quashed.
In our opinion, the Language of the 1955 Act and the Regulations framed thereunder being quite dissimilar to our Statute and the Rules, the decision aforesaid cannot be assessed into service in favour of respondents.
On a careful consideration of the matter, we have come to the conclusion, and we say so with very great respect, that Pamanani 's case on the point at issue before us was not correctly decided.
And this would have necessitated our passing of various consequential orders in these cases.
In some cases High Court refused special leave against orders of acquittal; in others some other grounds of attack on the order of conviction were available but were neither gone into nor decided by the High Court; in some others the High Court following the decision of this Court in Pamanani 's case recorded orders of acquittal.
We also (1) [1971] 3 All England Law Reports, 1306.
832 found that, in some cases, the adulteration was of a minor and technical character, although in some it was of, rather, serious nature too.
In some cases, decisions were given on the footing that chillies powder is condiment and not spice a matter which we are not deciding.
But taking the totality of the facts and circumstances of each case and specially the fact that Pamanani 's case has held the field for about three years, by now, we did not feel that justice required that we should interfere with the orders of acquittal in all these cases and send some cases back to the High Court while deciding others ourselves by recording orders of conviction.
Rule 22B clarifying the law has also been introduced as late as December, 1977 although Pamanani 's case was decided in December, 1974.
We were informed at the Bar, and so far we are aware, rightly 'too, that for non compliance with the requirements of Rule 22, many cases in different States had ended in acquittal.
Decision in many of them became final and only a few could be brought to this Court.
Each one of the Food Inspectors concerned had jailed in discharging his duty strictly in accordance with the requirements, of the law, and, in such a situation, after great harassment, long delay, and expenses which the respondents bad to incur, they should not be punished by this Court.
In the three Kerala cases Mr. section V. Gupte appearing with Mr. K. R. Nambiar and Mr. Sudhakaran stated before us that the State was interested more in the correct enunciation of the law than in seeing that the respondents in these appeals are convicted.
They were not anxious to prosecute these matters to obtain ultimate conviction of the respondents.
A large number of the other appeals are by the Municipal Corporation of Delhi for whom the Attorney General appeared assisted by Mr. B. P. Maheshwari.
Although a categorical stand was not taken on behalf of the appellants in these appeals as the one taken in the Kerala cases, eventually, the learned Attorney General did net seriously object to the course indicated by us.
In the few Bombay appeals M/s. V. section Desai and M. N. Shroff showed their anxiety for obtaining ultimate convictions of the offenders, but we do not find sufficient reason 'or passing a different kind of order in the Bombay appeals.
In similar situations in the case of The State of Bihar vs Hiralal Kejriwal and Another(") this Court refused to exercise its discretionary jurisdiction under Article 136 of the Constitution and did not order the continuance of the criminal proceeding any further.
In Food Inspector, Calicut Cororation vs Cherukattil Gopalan and anr.(2) this Court said at page 730 : "But in view of the fact that the appellant has argued the appeal only as a test case and does not challenge the aquittal of the respondents, we merely set aside the order and judgment of the High Court.
But we may make it clear that apart (1) [1960] 1 S.C.R. 726.
(2) 833 from holding the respondents technically guilty, we are not setting aside the order of acquittal passed in their favour.
" For the reasons stated above, we dispose of these appeals by merely laying down the correct proposition of law but do not make any con sequential orders setting aside the acquittal of any of the respondents or sending back the cases to the Courts below or convicting any of them by an order of this Court.
Appeals allowed.
| IN-Abs | Rule 22 of the Prevention of Food Adulteration Rules, 1955 framed under the specifies the quantity of sample of food to lye sent to the Public Analyst or Directorate for analysis as the case may be.
Items 1 to 22 gives a list of various articles of food and the residuary item 23 includes all foods not specified in items 1 to 22.
In the last column of the list, as against the quantity to be supplied, the heading is "Approximate quantity to be supplied".
While considering the said provisions, in Rajal Day Guru Namal Pamanani vs The State of Maharashtra ; 1975 SC 189 conviction of the appellant was set aside by this Court on the ground : "The Public Analyst did not have the quantities mentioned in the Rules for analysis.
The appellant rightly contends that non compliance with the quantity to be supplied caused not only infraction of the provisions but also injustice.
The quantities mentioned are required for correct analysis.
Shortage in quantity for analysis is not permitted by the Statute.
" Since under Article 141 of the Constitution, the above decision of the Supreme Court is binding on all the High Courts, following the above view in some cases the High Court refused special leave against the order of acquittal; in others, some other grounds Of attack on the order of conviction were available but were neither gone into nor decided by the High Court; in some others the High Court recorded orders of acquittal; in some cases, the adulteration was of a minor and technical character, although in some it was of, rather, serious nature too and in some cases, decisions were given on the footing that chillies powder is condiment and not spice.
Hence, the appeals by special leave.
The appellants contended that the view in Pamanani 's case was not correct and needed further examination.
Disposing of the appeals by laying down.
the correct proposition of the law, the Court HELD : (1) The report of the Analyst under section 13 of the has got a great sanctity for protecting the general public and their health against use and consumption of adulterated food.
On the other hand, it has great significance and importance for the protection of a citizen, as he can be convicted under the Act only on its basis, under section 16(1) 821 (a)(ii) of the Act, because unless and until the report of the Public Analyst is demolished shaken or becomes doubtful, it is final and conclusive evidence of the facts stated therein, under section 13 (5) of the Act.
[825 D E] (2) The use of the word 'shall ' in sub section
(3) of section 11 and in Rule 22 would on its face, indicate that an imperative duty has been cast upon the Food Inspector to send a sample in accordance with the prescribed rules.
The mere use of the word 'shall ' does not invariably lead to this result.
The whole purpose and the context of the provisions has to be kept in view for deciding the issue.
[827 D E] (3) The purpose of prescribing more than double the quantity required for analysis is that a Food Inspector while taking a sample of food for analysis in accordance with section 11 of the .
is not aware at the threshold whether the person from whom the sample has been taken would decline to accept one of the three parts.
It is to guard against such an eventuality that the quantity prescribed is more than double because if the person declines to accept one part of the sample then, as mentioned in sub section
(2), the Food Inspector has to send an intimation to the Public Analyst of such refusal and thereupon the latter has to divide 1/3rd part sent to him into two parts.
The half of the one third is retained for further tests, if necessary, or for production in case legal proceedings are taken.
[827 G H, 828 A B] State of Uttar Pradesh vs Kartar Singh ; referred to.
(4) The object of the Act is to obtain the conviction of a person dealing in adulterated food.
The whole object of section 11 and Rule 22 is to find out by a correct analysis, subject to further verifications and tests by the Director of the Central Laboratory or otherwise, as to whether the sample of food is adulterated or not.
If the quantity sent to the Public Analyst, even though it is less than that prescribed, is sufficient and enables the Public Analyst to make a correct analysis, then merely because the quantity sent was not in strict compliance with the rule will not result in the nullification of the report and obliterate its evi dentiary value.
If the quantity sent is less, it is for the public Analyst to see whether it is sufficient for his analysis or not.
If he finds it insufficient, there is an end of the matter.
If, however, he finds it sufficient, but due to one reason or the other, either because of further tests or otherwise, it is shown that the report of the Public Analyst based upon the short quantity sent to him is not trustworthy or beyond doubt, the case may fail.
in other words, if the object is frustrated by the sending of the short quantity, by the Food Inspector to the Public Analyst, the case will end in acquittal.
But if the object is not frustrated and is squarely and justifiably achieved without any shadow of doubt, then it will endanger public health by acquitting offenders on technical grounds which have no substance.
[827 E, 828 B F] Chandra Nath Bagchi vs Nabadwip Chandra Dutt and others A.I.R. 1931 Calcutta 476 quoted with approval.
(5) The object of rule 22 is to secure evidence as to whether the article of food sold is adulterated or not.
That being so, even directory Rules are meant to be observed and substantially complied with.
A Food Inspector committing a breach of the Rule may be departmentally answerable to the higher authorities.
He should, therefore, always be cautious in complying with the Rules as far as Possible and should not send a lesser quantity of sample than prescribed to the Public Analyst unless there be a sufficient reason for doing so.
[823 A B D E] State of Bombay vs Ramanlal Jamnadas Gandhi I.L.R. [1960] Bombay, 404, Nagar Swatha Adhikari, Nagar Mahapalika Aqra vs Ant Ram A.I.R. 1906 Allahabad, 32 Public Prosecutor vs Basheer Sahib A.I.R. 1966 Madras 325 Public Prosecutor vs Ediga Venkata Swami A.I.R. 1967 Andhra Pradesh 131 Andhra Pradesh vs Pusala Rama Ram A.I.R. 1967 Andhra Pradesh 49, FoodInspector, Quilon vs Kovakutty (1972) Kerala Law Times.
464 and Food Inspector, Calicut vs T. Karunakaran Others (1973) Kerala Law Times, 595 approved.
(6) Rule 22 is directory and not mandatory, as it seems to have been assumed by this Court in Pamanani 's case.
The use of the word 'approximate ' does in 822 dicate the directory nature of the Rule but does not necessarily militate against the view that the Rule is mandatory.
[826 A, 827 A B] (7) The expression 'approximate quantity ' is meant to convey that the quantity to be supplied must be in the close vicinity of the quantity specified.
So long it is so, there is no infraction of the Rule at all.
But the question of non compliance with the Rule comes in when the quantity supplied is not in close vicinity of the quantity specified and is appreciably below it.
Even so, if the quantity supplied is sufficient and enables the Public Analyst to do his duty of making a correct analysis, it should be inferred that the Rule has been substantially complied with, as the purpose of the Rule has been achieved.
[828 F H] (8) In Pamanani 's case, the Court seems to have been overwhelmed by a sense of injustice when the High Court, which had acquitted the manufacturer, convicted the appellant, a grocer, although facts of the case did indicate that the real culprit was the manufacturer.
Technically, the grocer could not succeed in getting protection under section 19(2)(a) of the Act.
It is in this background, that the Court 's sense of justice weighed heavily in favour of the grocer and promoted it to say "that non compliance with the quantity to be supplied caused not only infraction of the provisions but also injustice.
[829 A B] (9) The new Rule 22B added in 1977 to the Prevention of Food Adulteration Rules, 1955 is for the purpose of clarifying the law and not by way of amending it.
The law was so, even without any amendment.
Rule 22B places it beyond any debate of doubt.
[829 E] W. T. Stone, Warden, Petitioner 74 1055 vs Lloyd Charles Powell and Charles L. Wolff.
Jr. Warden Petitioner, 72 1227 vs David L. Rice decided on July 6, 1976 quoted with approval.
A representative sample has got a different connotation, meaning and purpose in commercial transaction.
In our statute, the ingredient of the offence is manufacturing for sale, storing, selling or distributing any adulterated food.
If the food sold to the Inspector is proved to be adulterated, it is immaterial whether the sample purchased by him is a representative sample or not of the entire stock in possession of the person.
A person who stores or sells such sample is liable to be punished under section 16(1)(a)(i) of the Act.
[830 F G] Dwerryhouse vs United Co operative Dairies, Ltd. [1962] 1 All England Law Reports 936 and Skeate vs Moore [1971] 3 All England Law Reports, 1306 distinguished.
Rajal Das Guru Namal Pamanani vs The State of Maharashtra ; overruled.
[ln ,view of Pamanani 's case holding the field for about 3 years, the introduction of the new section 22B and the States ' interest being more in the correct enunciation of the law than in seeing that the respondents in these appeals are convicted, the Court, in larger interest of justice, disposed of the appeals without disturbing or setting aside the orders under appeals or making any consequential orders]
|
minal Misc.
Petition,No. 191 of 1978.
in the Matter of: CRIMINAL APPEAL No. 274 of 1977 R. k. Jain for the Petitioner.
D. P. Uniyad and O. P. Rana for the Responent The Order of the Court was delivered by KRISHNA IYER, J.
The petitioners have moved for bail setting out special grounds in support of the prayer.
The State opposes on various grounds which we will presently set out.
One of us sitting as a Chamber Judge in Gudikanti Narasihmalu and others vs, Public Prosecutor, Govt.
of AP(1) had considered this question at some length and since the principles set out herein commend themselves to us,we are proceeding on the same lines and are inclined to reach the same conclusion.
Briefly we will state the facts pertinent to the, present petition and prayer and proceed thereafter to ratiocinate on the relevant criteria in considering the interlocutory relief of bail.
Right at the beginning, we must mention that, at an earlier stage, their application for bail was rejected by this, Court on September 7, 1977.
But an order refusing an application for bail does not necessarily preciude another, on a later occasion, giving more materials, further, developments and different considerations.
While we surely must set store by this circumstance, we cannot accede to the faint plea that we are, barred from second consideration ' at a later stage.
An interim direction is not a conclusive adjudication, and updated reconsideration is not over turning an earlier negation.
In this view, we entertain the application and evaluate the merits pro and con.
Shri R.K. Jain has brought to our notice certain significant factors which frown upon continuance of incarceration and favour provisional, perhaps conditional enlargement of the applicants.
All the petitioners were charged with an offence of murder under s.302 I.P.C. but all of them were acquitted by the, Sessions Court as early as November 4, 1972.
The, State successfully appealed against the acquittal and the High Court, reversing the, findings of the, Sessions Court, held all the petitioners guilty and sentenced them all to life imprisonment.
This judgment was pronounced on May 20, 1977, after an unfortunately tragic sojourn of five years 'for an appeal in a murder case.
Our justice, system, even in grave cases, suffers from slow motion syndrome which is lethal to "fair trial".
, whatever the ultimate decision ' Speedy justice is a component of social justice since the community, as a whole, is concerned in the criminal being condignly and finaly punished within a reasonable and the innocent being absolved from the incordinate ordeal of criminal proceedings.
This is, (1) [1978] 2 S.C.R.371 780 by the way, although it is important that judicial business management by engineering, not tinkering, so as to produce efficient expedition, is in urgent, high priority item on the agenda of court reform, to be adically undertaken none to soon.
Back to the necessary facts.
On the High Court upsetting the acquittal, the petitioners have come up to this Court exercising their statutory right to appeal.
The present petition, as earlier stated, is the second one for bail, the first having been rejected about six months ago.
The petitioners 1 to 5 have suffered sentence in some Measure, having.
been imprisoned for about twenty months.
The sixth petitioner had 'been on bail in the Sessions Court and all the petitioners had been free during the pendency of the appeal.
Certain other pregnant particulars deserve special mention.
All the petitioners 1 to 5 are the entire male members of a family, and one point mentioned by Shri Jain is that all of them are in jail.
Their defence in this Court may, therefore, be jeopardised.
Another factor, equally meaningful, is that there is nothing indicated before us to show that during the long five years, when the petitioners had been out of prison, pending appeal, there had been any conduct on their part suggestive of disturbing the peace, of the locality, threatening anyone in the village or otherwise thwarting the life of the community or the course of justice.
Nay more.
When the High Court entertained the appeal, the State did not press for their custody for apprehended abscondence or menace to peace and justice.
It must be noticed that the episode of murder itself is attributed as the outcome of a faction fight or feud between the two clans in the village, not an unusual phenomenon in rural India riven by rivalry of castes, sects and gens.
This is, of course, a survival of primitive tribalism, as it were, but cannot be wished away unless sociological therapeutics were applied.
The pharmacopoeia of the Penal Code is no sufficient curative.
Nevertheless, we have to remember the reality of the village feud and consequent proneness to, flare ups and recrudescence of criminal conflicts.
Against this backdrop of social and individual facts we must consider the motion for bail.
The correct legal approach has been clouded in the past by focus on the ferocity of the crime to the neglect of the real purposes of bail or jail and indifferent to many other sensitive and sensible circumstances which deserve judicial, notice.
The whole issue, going by decisional material and legal literature has been relegated to a twilight zone of the criminal justice system.
Courts have often acted intuitively or reacted traditionally, so much the fate of applicants for bail at the High Court level and in the, Supreme Court, has largely hinged on the hunch of the bench as on expression of 'judicial discretion '.
A scientific treatment is the desideratum.
The Code is cryptic on this topic and the court prefers to be tacit, be the order custodial or not.
And yet, the issue is one of liberty, justice, public safety and burden on the public treasury, all of which insists that a developed jurisprudence of bail is integral to a socially sensitized judicial process.
As Chamber Judge in the summit court I have to 781 deal with this uncanalised case flow, ad hoc response to the docket being the flickering candle light.
So it is desirable that the subject disposed of on basic principle, not improvised brevity draped as discretion.
Personal liberty, deprived whom bail is value of our constitutional system recognised Under article 21 that curial power to negate it is a great trust exercisable, not casually but judicially, with lively concern for the cost to the individual and the community.
To glamorise impressionistic orders as discretionary may, on occasions, make a litigative gamble, decisive of a fundamental right.
After all, personal liberty of an accused or convict is fundamental, suffering lawful eclipse only in terms of "procedure established by law".
The last four words of article 21 are the life of that human right.
The doctrine of Police, Power,, constitutionally validates punitive processes for the maintenance of public order, security of the State, national integrity and the interest of the public generally.
Even so, having regard to the solemn issue involved, deprivation of personal freedom, ephemeral or enduring, must be founded on the most serious considerations relevant to the welfare objectives of society, specified in the Constitution.
What then, is 'judicial discretion ' in this bail context? In the elegant words of Benjamin Cardozo. "The judge, even when he is free, is still not wholly free.
He is not to innovate at pleasure.
He is not a knight errant roaming at will in pursuit of his own ideal of beauty or of goodness.
He is to draw his inspiration from consecrated principles.
He is not to yield to spasmodic sentiment, to vague and unregulated benevolence.
He is to exercise a discretion informed by tradition, methodized by analogy, disciplined by system, and subordinated to 'the primordial necessity of order in the social life '.
Wide enough in all conscience is the field of discretion that remains." (The Nature of Judicial Process Yale University Press (1921).
Even so it is useful to notice the tart terms of Lord Camdon that "the discretion of a judge is the law of tyrants: it is always unknown, it is different in different men; it is casual, and depends upon constitution temper and passion.
In th e best, it is often times caprice; in the worst, it is every vice, folly and passion to which human nature is liable.
" (I Bovu.
Law Dict.
, Rawles ' III Revision p. 685 quoted in Judicial Discretion National College of the State Judiciary, Reno, Nevada p. 14).
Some jurists have regarded the term 'judicial discretion ' as a misnomer.
Nevertheless, the vesting of 'discretion is the unspoken but inescapable, silent command of our judicial system, and those who exercise it will remember that 782 discretion, when applied to a court of justice, means sound discretion guided by law.
It must be governed by rule, not by,humour, it must not be arbitrary, vague and fanciful but legal and regular.
(Attributed to Lord Mansfield Tinglay vs Dolby, "An appeal, to a judge 's discretion is an appeal to his judicial conscience.
The discretion must be exercised, not in opposition to, but in accordance with, established principles of law." Judicial discretion, (ibid) p. 33 Having grasped the core concept of judicial discretion and the constitutional perspective in which the 'Court must operate public policy by a restraint on liberty, we have to proceed to see what are the relevant criteria for granty or refusal of bail in the case of a person who has either been convicted and has appealed or one whose conviction has been set aside but leave has been granted by this Court to appeal against the acquittal.
"What is often forgotten, and therefore warrants reminder, is the object to keep a person in judicial custody pending trial or disposal of an appeal.
Lord Russel, C.J. said "I observe that in this case bail was refused for the prisoner.
It cannot be too strongly impressed on the, magistracy of the country that bail is not to be withhold as a punishment, but that the requirements as to bail are merely to secure the attendance of the prisoner at trial." (R.v.
Rose 1898 18Cox CC.
717: 67 LJOB 289 quoted in 'The granting of Bail ', Mod.
Law Rev. Vol.
81, Jan 1968 p. 40, 48).
This theme was developed by Lord Russel of killowen C. J., when he charged the grand jury at Salisbury Assizes, 1899 ". it was the duty of magistrates to admit accused persons to bail, wherever practicable, unless there were strong grounds for supposing that such persons would not appear to take their trial.
It was not the poorer classes who did not appear, for their circumstances were such as to tie them to the place where, they carried on their work.
They had not the golden wings with which to fly from justice." , Mod.
Law Rev. p. 49 (ibid) In Archbold it is stated that "The proper test of whether bail should be granted or refused is whether it is probable that the defendant will appear to take his trial .
The test should be applied by reference to the following considerations 783 (1) The nature of the accusation (2) The nature of the, evidence in support of the accusation (a) The severity of the Punishment which conviction will entail. (4) Whether the sureties are independent, OF indemnified by the accused person . " (Mod. Law Rev. ibid.
P. 53 Archbold, pleading Evidence and Practice in Criminal Cases, 56th edn., London,1966 para 203) Perhaps, this is an overly simplistic statement and we must remember the constitutional focus in article 21 and 19 before following diffuse observations and practices in the English system.
Even in England there is a growing awareness that the working of the bail system requires a second look from the point of view of correct legal criteria and sound principles, has been pointed out by Pr.
Bottomley.
(The Granting of Bail: Principles and Practices : Mod.
Law Rev. ibid p.40 to 54).
Let us have a glance around which other relevant factors must revolve.
When the case is finally disposed of and a person is sentenced to incarceration, things stand on a different footing.
We are concerned with the penultimate stage and the principal rule to guide release on bail should be to secure the presence of the applicant who seeks to be liberated, to take judgement and serve sentence in the event of the court punishing him with imprisonment.
In this perspective, relevance of considerations is regulated by their nexus with the likely absence of the applicant for fear of a severe sentence, if such be plausible in the case.
As Erle J. indicated, 'when the crime charged, (of which a convictions has been sustained) is of the highest magnitude, and the 'punishment of it assigned by law is of extreme severity, the Court may reasonably presume, some evidence warranting, that no amount of bail would secure the presence of the convict at the stage of judgment, should he be en larged.
Law Rev. p. 50 ibid, 1952 I.E. & B.I.).
Lord Campbell CJ concurred in this approach in that case and Coleridge J. down the order of priorities as follows "I do not think that an accused party is detained in custody because of his guilt, but because there are sufficient probable grounds for the charge against him as to make it proper that he should be tried, and because the detention is necessary to ensure his appearance at trial, .It very important element in considering whether the party, if admitted to bail, would appear to take his trial; and I think that in coming to a determination on that point three elements will generally be found the most important : the charge, the nature of the evidence by which it is supported, 784 and the punishment to which the, party would be liable if convicted.
In the present case, the charge is that of ' wilful murder; the evidence contains an admission by the prisoners of the truth of the charge, and the punishment of the offence is, by law, death".
Law Rev. ibid p. 50 51) it is thus obvious that the nature of the charge is the vital factor and the nature of the evidence also is pertinent.
The punishment to which the party may be liable, if convicted or conviction is confirmed, also bears upon the issue.
Another relevant factor is as to whether the course of justice would be thwarted by him who seeks the benignant jurisdiction of the Court to be freed for the time being.
(Patrick Devlin The Criminal Prosecution in England London) 1960, p. 75 Mod.
Law Rev. ibid p. 54); Thus the legal principle and practice validate the court considering the likelihood of the applicant interfering with witnesses for the prosecution or otherwise polluting the process of justice.
It is not only traditional but rational, in this context, to enquire into the antecedents of a man who is a lying for bail to find whether he has a bad record particularly a record which suggests that he is likely to commit serious offences while on bail.
In regard to habituals it is part of criminological history that a thoughtless bail order has enabled the bailee to expoit the opportunity to inflict further crimes on the members of society.
Bail discretion, on the basis of evidence about the criminal record of a defendant, is therefore not an exercise in irrelevance.
The significance and sweep of article 21 make the deprivation of liberty a matter of grave concern and permissible only when the law authorising it is reasonable, even handed and geared to the goals of community good and State necessity spelt out in article 19.
Indeed, the, considerations I have set out as criteria are germane to the constitutional proposition I have deduced.
Reasonableness postulates intelligent care and predicates that deprivation of freedom by refusal of bail is not for punitive purpose, but for the bi focal interests of justice to the individual involved and society affected.
We must weigh the contrary factors to answer the. test of reasonableness, subject to the need for securing the presence of the bail applicant.
It makes sense to assume that a man on bail has a better chance to Prepare or present his case than one remanded in custody.
And if public justice is to be promoted.
mechanical detention should be demoted.
In the United States, which has a constitutional perspective close to ours, the function of bail is limited, 'community roots ' of the applicant are stressed and, after the Vera Foundation 's Manhattan Bail Project, monetary suretyship is losing ground.
The considerable public expense in keeping in custody where no danger of 785 disappearance or disturbance can arise, is not a negligible consideration.
Equally important is the deplorable condition, verging on the inhuman, of our sub jails, that the unrewarding cruelty and expensive custody of avoidable incarceration makes refusal of bail unreasonable and a policy favouring release justly sensible.
A few other weighty factors deserve reference.
All deprivation of liberty is validated by social defense and individual correction along an anti criminal direction.
Public justice is central to the whole scheme of bail law.
Fleeing justice must be forbidden but punitive harshness should be minimised.
Restorative devices to redeem the man, even through community service, meditative drill, study classes or other resources should be innovated, and playing foul with public peace by tampering with evidence, intimidating witnesses or committing offences while on judicially sanctioned 'free enterprise, should be provided against.
No seeker of justice shall play confidence tricks on the court or community.
Thus, conditions may be hung around bail orders, not to cripple but to protect.
Such is the holistic jurisdiction and humanistic orientation invoked by the judicial discretion correlated to the values of our constitution.
Viewed from this perspective,, we gain a better insight into the ,rules of the game.
When a person, charged with a grave offence, has been acquitted at a stage, has the intermediate acquittal pertinence to a bail plea when the appeal before ;his Court pends ? Yes, it has.
The panic which might prompt the accused to jump the gauntlet of justice is less, having enjoyed the confidence of the court 's verdict once.
Concurrent holdings of guilt hive the opposite effect.
Again, the ground for denial of provisional release becomes weaker where the fact stares us in the fact that a fair finding if that be so innocence has been recorded by one court.
It may be conclusive, for the judgment of acquittal may be ex facie wrong, the likelihood of desperate reprisal, if enlarged, may be a deterrent and his own safety may be more in prison than in the vengeful village where feuds have provoked the violent offence.
It depends.
Antecedents of the man and socio geographical circumstances have a bearing only from this angle.
Police exaggerations of prospective misconduct of the accused, if enlarged, must be soberly sized up lest danger of excesses and injustice creep subtly into the discretionery curial technique.
Bad record and police prediction of criminal prospects to invalidate the bail plea are admissable in principle but shall not stampede the court into a complacent refusal.
Realisim is a component of humanism which is the heart of the legal system.
We come across cases where parties have already suffered 3, 4 and in one case (the other day it was unearthed) over 10 years in prison.
These persons may perhaps be acquitted difficult to guess.
If they are, the injustice of innocence long in rigorous incarceration inflicted by the protraction of curial processes is an irrevocable injury.
And, taking a pragmatic view, while life imprisonment may, in law, last a whole life, in practice it hardily survives ten years, thanks to rules of remission.
Thus, at the worst, the prisoner 786 may have to serve some more years, and, at the best, law is vicariously guilty of dilatory deprivation of citizen 's liberty, a consummation vigilantly to be vetoed.
So, a circumstance of some consequence, when considering a motion for bail, is the period in prison already spent and the prospect of the appeal being delayed for hearing, having regard to the suffocating crowd of dockets pressing before the few Benches.
It is , not out of place to mention that if the State takes up a flexible attitude it may be possible to permit long spells of parole, under controlled conditions, so that fear that the full freedom if bailed out, might be abused, may be eliminated by this experimental measure, punctuated by reversion to prison.
Unremitting insulation in the harsh and hardened company of prisoners leads to many unmention able vices that humanizing interludes of parole are part of the compassionate constitutionalism of our system.
The basics being thus illuminated, we have to apply them to the tangled knot of specifics projected by each case.
The delicate light of the law favours release unless countered by the negative criteria necessitating that course.
The corrective instinct of the law plays upon release orders by strapping on to them protective and curative conditions.
Heavy bail from poor men is obviously wrong.
Poverty is society 's malady and sympathy, not sternness, is the judicial response.
Yet another factor which heavily tips the scales of justice in favour of release Pendente lite is the thought best expressed, by Justice Bhagwati, speaking for the Court in Kashmira Singh vs The State of Punjab(1).
"The appellant, contends in this application that ?ending the hearing of the appeal he should be released on bail.
Now, the practice in this Court as also in many of the High Courts has been not to release on bail a person who has been sentenced to life imprisonment for an offence under section 302 of the Indian Penal Code.
The question is whether this practice should be departed from and if so in what circumstances.
It is obvious that no practice howsoever sanctified by usage and hallowed by time can be ' allowed to prevail if it operates to cause injustice.
Every practice of the Court must find its ultimate justification in the interest of justice.
The practice not to release on bail a person who has been sentenced to life imprisonment was evolved in the High Courts and in this Court on the basis that once a person has been found guilty and sentenced to life imprisonment, he should not be let loose, so long I as his conviction and sentence are not set aside, but the underlying, postulate of this practice was that the appeal of such person would be disposed of within a measurable of time, so that if he is ultimately found to be innocent, he would not have to remain in jail for an unduly long (1) ; at 2148.
787 period.
The rationale of this practice, can have no application where the Court is not in a position to dispose of the appeal for five or six years.
It would indeed be a travesty of justice to keep a person in jail for a period of five or six years for an offence which is ultimately found not to have been committed by him.
Can the Court ever com pensate him for his incarceration which is found to be unjustified ? Would it be just at all for the Court to tell a person : "We have admitted your appeal because we think you have a prima facie case, but unfortunately we have no time to hear your appeal for quite a few years and, therefore, until we hear your appeal, you must remain in jail, even though you may be innocent ?" What confidence would such administration of justice, inspire in the mind of the public ? It may quite conceivably happen, and it has in fact happened in a few cases in this Court, that a person may serve out his full term of imprisonment before his appeal is taken up for hearing.
Would a judge not be overwhelmed with a feeling of contribution while acquitting such a person after hearing the appeal? Would it not be an affront to his sense of justice? Of what avail would the acquittal be to a person who has already served out his term of imprisonment or at any rate a major part of it ? It is, therefore, absolutely essential that the practice which this Court has been following in the past must be reconsidered and so long as this Court is not in a position to hear the appeal of an accused within a reasonable period of time, the Court should ordinarily unless there are cogent grounds for acting otherwise, release the accused on bail in cases where special leave has been granted to the accused to appeal against his conviction and sentence." Having regard to this constollation of considerations, carefully viewed in the jurisprudential setting above silhourted, we are of the view, that subject to certain safeguards, the petitioners are eligible to be enlarged on bail.
The endemic pathology of factious scrimmage and blood shed should be preempted by suitable safeguards, even if we are inclined to bail out the petitioners.
So, we direct that the petitioners be released on their own recognisances in a sum of Rs. 5,000/ each, with one surety for each in a like sum, subject to two conditions, viz., firstly, that the petitioners shall not enter Bharaiyam village which is alleged to be the hot bed of Plan clashes according to the prosecution and secondly, the petitioners shall report at the Tandiawan Police Station (District Hardor) once every week.
We direct the Sub Inspector of Police station concerned to see that both the conditions are observed.
In 'the event 'of breach of either condition, the prosecution will be at liberty to move this Court for cancellation Of the bail hereby granted.
| IN-Abs | All the petitioners were charged with the offence of murder u/s 302 I.P.C., but all of them were acquitted by the Sections Judge on 4 11 1972.
The State successfully appealed against the acquittal and by its judgment dated 20 5 1977 the High Court, while reversing the findings of the Sessions Court, held all of them guilty and sentenced them all to life imprisonment.
The petitioners came up to the Supreme Court exercising their statutory right of appeal.
Pending the disposal of the appeal, they moved an application for bail which was rejected on 7 9 1977.
The petitioners moved another application for bail.
Granting the bail, subject to fulfilment of conditions imposed, the Court HELD : 1.
An order refusing an application for bail does not necessarily preclude another, on a later occasion, giving more materials, further developments and different considerations.
While it is a circumstance which the Courts surely must set store, Courts are not barred from second consideration at a later stage.
An interim direction is not a conclusive adjudication and updated reconsideration is not overturning an earlier negation.
[779 D E] 2.
The significance and sweep of article 21 make the deprivation of liberty ephemeral or enduring, a matter of grave concern and permissible only when the law authorising it is reasonable, even handed and geared to the goals of community good and State necessity spelt out In Article 19.
Reasonableness postulates intelligent care and predicates that deprivation of freedom by refusal of bail is not for punitive purpose, but for the bifocal interests of justice to the individual involved and society affected.
[784 E F] 3.
Personal liberty deprived when bail is refused, is too precious a value of ourconstitutional system recognised under article 21, that the curial power to negateit is a great trust exercisable, not casually, but judicially with lively concern for the cost to the individual and the community.
Personal liberty of an accused or convict is fundamental, suffering lawful eclipse only in terms of procedure established by law.
The last four words of article 21 are the life of that human right.
[781 A B] 4.
All deprivation of liberty is validated by social defence and individual correction along an anti criminal direction.
Public justice is central to the whole scheme of bail law.
Feeling justice must be forbidden but punitive harshness should be minimised.
Restorative devises to redeem the man, even through community service, meditative drill, study classes or other resources should be innovated and playing foul with public peace by tampering with evidence, intimidating witnesses or committing offences while on judicially sanctioned "free enterprise" should be provided against.
No seeker of justice shall play confidence tricks on the Court or community.
Conditions may be hung around bail orders, not to cripple but to protect.
Such is the holistic jurisdiction and humanistic orientation invoked by the judicial discretion correlated to the values of our Constitution.
[785 B C] 5.
The principal rule to guide release on bail should be to secure the presence of the applicant, who seeks to be liberated, to take judgment and serve sentence in the event of the Court punishing him with imprisonment.
In this 778 perspective relevance of considerations is regulated by their nexus with the likely absence of the applicant for fear of a severe sentence.
[783 E] The vital considerations are: (a) The nature of charge, the nature of the evidence and, the punishment to which the party may be liable, if convicted, or conviction is confirmed.
When the crime charged is of the highest magni tude and the punishment of it assigned by law is of extreme severity, the Court may reasonably presume, some evidence warranting, that no amount of bail would secure the presence of the convict at the stage of judgment, should he be enlarged (b) whether the course of justices would be thwarted by him who seeks the benignant jurisdiction of the Court to be freed for the time being (c) Antecedents of the man and socio geographical circumstance, and whether or the petitioner 's record shows him to be 'a habitual offender, (d) When, a person charged with a grave offence has been acquitted at a stage, the intermediate acquittal has pertinence to a bail plea when the appeal before this Court pends.
The grounds for denial of provisional releases becomes weaker when a fair finding of innocence has been recorded by one court, (e) Whether the accused 's safety may be.
in, prison, than in the, vengeful village where feuds have provoked the violent offence and (f) The period in.
prison already spent and the prospect of delay in the appeal being heard, and disposed of.
[783 A B,F, 784 C, D, 785 D E, 786,A] Kashmira Singh vs State of Punjab, ; = A.I.R. @ 2148; Gudikanti Narasihmalu and Ors.
vs Public Prosecutor, Govt of A.P.; , Reiterated.
Tinglay vs Dolby, ; Rex vs Rose, 1898 18 CC 717; 67 QB 289; quoted with approval.
Courts should soberly size up police exaggerations; of prospective misconduct of the accused if enlarged, lest danger of excesses and injustice creep subtly into the discretionary curial technique.
Bad record and police prediction of criminal prospects to invalidate the bail plea are admissible in principle, but shall not stampede the Court into complacent refusal.
The endemic pathology of factious scrimmage and bloodshed should be preempted by suitable safe guards.
[785 F G] To answer the test of reasonableness subject to the need for securing the presence of the bail applicant, the Court must also weigh the contrary factors like (i) the better chances which a man on bail has to prepare or present his case than one remanded in custody, (ii) promotion of public justice, (iii) the considerable public expenses in keeping in custody where no danger of disappearance or disturbance can arise and (iv) the deplorable condition verging on the inhuman of our sub jails.
[784 G H; 785 A] In the instant case, the following 'significant factors frown ' upon continuance of incarceration and favour provisional but conditional enlargement of the petitioners.
(a) Petitioners 1 to 5 have suffered sentences in some measures having been imprisoned for about twenty months.
(b) When the High Court entertained the appeal, the State did not press for their custody for apprehended abscondence or menace to peace and justice.
(c) The sixth Petitioner had been on bail in the Sessions Court and all the petitioners had been free during the pendency of the appeal.
(d) There is nothing indicated to show that during the long five years, when the petitioners had been out of prison, pending appeal, there had been any conduct on their part suggestive of disturbing the peace of #he locality, threatening any one in the village or otherwise thwarting the life of the community or the cause of justice and (e) All the petitioners 1 to 5 are the entire male members of a family and their remaining in jail will jeopardise their defence in this Court.
, B E]
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