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Writ Petition (Crl.) No. 359 of 1988.
(Under Article 32 of the Constitution of India. ) R.K. Jain, R.K. Khanna and A.S. Pundir for the Petitioner.
Yogeshwar Prasad, Mrs. Rachna Gupta, Mrs. Rachna Joshi, Dalveer Bhandari, Ms. C.K. Sucharita and Ms. A. Subhashini for the Respondents.
The Judgment of the Court was delivered by NATARAJAN, J.
This petition under Article 32 of the Constitution of India has been filed by the petitioner to seek the issue of appropriate writs for quashing an order of detention passed against 261 him under Section 3(2) of. the (here inafter the 'Act ') by the State of Uttar Pradesh and for his release from custody.
On April 5, 1988 an order of detention was passed against the petitioner under Section 3(2) of the Act but the petitioner could not be served the order of detention and taken into preventive custody as he was ab sconding.
Consequently he was treated an absconder and resort was had to Section 7(2) of the Act and a proclamation was obtained against him under Sections 82 and 83 of the Criminal Procedure Code on May 4, 1988 and the said order was executed on May 4, 1988.
Thereafter the petitioner surrendered himself in Court on July 4, 1988 and he was sent to the District Jail at Meerut where he was served the detention order and the grounds of detention on July 5, 1988.
In the grounds of detention three grounds were set out for the detention of the petitioner and they read as fol lows: 1.
On 8.7.87 at about 9.30 P.M. in the night at Kasba Sardhana, Police Station Sard hana (Meerut) you alongwith your other compan ions went to the garden of Lala Om Prakash Jain which is in the possession of Yusuf S/o Ismail on contract.
You said to Yusuf etc.
who were present there that they do not pay the (CHAUTH) fee for GUNDAGARDI of the Mango, therefore, you using abusive language said "Kill the Salas, so they may vanish for ever and you people with an intention to kill Yusuf etc.
assaulted them.
On the information of Shri Yusuf a case has been registered against you as Crime No. 211 under Sections 307, 323 I.P.C., which is under consideration of the Court.
Due to your aforesaid misdeed terror in Sardhana and in District Meerut terrorism has spread and in this way you have acted in such manner which is against the Maintenance of Public Law and order situation.
On 11 2 88 at about 11.00 A.M. in the day at the Binauli Road in Kasba and Police Station Sardhana you alongwith your companion Vinay Kumar went to the Shop of Shri Ashok Kumar and you threatened Shri Ashok Kumar that he should pay Rs. 10,000 (Ten thousand) by tomorrow or day after tomorrow otherwise he will be killed.
On the basis of information of Shri Ashok Kumar Crime No. 48 under Section 506 I.P.C. has been diarised which is under consideration.
Due to your aforesaid indecent terror in Kasba Sardhana and in the District of Meerut terrorism has prevailed and in this way you have acted in such manner which is against the maintenance of the Public Law and Order situation.
262 3.
On 3.3.88 in the Kasba of Sardhana, Police Station Sardhana, District Meerut, you taking a Revolver in your hand in the market of Sardhana said to the Shopkeepers that who so ever will not pay money (CHAUTH), he cannot open the shop in the market, due to which the shops were closed in the market.
H.C. Khajan Singh with the help of other employ ees when tried to arrest you then you ran away on the Motor Cycle alongwith your companion while firing in the air.
Information to this effect has been got diarised by HC.
Khajan Singh at Police Station in G.D. No. 14 at 10~10 hours and investigation to this effect has been done by the Inves tigation Inspector Shri R.C. Verma and on investigation the aforesaid incidents were found correct and entry to this effect has been carried out at G.D. No. 33.
By your afore said indecent activity in Sardhana and in District Meerut terrorism has prevailed and in this way you have acted in such manner which is against the provisions of Maintenance of Public law and Order situation.
The grounds of detention also set out the following: (1) The petitioner if he so desires could make repre sentation under Section 8 of the Act to the Home Secretary, Ministry of Home, State Government through the Superintend ent of Jail at the earliest possible; (2) That the papers relating to the petitioner 's detention would be submitted under Section 10 of the Act to the Advisory Board within three weeks from the date of detention and that if the representation is received late it would not be considered by the Advisory Board; (3) That if the petitioner so desired he could also make representation to the Government of India by addressing the representation to the Secretary, Government of India, Ministry of Home (Internal Security Department), North Block, New Delhi through the Superintendent of the Jail, and (4) That if under the provisions of Section 11(1) the petitioner desired to have a personal hearing by the Adviso ry Board he should specifically make mention of it in his representation or he should inform the State Government of his desire through the Jail Superintendent.
263 It is common ground that the petitioner made a represen tation to the Government against his detention and the order passed therefore.
Therein he had set out that he wished to have the services of a friend at the time of the meeting of the Advisory Board to make representations on his behalf.
The representation was received by the District Magistrate, Meerut on July 15, 1988.
After receipt of the comments of the SSP, Meerut the representation along with the comments of the District Magistrate were sent to the State Government on July 21, 1988.
Even prior to it the copies of the repre sentation were forwarded to the State Government and the Advisory Board on July 19, 1988.
The representation was considered and rejected by the State Government on July 28, 1988 and the petitioner was informed of the same through the Jail Superintendent, Meerut.
The meeting of the Advisory Board to consider the case of the petitioner was fixed on August 2, 1988 and a Radio gram was sent by the State Government to the District Magis trate and the Superintendent District Jail, Meerut informing the date of the meeting of the Advisory Board.
The Radio gram further set out as follows: "Board further directs that either District Magistrate or Superintendent of Police to appear before the Board on the date of hearing with.all relevant records and on request of the detenu his best friend (non advocate) may also be allowed to appear with him." A copy of the Radio gram was sent to the Jail Superintendent and it was shown to the petitioner and his acknowledgement was obtained.
The Adviso ry Board considered the written and oral representations of the petitioner and gave a report that there was sufficient cause for the detention of the petitioner.
The State Govern ment accepted the report of the Advisory Board and passed a further order on August 17/18, 1988 confirming the detention of the petitioner.
Thereafter the petitioner has come for ward with this petition under Article 32 of the Constitu tion.
In his petition, the petitioner has raised several grounds to assail his detention, one of them being the non furnishing of the investigation report of Shri R.C. Verma, Inspector of Police who had verified the truth and correct ness of the report of HC 1057 Khajan Singh about the inci dent which took place on March 3, 1988.
However, during the hearing of the writ petition no arguments were advanced in respect of this ground of objection.
Mr. Jain, learned counsel for the petitioner assailed the order of detention on the following grounds: 264 (1) All the three grounds set out in the grounds of detention even if true, are not incidents which would affect the maintenance of public order and at best they can be con strued only as offences committed against individuals or incidents which are likely to affect the law and order situation.
(2) The third ground is a concocted incident in order to give credibility to the detention order by making it appear that the petitioner was indulging in anti social acts which affected the maintenance of public order.
(3) The petitioner was denied opportu nity to have the assistance of a friend when he appeared before the Advisory Board on August 2, 1988.
Besides these contentions Mr. Jain also raised a fourth contention that under Section 3(5) of the Act the State Government is enjoined to send a report within seven days to the Centre Government, of the detention of any detenu under the Act together with the grounds on which the order had been made and on receipt of such a report the Central Gov ernment is bound to consider the matter and either approve the detention or revoke the same in exercise of its powers under Section 14 of the Act.
In this case there was no material to show that the Central Government had performed its duty under the Act.
Since this contention was not raised in the petition and since the Central Government had not been impleaded a party respondent, the petitioner 's counsel filed a petition and sought leave of Court for raising an additional ground and for impleading the Central Government as a party respondent.
These prayers were acceded and on notice being issued to the Central Government, the Central Government made its repre sentation through counsel.
The contentions of the petitioner in his petition have been refuted by the respondents in their counter affidavits, one by the second respondent, District Magistrate, Meerut and the other filed by Shri P.N. Tripathi, Upper Division Assistant, Confidential Section 8 of U.P. (Civil), Secre tariat, Lucknow on behalf of the first respondent, the State of U.P.
We will now examine the merits of the contentions of the petitioner in seriatum.
The first contention is that the three grounds 265 mentioned in the grounds of detention could by no stretch of imagination be construed as acts which would affect the maintenance of public order or the even tempo of life of the community.
Mr. Jain, learned counsel for the petitioner referred to Gulab Mehra vs State of U.P., [1987] IV SCC 302 and urged that the first ground of detention in that case also pertained to the detenu therein threatening to shoot the shopkeepers of Khalasi Line locality if they failed to give money to him and the shopkeepers becoming terror stricken and closing their shops.
This Court had construed the ground as only affecting law and order and not the maintenance of public order.
Mr. Jain argued that grounds 1 and 2 were threats meted out to individual persons regarding which criminal cases have been registered and the 3rd ground was identical to the one noticed by this Court in Gulab Mehra 's case.
Consequently, it was argued that we should also hold, as was done in Gulab Mehra 's case that the grounds set out against the petitioner would at best affect only the law and order situation and would not pose a threat to the maintenance of public order.
We have given the matter our careful consideration but we find ourselves unable to agree with the contention of Mr. Jain.
In ground No. 1, the petitioner had gone with his associates and threatened one Yusuf, the contractor of a mango grove that fees for goonda gardi (Chauth) should be paid to him and the petitioner and his associates assaulted Yusuf saying that they will "Kill the salas".
On Yusuf reporting the matter to the police a case was registered under Sections 307 & 323 I.P.C. against the petitioner and his associates.
The demand for chauth from the contractor and the attack launched on him would show that it was not a case of singling out a particular contractor for payment of chauth but a demand expected to be complied with by all owners or contractors of mango groves in the locality.
In such circumstances the demand made and the attack launched would undoubtedly cause fear and panic in the minds of all the owners and contractors of mango groves in that area and this would have affected the even tempo of life of the community.
Similarly, the second ground pertains to the petitioner going to the shop of one Ashok Kumar and making a demand of Rs. 10,000 and threatening him that unless the money was paid on the following day or the day after the shopkeeper would be killed.
The shopkeeper had reported the matter to the police authorities and a case has been registered against the petitioner u/s 506 I.P.C.
This incident must also be viewed in the same manner in which the first incident has been construed.
It is not as if the demand and the threat following it were made against Ashok Kumar in an insolated manner.
On the other hand, the demand had been made as part of a scheme to extort money from all the shopkeepers under a threat that their continuance of business and even 266 their lives would be in danger if chauth was not paid.
The demand made on Ashok Kumar would have certainly made all the shopkeepers in that locality feel apprehensive that they too would be forced to make payments to the petitioner and that otherwise they would not be allowed to run their shops.
It so far as the 3rd incident is concerned, it is seen that the petitioner had taken a revolver with him and threatened all the shopkeepers in the market of Sardhana that if anyone failed to pay "chauth" he would not be al lowed to open his shop and he would have to face the conse quences.
On account of this threat the shop owners downed the shutters of their shops and at that point of time H.C. Khajan Singh happened to reach the market.
Seeing what was happening H.C. Khajan Singh attempted to apprehend the petitioner but he managed to escape on his motor cycle after firing several shots in the air with his revolver.
H.C. Khajan Singh had at once returned to the station and made an entry in the general diary about this incident.
This incident cannot be considered as merely causing disturbance to the law and order situation but must be viewed as one affecting the even tempo of fife in the mar ket.
The shopkeepers had closed their shops and they as well as the public in the market area would have felt terrified when they saw the petitioner moving with a revolver and demanding 'chauth ' payment by the shopkeepers.
Whether an act would amount to a breach of law and order or a breach of public order has been considered by this Court in a number of decisions and we may only refer to some of them viz.
Dr. Ram Manohar Lohia vs State of Bihar, ; ; Arun Ghosh vs State of West Bengal, ; Nagendra Nath Mondlal vs State of West Bengal, ; and Nandlal Roy vs State of West Bengal, In Gulab Mehra 's case (supra) after noticing all these decisions, it was set out as follows: "Thus from these observations it is evident that an act whether amounts to a breach of law and order or a breach of public order solely depends on its extent and reach to the socie ty.
If the act is restricted to particular individuals or a group of individuals it breaches the law and order problem but if the effect and reach and potentiality of the act is so deep as to affect the community at large and/or the even tempo of the community then it becomes a breach of the public order.
" 267 In State of U.P. vs Hari Shankar Tewari, ; referring to S.K. Kedar vs State of West Bengal, and Ashok Kumar vs Delhi Administration, it was held as follows: "Conceptually there is difference between law and order and public order but what in a given situation may be a matter covered by law and order may really turn out to be one of public order.
One has to turn to the facts of each case to ascertain whether the matter relates to the larger circle or the smaller circle.
Thus whether an act relates to law and order or to public order depends upon the impact of the act on the life of the community or in other words the reach and effect and potenti ality of the act if so put as to disturb or dislocate the even tempo of the life of the community, it will be an act which will affect public order.
" Viewed in this perspective, it cannot be said that the demands made and threats given by the petitioner to the contractors and shopkeepers as mentioned in the grounds would have its reach only to the limited extent of affecting the law and order situation and not go so far as to affect the maintenance of public order.
We are therefore, unable to sustain the first contention urged on behalf of the peti tioner.
Learned counsel for the petitioner then contended that no credence should be given to the last mentioned ground because the names of the shopkeepers who had closed their shops out of fear for the petitioner or the names of the witnesses to the incident have not been set out in the grounds.
It was further contended that the 3rd incident has been concocted in order to give a colour of credibility to the detention order.
The counsel argued that in the report made by Inspector R.C. Verma for an order of detention being passed against the petitioner, a number of instances were given but in spite of it the police authorities felt diffi dent about the adequacy of the materials and had therefore concocted the third incident given as ground No. 3.
We do not find any merit in this contention because the records go to show that H.C. Khajan Singh had promptly reported the incident at the police station and the truth of his report had been verified by Inspector R.C. Verma.
268 It is not therefore possible to accept the contention that the 3rd incident referred to in the grounds of detention is a concocted affair.
In Gulab Mehra 's case upon which reliance was placed by Mr. Jain, we find that the facts therein were quite differ ent.
The first ground of detention in that case pertained to the detenu demanding money from the shopkeepers of Khalasi Line but no shopkeeper had come forward to complain about the detenu and only a picket employed at the police station had made a report.
The second ground related to the detenu lobbing a comb at a police party when it tried to effect his arrest.
It was in those circumstances, this Court deemed it appropriate to quash the order of detention.
In the present case, it may be seen that specific reports had been given by Yusuf and Ashok Kumar about the incidents forming grounds 1 and 2 and cases had been registered against the petitioner.
In so far as the 3rd ground is concerned, H.C. Khajan Singh was himself a witness to the threats given by the petitioner to the shopkeepers with a revolver in his hand and the firing of the revolver by the detenu while leaving the place.
The report of H.C. Khajan Singh has been verified by Inspector R.C. Verma and found to be true.
It is thus seen that the facts in the two cases have no similarity whatever.
On the other hand the observation in State of U.P. vs Karnal Kishore Saini, ; at 213 would be of relevance in this case.
It was held in that case that if firing is made in a public street during the day time, the incident would undoubtedly.
affect public order as its reach and impact would disturb public tranquility and it would affect the even tempo of the life of the people in the locality concerned.
Therefore the decision in Gulab Mehra 's case (supra) cannot be of any avail to the petitioner.
In so far as the 3rd contention is concerned, it was urged that in spite of the petitioner having specifically asked for the assistance of a friend at the time he was heard by the Advisory Board, he was denied opportunity to have such assistance.
The petitioner has averred in his petition as follows: "The petitioner orally as well as in writing requested the Chairman of the Advisory Board to allow him to engage a counsel or atleast a person who is acquainted with the law to represent him before the Advisory Board, as the petitioner was illiterate and was not capable of representing his case before the Advisory Board.
Unfortunately, the Advisory Board rejected the request of petitioner and did not allow him to engage a legal counsel or atleast a person 269 who is acquainted with the provisions of the and forced the petition er to appear before the Advisory Board without any defence helper.
This part of the act of the members of the Advisory Board is illegal, unconstitutional and violative of Articles 14, 19, 21 and 22 of the Constitution of India.
" In the counter affidavit of the District Magistrate, this allegation has been refuted as follows: "Averments made in para No. 2 are wrong and denied.
The petitioner was detained on 5.7.88 in Distt.
Jail, Meerut and his detention is absolutely legal and constitutional.
It is wrong to say that the petitioner was not provided an opportunity by the Advisory Board to defend himself.
On the contrary, he was heard by the Advisory Board on 2.8.89 and the detaining authority had no objection to his case being represented by a person who is not an advocate.
The fact that his request was rejected by the Advisory Board is not in the notice of detaining authority.
As per the Tele.
dated 26.7.88 of the Home Deptt.
of Government of U.P., Lucknow, the petitioner was allowed to appear before the Advisory Board through non advocate next friend.
A copy of the said message is annexed hereto and marked as annexure R I.
However the petitioner 's assertion that he is illiterate is wrong because he knows English and has submitted detailed representation.
According to information available, petitioner is an Intermediate.
The ratio of the decision in A.K. Royal vs U.O.I., (reported in AIR 1982 SC 709) has not been contravened in any manner in the instant case.
" In the counter affidavit on behalf of the State of U .P. it has been stated as follows: "But it is evident from the record that the Advisory Board had directed the State Govt.
through its letter dated 2 Ist July, 1988 that since the petitioner Shri Sharad Tyagi had requested to appear alongwith his next friend, he may be informed to attend the Board 's meeting alongwith his next friend (non advo cate) on the date of hearing.
The State Gov ernment complied with the instructions of the Advisory 270 Board and had sent the necessary directions to the District Authorities through its radiogram message dated 26 July, 1988, a copy of which is annexed hereto and marked as Annexure R I".
Besides the specific averment made in the counter affi davit, Shri Yogeshwar Dayal, learned counsel for the State of U.P. also drew our attention to the radiogram sent by the Government to the District Magistrate wherein it has been clearly stated that "on request of detenu his next friend (non advocate) may also be allowed to appear with him." Mr. Yogeshwar Dayal also made available to us the file contain ing the original records relating to the detention of the petitioner.
We find from the records that the radiogram had been served on the petitioner through the Superintendent of the Meerut District Jail.
The petitioner has affixed his signature in English therein and also written the word "date" but he has not filled up the date.
(It is stated in the counter affidavit that the petitioner is not an illiter ate but has studied upto Intermediate).
This would falsify the averment in the rejoinder affidavit filed by the peti tioner 's wife Smt.
Shobha Tyagi "that the copy of the tele gram annexed to the counter affidavit of the respondent No. 2 was not served upon the detenu; the detenu was never informed that he was entitled to be represented by a friend who is not an advocate." Mr. Jain 's contention was that even if the radiogram had been shown to the petitioner, it must have been done belatedly and there would not have been time for the petitioner to contract anyone and make arrangements for a non advocate friend appearing alongwith him at the meeting of the Advisory Board.
We are unable to countenance this argument because of several factors.
In the first place, the petitioner has not raised such a plea in his petition.
His specific contention was that he had requested the Chairman of the Advisory Board in writing as well as orally to permit him to have the services of a counsel or a person acquainted with the law to represent his case before the Advisory Board but the Advisory Board rejected his request.
It was not therefore his case that he was shown the radiogram belatedly and he did not have time to make ar rangements for anyone to appear alongwith him before the Advisory Board.
Another circumstance which militates the contention of Mr. Jain is that there is no material to show that the petitioner had orally represented to the Chairman of the Advisory Board that he wanted the services of a friend and that he had been shown the radiogram very late.
The respondents have filed a copy of the letter sent by the Additional Registrar of the High Court to confirm that the Advisory Board had accorded permission to the petitioner to appear before the Board 271 alongwith a non advocate friend but in spite of it no one appeared along with the petitioner on the date of hearing, and hence no mention was made in the report of the Advisory Board about the non appearance of a friend on behalf of the petitioner.
Mr. Jain argued that in a number of decisions commencing from A.K. Roy vs Union of India, ; 1 it has been consistently held that even though a detenu will not be entitled to have legal assistance, he does have a right to have the assistance of a friend at the time his case is considered by the Advisory Board and hence denial of opportunity to have the assistance of a friend would vitiate the detention.
This principle is undoubtedly a well stated one.
It has however to be noticed that though the Advisory Board had permitted the detenu to appear alongwith a friend the detenu had failed to take a friend with him.
He did not also represent to the Advisory Board that he did not have adequate time to get the services of a friend and that he required time to have the services of a friend.
Such being the case, he cannot take advantage of his own lapses and raise a contention that the detention order is illegal because he was not represented by a friend at the meeting of the Advisory Board.
This position is a settled one and we may only refer to the observation of this Court in Vijay Kumar vs Union of India, AIR '1988 SC 934 at 939: "It appears from the observation made by the High Court that the appellant, without making any prayer before the Advisory Board for the examination of his witnesses or for giving him assistance of his friend, started arguing his own case, which in all probability, had given an impression to the members of the Advisory Board that the appellant would not examine any witness.
The appellant should have made a spe cific prayer before the Advisory Board that he would examine witnesses, who were standing outside.
The appellant, however, did not make any such request to the Advisory Board.
There is no reason for not accepting the statement of the detaining authority that the appellant was permitted by the Advisory Board to have the assistance of an advocate or friend at the time of hearing, but the appellant did not avail himself of the same.
In the circum stances, we do not think that there is any substance in the contention made on behalf of the appellant that the Advisory Board acted illegally and in violation of the principles of natural justice in not examining the wit nesses produced by the appellant at the meet ing of the Advisory Board and in not giving permission to the appellant to have the as sistance of his friend.
" 272 From the materials on record, we are satisfied that the appellant was accorded permission to have the services of a friend and the radiogram sent by the Government was duly communicated to him but for some reason he had not availed the services of a friend.
He did not also choose to repre sent to the Advisory Board that he was not given sufficient time to secure the services of a friend.
Consequently, the third contention also fails.
We are only left with the fourth and last contention.
No grievance was made in the petition that the Central Govern ment had not considered the petitioner 's case when the State Government sent a report under Section 3(5) of the Act and the non application of mind by the Central Government viti ates the detention of the petitioner.
This ground of objec tion was raised only during the arguments and consequently the Central Government was permitted to be impleaded as a party respondent.
Learned counsel appearing for the Central Government has stated that the Central Government had infact considered the report sent by the State Government and saw no reason to revoke the order in exercise of its powers upon Section 14.
There is no reason to doubt the correctness of this statement.
One other argument advanced before us was that even though the order of detention had been passed on April 5, 1988, no steps were taken to take the petitioner into custo dy till he surrendered himself in Court on July 4, 1988.
This contention is on the face of it devoid of merit because it has been specifically stated in the counter affidavits that the petitioner was absconding and hence proclamations were made under Sections 82 and 83 Cr.
P.C. and it was only thereafter the petitioner had surrendered himself in Court.
It is not therefore a case where the petitioner was freely moving about but no arrest was effected because his being at large was not considered a hazard to the maintenance of public order.
In the result we do not find any ground for quashing the order of detention passed against the petitioner.
The writ petition is accordingly dismissed.
N.V.K. Petition dismissed.
| IN-Abs | On April 5, 1988 an order of detention was passed against the petitioner in the writ petition under section 3(2) of the .
He could not be served with this order and taken into preventive custody as he was abscond ing.
He was treated as an absconder and resort was had to section 7(2) of the Act.
A proclamation was obtained against him under Sections 82 and 83 of the Criminal Procedure Code 1973 and was executed on May 5, 1988.
He surrendered thereafter in Court on July 4, 1988 and was sent to the District Jail where he was served the detention order and the grounds of detention on July 5, 1988.
In the grounds of detention three incidents were enumer ated indicating that the petitioner had acted in a manner which was against the maintenance of public law and order situation.
The incidents were: (1) On July 8, 1987 the petitioner had gone along with his associates and threatened the contractor of a mango garden that fees for goondagardi (Chauth) should be paid to him and assaulted the contractor.
The matter was reported to the police who registered a case under Sections 301 and 323 I.P.C. (2) On February 11, 1988 the petitioner threatened a shopkeeper that he should pay Rs. 10,000 immediately falling which he would killed.
The shopkeeper reported the matter to the police who had 258 registered a case under section 506 I.P.C. (3) On March 3, 1988 the petitioner taking a Revolver in his hand moved in the market area and, threatened the shop keepers if they do not pay 'Chauth ' they could not open their shops.
On account of this threat the entire market was closed.
The grounds of detention also informed the petitioner that he could make a representation under section 3 of the Act and that the matter would be submitted under section 10 to the Advisory Board, and that he could make any representation for the consideration of the Board.
The meeting of the Advisory Board was fixed on August 2, 1988.
The Board considered the written and oral representa tions of the petitioner and gave a report that there was sufficient cause for the detention of the petitioner.
The State Government accepted the report of the Advisory Board and passed a further order on August 17/18, 1988 confirming the detention of the petitioner.
In the writ petition to this Court the detention order was assailed on the following grounds: (1) The three grounds set out in the grounds of deten tion are not incidents which would affect the maintenance of public order or the even tempo of the life of the community.
(2) the third incident has been concocted in order to give credibility to the detention order.
(3) The petitioner was denied the opportunity to have the assistance of a friend when he appeared before the Advisory Board, and (4) That the Central Government had not considered the petitioner 's case when the State Government sent a report under section 3(5) of the Act and the nonapplication of mind by the Central Government vitiates the detention of the petitioner.
Dismissing the writ petition, HELD: 1 .(a) The demand for chauth from the contractor and the attack launched on him would show that it was not a case of singling out a particular contractor for payment of chauth but a demand expected to be complied with by all owners or contractors of mango groves in the locality.
In such circumstances the demand made and the attack launched would undoubtedly cause fear and panic in the minds of all the owners and contractors of mango groves in that area, and this would have affected the even tempo of life of the community.
[265E F] 259 l.(b) The incident in the second ground must also be viewed in the same manner in which the first incident has been construed as indicated above.
It is not as if the demand and the threat following it were made against Ashok Kumar in an isolated manner.
On the other hand, the demand had been made as part of a scheme to extort money from all the shopkeepers under a threat that their continuance of business and even their lives would be in danger if chauth was not paid.
This demand would have certainly made all the shopkeepers in that locality feel apprehensive that they too would be forced to make payments to the petitioner.
and that otherwise they would not be allowed to run their shops.
[265G H; 266A B] l.(c) In so far as the incident in the third ground is concerned, the petitioner is stated to have taken a revolver with him and threatened all the shopkeepers in the market, that if anyone failed to pay 'chauth ' he would not be al lowed to open his shop and he would have to face the conse quences.
This incident cannot be considered as merely caus ing disturbance to the law and order situation but must be viewed as affecting the even tempo of life in the market.
[266B D] l.(d) Whether an act relates to law and order or to public order depends upon the impact of the act on the life of the community.
In other words if the reach and effect and potentiality of the act disturb or dislocate the even tempo of the life of the community, it will be an act which will affect public order.
[266E, G] In the instant case, it cannot be said that the demands made and threats given by the petitioner to the contractors and shopkeepers as mentioned in the three grounds would have its reach only to the limited extent of affecting the law and order situation, and not go so far as to affect the maintenance of public order.
[267E] Dr. Ram Manohar Lohia vs State of Bihar, ; ; Arun Ghosh vs State of West Bengal, ; Nagendra Nath Mondal vs State of West Bengal, ; ; Nandial Roy vs State of West Bengal, referred to and Gulab Mehra vs State of U.P., [1987] IV SCC 302, distinguished.
It is not possible to accept the contention that third incident referred to in the grounds of detention is a concocted altair.
The records go to show that H.C. Khajan Singh had promptly reported the incident at the police station and the truth of his report had been verified by Inspector R.C. Verma.
[267H; 268A] 260 State of U.P. vs Kamal Kishore Saini, ; at 213 referred to.
Though the Advisory Board had permitted the detenu to appear along with a friend the detenu had failed to take a friend with him.
He did not also represent to the Advisory Board that he did not have adequate time to get the services of a friend and that he required time to have the services of a friend.
Such being the case, he cannot take advantage of his own lapses and raise a contention that the detention order is illegal because he was not represented by a friend at the meeting of the Advisory Board.
He did not also choose to represent to the Advisory Board that he was not given sufficient time to secure the service of a friend.
[271C D; 272B] 4.(a) The Central Government had in fact considered the report sent by the State Government under section 3(5) of the Act, and saw no reason to revoke the detention order in exercise of its powers under section 14.
[272D] 4.(b) The petitioner was absconding and proclamations were made under sections 82 and 83 Cr.
P.C. and it was only thereafter the petitioner had surrendered himself in Court.
The challenge to the detention order on ground of delay in arrest is not sustainable.
This is not a case where the petitioner was freely moving about but no arrest was effect ed because his being at large was not considered a hazard to the maintenance of public order.
[272F]
|
Appeal No. 398 of 1956.
Appeal from the judgment and order dated March 19, 1956, of the Bombay High Court in Appeal No. 45 of 1955, arising out of the judgment and order dated March 23, 1956, of the said High Court in its Ordinary Original Civil.
Jurisdiction in Suit No. 468 of 1951.
M. C. Setalvad, Attorney General for India, N. P. Nathwani, J. B. Dadachanji, section N. Andley and Rameshwar Nath, for the appellants.
Purshottam Tricumdas, K. K. Desai and I. N. Shroff, for the respondents.
March 31.
The Judgment of the Court was delivered by 348 BHAGWATI J.
This appeal with a certificate of fitness is directed against the judgment and decree passed by the High Court,of Judicature at Bombay in appeal from its ordinary Original Civil Jurisdiction confirming, though on different grounds, the judgment and decree passed by a single Judge of that High Court in Suit No. 468 of 1951 instituted by the appellants (Original Plaintiffs) to recover from the respon dents (Original Defendants) a sum of Rs. 1,80,099 8 0 with interest and costs.
Since the year 1932 the first appellant has been a member of the East India Cotton Association Ltd., (hereinafter referred to as " the Association " ) as the sole 'proprietor of the firm of Messrs. Narrondass Manordass There in after referred to as "the member firm").
The first appellant along with other partners carried on business in partnership in Bombay inter alia as Cotton Merchants and Commission Agents in the name and style of Messrs. Narrondass Manordass, the 2nd appellant (hereinafter referred to as " the partnership firm ").
The respondents are a partnership firm and also a member of the Association.
Between September 23, 1947, and December 10, 1947, the member firm sold to the respondents 2,300 bales of Broach Vijay Fine 3/4" Navsari and/or Bardoli 7/8" Cotton for March/April 1948 Delivery.
Out of these 2,300 bales, 1,100 bales were disposed of by means of " Havalas " and in respect of the remaining 1,200 bales, there were cross contracts.
In the result when the time for " Delivery " arrived, sales in respect of 700 bales remained outstanding and the member firm was liable to give delivery of 700 bales to the respondents.
As however, the member firm failed to give delivery of the said 700 bales to the respondents, under the relevant by laws of the Association, the respondents " Invoiced Back " these 700 bales to the member firm on May 3, 1948, and as a result of this " Invoicing Back " a sum of Rs. 1,07,530 8 0 became due and payable by the member firm to the respondents and with regard to the transactions of all the 2,300 bales taken together an aggregate sum of Rs. 1,79,749 8 0 became due and payable by the 349 member firm to the respondents.
In respect of this sum of Rs. 1,79,749 8 0, the respondents sent to the member firm eight separate " Debit Notes " in respect of varying amounts and finally a consolidated debit note for Rs. 1,79,749 8 0.
It appears that the contract notes in respect of these transactions had been signed by one Ramanlal Nagindas who had been employed as a salesman in the Ready Cotton Department of the partnership firm.
The appellants contended that the said Ramanlal Nagindas had no authority to enter into the said transactions or to sign contract notes in respect thereof on behalf of the appellants and also that the said contracts were not in accordance with the by laws of the Association and they therefore denied their liability in respect of the said transactions.
The partnership firm, however, as the beneficiary under the said contracts decided to pay the amounts claimed by the respon dents without prejudice to the rights and contentions of both the parties.
On May 7, 1948, the said sum of Rs. 1,79,748 8 0 was paid by the partnership firm and was received by the respondents in terms of the letter addressed by the respondents on the said date: "The payment is made by you and accepted by us without prejudice to the rights and contentions of both the parties in respect thereof.
" A further sum of Rs. 350 being the amount of penalty for the alleged failure to tender the aforesaid 700 bales of the said contracts of Broach/Vijay March/April 1948 Delivery, was also paid by the partnership firm to the respondents on June 6, 1948, without prejudice to their aforesaid contentions.
The said Ramanlal Nagindas had entered into similar transactions with several other merchants and some of them claimed arbitration under by law 38 A of the Association.
Petitions were thereupon filed by the member firm in the High Court at Bombay being Petitions Nos.
A/51, A/52, A/55 and A/56 of 1949 under section 33 of the Indian Arbitration Act inter alia for a declaration that there existed no valid and enforceable arbitration agreement between the parties.
Mr. Justice Shah delivered judgment in the said petitions 350 on August 20, 1950, holding inter alia that the said contracts were void as being not in accordance with the by laws of the Association and allowed those petitions.
The respondents to the petitions thereupon filed petitions under article 136 of the Constitution for special leave to appeal to this Court against the said judgment of Mr. Justice Shah.
These petitions were, however, dismissed by this Court on or about April 6, 1951.
The appellants thereafter by their attorney 's letter dated May 2, 1951, called upon the respondents to return the said sum of I Is.
1,80,099 8 0 (being the aggregate of the said two sums of Rs. 1,79,749 8 0 and Rs. 350.) with interest thereon at the rate of 6 per cent.
per annum.
The respondents failed and neglected to pay to the appellants the said sum or any part thereof with the result that on May 7, 1951, the appellants filed the suit against the respondents for repayment to them of the said sum with interest and costs.
In the plaint as filed the appellants averred that the said contracts were void under the Bombay Cotton Contracts Act, 1932, as being not in accordance with the by laws of the Association inter alia in the following respects: (1) The contract notes produced by the respondents omitted to state the difference of Rs. . above or below the settlement rate of hedge contracts for the purpose of periodical settlements as required by by laws 139 and 141; and (2) no provision was made in any of the aforesaid contract notes with regard to the measurement of bales as required by the official form for delivery contracts prescribed in bylaw 80.
The respondents in their written statement contended that there was no by law which required any person to agree upon any difference above or below the settlement rate of hedge contracts for the purpose of periodical settlements and to state the same.
They further contended that the relative provisions contained in the official contract form had become obsolete as at all material times there were no hedge contracts bearing different numbers and in practice the said contracts were not put through periodical settlements.
351 They also contended that at all material times there was no by law which required any person to agree upon any specific measurements in respect of the bales agreed to be purchased inasmuch as the operation of by law 101 in regard thereto had been suspended by the Board since November 30, 1942.
After the suit reached hearing the appellants amended the plaint by averring that by reason of the said payments having been made by them and accepted by the respondents without prejudice to the rights and contentions of both the parties there was an implied agreement between them that in the event of the appellant 's establishing that they were not bound to pay the said sums to the respondents and that the respondents were not entitled to the payment thereof the respondents would repay or return the same to the appellants.
This plea was traversed by the respondents in the supplemental written statement which they filed.
The learned trial Judge followed the judgment of Mr. Justice Shah and held that the omission of the clause regarding measurement in the contract notes did not alter the character or legal effect of the contracts.
He similarly held that the omission of any reference in the contracts to the amount of difference above or below the settlement rate of hedge contracts in the last term of the contract notes rendered the contracts void.
He however was of the opinion that there was no implied agreement between the parties of the nature alleged by the appellants and that the payment made by appellants to the respondents was voluntary and therefore dismissed the appellants ' suit with costs.
The appellants preferred ail, appeal against this decision and the appellate Court dismissed the appeal and confirmed the decree passed by the learned trial Judge, though on different grounds.
The appellate Court agreed with the learned trial Judge that the omission of the term regarding measurement in the contract notes did not affect the character or legal affect of the contracts.
In regard to the omission to fill up the difference above or below the settlement rate 352 fixed for the hedge contracts in the last clause of the contract notes, however, the appellate Court was of the opinion that there was no obligation on the parties to agree to add or deduct the difference above or below the settlement rate as contended by the appellants.
If the parties did agree then the contract form provided that the agreement should be set out therein.
If, however, they did not agree then the first part of cl.
(2) of by law 141 would come into play and the settlement of the delivery contract would go through on the basis of the settlement rate of the hedge contract.
The omission to fill up the difference was thus of no consequence and did not invalidate the contracts.
The appellate Court also differed from the trial Judge on the question of the implied agreement and held that if the appellants succeeded in establishing that the respondents were not entitled to receive the payments the respondents were bound to repay the sums paid by the appellants to them.
In view, however, of the conclusion reached that the contracts were not void, the appellate Court dismissed the appeal.
The provisions of the Bombay Cotton Contracts Act, 1932 (Bom.
IV of 1932) and the by laws of the Association which fall to be considered by us may now be referred to: Section 8(1) (Bombay Cotton Contracts Act, 1932): " Save as hereinafter provided in this Act, any contract (whether either party thereto is a member of a recognized cotton association or not) which is entered into after the date on which this Act comes into operation and which is not in accordance with the by laws of any recognized cotton association shall be void.
" By law 80 of the Association: " Forward contracts between members how made: Delivery Contracts between members shall be made on the official form given in the Appendix.
Hedge contracts between members may be verbal or in writing and when in writing shall be in one or other of the forms given in the Appendix.
Whether verbal or written all contracts shall be subject to the by laws, 353 provided that in the case of Delivery Contracts By laws 149 to 163 inclusive shall not apply.
The specimen of the official contracts form in triplicate as used in 1947 48 (Vide Exhibit " D ") contained the following terms amongst others: No. Contract Note From Brokers To Messrs. . . . .
We have this day bought by your order and for your account subject to the By laws of the East India Cotton Association Ltd. From Messrs. (. ) bales of Cotton at Rs. per candy, delivered in Bombay in full pressed bales.
Measurement. tons/per 100 bales.
(For delivery contracts only).
for the purpose of periodical settlement of this contract we agree to a difference of Rs. above/below the settlement rate of hedge contract No. Remarks. Bombay. 194 No. Contract Note From Brokers To Messrs. . . . .
We have this day sold by your order and for your account subject to the By laws of the East India Cotton Association Ltd. To Messrs. (. ) bales of. Cotton. at Rs. per candy, delivered in Bombay in full pressed bales.
Measurement. tons/per 100 bales.
(For delivery contracts only).
For the purpose of periodical settlement of this contract we agree to a differ ence of Rs . above/below the settlement rate of hedge con tract No. Remarks . Bombay . 194 The contract notes which are rendered between the member firm and the respondents, however, contained no term as to measurement and so far as the last clause was concerned the blanks in regard to the difference of Rs. above or below the settlement rate of hedge contract No. were not filled in.
The relevant by laws in connection with these two terms contained in the official contract form were by law 101, and by laws 139 and 141: By law: 101.
Claims for excess measurement.
In respect of all Forward Contracts, measurement 45 354 shall approximate 13 1/2 tons per 50 bales provided that in respect of Forward Contracts, other than Hedge Contracts, the parties may agree upon any other measurement.
In all Forward Contracts, for any port the rate or rates of freight for any excess measurement over 13 1/2 tons per 50 bales shall be fixed by the Board from time to time and unless otherwise fixed the rate for such excess for all ports shall be Rs. 15 per ton in respect of each lot of 50 bales measuring more than 13 1/2 tons but not more than 14 1/2 tons and in respect of each lot of 50 bales measuring more than 14 1/2 tons Rs. 35 per ton for any excess over 13 1/2 tons.
No allowance for excess measurement shall be payable by the seller: (a) unless the buyer has given to the seller reasonable notice fixing an appointment for measurement, or (b) unless the buyer submits a claim to the seller within 6 weeks after the complete lot has been weighed over.
The Board shall have power from time to time and at any time to suspend the operation of this Bylaw as regards measurements.
By law: 139. "Settlement Days.
All Delivery Contracts other than those excepted under By laws 136 and Hedge Contracts shall be subject to periodical settlements through the Clearing House and in every case the parties to the contract must be members of the Association.
Settlements of differences due on open contracts and of other liabilities to be settled through the Clearing House shall be made once weekly on days which shall be fixed by the Board and notified in a calendar to be published annually.
The day on which Balance Sheets are required to be submitted to the Clearing House shall be known as Settlement Day.
" By law: 141.
Settlement rates. (1) For the purpose of these settlements, settlement prices for all positions of the Hedge Contract shall be fixed by the Board on or about the third working day immediately preceding Settlement 355 Day.
The prices so fixed shall be I P. M. prices on the day of fixation.
(2)In the case of Delivery Contracts, the settlement price of the Hedge Contract shall be the basis for the periodical settlement.
Such allowances as shall be agreed upon by the parties in their contract to cover any difference, between the cotton contracted for and the cotton which is the basis of the Hedge Contract shall be added to or deducted from the said settlement price.
In the case of contracts for descriptions which are not tenderable against the Hedge Contract the parties may either agree in their contract upon an allowance above or below the Hedge Contract for the purpose of their periodical settlement or may apply to the Board to fix settlement rates.
. . . . . . . . . . .
The only question for our determination in this appeal is whether the contracts between the parties were not in accordance with the by laws of the Association and therefore void.
There is no doubt that all the contracts were subject to the by laws of the Association.
The question still remains whether they were in accordance with the by laws because if they were not in accordance with those by laws they would be void.
The expression " not in accordance with " has been the subject of judicial interpretation in Radhakisson Gopikisson vs Balmukund Ramchandra (1).
Their Lordships of the Privy Council there held that the form prescribed was not a stereotyped one and that literal compliance with it was not essential.
The only thing required was that the contract notes must contain all the terms and conditions set out in the form in order to comply with it.
Their Lordships were of the opinion that substantial compliance with the form would be enough and if such sufficient compliance with the by laws was found in a particular case that would save the contracts from being declared void as not being in accordance with the by laws.
It was, however, urged on behalf of the appellants that by law 80 prescribes the form in which the contracts were to be entered into and all the terms and (1) (1932) L.R. 60 I.A. 63.
356 conditions incorporated in the official contract form had to be strictly complied with, that the omission of the term as to measurement as also the omission to fill in the blanks in regard to difference of Rs. above or below the settlement rate of hedge contract No. . . . were such departures from the form prescribed as would render the contracts void because it could not be then said that there was sufficient compliance with the statutory form.
Reliance was placed in support of this contention on Burchell vs Thompson (1), Ex parte Stanford, In re Barber (2), Thomas vs Kelly (3) and Parsons vs Brand & Cols vs Dickson (4).
The principle emerging from these decisions was enunciated to be that if the document executed by and between the parties departed from a characteristic part of the form prescribed or made a difference in the legal effect of the instrument, it would not be in accordance with the form and would therefore be void.
It would all depend upon the materiality of the particular term which is incorporated in the form.
If the non compliance with the requirements of the form were such as to make the document something else by reason of a characteristic part of the form not being followed or the document would lose some legal effect which it would have had if the proper words had been inserted therein, it cannot be said that there is sub stantial compliance with the statutory form.
Considering the term as to measurement in this light, it appears that the same had its basis in the requirements of the trade in regard to the pressing of the bales.
The bales which were the subject matter of these forward delivery contracts were either meant for transport within the country or export outside the country.
The bales were to be fully pressed so as to occupy the minimum space either in transport by rail or by steamer and initially they were bound with hoops.
The baling hoops were however difficult to obtain from Japan and therefore the bales came to be bound with ropes made of cotton, jute coir and hemp.
The bales thus bound otherwise than with hoops (1) (3) (4) , 357 occupied more space and difficulties were encountered by the merchants because of their being obliged to pay extra insurance and freight charges in respect of such bales.
Not only did the railways charge more for the transport of such bales, the shipping companies also did so and the insurance companies charged higher rates for insurance because the bales were not pressed in a manner which would minimise the risks of insurance.
All these factors brought about a situation creating difficulties between the purchasers and the sellers of cotton and these difficulties had to be resolved by the Association.
by law 101 had proceeded on the basis of cotton bales being bound with hoops, the approximate measurement in tons as agreed and understood in the trade being, 13 1/2 tons per 50 bales.
That was the standard measurement.
It was open however to the parties to agree upon any other measurement.
If any measurement other than the standard measurement was agreed to, an adjustment had to be made by reason of such difference in measurement and by law 101 provided that certain amount therein specified had got to be paid by the seller to the purchaser as and by way of allowance for such excess measurement.
Towards October, 1942, the situation in regard to the baling hoops deteriorated so much that it was thought desirable that bales bound with ropes should be permitted to be tendered under the by laws of the Association and that the operation of by law 101 as regards measurements should be suspended.
There were heavy fluctuations in the prices of the materials permitted to be used, and it was therefore thought advisable to fix certain allowances from time to time or before the beginning of the delivery periods taking into consideration the extra insurance and freight charges, if any, in respect of such bales.
A sub committee appointed by the Association made a report in this behalf on October 29, 1942, and on November 20 1942, the Board of Directors of the Association passed a resolution approving the recommendations of the subcommittee with this modification that the allowance to be prescribed in the price of bales bound with ropes 358 as against the price of bales bound with hoops as provided in by laws 96 and 119, be fixed before the commencement of the season and not be altered from time to time.
The Board of Directors issued a notice on November 30, 1942, suspending the operation of bylaw 101 as regards the measurement until further notice.
The position as it obtained at the time when the suit contracts were entered into was that by law 101 as regards measurement had been suspended and there was no necessity so far as the by laws went to make any mention in the contracts in regard to the same.
If the claim for excess measurement had not to be entertained, it was not at all necessary to mention the measurement in the contract forms and there would be substantial compliance with the contract form, even though no measurement was mentioned therein, the very basis for the mention of such measurement having disappeared.
It was, however, urged on behalf of the appellants that measurement was an essential part of the description of the goods sold and the suspension of by law 101 made it all the more necessary that the measurement should be specified in the contract form itself.
The standard measurement which had been mentioned in by law 101 had disappeared and it would therefore be necessary to mention in the contract form what was the measurement on the basis of which the price of the contract had been fixed by and between the parties.
If the bales actually tendered measured more in weight than what was actually agreed upon, the purchaser would be entitled to obtain from the seller an allowance for such excess measurement and that was the reason why it was necessary after the suspension of by law 101 to mention the agreed measurement between the parties.
This argument however ignores the fact that simultaneously with the suspension of the operation of the by law 101, by laws 96 and 119 which referred to forward and hedge contracts respectively were altered and provision was made therein to incorporate measures consequent upon the tender of bales bound with ropes 359 in place of bales bound with hoops.
The consequences of such tenders were worked out in the by laws as thus amended and allowances in the price of bales bound with ropes as against the price of bales bound with hoops were also provided for.
These allowances were in accordance with the resolution of the Board dated November 20, 1942, to be fixed before the commencement of the season and if such allowances were provided for there was nothing further to be done in regard to the difference in measurement, if any.
If the situation which obtained after November 20, 1942, provided for a tender of bales bound with ropes instead of bales bound with hoops in fulfilment of the contracts entered into between the parties, that was well known to all the members of the Association and it was open to them while fixing the prices themselves to take count of the extra charges for insurance and freight which would be payable by the purchaser in the event of bales bound with ropes being tendered instead of bales bound with hoops.
It, therefore, follows that the omission to mention the measurements in the contract notes did not render the contracts not in accordance with the by laws.
There was no such by law in operation at the time and even otherwise there was no need whatever to incorporate in the contract notes any term as to measurement.
It could not therefore be said that there was any departure from an essential or a characteristic part of the contract form or that the legal effect of the contracts was changed so as to invalidate the same.
When we come to the term in regard to the differences of Rs. . . above or below the settlement rate of hedge contract No. . . we find that that had reference to periodical settlements of contracts through the clearing house.
In accordance with bylaw 139 all delivery contracts other than those excepted under by law 136 and hedge contracts were subject to periodical settlements through the Clearing House which settlements had to be made once weekly on days fixed by the Board.
If the contracts had got to go through the clearing house in this manner it was necessary also that settlement rates should be fixed 360 and by law 141(1) provided that settlement prices for all positions of the hedge contract should be fixed by the Board.
The settlement prices thus fixed were to be taken as the basis for the periodical settlement of delivery contracts and it was further provided in bylaw 141(2) that such allowance as shall be agreed upon by the parties in their contracts to cover any difference between the cotton contracted for and the cotton which was the basis of the hedge contract shall be added to or deducted from the said settlement prices.
This was the basis of the provision contained in the relevant term of the contract form.
In the case of contracts for descriptions not renderable against the hedge contract it was open to the parties either to agree upon an allowance above or below the hedge contract or they would make an application to the Board to fix the settlement rates.
Whenever there was an agreement in this behalf the parties were to mention the difference thus agreed into the contract form and the periodical settlements of delivery contracts were to be effected on that basis.
The question arises as to whether the parties were bound to enter into any such agreement at the time they entered into the contracts.
It was contended on behalf of the appellants that such an agreement was necessary because it would otherwise involve the parties into payment of large sums of money on the settlement day next after the day of the contract.
The hedge contracts appertained to cotton of the lowest average and if the quality of cotton which was the subject matter of the contract between the parties was, as was usual, of a higher variety, it would involve the payment of large amounts by way of differences on the next settlement day, which certainly would not be within the contemplation of the contracting parties.
If that was so, the parties would agree to a difference between the rates of the cotton contracted for and the cotton which was the basis of the hedge contract and this difference above or below would serve to minimize the incidence of such payment on the next settlement day.
It was, therefore, submitted that it was incumbent on the parties when entering into a contract to 361 fill in this term as to differences.
If they agreed upon such differences the blank had to be filled in accordingly; but even though they did not agree upon any such differences, it was necessary for them to mention in the contract form that the difference above or below the rate of the hedge contract agreed upon by them was nil.
It was contended on the other hand on behalf of the respondent that there was no obligation on the parties entering into the contract to fill in that term.
If they agreed upon the difference all well and good but if they did not agree upon the difference, the first part of by law 141(2) stepped in and the consequences had to be worked out as if there was no agreement and the differences had to be paid on the settlement day next ensuing on the basis of the difference between the contract rates and rates of hedge contract, even though it may involve a payment of a substantial amount all at once.
According to this submission, in the case of contracts for descriptions tenderable againt the hedge contract two positions arose: viz., (1) parties to the contract may not agree to any difference in which case it would not be necessary to fill in that term in the contract note or (2) they may agree to the difference in which event the difference would be mentioned in the contract note.
In the case of contracts for descriptions which were not renderable against the hedge contract three positions would arise, viz., (1) the parties may not agree upon any difference in which event it would not be necessary to fill in the term as to difference in the contract notes; (2) the parties may agree upon such difference and that would have to be mentioned in the contract notes or (3) the parties could apply to the Board to fix the settlement rates.
It appears that the contention urged on behalf of the appellants would be more in consonance with business idea, , because no business man would think of immediately forking out a large sum of money on the next ensuing settlement day.
It would be tantamount to paying the price of the goods or a substantial part thereof long before the due date of delivery ever 46 362 arrived.
While recognizing the necessity of arriving at an agreement in this manner we are, however, not impressed with the argument that in the event of no such agreement as to the difference having been reached it would even so be necessary to mention in the contract note that the difference agreed upon was nil.
When the parties entered into the transactions all the terms and conditions of the contract would certainly be negotiated and agreed upon between them.
It would be open to them, in view of the by laws above referred to, to agree upon the difference above or below the settlement rate of hedge contracts for the purpose of facilitating the settlements through the clearing house.
But if no such difference above or below the settlement rate of hedge contracts were agreed upon between the parties, it would not necessarily follow that the word nil had got to be mentioned in the contract notes.
The very fact that no difference above or below the settlement rate of hedge contracts was agreed upon in the manner contemplated would be enough to spell out an agreement that no such difference was to be computed in arriving at the settlement rates in respect of these contracts.
If that was the true position it would be Superfluous to write the word " nil " as contended for by the appellants and the consequences, of such non mention would be the same as if the difference agreed upon was nil.
By law 141 (2) could then be worked out without any difficulty and the settlement rates in the case of delivery contracts would be fixed on the basis of the settlement price of the hedge contracts taking into account the facts that there was either no difference which was agreed upon or that the difference agreed upon was a specific one which was mentioned in the contract notes.
It was however pointed out on behalf of the respondents that the official contract form contained the expression " above/below the settlement rate of hedge contract No. .
Even though this may have been in consonance with the position as it obtained when the hedge contracts of five different varieties were in vogue, involving the specification of hedge contracts as Nos.
I to 5, that position substantially chanced 363 when hedge contracts of these 5 varieties were abolished and in their place and stead was substitute, a hedge contract called the 1.
The five varieties of hedge contracts were also for different deliveries which did not necessarily coincide one with the other and these contracts were not on the market all at one time, With the result that it would be necessary if the requirements of the contract form had to be complied with to fill in the blank not only by describing the hedge contract number, whether it was one or the other of the numbers I to 5 but also the particular hedge contract of a particular delivery.
Even if it may be assumed that the blank to be filled in in this behalf required a mention not only of the hedge contract No but also of a particular delivery thereof, all that went by the board when the I. C. C. was substituted in place of the hedge contract Nos.
I to 5.
The old contract form which had been prescribed by by law 80 was continued without any change being effected therein by virtue of such substitution and if at all the parties to a contract were to fulfill the requirements of the contract form, it would be necessary for them to strike out the words " hedge contract No and put in their place and stead the word " 1. C. C. " Even there the 1.
C. C. appertained to different deliveries which were not on the market all at one time.
The months of delivery were nowhere required to be filled in in the contract form, whether the contract form required the parties to have regard to the hedge contract No or the I. C. C., and to that extent, it can be said that the parties were expected to rely upon their commonsense and the practice of the trade as to what particular delivery was contemplated when the contracts were entered into between them.
All this goes to show that the parties to the contract were not tied down to a literal compliance with the terms contained in the official contract form but were required to act according to the position as it then obtained and if they substantially complied with the requirements of the contract form that was enough.
If the hedge contract No was not in vogue in the 364 market they need not conform to that provision in the official contract form but could make the necessary changes in accordance with the type of hedge contract which was then in vogue.
Similarly, they would have to record in the contract form the agreement reached between them in regard to the difference of Rs. above or below the settlement rate of the hedge contract No. if they came to a particular agreement in that behalf.
if, however, no such agreement was reached between the parties and here the effect of no agreement having been arrived at in regard to such difference would be the same as if the agreement between them was that the difference was to be nil no mention need be made of such difference in the contract form.
The result of either of the two latter positions would be that if the contracts were to pass through the Clearing House the settlement rates would be determined on the basis of the settlement price of the hedge contract fixed by the Board for those various settlements and the parties would have to pay to or receive from one another the differences calculated on the difference between the contract rates and those settlement rates.
The whole of this discussion, however, is academic by reason of the fact that in practice delivery contracts were not put through any periodical settlements and at all material times the operation of this term in the official contract form ' had become obsolete.
This position was not disputed on behalf of the appellants and their counsel stated before the Court that he did not wish to dispute the fact that delivery contracts were at no time submitted to periodical settle ments in the Association.
The effect of this procedure being adopted in the Association was tacitly to suspend the operation of these by laws as to periodical settlements in respect of delivery contracts and it would be superfluous, nay absurd, on the part of the business people entering into contracts subject to the by laws of the Association to incorporate in the contract form provisions which had become obsolete.
If the contracts were not to pass through the periodical settlements in the Clearing House no question would 365 ever arise of settlement rates requiring to be fixed, much less of the basis of such settlement rates being determined, or of the difference of Rs. above or below the settlement rate of hedge contracts being ever agreed upon between the parties.
If under those circumstances, the parties did not fill in those blanks which required to be filled in in the official contract form on the basis of by laws 139 and 141 being in operation, it could not be said that they had failed to substantially comply with the requirements of the official contract form.
The official contract form had to be filled in so far as it was practicable.
The operation of these by laws was in effect suspended and by the tacit understanding of the trade they were to be treated as if they did not exist.
It could not therefore be urged that the parties were put to the necessity of agreeing to such differences, if having regard to the circumstances that prevailed, it was impracticable to do so and if these blanks were not filled in as originally contemplated the contract notes could certainly not be impeached as being not in accordance with the by laws of the Association.
It was, however, urged on behalf of the appellants that if the parties to the contracts intended not to comply with the requirements of by laws 139 and 141 that would by itself vitiate the contracts because in that event the contracts would certainly be not in accordance with the by laws of the Association.
The parties in that event intended to perpetrate an illegality at the very inception of the contracts and the contracts were therefore void.
There is considerable force in this argument but we do not feel called upon to consider the same in view of the fact that that was not the ground on which the validity of the suit contract was challenged in the plaint.
We are therefore of the opinion that the omission to fill in those blanks in the contract notes did not spell any departure from an essential or a characteristic part of the contract form nor was the legal effect of the contracts in any manner changed thereby rendering the contracts void within the meaning of section 8 of the Bombay Cotton Contracts Act, 1932.
366 Both these grounds of attack against the validity of the contracts in question therefore fail and we are of the opinion that the contracts entered into between the appellant, , and the respondents were not void as alleged.
The appellants were therefore not entitled to recover from the respondents the said sum of Rs. 1,80,099 8 0 or any part thereof as alleged or at all and we are of the opinion that the appellate Court was right in rejecting the appellants ' claim.
We cannot part with this appeal without observing that the whole difficulty has been created by reason of the Association not having made the necessary alterations in the contract form in accordance, with the situation as it obtained.
from time to time.
When by law 101 was suspended in operation the Association ought to have deleted the term as to measurement from the contract form.
When the by laws 139 and 141 were virtually abrogated by reason of the delivery contracts not being subjected to periodical settlements in the Clearing House, the Association ought to have similarly deleted the last clause from the official contract form which required the difference of Rs above or below the settlement rates of hedge contract No to be filled in by the parties.
Equally untenable west he retention of the expression " Hedge Contract No when the five different varies of hedge contracts were abolished and one hedge contract named 1.
C. C. was substituted therefor.
We fully endorse the observations made by the appellate Court in the course of its judgment: " We have had occasion to point out in the past how badly the by laws of the East India Cotton Association are drafted and how clumsily the forms also settled, and the present form is an illustration of what we have had occasion to say in the past.
" The manner in which the official contract form which had been settled when the by laws of the Association came first to be promulgated has been retained in its pristine glory in spite of the various changes made in the operation of the by laws and the practice of the trade only enhances the difficulties of the parties and enables the parties who are so minded to raise all 367 sorts of disputes tenable or otherwise in order to avoid their liability in respect of the transactions effected by them in the Association.
It may be hoped that the Association will take effective steps to bring the official contract form in conformity with the bylaw,% in operation from time to time and the practice of the trade prevailing in the Association.
The result therefore is that this appeal fails and must stand dismissed with costs throughout.
Appeal dismissed.
| IN-Abs | Sub section (1) of section 8 of the Bombay Cotton Contracts Act, 1932, provides: " Save as hereinafter provided in this Act, any contract . which is entered into after the date on which this Act comes into operation and which is not in accordance with the by laws of any recognized cotton association shall be void ".
In respect of the transactions in cotton entered into between the parties, the appellants had to pay the respondents a sum of money for failure to give delivery of the cotton bales under the 347 contracts, but the payment was made without prejudice to the rights and contentions of the parties.
Subsequently, the appellants sued the respondents for recovery of the amount on the footing that the contracts were void under section 8(1) of the Bombay Cotton Contracts Act, 1932, as being not in accordance with the by laws of the East India Cotton Association Ltd., of which both the parties were members, in as much as the contract notes did not company with the terms contained in the official contract form provided by the by laws of Association, by reason of the omission to fill in the blanks relating to measurements and difference above or below the settlement rate.
The respondents contended that the relevant provisions contained in the official contract form bad either become obsolete or were suspended at all material times.
The evidence showed that according to the practice of the trade the parties to the contract were not tied down to a literal compliance with the terms contained in the official contract form but were required to act according to the position as it then obtained and that it was sufficient if they substantially complied with the requirements of the contract form : Held, that in the circumstances of the case the official contract form had to be filled in so far as it was practicable and that the omission to fill in the blanks in the contract notes did not spell any departure from an essential or a characteristic part of the contract form; consequently, the legal effect of the contracts was not in any manner changed so as to render the contracts void as not being in accordance with the by laws of the Association, within the meaning of section 8 of the Bombay Cotton Contracts Act, 1932.
Radhakisson Gopikisson vs Balmukund Ramchandra, (1932) L. R. 60 I. A. 63, relied on.
|
ivil Appeal No. 183 of 1989.
232 From the Judgment and Order dated 4.5.88 of the Rajas than High Court in Writ Petition No. 521 of 1988.
Sushil Kr.
Jain for the Appellant.
C.M. Lodha and R.B. Mehrotra for the Respondents.
The Judgment of the Court was delivered by DUTT, J.
Special leave is granted.
Heard learned Counsel for both parties.
This appeal is directed against the judgment of the Rajasthan High Court whereby the High Court dismissed the writ petition of the appellant challenging the order of the Dean of the Faculty of Engineering of the Jodhpur Universi ty, putting in abeyance the admission of the appellant in the B .E.
Degree Course till further orders.
The appellant is a diploma holder and is serving in the 1 N.M. Engineering College (Faculty of Engineering), Jodhpur since 1976 as an Administrator/Instructor.
In may, 1987, the appellant submitted an application to the Study Leave Com mittee of the University of Jodhpur for study leave for three years enabling the appellant to prosecute his studies in the B.E. Degree Course.
On August 3, 1987, the Study Leave Committee recommended the case of the appellant for the grant of study leave and on August 14, 1987 the Syndi cate of the University accepted the said recommendation and granted study leave to the appellant for a period of three years with full pay.
Pursuant to the leave granted to the appellant, he made an application on November 14, 1987 for admission in the B .E.
Degree Course.
At this stage, it will be pertinent to refer to a reso lution dated September 21, 1970 passed by the Faculty of Engineering recommending that the teachers of the University should be granted leave so as to enable them to join the B.E. Degree Course as a regular candidate on a full time basis.
The said resolution was accepted by the Academic Council of the University on March 25, 1970 and the Syndi cate in its turn approved the resolution of the Academic Council.
According to the appellant, the above resolution of the Syndicate was acted upon and, as a matter of fact, certain teachers of the University were admitted to B.E. Degree Course.
In his application dated November 14, 1987, the appellant specifically mentioned the 233 names of seven teacher candidates who had been admitted to the various Departments of the Engineering College in pursu ance of the above resolution of the Syndicate and the policy of the University.
The case of the appellant is that it is the practice of the University to give admissions to teach ers by creating extra seats in addition to general seats.
The appellant made the application for admission after he had been communicated with the resolution of the Syndi cate granting leave on the recommendation of the Study Leave Committee.
Admittedly, the application was made on November 14, 1987 after the last date for admission in the general seats had expired.
Accordingly to the appellant, he was communicated with the decision of the Syndicate granting study leave to him on October 29, 1987 and soon thereafter he made the application for admission.
It is the case of the appellant that in view of the practice of the University, as the teachers who are granted study leave are admitted by the creation of extra seats, the question of making applications after the last date for admission in the general seats is irrelevant.
Be that as it may, the application of the appellant was forwarded by the Professor and Head of the Mechanical and Engineering Department and the Dean, Faculty of Engineering, to the Vice Chancellor.
The Vice Chancellor referred the application back to the Dean observing that the Dean was competent to make admissions.
Certain objections were raised by the Officer in Charge, Admissions, including the objec tion that the appellant had obtained less than 60 per cent marks in the Diploma Examination passed by him.
The Dean considered the said objections and recommended the case of the appellant for admission to the Vice Chancellor with the following observation: "However, there is another aspect of this case which deserves consideration.
The University has in the past, allowed the teacher candi dates of this faculty, securing less than 60 per cent marks in their Diploma Examinations, admission to B.E. Course.
This was perhaps to encourage the Faculty Staff to improve their qualifications so that they serve the faculty in a better capacity.
With these precedents in view, Shri A.C. Singhvi, Instructor, may be admitted to B.E. Degree course as a very special case.
" 234 The Vice Chancellor, after considering the facts of the case, accepted the recommendation made by the Dean.
Thereaf ter, on January 16, 1988, the order for admission of the appellant was issued by the Dean, Faculty of Engineering, admitting the appellant in B.E. Second Year Engineering Course.
Pursuant to the said order, the appellant deposited the requisite fees on the same date and joined the classes from January 16, 1988.
The appellant was, however, communi cated on February 9, 1988 with an order dated January 20, 1988 of the Dean directing that the appellant 's admission was put in abeyance until further orders.
Being aggrieved by the said order dated January 20, 1988 of the Dean, the appellant filed a writ petition in the High Court and, as stated already, the High Court dismissed the writ petition.
Hence this appeal.
The first objection that was raised to the admission of the appellant was that the appellant had not secured 60 per cent of marks which was the minimum requirement for admis sion.
Indeed, the appellant also stated that he had obtained only 59.72 per cent of marks in his Diploma Examination.
It appears that both the University and the appellant proceeded on the assumption that the appellant had secured in the Diploma Examination less than 60 per cent of marks.
It is the case of the appellant that though for teacher candidates it was not necessary to secure 60 per cent of marks in the Diploma Course yet, according to the computation mentioned in the Admission Circular, the appellant had secured 60 per cent of marks.
The Admission Circular provides as follows: "It is further provided that no such candidate who has secured less than 60% marks in the aggregate in the diploma examination shall be eligible for admission to this programme and the admission will be made strictly on the basis of merit determined by taking the per centage of marks obtained at the three diploma examinations passed as follows: I Year: 40 per cent of marks.
II Year: 60 per cent of marks.
III Year: 100 per cent of marks.
235 The candidates must submit, along with their application, true copies of marks sheets of all the three diploma examinations.
" The appellant secured 21.54 (as per 40 per cent weight age), 36.27 (as per 60 per cent weightage) and 65.18 (as per 100 per cent weightage).
The total comes to 122.99 out of 200.
As per the admission rules, this works out to about 61.5 per cent.
Thus, it appears that the appellant had secured more than 60 per cent of marks in the aggregate in the Diploma Examination and was not disqualified for admis sion in that regard.
The next question is whether the appellant should have been admitted after the last date.
We have referred to the resolution of the Academic Council and the Syndicate with regard to the admission of teacher candidates.
It is, howev er, the case of the University that the said resolution has no effect whatsoever and admissions are governed by the statutes of the University.
There is much controversy wheth er in the past the teacher candidates were admitted in extra seats created over and above the general seats.
The appel lant has referred to certain cases where the teacher candi dates were admitted in additional seats created by the University with a view to giving the teachers an opportunity to acquire higher knowledge which may be used in he 'inter est of the institution and which may raise the standard of teaching.
It may be that the previous policy of the University is not in force and the admissions are governed strictly by the statutes or the admission rules framed thereunder.
In the objections raised by the Officer in Charge, Admissions, it was specifically pointed out that the seats were limited and all admissions were made strictly on the basis of merit list drawn amongst all eligible candidates, and that no preferen tial treatment could be given to anyone including employees of the University (non teaching/teaching) in any discipline in any Faculty.
In spite of that objection, the Dean recom mended for the admission of the appellant.
The Vice Chancel lor also considered the office note, but approved the recom mendation of the Dean.
In consequence of such approval by the Vice Chancellor, the appellant was admitted.
It is urged by Mr. Mehrotra, learned Counsel appearing on behalf of the respondents, that the appellant could not be admitted and his admission was illegal.
There may be some force in the contention of the learned Counsel, but when all facts were before the Uni 236 versity and nothing was suppressed by the appellant, would it be proper to penalise the appellant for no fault of his? The admission of the appellant was not made through inad vertence or mistake, but after considering even all objec tions to the same, as raised by the said Officer in Charge, Admissions, in his note.
The appellant was communicated with the decision of the Dean as approved by the ViceChancellor admitting him to the Second Year B .E. Course.
The appellant deposited the requisite fees and started attending classes when he was told that his admission was directed to be put in abeyance until further orders without disclosing to him any reason whatsoever.
It is curious that although the admission to the B.E. Degree Course of the University is governed by statutes of the University and admission rules, the said resolution of the Syndicate dated December 13, 1970 has also been kept alive.
Neither the Dean nor the ViceChancellor was where of the true position, namely, as to whether the said resolution had become infructuous in view of the statutes and the admission rules.
A teacher candidate is likely to be misled by the said resolution.
It is the duty of the University to see that its statutes, rules and resolutions are clear and unambiguous and do not mislead bona fide candidates.
The University should have revoked the said resolution in order to obviate any ambiguity in the matter of admission or included the same in the statutes as part of the admission rules.
When the appellant made the application beyond the last date, his application should not have been entertained.
But the application was entertained, presumably on the basis of the said resolution of the Syndicate.
The appellant also brought to the notice of the Dean the said resolution and also the implementation of the same by admitting seven teacher candidates.
It is submitted on behalf of the University that it was through mistake that the appellant was admitted.
We are unable to accept the contention.
It has been already noticed that both the Dean and the Vice Chancellor considered the objections raised by the Officer inCharge, Admissions, and thereafter direction for admitting the appellant was made.
When after considering all facts and circumstances and also the objections by the office to the admission of a candi date, the Vice Chancellor directs the admission of such a candidate, such admission could not be said to have been made through mistake.
Assuming that the appellant was admit ted through mistake, the appellant not being at fault, it is difficult to sustain the order withholding the admission of the appellant.
In this connection, we may refer to a deci sion of 237 this Court in Rajendra Prasad Mathur vs Karnataka University and another; , In that case, the appel lants were admitted to certain private engineering colleges for the B.E. Degree Course, although they were not eligible for admission.
In that case, this Court dismissed the ap peals preferred by the students whose admissions were subse quently cancelled and the order of cancellation was upheld by the High Court.
At the same time, this Court took the view that the fault lay with the engineering colleges which admitted the appellants and that there was no reason why the appellants should suffer for the sins of the management of these engineering colleges.
Accordingly, this Court allowed the appellants to continue their studies in the respective engineering colleges in which they were granted admission.
The same principle which weighed with this Court in that case should also be applied in the instant case.
The appel lant was not at fault and we do not see why he should suffer for the mistake committed by the Vice Chancellor and the Dean of the Faculty of Engineering.
In the circumstances, we set aside the judgment of the High Court and also the impugned order dated January 20, 1988 of the Dean of the Faculty of Engineering and direct that the admission of the appellant will continue.
The appeal is allowed.
There will, however, be no order as to costs.
N.V.K. Appeal allowed.
| IN-Abs | The appellant was a diploma holder and was serving as an Administrator/Instructor since 1976 in an Engineering Col lege.
In May 1987 he submitted an application to the Univer sity for study leave for three years to enable him to prose cute his studies in the B.E. Engineering Degree Course.
The Study Leave Committee recommended the case on August 3, 1987 and the Syndicate of the University accepted the recommenda tion on August 14, 1987 and the appellant was granted study leave for a period of 3 years with full pay.
This order was communicated to the appellant on October 29, 1987.
The appellant submitted an application on November 14, 1987 for admission on the B.E. Degree Course.
This application was made after the last date for admission in the general seats had expired.
The Officer in Charge, Admissions raised cer tain objections to the effect that the appellant submitted the application after expiry of the last date and that he had obtained less than 60% marks in the Diploma Examination passed by him.
The Dean considered the objections and recom mended the case of the appellant for admission to the Vice Chancellor.
Thereafter the order for admission of the appel lant was issued by the Dean, the appellant deposited the fees and joined classes from January 16, 1988.
On February 18, 1988 the appellant was communicated an order dated January 20, 1988 of the Dean directing that his admission was put in abeyance until further orders.
The appellant challenged the aforesaid order of with drawal of his admission, before the High Court unsuccessful ly. 231 In the appeal to this Court, the objections that were raised to the admission of the appellant were that: (1) he had not secured 60% of marks which was the minimum require ment for admission, and (2) that he should not have been admitted after the last date.
The admission it was submitted was illegal.
Allowing the Appeal, the Court, HELD: 1.
The appellant had secured more than 60% of marks in the aggregate in the Diploma Examination and was not disqualified for admission in that regard.
[235B] 2.
When the appellant made the application beyond the last date, his application should not have been entertained.
But the application was entertained presumably on the basis of the resolution of the Syndicate dated December 13, 1970.
The appellant also brought to the notice of the Dean the said resolution and also the implementation of the same by admitting seven teacher candidates.
[236E F] 3.
Although the admission to the B.E. degree course is governed by statutes of the University and admission rules, the Syndicate 's resolution dated December 13, 1970 had also been kept alive.
Neither the Dean, nor the Vice Chancellor was aware of the true position, viz whether the resolution had become infructuous in view of the statutes and admission rules.
The University should have revoked the said resolu tion to obviate any ambiguity in the matter of admission or included the same in the statutes as part of the admission rules.
[236C E] 4.
It is the duty of the University to see that its statutes, rules and resolutions are clear and unambiguous and do not mislead bona fide candidates.
[236D] 5.
When after considering all facts and circumstances and also the objections by the office to the admission of a candidate, the ViceChancellor directs the admission of such a candidate such admission could not be said to have been made through mistake.
[236G] 6.
Assuming that the appellant was admitted through mistake, the appellant not being at fault, it is difficult to sustain the order withholding the admission of the appel lant.
[236H]
|
Appeal No. 38 of 1989.
From the Judgment and order dated 15.3.
1988 of the Central Administrative Tribunal, Ahmedabad in M.A. No. 49 of 1988.
P.H. Parekh and Shishir Sharma for the Appellant.
B. Dutta, Additional Solicitor General, Ms. Indu Malho tra and C.V. Subba Rao for the Respondents.
The Judgment of the Court was delivered by VENKATARAMIAH, J.
The appellant was working as an Upper Division Clerk in the year 1975.
He was placed under suspen sion by an order dated 25.7.1975 as a result of the institu tion of a criminal prosecution against him and he continues to remain under suspension till today.
By an order dated 4.9.
1975 he was sanctioned subsistence allowance at the rate of 50 per cent of his salary last drawn.
By a further order made on 6.6.1982 the subsistence allowance was reduced to 25 per cent of the salary he was drawing on the date of suspension.
The increments he would have earned from time to time and the periodical revisions of pay scales were not taken into consideration in determining the subsistence allowance.
The charge sheet was filed in the criminal case against the appellant in 1976 and the case was committed to the sessions, but the committal proceedings were quashed by the High Court in 1978.
Then the proceedings again began before the Metropolitan Magistrate in 1979.
The case, however, has not yet come to an end.
Aggrieved by the denial of the salary and allowances due to him for a long time on account of the order of suspension and in particular the order fixing the subsistence allowance at 25 per cent of the salary which he was drawing at the time of suspension by the Order dated 6.5.
1982, the appel lant approached in the year 1988 the Central Administrative Tribunal (Ahmedabad Bench) for a direction to be 227 issued to the Government to restore the original Order dated 4.8.
1975 by which the subsistence allowance was fixed at 50 per cent of his salary.
That petition was dismissed by the Tribunal by its order dated 15.3.1988 on the ground that the appellant had approached the Tribunal more than five years after the date on which the Order dated 6.5.
1982 had been passed apparently on the ground of limitation set out in sub section (2) of section 21 of the Administrative Tribu nals Act, 1985 (hereinafter referred to as 'the Act ').
Aggrieved by the order of the Tribunal, the appellant filed this appeal.
The question for consideration in this appeal by special leave is whether in a case of this nature, the Tribunal was right in holding that the application before it, was barred by time.
Sub section (1) of section 21 of the Act, no doubt, says that a Tribunal shall not admit an application in a case where a final order such as is mentioned in clause (a) of sub section (2) of section 20 has been made in connection with the grievance unless the application is made, within one year from the date on which such final order has been made, and in a case where an appeal or representation such as is mentioned in clause (b) of subsection (2) of section 20 has been made and a period of six months had expired thereafter without such final order having been made, within one year from the date of expiry of the said period of six months.
Sub section (2) of section 21, however, provides that notwithstanding anything contained in sub section (1) of section 21 where the grievance in respect of which an application is made had arisen by reason of any order made at any time during the period of three years immediately preceding the date on which the jurisdiction, powers and authority of the Tribunal become exercisable under the Act in respect of the matter to which such order related, and no proceedings for the redressal of such grievance had been commenced before the said date before any High Court, the application shall be entertained by the Tribunal if it is made within the period referred to in clause (a), or, as the case may be, clause (b) of sub section (1) or within a period of six months from the said date, whichever period expires later.
Sub section (3) of section 21 further confers power on the Tribunal to condone the delay in certain cir cumstances if the applicant satisfies the Tribunal that he had sufficient cause for not making the application within such period.
In the present case the main grievance of the appellant was not that the Order dated 6.5.1982 by which the subsist ence allowance payable to him was reduced to 25 per cent was bad at the commencement although there were some allegations to that effect but it was one relating to the failure of the authority or the Government to review the Order dated 6.5.1982 even though a long period of 5 years had elapsed 228 after the reduction of the subsistence allowance.
His con tention was that the delay in the conclusion of the criminal proceedings as a consequence of which he had been kept under suspension was not due to him and in the circumstances it was not just and proper that he should be paid a subsistence allowance at a reduced rate for an unreasonably long period.
In support of his case the appellant relied upon a decision dated 23.6.1987 of the very bench of the Tribunal in Shri Bhupendra Mahashuklal Mehtap vs The Union of India & Ors., in T.A. No. 223 of 1986 (S.C.A. No. 3509 of 1922) in which Fundamental Rule 53 which authorised the Government to review an order regarding subsistence allowance arose for consideration.
In the said case the Ahmedabad Bench of the Tribunal quashed the Order dated 6.5.1982 passed against the applicant in that case by which the subsistence allowance payable to the said applicant had been reduced.
An order of suspension is not an order imposing punish ment on a person found to be guilty.
It is an order made against him before he is found guilty to ensure smooth disposal of the proceedings initiated against him.
Such proceedings should be completed expeditiously in the public interest and also in the interest of the Government servant concerned.
The subsistence allowance is paid by the Govern ment so that the Government servant against whom an order of suspension is passed on account of the pendency of any disciplinary proceeding or a criminal case instituted against him could maintain himself and his dependants until the departmental proceeding or the criminal case as the case may be comes to an end and appropriate orders are passed against the Government servant by the Government regarding his right to continue in service etc.
depending upon the final outcome of the proceedings instituted against him.
The very nomenclature of the allowance makes it clear that the amount paid to such a Government servant should be suffi cient for bare subsistence in this world in which the prices of the necessaries of life are increasing every day on account of the conditions of inflation obtaining in the country.
It is luther to be noted that a Government servant cannot engage himself in any other activity during the period of suspension.
The amount of subsistence allowance payable to the Government servant concerned should, there fore, be reviewed from time to time where the proceedings drag on for a long time, even though there may be no express rule insisting On such review.
In doing so the authority concerned no doubt has to take into account whether the Government servant is in any way responsible for the undue delay in the disposal of the proceedings initiated against him.
If the Government servant is not responsible for such delay or even if he is responsible for such delay to some extent but is not primarily responsible for it, it is for the Government to recon 229 sider whether the order of suspension should be continued or whether the subsistence allowance should be varied to his advantage or not.
The decision on the said question no doubt depends upon several factors relevant to the case.
In the instant case the appellant was suspended in the year 1975.
Now nearly 13 years have elapsed from the date of suspen sion.
He was paid subsistence allowance at the rate of 50 per cent of the salary last drawn by him from 1975 and 1982 and from 1982 he is being paid 25 per cent of the salary last drawn by him.
It is not clear from the record before us, since the application made by the applicant was dis missed by the Tribunal at the preliminary stage, whether the appellant was responsible for the inordinate delay in the disposal of the case instituted against him.
In the circum stances of the case we are of the view that even though no relief could be given to the appellant in respect of the period which was beyond three years from the date on which the Tribunal commenced to exercise its powers under the Act, it was quite open to the Tribunal to consider whether it was proper for the Government to continue to give effect to the Order dated 6.5.1982 from any subsequent date and if the Tribunal came to the conclusion that the Order dated 6.5.1982 was required to be revised it could pass an appro priate order notwithstanding the fact that a period of five years had elapsed from the date on which the order reducing the subsistence allowance was passed.
While doing so it was open to the Tribunal to fix a date within the period of the said three years from which the appellant should be paid the subsistence allowance at the revised rate of course, having due regard to the date of the application also.
In the alternative, the Tribunal could have asked the authority concerned to review the order.
In the circumstances, the Tribunal was not right in rejecting the application solely on the ground that the order reducing the subsistence allowance having been passed on 6.5.
1982 the Tribunal could not entertain an application for directing the Government to revise the Order dated 6.5.
1982 even in respect of any period within three years from the date on which the Tribunal commenced to exercise its powers having due regard to the date of the application also since we feel that the cause of action in respect of such prayer arises every month in which the subsistence allowance at the reduced rate is paid.
We therefore set aside the order of the Tribunal and remand the case to it to dispose of the application made by the appellant on merits.
We make an order accordingly.
There is no order as to costs.
P.S.S. Appeal allowed.
| IN-Abs | Sub section (2) of section 21 of the empowers the Tribunal not to entertain an applica tion the grievance in respect of which had arisen beyond three years immediately preceding the date on which the jurisdiction, powers and authority of the Tribunal became exercisable under the Act.
The appellant, an Upper Division Clerk, was suspended from service, in July 1975 pending on account of the insti tution of criminal proceedings against him.
By an order dated August 4, 1975 he was sanctioned subsistence allowance at the rate of 50 per cent of his salary last drawn.
By a further order dated May 6, 1982 the subsistence allowance was reduced to 25 per cent of the salary he was drawing on the date of suspension.
He moved a petition before the Tribunal in the year 1988 for a direction to the Government to restore the original order of August 4, 1975.
That peti tion was dismissed by the Tribunal solely on the ground that the order reducing the allowance having been passed on May 6, 1982, it could not entertain the application made more than five years thereafter, apparently on the ground of limitation set out in section 21(2) of the Act.
In this appeal by special leave it was contended for the appellant that the Government had failed to review the order of May 6, 1982 even though a long period of five years had elapsed after the reduction of the subsistence allowance, that the delay in conclusion of the criminal proceedings, as a consequence of which he had been kept under suspension, 225 was not due to him and in the circumstances it was not just and appropriate that he should be paid a subsistence allow ance at a reduced rate for an unreasonably long period.
Allowing the appeal, HELD: 1.
The Tribunal was not right in rejecting the application.
[229F] 2.
The cause of action in respect of a prayer seeking enhancement of subsistence allowance arises every month in which the said allowance at the reduced rate is paid.
There fore, in the instant case, though no relief could be given to the appellant in respect of the period which was beyond three years from the date on which the Tribunal commenced to exercise its powers under the Act, it was quite open to the Tribunal to consider whether it was proper for the Govern ment to continue to give effect to the order dated May 6, 1982 from any subsequent date, and if the Tribunal came to the conclusion that the said order was required to be re vised it could pass an appropriate order notwithstanding the fact that a period of five years had elapsed from the date on which the order reducing the subsistence allowance was passed.
While doing so it was open to the Tribunal to fix a date within the period of the said three years from which the appellant should be paid subsistence allowance at the revised rate having due regard to the date of the applica tion.
[229C E] 3.1.
The very nomenclature of the allowance makes it clear that the amount paid to a Government servant under suspension should be sufficient for bare subsistence in this world in which the prices of the necessaries of life are increasing every day on account of the conditions of infla tion obtaining in the country.
More so, when a Government servant cannot engage himself in any other activity during the period of suspension.
The amount of subsistence allow ance payable to the Government servant concerned should, therefore, be reviewed from time to time where the proceed ings drag on for a long time, even though there may be no express rule insisting on such review.
[228F G] 3.2.
In doing so, the authority concerned no doubt has to take into account whether the Government servant is in any way responsible for the undue delay in the disposal of the proceedings initiated against him.
If the Government servant is not responsible for such delay or even if he is responsible for such delay to some extent but is not pri marily responsible for it, it is for the Government to consider whether the 226 order of suspension should be continued or whether the subsistence allowance should be varied to his advantage or not.
[228G H; 229A] 4.
The case is remanded to the Tribunal to dispose of the application made by the appellant on merits.
[229G]
|
ivil Appeal Nos. 850852 of 1988.
From the Order dated 23.10.87 of the Customs Excise and Gold (Control) Appellate Tribunal, New Delhi in Appeal No. 830/83 B2 and C/3 105 & 3 105 of 87/B 2.
Order Nos.
2091 to 2093/87 B. A.N. Haksar, H.S. Anand and Mrs. M. Karanjawala for the Appellants.
G. Ramaswamy, Additional Solicitor General, Ashok K. Shrivastava and P. Parmeswaran for the Respondent.
283 The Judgment of the Court was delivered by RANGANATHAN, J.
The appellant, M/s Auto Tractors Limit ed, is a company manufacturing tractors.
For purposes of manufacture, the company imports certain parts and compo nents from abroad.
There are two notifications on the Government of India granting certain concessions from the levy of customs duty which are applicable to such goods as have been imported by.
the appellant.
The first of these, namely, Notification No. 200/79 dated 28.09.1979 (as amended from time to time) exempts components "required for the manufacture of heavy commercial motor vehicles . or of tractors" from so much of the customs duty as is in excess of 25 per cent ad valorem and the whole of the additional duty leviable there on.
The grant of the concession was subject to the fulfill ment of certain conditions specified in the notification.
The second notification was Notification No. 179/80 dated 4.9.1980 (as amended from time to time).
This notification confers an exemption in respect of parts of articles falling under specific headings in the First Schedule to the .
These admittedly included parts required for the purposes of the initial setting up or for the assem bly or manufacture of "tractors", this being an article falling under heading No. 87.01(1) of the First Schedule above referred to.
This exemption was in respect of so much of the customs duty as is in excess of the rate applicable to the said article (i.e. tractor) when imported complete.
This concession was again subject to a certificate and recommendation from certain specified authorities, one of whom is the Directorate General of Technical Development (DGTD) The relief available to the assessee under the first notification of 1979 is, apparently, larger than the one available under the second notification of 1980.
The appellant company imported three consignments.
Each of the consignments was cleared after production of a cer tificate from the DGTD in the following terms: "Certified that M/s Auto Tractors Ltd., Luc know are holding a valid Industrial Licence for the manufacture of agricultural tractors and have an approved manufacturing programme.
It is further certified that the above compo nents of agricultural tractors, which fall under ICT No. 87.01 (1) qualify for conces sional rate of import duty in terms of Cus tom 's Notification No. 179/F No. 370/99/79CUS.
I dated 4.9.1980." (underlining ours).
284 Apparently, since the certificates of the DGTD referred only to Notification No. 179/80, the appellant was granted the concession available under the said Notification.
The appel lant cleared the goods, availing itself of the said conces sion, in March, May and June 1981.
Subsequently, the appellant appears to have realised that it was entitled to the larger concession available under Notification No. 200 of 1979 and that it had erred in clearing the goods after payment of duty subject only to the smaller concession available under Notification No. 179 of 1980.
The appellant therefore filed three refund applica tions in August, September and October 1981 claiming refund to the extent of Rs. 1,55,342.50, Rs. 1,28,350.05 and Rs.6,46,415.44, being the difference between the entitle ments on concession under the two notifications in question.
It also appears that the appellant subsequently applied to the DGTD for an amendment of the original certificates to make it clear that the goods imported by the appellant were eligible for the concession under notification No. 200 of 79.
The DGTD on such application issued a certificate to the following effect: "Certified that M/s. Auto Tractors Ltd. Pra tapgarh are holding an Industrial Licence to manufacture Agricultural Tractors and have an approved manufacturing programme.
It is fur ther certified that the items listed above are components of agricultural tractors falling under ITC No. 87.01 (1) and are eligible for concessional rate of import duty under custom notification No. 200/79 and 52/81 as extended by Custom 's notification No. 81/81 and 82/81 both dated 28.3.
This supersedes the earlier duty concession certificate issued by this office vide Notifi cation No. 179/F No. 370/ 99/79 CUS.
I dated 4.9.1980 under this office letter No. DD II/5(49)/79 Ag dated 16.1.81.
" These amended certificates were also produced before the Customs authorities.
The assessee 's prayer for refund was however rejected by the Assistant Collector of Customs on the ground that the assessee had failed to produce "end use" certificates.
The assessee 's appeals to the Collector of Customs (Appeals) also failed.
There were further appeals to the CUstoms, Excise and Gold (Control) Appellate Tribunal, which by its order dated 23.10.1987, dismissed the appeals of 285 the Appellants and hence the present appeals.
The Tribunal disposed of the assessee 's claim by a short order.
It observed that the Notification No. 200/79 entitled an assessee to the concessions therein mentioned on the fulfillment of three conditions: (i) A manufacturing programme as duly approved by the Direc tor General of Technical Development (D.G.T.D.) should be produced at the time of clearance of the goods.
(ii) The list of components and goods should be produced duly certified by the D.G.T.D.; and (iii) An End use certificate from the same Directorate to be produced in clue course in regard to the consumption of goods in the manufacture of the motor vehicles or tractors, etc.
The Tribunal proceeded to observe: "The first statutory condition of the notifi cation that the manufacturing programme of the appellants as approved by the D.G.T.D. should have been produced before the Assistant Col lector at the time of clearance of the goods was not fulfilled by the appellants.
As a matter of fact at the time of clearance of the goods there was no claim even by the appel lants under Notification Nos. 200 and 201/79Cus.
Their claim at that time was under a different notification No. 179/80 Cus.
Which contained no requirement to produce an ap proved manufacturing programme.
Since the statutory wording of the notification made it imperative for the appellants that the ap proved manufacturing programme should have been produced at the time of clearance and since this condition was not fulfilled, the entitlement of the appellants to the exemption is not accepted.
The approved manufacturing programme was available all along with the appellants yet they did not produce it at the time of clearance before the Assistant Collec tor." (underlining ours) We have heard the learned counsel for the appellant as well as learned Additional Solicitor General and we are of the opinion that 286 the Tribunal has erred in denying the appellant the benefit of the Notification No. 200 of 1979.
This notification made the availability of the concession thereunder subject to three conditions of which one alone is relevant for our purposes.
The Tribunal thought that this condition was that the approved manufacturing programme should have been pro duced at the time of clearance and it has denied the asses see the benefit of the concession, even though satisfied that the approved manufacturing programme was all along available with the assessee, because such programme was not produced at the time of the clearance.
The Tribunal has committed an error in its reading of the relevant condition of the notification.
The condition is not that the manufac turing programme should be produced but that "the importer should produce evidence to the Assistant Collector of Cus toms at the time of clearance of the components or the goods that they have a programme duly approved by the Ministry of Industry and the Industrial Adviser or Additional Industrial Adviser of the Directorate General of Technical Development of the Ministry of Industry for the manufacture of such motor vehicles . . or of tractors".
In other words, the importer had only to satisfy the customs authorities that it had an approved industrial programme for the manufacture of tractors by production of a certificate from the DGTD.
It is indeed common ground before us that the second set of cer tificates issued by the DGTD constitutes sufficient evidence that would entitle the appellant to the concession under Notification No. 20)/1979.
But the argument is that the amended certificates were produced not at the time of the clearance of the goods but only much later and that there fore the appellant is not entitled to the concession under the said notification.
There is a fallacy in this approach, for, even ignoring the subsequent amendment of the certifi cates, we are of the opinion that the production of the original set of certificates at the time of clearance of the goods was sufficient compliance with the terms of the noti fication in question.
We have extracted the terms of this certificate earlier.
It is an unequivocal certificate by the DGTD that the appellant holds a valid industrial licence for the manufacture of agricultural tractors and that it also has an approved manufacturing programme.
That is all the second set also says.
There is therefore no doubt that the assessee had produced evidence, in the form of the said certificate, of the fact that the appellant had an approved industrial programme.
This was the only requirement of the notification and this requirement has, in our opinion, been complied with.
The further words in the first set of certif icates that the assessee was eligible for the concession under 1980 notification were mere surplusage.
The omission of the assessee to request the DGTD to refer to the asses see 's entitlement under the 287 1979 notification or the omission of the DGTD to refer to the assessee 's entitlement under the 1979 notification cannot take away the assessee 's rights.
The grant of conces sion depends on a certificate that the assessee had an approved manufacturing programme which is there and not the reference therein to the notifications that can be availed of by the assessee.
We are therefore of the opinion that the order of the Tribunal should be set aside and that the assessee should be held entitled, in respect of the three consignments referred to earlier, to the concession available under Notification No. 200 of 79.
We direct ac cordingly.
The appeals are allowed but having regard to the circumstances we make no order as to costs.
P.S.S Appeals allowed.
| IN-Abs | Customs Notification No. 200/79 dated 28.9.1979 exempts components required for the manufacture of heavy commercial motor vehicles or of tractors from customs duty in excess of 25 per cent ad valorem and whole of the additional duty leviable thereon.
Notification No. 179/ 80 dated 4.9.1980 exempts components required for the purpose of initial setting up or for the assembly or manufacture of tractors, an article falling under Heading No. 87.01(1) of the First Schedule of the Act from so much of the customs duty as is in excess of the rate applicable to the said article when imported complete.
The appellant company imported three consignments of components of agricultural tractors.
The Directorate General of Technical Development issued certificate in terms of notification No. 179/80 stating that the appellant company was holding a valid industrial licence for the manufacture of agricultural tractors and have an approved manufacturing programme.
The appellant cleared the goods availing itself of the said concession.
Having realised later that it was entitled to the larger concession available under Notifica tion No. 200 of 1979, it filed three applications in respect of the said consignments claiming refund to the extent of the difference between the entitlements to concession under the two notifications.
The DGTD issued certificates in terms of notification No. 200 of 1979 in its favour.
The Assistant Collector of Customs rejected assessee 's prayer on the ground that it had failed to produce end use certificate.
Its appeals before the Collector of Customs (Appeals) failed.
The Customs, Excise and Gold (Control) Appellate Tribunal dismissed the appeal on the ground that the appellant did not produce the approved manufacturing programme at the time of clearance of the goods as required under Notification No. 200 of 1979.
282 In these appeals it was contended for the respondents that since the amended certificates were not produced at the time of clearance but only much later the assessee was not entitled to the concession under Notification No. 200 of 1979.
Allowing the appeals, HELD: 1.
The assessee is entitled to the concession available under Notification No. 200 of 1979.
[287B C] 2.1 The grant of concession depends on production of evidence by the importer to the Assistant Collector of Customs at the time of clearance of the components or the goods that they have a programme duly approved by the Minis try of Industry and the Industrial Adviser or Additional Industrial Adviser of the Directorate General of Technical Development of the Ministry of Industry for the manufacture of such motor vehicles or of tractors and not on the refer ence in the certificates to the notifications that can be availed of by the assessee.
[286C D; 287B] 2.2 In the instant case, the assessee had produced unequivocal evidence in the form of original set of certifi cates from DGTD at the time of clearance of the goods of the fact that the appellant held a valid industrial licence for the manufacture of agricultural tractors and that it also had an approved manufacturing programme.
That was sufficient compliance with the terms of the notification in question.
The omission of the assessee to request the DGTD to refer to the assessee 's entitlement under the 1979 notification or the omission of the DGTD to refer to the assessee 's entitle ment under the 1979 notification cannot take away the asses see 's rights.
The order of the Tribunal is, therefore, set aside.
[286F H; 287A]
|
ivil Appeal Nos.
2591 2597 of 1987.
From the Judgment and Order dated 11.2.
1987 of the Andhra Pradesh High Court in Writ Appeal Nos.
1418 to 1424 of 1986.
P.A. Choudhary, T.V.S.N. Chari, Ms. Sunita Rao and Badri Nath for the Appellants.
A.K. Ganguli, C.V. Subba Rao, E. Ayyapu Reddy, G. Nara simhulu and A. Subba Rao for the Respondents.
The Judgment of the Court was delivered by SINGH, J.
These appeals are directed against the judg ment and order of a Division Bench of the High Court of Andhra Pradesh dated 11.2.1987 affirming the judgment of a learned single Judge of that Court allowing the respondents ' writ petitions made under Article 226 of the constitution and quashing the State Government 's Order dated 21.6.1985.
The respondents are oil millers and traders who carry on business in the sale and purchase of groundnut seed and groundnut seed oil which is edible.
The millers purchase groundnuts and manufacture oil in their mills thereafter they sell the same in the State and outside the State.
Similarly the traders purchase the groundnut seed and groundnut oil and sell the same in the State and outside the State of Andhra Pradesh.
The State Government issued a Circular Order dated 21.6.1985 containing directions regu lating the transport and export of groundnut seeds and oil outside the State.
The oil millers and traders were permit ted to export oil and groundnut seeds only on the condition contained in the Order according to which all millers and traders were required to deliver oil to the State Government at a fixed price in proportion of one tonne of oil for every three tonnes to be transported outside the State and simi larly a trader was required to supply to the State Govern ment one tonne of oil for every five tonnes of groundnut seeds proposed to be transported outside the State on the price fixed by the State Government.
The oil millers and traders were required to execute undertaking for complying with the directions issued by the State Government.
The Government Order warned the oil millers and 248 traders that action would be taken against them if they failed to comply with the directions of the Government.
In substance the State Government imposed compulsory levy on oil millers and traders on the transport and export of groundnut oil and seeds.
The respondents challenged the validity of the Order of the State Government by means of writ petitions before the Andhra Pradesh High Court.
A learned single Judge quashed the Order of the State Govern ment on the findings that the directions contained therein violate Articles 19(1)(g) and 301 of the Constitution.
On appeal by the State Government a Division Bench of the High Court held that the Government Order was violative of Sec tion 3(2)(f), Section 3(3) B and Section 3(5) of the Essen tial Commodities Act 1955 (hereinafter referred to as the Act) as the directions contained in the Order amounted to imposition of levy which could not be done without obtaining prior concurrence of the Central Government in terms of Section 3(2)(f) of the Act.
The Bench further held that the directions contained in the impugned Government Order are outside the power of the State Government under clause 12 of the Andhra Pradesh Scheduled Commodities Dealers (Licensing & Distribution) Order 1982.
The Division Bench did not record any finding on the question whether the Government Order violated the constitutional guarantee of free trade under Article 301 of the Constitution.
Mr. Chaudhary, learned counsel for the appellants con tended that the directions contained in the Government Memo dated 21.6.1985 were issued by the State Government in exercise of its powers under clause 12(2) of the Andhra Pradesh Scheduled Commodities Dealers (Licencing & Distribu tion) Order 1982 (hereinafter referred to as the 1982 Order) which had been made by the State Government with the prior concurrence of the Central Government in exercise of the powers conferred by Section 3 of the Act.
The impugned directions are legal and valid as the same are within the purview of 1982 Order.
Having given our anxious considera tion to the submissions made on behalf of the appellants we find no merit in these appeals.
The 1982 Order was framed by the State Government in exercise of delegated powers under Section 3(1) of the Act with the prior concurrence of the Central Government.
The Act is a central enactment providing for the control of the production, supply and distribution, trade and commerce in certain specified essential commodities.
Section 3 confers power on the Central Government to provide for regulating or prohibiting the production, supply and distribution thereof and trade and commerce therein if it is of opinion that it is necessary or 249 expedient so to do for maintaining or increasing supplies of any essential commodity or for securing their equitable distribution and availability at fair prices.
The Central Government has the legal sanction to issue orders under the aforesaid provisions for securing the aforesaid objectives which may include control of price, regulation of production and manufacture of any essential commodity, regulation, movement, transport, sale and distribution of the essential commodities and other allied matters.
Section 5 empowers the Central Government to delegate its powers under Section 3 for issuing orders or notifications to such officers or authorities subordinate to the Central Government or to State Government or such officers or authorities subordinate to State Government as may be specified in the order in relation to such matters and subject to such condition as it may specify in the order.
The Central Government is compe tent to delegate powers to the State Government or its officers and it may further specify restrictions and condi tions for the exercise of the delegated power.
Any order issued under Section 3 of the Act is legislative in nature and is required to be notified in the official gazette under Section 3(5) of the Act.
The Central Government in the Ministry of Agriculture and Irrigation (Department of Food) issued the Notification No. GSR 800 dated 9th June 1973 delegating its powers under Section 3(1) of the Act to the State Government to make orders in respect of the matters specified in various sub clauses of sub section (2) of Section 3 in relation to foodstuffs subject to certain conditions specified therein.
The Notification is as under: "PUBLISHED IN THE GAZETTE OF INDIA (PART) II SECTION 3 SUB SECTION (i) DATED 17TH JUNE, 1978/27 JYAISTHA, 1900 (SAKA).
MINISTRY OF AGRICULTURE & IRRIGATION (DEPARTMENT OF FOOD) . . .
ORDER New Delhi, the 9th June, 1978.
G.S.R. 800 In exercise of the powers con ferred by Section 5 of the Essential Commodi ties Act, 1955 (10 of 1955), 250 and in supersession of the Order of the Gov ernment of India in the late Ministry of Agriculture, (Department of Food) No. GSR, 315(E) dated the 20th June 1972, the Central Government hereby directs that the powers conferred on it by sub section (1) of Section 3 of the said Act to make orders to provide for the matters specified in clauses (a), (b), (c), (d), (e), (f), (h), (i) and (j) of sub section 2 thereof shall, in relation to food stuffs be exercisable also by a State Govern ment subject to the conditions: (1) that such powers shall be exer cised by a State Government subject to such directions, if any, as may be issued by the Central Government in this behalf; (2) that before making an order relating to any matter specified in the said clauses (a), (c) or (f) or in regard to dis tribution of disposal of foodstuffs to places outside the State or in regard to regulation of transport of any foodstuff, under the said clause (d), the State Government shall also obtain the prior concurrence of the Central Government; and (3) that in making an order relating to any of the matters specified in the said clause (j), the State Government shall autho rise only an officer of the Government.
sd/ (K. Balakrishnan) Deputy Secretary to the Government of India.
No. 3 (Genl)(1) D & R(1) 59" By Clause (2) of the Notification the Central Government while delegating its powers under Section 3 of the Act to the State Government for issuing orders in respect of the matters specified therein, expressly placed restriction on the State Government relating to any matters specified in clauses (a), (c), (d) and (f) of sub section (2) of Section 3 of the Act to the extent that while making an order per taining to any matters specified in the aforesaid clauses the State Government shall obtain prior concurrence of the Central Government.
The Notification is manifestly clear that the Central Government did not delegate to the State Government its general power to pass any order 251 under Section 3(1) of the Act for regulating or prohibiting the production, supply and distribution of the specified essential commodities and trade and commerce therein.
On the other hand the State Government was delegated limited power to make orders in relation to foodstuffs subject to certain conditions specified in the Notification after obtaining prior sanction of the Central Government.
Any order made by the State Government regulating matters specified in clause (2) of the Notification without obtaining the prior sanction of the Central Government would be in contravention of the delegated power.
A delegate is not entitled to exercise powers in excess or in contravention of the delegated pow ers.
If any order is issued or framed in excess of the powers delegated to the authorities, such order would be illegal and void.
In the instant case the State Government in exercise of its powers conferred by Section 3 of as delegated to it by Notification GSR 800 dated 9th June, 1978 made the Andhra Pradesh Scheduled Commodities Dealers (Licencing and Distribution) Order 1982, after obtaining prior concurrence of the Central Government.
This Order seeks to regulate the sale and purchase of scheduled commodities as specified in Schedule 1 to the Order.
Edible oil seeds and edible oil are included in Schedule 1 to the Order.
Clause 3 of the Order provides that no person shall carry on business as a dealer except under and in accordance with the terms and conditions of a licence issued by the licensing authority.
Other provisions relate to the proce dure for grant, renewal, and cancellation of licence.
Clause 11 places restriction on storing of scheduled commodities, it provides for the maximum quantity which is permitted to be stored by a licence.
Clause 13 provides that the Govern ment/Commissioner/Collector may direct a dealer to convert edible oil seeds into edible oils stored or held by him.
Clause 14 provides that a licence holder transacting busi ness in purchase and sale of scheduled commodities shall not purchase commodities at prices lower than the notified procurement price from farmers.
Similarly, clause 115 pro vides that the licencee shall not sell the scheduled commod ities at a price higher than the maximum price fixed if any by the Central Government or by the State Government.
It is not necessary for the purpose of the present cases to refer to the other clauses of the Order.
There is no dispute that the provisions of the Order do not place any restriction on the movement or transport of groundnut oil seeds or oil outside the State nor the Order fixes any price for the edible oil.
It appears that a number of millers, traders were exporting.groundnut seeds and oil outside the State of Andhra Pradesh.
The State Government issued directions to the Collectors 252 and Licensing Authorities to ensure that groundnut seeds and oil produced in a District is sold within the District and in the State and the same is not permitted to be moved out of the State.
The oil millers and traders were told to ensure that the price of edible oils are maintained around Rs. 14 per k.g.
in the retail market.
By a circular letter dated 6th December, 1983 the State Government directed the licensing authorities, Collectors and other officers of the State to ensure that producers, millers and traders are not permitted to transport the groundnut seeds or oil outside the State and it further directed that the restriction imposed on movement of groundnut be removed with immediate effect so far as bona fide farmers are concerned but so far as the millers and traders were concerned movement of oil seeds and oil was subject to their agreement to supply certain quantities of groundnuts seeds and oil to the State Government at the price fixed by it.
Since there was problem of storage the millers and traders were required to give undertaking in writing that they would deliver the quanti ties due from them whenever demanded and on the basis of such undertakings they were permitted to transport three times quantity of oil for which undertaking was furnished.
The policy as set out in the Government 's Order dated 6.12.1983 was enforced for the year 198384.
For the year 1984 85 the Government took policy decision details of which were communicated to the licensing authorities, Collectors and other authorities of the State under its circular letter dated 21.6.1985.
Under the revised policy bona fide farmers were permitted to move and sell groundnut produced in their own field without any restriction anywhere in the country.
But the policy requiring the oil millers and traders to deliver to the State Civil Supply Corporation, a specified quantity of oil enabling them to transport oil and groundnut seeds outside the State was continued.
By the Government Order dated 6.12.1985 the policy adopted for the year 1984 85 was directed to be continued for the year 1985 86.
The policy decision taken by the State Government and enforced under the aforesaid circular letter placed restric tion on the transport and movement of edible oil and oil seeds and it further imposed compulsory levy requiring the millers and traders to supply oil to the State Government at the price fixed by it.
There is no doubt that these steps were taken bona fide to ensure availability of the edible oil and oil seeds for public distribution at fair price but the steps taken by the State Government were not permissible in law as the 1982 Order did not confer power on the Govern ment to place such restrictions.
Section 3(2)(d) provides for regulating by licence, permits or otherwise the storage transport, distribution, disposal, acquisition, use or con 253 sumption Of any essential commodity.
Clause (f) of Section 3(2) of the Act confers power for making an order requiting any person holding in stock or engaged in the production or in the business of buying or selling of any essential com modity to sell the whole or specified part of quantity held in or produced or received by him to the Government or to an officer or agent of the Government.
Clause (d) among other things provides for regulating transport and movement of an essential commodity while clause (f) confers power to impose compulsory levy on a person holding the essential commodity in stock by selling the same to the Government.
Section 3(3) provides that a person selling any essential commodity to the Government in compliance with the Order made with refer ence to clause (f) of sub section (2) shall be paid con trolled price if any fixed by the Government or agreed between the parties and in the absence of agreement the price payable would be at the market rate prevailing in the locality on the date of sale.
The 1982 Order which was framed by the State Government in exercise of the delegated powers does not contain any provision placing any restric tion on the transport or movement of the edible oil or oil seeds nor it provide for imposition of compulsory levy, further it does not fix any price.
The directions issued by the Government placing restriction on the movement of oil seeds and oil and imposing compulsory levy and requiting millers and traders to sell oil seeds and oil at a price fixed by it, are outside the purview of the 1982 Order.
Those directions have no sanction of law.
If the State Government was facing any problem it could have made amend ments in the 1982 Order regulating matters specified in clauses (d) and (f) of Section 3(2) of the Act after obtain ing the prior concurrence of the Central Government.
No such course was followed.
There is therefore no escape from the conclusion that the directions contained in the impugned Government Order are illegal and void as the same have been issued in exercise of and in contravention of the power delegated to the State Government under the Notification dated 9.6.1978.
Learned counsel for the appellants urged that the direc tions issued by the State Government placing restriction on the transport, movement and compulsory levy on the edible oils and oil seeds were placed with the prior concurrence of the Central Government.
We find no merit in the submission.
The State Government failed to place any material before the Court to show that the prior concurrence of the Central Government as contemplated by clause (2) of the Notification dated 9.6.1978 issued by the Government of India, was ob tained.
The State Government while issuing or making orders in respect of the essential commodities under Section 3 of the Act could make provision 254 to the extent and subject to the conditions specified in the Notification dated 9.6.1978, it had no power to make any order in respect of matters for which it had not been autho rised to exercise powers under Section 3 of the Act.
The State Government clearly transgressed the legislative au thority in issuing the directions are contained in its circular letters dated 6.12.1983 and 21.6.1985.
In fact an affidavit was filed on behalf of the Central Government stating that no concurrence of the Central Government had been obtained and the State Government had not competence to exercise powers in respect of matters specified in clauses (d) and (f) of Section 3(2) of the Act.
The purpose and object for obtaining prior concurrence is to ensure avail ability of essential commodity throughout the country.
The State Governments are not authorised to impose restrictions on the movement of the essential commodities as it would have reflection in other States both in regard to the price and in regard to the availability of the commodity for distribution.
The Central Government has the responsibility of maintaining a balance between the interest of the various States and it has to ensure the availability of essential commodities for distribution at a fair price in other States also.
All relevant aspects are necessary to be scrutinised by the Central Government in giving or refusing its concur rence not merely from the point of view of the State impos ing restrictions but beating in mind the conditions of trade and industry and the demand and supply of the concerned commodities in other States.
Unless the Central Government is satisfied that it would be in the interest of all con cerned, it may withhold concurrence for imposing restric tions on free movement of essential commodities.
It is in this context that while delegating the powers to the State Government under Section 3 of the Act for making orders in respect of the matters specified in Section 3 of the Act the Central Government placed limitations in respect of matters specified in clause (f) of Section 3(2) of the Act by pro viding that such power shall not be exercised by the State Government without obtaining its prior concurrence.
Before the learned single judge the entire correspondence which passed between the State Government and the Central Govern ment was placed and on perusal of the same the learned Single Judge recorded a positive finding that the Central Government was opposed to restrictions on export of ground nut seeds and groundnut oil.
The State Government 's direc tions requiring the millers and traders to sell groundnut oil to the State Government is a matter directly specified within the terms of Section 3(2)(f) of the Act it is there fore clear that the State Government had no authority to place any such restriction without the prior concurrence of the Central Government.
255 Learned counsel for the appellants then urged that impugned restrictions could validly be placed by the State Government in public interest in exercise of its powers under clause 12 of the 1982 Order which had been framed with the prior concurrence of the Central Government.
There is no dispute that clause 12 of the 1982 Order was framed by the State Government with the prior concurrence of the Central Government but the question is as to whether clause 12 of the 1982 Order confers any authority on the State Government to place restriction on the movement and transport of edible oil and seeds or to subject the millers and traders to compulsory levy.
Clause 12 of the Order is as under: "12. Power to issue directions: (1) The Government, the Commissioner, the Collector or the licensing authority may issue instructions or directions on all matters covered by the provisions of this order and all dealers shall comply with the same.
(2) Without prejudice to the generality of the foregoing power such directions may be issued to any dealer that all or any of the commodi ties mentioned in Schedule I to this Order may be sold to only such persons or institutions, in such quantities and at such intervals as the Commissioner, Collector, or the licensing authority may by general or special order, direct.
" Sub clause ( 1 ) of Clause 12 authorises the Government, Commissioner, Collector or the licensing authority to issue instructions and directions in matters covered by the provi sions of the 1982 Order it further provides that such direc tions shall be complied by all dealers.
The power of the authorities specified in sub clause (1) to issue instruc tions and directions is limited to the subject matter of the 1982 Order.
Such directions and instructions cannot pertain to regulate matters which are not covered or dealt with by the 1982 Order.
Sub clause (2) of Clause 12 of the Order provides that directions may be issued to any dealer to sell an essential commodity (as mentioned in Schedule 1 to the Order) only to such persons or institutions in such quanti ties as may be directed by the Commissioner, Collector or the licensing authority.
This clause regulates the sale of essential commodity to the specified persons and institu tions in such quantities as may be directed by the authori ties.
None of these two clauses confer any power on the authorities to impose levy or to fix price for the essential commodities 256 supplied to the Government.
As already noticed, restriction on transport, imposition of levy and fixation of price was not the subject matter of the 1982 Order therefore the State Government had no authority in law to issue orders in re spect of the aforesaid matters in exercise of its powers under Clause 12 of the 1982 Order.
If the submissions made on behalf of the State Government are accepted it would nullify the restrictions and limitations placed by the Notification dated 9th June 1978 delegating legislative power to the State Government.
The State Government could not impose any restriction on the export of groundnut seed or oil to outside State and further it could not issue directions for the compulsory levy at the specified price in view of the limitations placed on exercise of its powers under the Notification dated 9th June 1978.
What it could not do directly could not be permitted to be done indirectly by virtue of clause 12 of the 1982 Order.
The scope and ambit of clause 12(2) of the 1982 Order could not and did not authorise the State Government to impose the impugned restrictions.
We are therefore of the opinion that no exception can be taken to the view taken by the High Court that the impugned restrictions placed by the State Government are ultra vires of its powers.
The High Court has rightly struck down the directions issued by the State Government.
We find no merit in these appeals and the same are accordingly dismissed with costs.
N.V.K. Appeals dis missed.
| IN-Abs | The is a Central Enact ment providing for the control of the production, supply and distribution, trade and commerce in certain specified essen tial commodities, Section 3 of the Act confers power on the Central Government to provide for regulating or prohibiting the production, supply and distribution thereof and trade and commerce therein, if it is of the opinion that it is necessary or expedient so to do for maintaining or increas ing supply of any essential commodities or of securing their equal distribution and availability on fair price.
The Central Government issued the Notification No, GSR 800 dated June 9, 1978 delegating its powers under section 3(1) of the Act to the State Governments to make orders in respect of the matters specified in the various sub clauses of sub section (2) of section 3 in 244 relation to foodstuffs subject to certain conditions speci fied therein.
By clause (2) of the Notification the Central Government while delegating its powers under section 3 to the State Government for issuing orders in respect of mat ters specified therein, expressly placed restriction on the State Government relating to any matters specified in clauses (a), (c), (d) and (f) of sub section (2) of section 3 to the extent that while making an order pertaining to any of the matters specified in the said clauses, the State Government shall obtain prior concurrence of the Central Government.
The State Government of Andhra Pradesh in exercise of its powers under section 3(1) of the Act as delegated to it by the Notification GSR 800 dated June 9, 1978 made the Andhra Pradesh Scheduled Commodities Dealers (Licensing and Distribution) Order, 1982 after obtaining prior concurrence of the Central Government.
This order sought to regulate the sale and purchase of scheduled commodities as specified in schedule I to the Order.
Edible oil seeds and edible oil were included in the said Schedule.
The State Government issued a circular order dated June 21, 1985, containing directions regulating the transport and export of groundnut seeds and oil outside the State.
The oil millers and traders were permitted to export oil and groundnut seeds only on the condition that they deliver oil to the State Government at a fixed price in proportion of one tome of oil for every three tonnes to be transported outside the State.
Similar conditions were imposed in re spect of groundnut seeds.
The oil millers and traders were required to execute undertaking for complying with the directions issued by the State Government.
The respondents who were oil millers and traders carry ing on business in the sale and purchase of groundnut seed and groundnut oil which is edible challenged the validity of the 1982 Order and the 1985 Circular in writ petitions to the High Court.
A Single Judge quashed the order of the State Government on the findings that the directions con tained therein violated Articles 19(1)(g) and 301.
On appeal by the State Government a Division Bench held that the order of the government was violative of section 3(2)(f), section 3(31 B) and section 3(5) of the as the directions contained in the order amounted to imposition of levy which could not be done without obtaining the prior concurrence of the Central Government in terms of section 3(2)(f) of Act.
It further held that the directions contained in the 245 Government Order were outside the purview of the State Government under clause 12 of the Andhra Pradesh Scheduled Commodities Dealers (Licensing and Distribution) Order, 1982.
No finding was however recorded on the question wheth er the Order violated the constitutional guarantee of free trade under article 301.
In the appeals to this Court, it was contended on behalf of the appellants that the directions contained in the Government Order dated 21st June, 1985 were issued by the State Government in exercise of its powers under clause 12(2) of the Andhra Pradesh Scheduled Commodities Dealers (Licensing and Distribution) Order, 1982 which had been made by the State Government with the prior concurrence of the Central Government in exercise of powers conferred by sec tion 3 of the and that the directions were legal and valid.
Dismissing the appeals, HELD: 1.
The High Court has rightly struck down the directions issued by the State Government.
The directions contained in the Government Circular Order dated June 21, 1985 are illegal and void as the same have been issued in exercise of and in contravention of the power delegated to the State Government under the Notification No. GSR 800 dated June 9, 1978.
[256E; 253F] 2.
The 1982 Order which was framed by the State Govern ment in exercise of the delegated powers does not contain any provision placing any restriction on the transport or movement of edible oil or oil seeds nor it provides for imposition of compulsory levy further it does not fix any price.
[253C D] 3.
The directions issued by the State Government by its Circular Order dated June 21, 1985 placing restrictions on the movement of oil seeds and oil and imposing compulsory levy and requiring millers and traders to sell oil seeds and oil at a price fixed by it, are outside the purview of 1982 Order.
These directions have no sanction of law.
[253D E] 4.
If the State Government was facing any problem it could have made amendments to the 1982 Order regulating matters specified in clauses (d) and (f) of section 3(2) of the Act after obtaining prior concurrence of the Central Government.
No such course was followed.
[253E F] 246 5.
The State Government 's directions requiring the millers and traders to sell groundnut oil to the State Government is a matter directly specified within the terms of section 3(2)(f) of the Act.
The State Government had no authority to place any such restriction without the prior concurrence of the Central Government.
[254G H] 6.
The purpose and object for obtaining prior concur rence is to ensure availability of essential commodity throughout the country.
The State Governments are not autho rised to impose restrictions on the movement of the essen tial commodities as it would have reflection in other States both in regard to the price and in regard to the availabili ty of the commodity for distribution.
The Central Government has the responsibility of maintaining a balance between the interest of the various States and ensuring the availability of essential commodities for distribution at a fair price in other States also.
All relevant aspects are necessary to be scrutinised by the Central Government in giving or refusing its concurrence not merely from the point of view of the State imposing restrictions but bearing in mind the condi tions of trade and industry and the demand and supply of the concerned commodities in other States.
Unless the Central Government is satisfied that it would be in the interest of all concerned, it may withhold concurrence for imposing restrictions on free movement of essential commodities.
[254C E] 7.
A delegate is not entitled to exercise powers in excess or in contravention of the delegated powers.
If any order is issued or framed in excess of the powers delegated to the authorities, such order would be illegal and void.
[251B C] 8.
The power of the authorities specified in sub clause 1(1) of clause 12 of the Order to issue instructions and directions is limited to the subject matter of the 1982 Order.
Such directions and instructions cannot pertain to regulate matters which are not covered or dealt with by the 1982 Order.
Such directions and instructions cannot pertain to regulate matters which are not covered or dealt with by the 1982 Order.
[255F G] 9.
The State Government could not impose any restriction on the export of groundnut seed or oil to outside the State and further it could not issue directions for the compulsory levy at the specified price in view of the limitations placed on exercise of its powers under the notification dated June 9, 1978.
What it could not do directly could not be permitted to be done indirectly by virtue of clause 12 of the 1982 Order.
The scope and ambit of clause 12(2) of the 1982 Order did not authorise the State 247 Government to impose the restrictions in the Circular Order dated June 21, 1985.
[256B C]
|
ivil Appeal No. 830 of 1988.
275 From the Judgment and Order Dated 7.12.1987 of the Allahabad High Court in Civil Misc.
No. Nil 1987.
A.K. Ganguli and Sunil Kumar Jain for the Appellant.
Gopal Subramanium and Ashok K. Srivastava for the Re spondents.
The Judgment of the Court was delivered by RANGANATHAN, J.
The petitioner is a concern engaged in the business of manufacture of electric motors, pump sets and their parts.
It applied for exemption from sales tax in respect of the goods manufactured by it in terms of a noti fication issued by the State Government on 30.9.1982 under section 4A of the Uttar Pradesh Sales Tax Act, 1948 (herein after called the 'Act ').
This application was rejected by a Division Level Committee by an order dated 9.2.
1987 and a further review application was also dismissed on 27.10.1987.
Thereupon the appellant filed a writ petition which was also rejected by the High Court by a short order dated 7.12.1987.
Aggrieved by this denial of the exemption, which it claims it is entitled to, the appellant has preferred this appeal.
Section 4A of the Act reads as under: "4 A. Exemption from sales tax of certain goods for specified period (1) Notwithstanding anything co tained in section 3 or section 3 A, where the State Government is of the opinion that it is necessary so to do for increasing the produc tion of any goods or for promoting the devel opment of in any districts or parts of dis tricts in particular, it may on application or otherwise, by notification, declare that the turnover of sales in respect of such goods by the manufacturer thereof shall, during such period not exceeding seven years from the date of starting production by such manufacturer, and subject to such conditions as may be specified, be exempt from sales tax or be liable to tax at such reduced rate as it may fix.
(2)It shall be lawful for the State Government to specify in the notification under sub section (1) that the 276 exemption from, or reduction in, the rate of tax shall be admissible (a) generally in respect of all such goods manufactured subsequent to the date of such notification; or (b) in respect of such of those goods only as are manufactured in a new unit, the date of starting production whereof fails on or after the first day of October, 1982; or (c) only if the manufacturer had not discon tinued production of such goods for a period exceeding six months at a stretch in any assessment year.
Explanation For the purposes of this section (i) 'new unit ' means a factory or workshop using machinery, accessories or components not already used or acquired for use in any other factory or workshop in India but does not include any factory or workshop established on the site of an existing factory or workshop manufacturing the same goods or any addition to or extension of an existing factory or workshop; and (ii) 'date of starting production ' means the date on which any raw material required for use in the manufacture or packing of the specified goods is purchased for the first time or the date of installation of power connection, where needed, whichever is later.
In pursuance of the above section, the State Government published a scheme for the grant of exemption from sales tax to certain industrial units in the State.
The scheme, ac cording to its introduction, had been introduced "in order to encourage capital investment and establishment of new industrial units in the State".
It granted exemption to the industrial units established in certain areas of the State during the period from 1.10.1982 to 31.3.1985 and producing certain categories of goods.
It is not necessary to refer in detail to the provisions of the scheme or other conditions of exemption.
It is sufficient to say that this exemption was conferred only on units established on or after 1.10.1982 but before 31.3.1985.
The scheme also makes it clear that though it referred to units "established" this really is a reference to the date of commencement of produc tion by the industrial 277 unit.
This is also in accord with the terms of the statute and in particular sub section (2) of 4A.
The appellant 's claim to exemption has been rejected on a very short ground, namely, that it had not commenced production after 1.10.1982.
In the application filed by the appellant for exemption the appellant had mentioned that the date of actual com mencement of use of electricity for production was the 4th of December, 1982, which was also the actual date of com mencement of production.
The appellant also claimed that upto 30.9.1984 it had produced and sold electric motor parts for Rs.2,70,590.
The General Managers of the District Indus trial Centers at Deoband and Saharanpur and the Assistant Engineer of the Industrial State of Roorkee endorsed the following recommendation on the application: " . .
I have checked with the use of power and other sources that the unit started actual production from 4.12.1982 and the production made is self manufactured and is within the prescribed production capacity.
1 am fully satisfied with the facts produced by the Unit and I recommend that this unit is eligible to get exemption from sales tax/inter state sales tax . with effect from date of production commencement for 5 6 7 years under section 4 A of the Sales Tax Act vide G.O. No. 8244 Bha/18 11 231(A)Bha/39, dated 30.9.82.
" The difficulty in the appellant 's way appears to have been created by a certificate which had been produced by it before the Division Level Committee along with its applica tion.
This purported to be a certificate by a firm known as Krishna Trading Co. (in which the proprietor of the appel lant was a partner).
This certificate dated 4.12.
1981 reads as follows: "It is certified that the Trial Production of Kupla Bhatti was made today is 4.12.1981 expenses for which were incurred by our compa ny by purchasing raw material for its own ex penses under the agreement dated 15.5.1981 entered into.
M/s Janta Machine Tools was assured by the company to supply very soon all the remaining machines and installing them and making its trial production at its own ex penses.
" The Division Level Committee, while rejecting the applica tion 278 dated 9.2.1987, essentially gave only one reason for the rejection.
It was stated that the date of the alleged trial production was really the date of commencement of production and this fell prior to 1.10.1982.
As stated earlier the assessee preferred a review appli cation pointing out that the trial production could not be treated as commencement of actual production.
This review application was disposed of on 27.10.1987.
In its order the Committee observed: "On joint inquiry into the reality of your unit being conducted by the General Manager and sales tax officer of Deoband Industries Department they have reported that Shri Suresh Datt Sharma the proprietor of M/s Janta Ma chine Tools is partner of one third share in M/s Krishna Trading Company also.
No purchase of raw material was declared by M/s Krishna Trading Company in the year 198 1 82, and therefore, the certificate of trial production issued by M/s Krishna Trading Company on 4.12.
1981 is baseless and untrue.
In joint inquiry report it is also clear that your unit has purchased from M/s Krishna Trading Company Kupla etc.
of Rs.69,000 on 21.5.81, whereas M/s Krishna Trading Company have declared sale of Rs. 13,035 only in 198 1 82 as per file of the Sales Tax Department.
In the joint inquiry Report it is also mentioned that your unit got electricity on 21.11.1982 and on inquiry the unit informed that the trial production was done with the help of a generator.
Your unit could not give any certificate for purchasing or hiring a generator and now it has declared to have hired the generator for 4 5 hours from M/s Mitra Industries Deoband.
In the inquiry report it is also made clear that a unit cannot use a generator of other unit without prior permission of the electricity depart ment.
xx xx xx On the above discussion it is concluded that the unit in question wants to (get) illegal benefit of exemption from sales tax by produc ing wrong facts.
The trial production done by M/s. Krishna Trading Company on 4.12.
1981 is proved to have been done by the unit in ques tion itself and not by them.
Thus, the unit was established before l. 10.82.
The unit established before 1.10.82 is therefore not entitled to exemption from sales tax.
" 279 In our opinion, the rejection of the assessee 's applica tion proceeds on a total misconception of the facts.
The conclusion of the Division Level Committee is that produc tion was commenced by the appellant on 4.12.81 but this conclusion is based on no evidence.
It is true that the appellant produced a certificate showing that some produc tion was done on 4.12.
1981 but the appellant 's case was that this was merely a trial production.
It is not quite clear whether the District Level Committee completely doubts any trial production having taken place at all, or whether its conclusion is that there was a trial production, on 4.12.1981.
If its conclusion is the former one, it does not affect the appellant 's claim.
Assuming that the Committee has come to the conclusion that the production on 4.12.81 was conducted not by M/s Krishna Trading Company but by the appellant itself, the fact still remains that what had happened on that date was only trial production.
The mere fact that a certificate by M/s Krishna Trading is disbe lieved cannot lead to the conclusion that the assessee had produced goods on 4.12.81.
If one is to go by the definition contained in the explanation to section 4A for determining when the production started, one has to concentrate on the date of purchase of raw materials or on the date on which the electricity was brought into use for commercial produc tion.
The appellant 's claim that it had manufactured goods by 30.9.1984 is not denied.
Production had, therefore, commenced before 31.3.
There is no suggestion by the Department or the Committee, and there is no material to show that the appellant had purchased raw materials suffi cient to carry out normal commercial production at any time prior to 1.10.82.
It is an admitted fact that the assessee was able to obtain electricity for use for commercial pro duction only in November 1982.
This lends support to the appellant 's contention that the production could not have been effected by the assessee prior to that date.
In fact, this is a point on which emphasis is laid in the order dated 27.10.1987.
That being so, there is no iota of evidence or material on the basis of which the appellant 's claim that it had started production in December 1982 could have been rejected.
On the other hand, the recommendation and endorse ment of the General Manager, District Industries Centre, which has been extracted earlier, also supports the appel lant 's contention that it had started production on 4.12.1982 and this report was given after verifying the actual position on the spot.
For the reasons above mentioned we are of the opinion that the denial of the exemption to the appellant under the notification dated 30.9.82 was not justified.
The rejection of the appellant 's application in this regard is quashed and the appellant is declared entitled to the 280 exemption in terms of the notification.
We should not be understood, however, to have expressed any opinion as to the amount of exemption available to the appellant under the notification.
That will be a matter for consideration of the authorities in respect of each of the years concerned in respect of which the claim is made for exemption.
The appeal stands allowed, but in the circumstances, we make no order as to costs.
G.N. Appeal allowed.
| IN-Abs | The State Government in pursuance of Section 4A of the Act formulated and published a scheme for grant of exemption from Sales Tax, to encourage capital investment and estab lishment of new industrial units which were established during the period from 1.10.1982 to 31.3.1985 and producing certain categories of goods.
Though the scheme referred to units established, it actually referred to the date of commencement of production.
The appellant, a concern engaged in the business of electric motors, pump sets and their parts, applied for the exemption.
The appellant claimed that the date of actual commencement of use of electricity for production was 4th December, 1982 and that was the actual date of commencement of production.
The same was endorsed by the General Manag ers, District Industrial Centers and the Assistant Engineer concerned, while recommending the application.
But the difficulty had arisen on account of a certificate attached to the application for exemption.
It was given by a firm which had entered into an agreement with the appellant for supply of machines and installation.
According to the cer tificate, trial production commenced on 4.12.1981.
The Division Level Committee, before which the application was filed, rejected it, saying that the date of trial production was really the date of commencement of production and it fell prior to 1.10.1982.
The appellant preferred a review claiming that trial production could not be treated as commencement of actual production.
The review application was also dismissed and it was held that the unit was estab lished before 1.10.1982 and, therefore, was not entitled to the exemption.
Thereafter, the appellant filed a writ peti tion before the High Court.
It was rejected.
274 Claiming that it is entitled to the exemption, the appellant has preferred this appeal, by special leave.
Allowing the appeal, HELD: 1.1 The appellant is entitled to the exemption, in terms of the notification dated 30.9.1982.
The rejection of the application for exemption proceeds on a total misconcep tion of facts.
The conclusion that production was commenced on 4.12.1981 is not based on any evidence.
It does not affect the appellant 's claim even if there was any doubt about the trial production having taken place at all.
Wheth er trial was conducted by the other firm or the appellant itself, the fact remains that only trial production took place on 4.12.1981.
The mere fact that the certificate is disbelieved cannot lead to the conclusion that the appellant had produced the goods on 4.12.1981.
[279A D] 1.2 To go by Section 4A of the Act to determine the date of commencement of production, the date of purchase of raw material or the date on which electricity was brought into use would be relevant.
The appellant 's claim that it had manufactured goods by 30.9.1984 is not denied.
Production had, therefore, commenced before 31.3.1985.
There is no suggestion by the Department or the Committee, and there is no material to show that the appellant had purchased raw materials sufficient to carry out normal commercial produc tion at any time prior to 1.10.1982.
It is an admitted fact that the assessee was able to obtain electricity for use for commercial production only in November 1982.
This lends support to the appellant 's contention that the production could not have been effected by the assessee prior to that date.
In fact, this is a point on which emphasis is laid.
That being so, there is no iota of evidence or material on the basis of which the appellant 's claim that it had started production in December 1982 could have been rejected.
On the other hand, the recommendation and endorsement of the Gener al Manager, District Industries Centre also supports the appellant 's contention that it had started production on 4.12.1982 and this report was given after verifying the actual position on the spot.
[279D G] 2.
As regards the amount of exemption available to the appellant, it is a matter for consideration of the authori ties in respect of each of the years concerned in respect of which the claim is made for exemption.
[280B]
|
vil Appeal Nos.
2346 47 of 1978 Etc.
From the Judgment and Orders dated 5.8.1976 of the Madras High Court in T.C. Nos. 436 and 437 of 1971.
R. Mohan and R.A. Perumal for the Appellant.
T.A. Ramachandran and Mrs. Janaki Ramachandran for the Respondents.
The Judgment of the Court was delivered by SABYASACHI MUKARJI, J.
Special leave granted in Special Leave Petitions (C) Nos.
10539, 4704 and 92 1 of 1979.
305 These appeals by leave under Article 136 of the Consti tution, are from the orders of the High Court of Madras, involving a common question though for different assessment years.
It would be appropriate to deal with Civil Appeal Nos. 2346 47/78, and the facts in other appeals are essen tially the same.
The assessee in these cases had entered into contracts with the Universities and other educational institutions in the country for printing question papers for the said educa tional institutions.
The assessee in the demand notes pre pared, gave the charges for printing blocks, packing charges, handling charges, delivery charges, postage, value of paper and value of packing materials separately in the relevant assessment years.
The question involved is, whether the taxable turnover should also include the printing and block making charges or not.
It appears from the judgment of the High Court that for the assessment year 1966 67, the printing charges amounted to Rs.99,675.00 and block making charges amounted to Rs.2,923.95, totaling Rs.1,02,598.95.
Similarly, so far as the assessment year 1968 69 is con cerned, the printing charges amounted to Rs. 1,33,137 and blockmaking charges amounted to Rs. 5,361.75 totaling Rs. 1,38,498.75.
The controversy involved in these appeals was, whether these two amounts were includable in the assessable turnover of the respondent in the respective years in question.
The case of the assessee was that the contract entered into between her and the respective educational institutions was a contract of work and labour and in the performance of that contract, incidentally she had to sell paper to them and, hence, except to the extent of the cost of paper, in respect of the other amounts received by her she was not liable to pay sales tax.
On the other hand, the Government 's stand was that the contract was for the sale of printed materials by the respondent to the respective educational institutions and, therefore, the entire amount will have to be taken into account as turnover liable to tax.
In other words, would printing question papers and incidentally supplying the papers upon which such questions were printed, entail the entire cost to be liable to sales tax.
As was put before us, the question is, can one sell printed question papers and charge for the same? The High Court mentioned that till 1963 the assessee was herself doing the printing and the Tribunal held that during that period only the cost of paper was includable in the taxable turnover.
With effect from 3.11.1963 the printing was done by a firm of which the assessee 's sons and daugh ters were partners.
The contract, however, continued 306 to be entered into between the assessee and the respective educational institutions.
According to the Govt.
, as appears from the judgment of the High Court, this made a difference and, as such, the order of the Tribunal in the previous years could not govern the assessment for the respective years referred to above.
The Tribunal, however, held against the revenue holding that only the value of paper was liable to be included in the taxable turnover of the assessee.
The correctness of that decision was challenged before the High Court by two Revision Cases under section 38 of the Tamil Nadu General Sales Tax Act, 1959 (hereinafter called 'the Act ').
The High Court on an analysis of the facts and the several decisions came to the conclusion that printing of question papers involved confidentiality of the materials to be printed, and held that apart from the paper nothing else could be includ ed in the total taxable turnover of the assessee.
The High Court came to the conclusion that the contract entered into between the assessee and the University and other education al institutions was a composite contract i.e., a contract for work and labour, as well as a contract for sale of the paper.
It was contended on behalf of the revenue that in case of sale of all printed materials, the sales tax was liable on the entire work.
In that view of the matter if the liability for sale of printed material would include the entire price then there was no authority, according to the revenue, to treat the question papers differently.
It is, however, clear as the High Court noted, that the printing of question papers of educational institutions was an extremely and highly confidential matter.
This is the first aspect of the matter which must be borne in mind.
It was emphasised that such printing could not be entrusted to any press of one 's choice, and the Universities and other educational institutions were only obliged to enter into such contracts with those in whom they have got the highest confidence so that the printer would not divulge the questions to be printed by him/her and will preserve the confidential nature of the transaction.
Therefore, in printing question papers entrusted by educational institutions to the printer the value included the price of the confidentiality and the confidence reposed in the printer.
It has to be borne in mind that the price paid for such confidentiality and trust is not the price for the sale of goods.
In case of printing of other materials just like letter heads, bills, account books or even printing works like a novel, story, poem or drama (subject to copyrights), the technical excellence and the professional efficiency of the printer, among other things, might enter into calculation for entrusting the job to a particular printer and the performance thereof.
Howev er, the position is different in case of printing of confi dential matters like question 307 papers of the Universities or other educational institu tions.
The value paid for such printing job includes to a large extent the price of not only the technical and profes sional work but also the value, if it could be measured in terms of money, of the confidence and faith reposed that the printing materials should not be disclosed to anyone save to be returned back to the University or the educational insti tutions to be dealt with in accordance with its obligations.
The High Court noticed these points and came to the conclusion that in view of these peculiar features which will be present in the printing of matters which are confi dential in nature and will not be present in other case the contracts pre dominantly being contracts for work with confidence and faith, should be treated mainly as contracts for labour and not contracts for sale of any goods such as printed materials.
It may be that in the execution of the contracts and for the purpose of completing the work, the parties might enter into the contracts for sale of the paper and in this context, it was a composite contract which can be split up into contract for sale of paper and contract for work and labour.
Relying on a decision of this Court in Govt.
of Andhra Pradesh vs Guntur Tobaccos Ltd., XVI STC 240, the High Court was of the view that the cost of paper shown separately in the contract would be liable to tax and except for that cost of paper and the material supplied in other respect, the contract was a contract for work and labour and there could not be any liability for sales tax.
According to the High Court, this would cover the printing charges.
Blocks, it was found, were destroyed after the question papers had been printed.
Hence, there was no question of sale of blocks or passing of the property.
The High Court so held.
Following the aforesaid position in other matters which are the subject matters of other appeals where the _High Court held accordingly, it dismissed the revision applica tion of the revenue.
Aggrieved thereby, the appellant has come up to this Court by leave.
Our attention was drawn by both Mr. Mohan, learned counsel for the appellant and Mr. Ramchandran, counsel for the respondent to the decision of this Court in Govt.
of Andhra Pradesh vs Guntur Tabacco Ltd., (supra), where this Court laid down that a contract for work in the execution of which goods are used may take one of three forms.
The con tract may be for work to be done for remuneration and for supply of materials used in the execution of the works for a price; it 308 may be a contract for work in which the use of materials is accesssory or incidental to the execution of the work; or it may be a contract for work and use or supply of materials, though not accessory to the execution of the contract, is voluntary or gratuitous.
In the last class there is no sale because though property passed it did not pass for a price.
Whether a contract is of the first or the second class must depend upon the circumstances; if it is of the first, it is a composite contract for work and sale of goods; where it is of the second category, it is a contract for execution of work not involving sale of goods.
In our opinion, the aforesaid tests lay down correct criteria for determining the question.
Mr. Mohan, appearing for the revenue, pressed before us that the said principle requires clarification.
He emphasised that Press has no ownership over the materials or papers upon which the ques tions were printed.
Who then, Mr. Mohan posed, was the owner, author or the paper setter of the University or the educational institution or the printing Press? In our opin ion, when the questions are set on a piece of paper and sent for printing the University remains the owner until it divulges these to the intending candidates or the students.
But that is a matter which is relevant in the method of communication of the questions to the candidates appearing in the examination.
The means employed for such communica tion entail use of mind, confidence, trust for the material, paper and the technical skill of printing.
It is a combina tion of these various factors that results in printing the question papers and the payment made in the process entails a composite payment for all these and can only be dissected and determined in the way laid down by the principle enunci ated in the aforesaid decision.
Our attention was, however, drawn by Mr. Mohan to a decision of the Bombay High Court in Saraswati Printing Press vs Commissioner of Sales Tax, Eastern Division, Nag pur, X STC 286.
There the petitioner Press itself purchased the stationery and did printing work upon it according to the orders of individual customers and supplied the printed stationery to the customers.
It was held that there the petitioner had produced a commercial commodity which was capable of being sold or supplied and when the petitioner sold the printed stationery to its customers, it sold goods to the customers upon which sales tax was leviable.
In those circumstances, it was held that the transactions done by the said petitioner Press were not in the nature of works con tracts but were sales of goods and therefore recourse to rule 5(3) of the rules could not be made.
It was further held that as the petitioner did not immediately dispose of the stationery purchased by 309 it in favour of its constituents, but kept it in the Press and did printing work upon it and then supplied the finished product to its constituents, the provisions of clause (iv) of Explanation I of clause (m) of section 2 were not at tracted.
The High Court relied on the decision of the Allahabad High Court reiterating the principle that it is necessary to determine the substance of the contract, and as the sub stance of the contract is that skill and labour that had been exercised for the production of the article and sale of material is only ancillary to that.
In our opinion, the principle upon which the High Court relied, is not applica ble in case of transactions of printing of question papers.
Question papers as such, after being printed are neither available commercially nor available to any community commercial or otherwise, save under specific circumstances for the candidates appearing at a particular time in an examination.
Mr Mohan also drew our attention to the decision of Andhra Pradesh High Court in State of Andhra Pradesh vs Sri Krishna Power Press, Vizianagaram, XI STC 498.
There, the court reiterated that a transaction which results in the transfer of property in finished goods to another person cannot be described as a works contract.
It was further held that where the assessee Press itself pur chased stationery and did printing work upon it according to the orders of individual customers and supplied the printed stationery to the customers at an agreed price the transac tion was sales liable to sales tax and not works contract.
The fact that the goods prepared by the assessee could not be exhibited for sale to the general public is not decisive of the issue.
According to the High Court the only test is whether the contract is for the sale of finished product.
Mr. Mohan relying on the aforesaid observations submitted that the goods prepared by the assessee could not be sold to other customers, the person who placed order could be com pelled to accept it or claim damages from the printers.
He submitted that even in a case where goods are prepared according to the specific requisition to suit the require ments of individual customer, yet printing materials sup plied thereto have been held to be sale of goods and he drew our attention to the several decisions referred to by the High Court of Andhra Pradesh in aid of his propositions.
Normally, it may be that the goods prepared by the assessee which could not be exhibited for sale, would not be decisive of the matter and could in certain circumstances be sales liable to sales tax, but in all circumstances it depends upon the nature of the sale and the nature of the transac tion involved.
Printing of question papers at the behest of University or educational institutions is rather a delicate and confidential type of work and the price paid for supply ing such printed question 310 papers or printed matters entails primarily the confidence, and secondly the skill and to a very small measure the material.
If that is the position then, in our opinion, it cannot be categorised entailing sale of goods but it is rather a contract for works done.
Mr. Mohan also relied on the decision of the Madras High Court in P.M. Venkatachalam Pillai vs The State of Madras, XXIII STC 72, where it was held that when a transaction is claimed to be a works contract, a decision on the question depends on the particular facts.
The primary point to bear in mind in such cases is what is the intention of the par ties viewing the transaction as a whole; do they intend an apportionment or view the transaction on compartmental basis as that which represents labour and that which represents sale of the materials.
Different tests may be applied in answering such a question as the stage of passing of proper ty, risk and the like.
But all these tests converge towards finding out what is the intention of the parties.
There, the question was whether the assessee 's turnover consisted of the aggregate of labour charges and the cost of materials in printing work or of outright sales of finished commodity.
The assessee relied on certain bills which showed the cost of materials and labour charges but he did not produce order books or other documents.
The Tribunal found that the sepa rate entries were only a make believe apportionment for the purpose of sales tax and that what was sold was only a finished product.
In those findings the Tribunal justified on the materials to uphold the liability for sales tax.
As emphasised by the Division Bench of the Madras High Court, the entire transaction should be viewed and the intention of the parties found out.
Our attention was drawn by Mr. Mohan to the decision of the Orissa High Court in the case of State of Orisssa vs Ramnath Panda, XXVlI STC 98.
There the High Court held that in the case of an assessee, a printer supplying printed materials, where the customers supply paper and the assessee does nothing except printing on it, the contract is one of labour and there is no sale.
Where the customer enters into an agreement that he would separately pay for the paper and the assessee would merely print on it, then also there is no sale.
Where the customer does not enter into any separate agreement but merely asks the assessee to supply the printed materials, the contract is indivisible and the supply of printed materials is a sale liable to sales tax.
In such a case charging separately for the paper and printing in the bill issued to the customer does not alter the essential character of the agreement, which is for the purchase of printed materials.
311 Our attention was also drawn to another decision of Andhra Pradesh High Court in S.R.P. Works and Ruby Press vs State of Andhra Pradesh, XXX STC 195.
There, the petitioner was running a printing press, supplying cinema tickets printed on paper of different colours to the customers.
The customers obtained samples from the petitioner and then placed orders giving specifications.
The petitioner while making out bills, gave break up figures, showing the cost of paper and the cost of printing separately and the total cost.
The assessing authority assessed the petitioner only on the value of the paper for printing the tickets and granted exemption in respect of printing charges on the ground that they represented the cost of labour.
The Deputy Commissioner revised the order and held that the transac tions involved were sales of finished goods, viz., the tickets, and not merely of paper.
The Tribunal agreed with the finding of the Deputy Commissioner and confirmed the order.
On a revision it was held by the High Court on a consideration of some of the orders placed by the customers, that the orders were specifically for printing and supply of tickets.
The fact that break up figures were given in the bills was not decisive or conclusive in determining the question whether there were two contracts one for supply of paper and the other for printing.
We agree that the transaction under its true perspective must be viewed and the intention of the parties must be found out.
Our attention was drawn to the decision of the High Court of Kerala in The Sales Tax Officer, Special Circle 11, Palghat vs 1.
V. Somasundaran, 33 STC 68.
In that case by printing something on paper, as in .the cases of printing letter heads, invitation cards, wedding invitations, judg ments of courts, or ration cards, the printed matter does not become "paper products" within the meaning of that expression in item 42 of Schedule I to the Kerala General Sales Tax Act, 1963.
The High Court found that in such a case a further question arises as to whether it was sale of goods which could be taxed at all points.
In order to spell out a contract of sale there must be an agreement which may be express or inferred from the circumstances.
There can be an agreement for work and labour or there can be one for sale of goods.
If essentially the agreement is one for work and labour, complete exemption from taxation should be allowed.
If, on the other hand, it is a contract for sale, the whole turnover should be taxed.
A contract for printing of judgment of courts is essen tially a contract for work and labour and there is no justi fication for bifurcating that contract into two different contracts, one for cost of labour and 312 the other for sale of paper.
Imposition of sales tax on the turnover relating to printing of judgments of courts is, therefore, unwarranted.
In the case of contracts relating to the printing of ration cards, it is in the nature of job works and it is essentially a contract for the sale of finished articles.
In P.T. Varghese vs State of Kerala, 37 STC 171, the assessee who was conducting a press and printing bill books, vouchers, receipt books, letter heads, question papers and notices as ordered by his clients contended that he only executed a works contract for which he used his own paper, that the sale of paper used for printing could not be taxed under the Kerala General Sales Tax Act, 1963, as he was not the first seller of paper in the State, and that the remu neration received by him from his clients for the work and labour could not also be taxed under the Act.
It was held that the question really was whether the contract was for the sale of paper as well as for work and labour or whether it was a contract for printed materials as such or whether it was a contract for work and labour.
If it was a contract for sale of paper and for work it would be a composite contract where it might be possible to separate the sale from the work.
If, on the other hand, it was a contract for printed materials, what was sold was not paper, but printed materials.
If the contract was for work and labour, in which the use of materials was merely accessory or incidental, it would be a works contract which would not involve any sale and the charges received would not be assessable to tax under the Sales Tax Act; and that the assessee 's contract with the customers was not a contract for sale of paper in which labour was also involved making it a composite trans action which was capable of bifurcation into a contract for sale of materials and a contract for work and labour.
What was sold was something other than paper.
It could not be said that printed materials such as bills books, vouchers and the like were mere paper or products of paper.
Hence, the supply of bills books, vouchers etc.
was liable to be taxed under the Act as finished products.
It was further held that the question papers, however, were the subject matter of a contract for work and labour and the charges realised by the assessee for printing them were not liable to tax.
The High Court at page 176 of the report observed: "Only in respect of those goods to which title has passed as a result of contract, can it be said that the goods have been sold.
Where a person buys a "Picasso" or a "Ravi Varma", he does not intend to buy or pay for the canvas or the paint, although canvas and paint are involved in the production of 313 the painting, and title to such materials is transferred to him.
But such transfer of title to the materials is not pursuant to any agree ment for the sale of the materials as such.
It would never have been in his mind to pay separately for the materials and for the labour.
What the buyer buys is a finished product which is a work of article On the other hand, when a person gets his manuscript print ed as an article or a book of verses, the printer does no more than a mechanical or technical job.
The printer does not create the article or the poem, but merely renders his services to print which is in the nature of a job work.
The manuscript as such is the result of the skill, industry and scholarship of the author.
In such a case, there is no sale of the article or book by the printer; nor would it be possible in such a case to spell out an agreement for the sale of materials such as paper or ink, which may have been incidentally used in the production of the printed work.
While the painter sells a finished product which is a work of art, quite distinct and different from the materials used in its pro duction, the printer merely does a job work involving no sale; one is the work of an artist who is endowed with the finer qualities of imagination and taste and the other that of an artisan who is trained as a mechanic or technician A printer of judgments, for exam ple, does not produce and sell them; his work is purely that of a technician.
This court has therefore held that printing of judgments is only a works contract.
The work of a printer in certain cases may involve more than print ing; he may be a producer of finished articles such as bill books, vouchers and the like.
When such articles are printed and sold to the customers, what is sold is not paper or paper products but printed materials which are finished products.
Such contracts cannot be considered as contracts for the sale of paper coupled with an agreement to render service.
The sale of paper had never been the subject matter of the agreement between the parties.
Like in the case of painting which is a fin ished product being a work of art, the bill books and voucher are new products being printed materials; and the sale of such goods does not involve a composite contract which can be bifurcated into an agreement for the sale of goods be they canvas and paint or paper and ink and an agreement for work." 314 In our opinion, the High Court tightly applied the test in that case.
Further, our attention was drawn by Mr. Mohan to a decision of the Madras High Court in A.S. Hameed Bha rath Press vs State of Tamil Nadu, 54 STC 379.
There, the Tribunal found that the contracts between the assessee and his customers were indivisible contracts under which the assessee undertook to deliver printed material in accordance with the customer 's instructions and therefore considered the receipts in the assessee 's business as representing turnover in sales of goods taxable under the Tamil Nadu General Sales Tax Act, 1959, and that the order form was a make believe and did not reflect the real nature of the transactions between the assessee and his customers.
It was held that given the finding by the Tribunal, the printed conditions in the order form were not to be accepted at face value and that the transactions between the assessee and the customers involved only the supply of printed material at a price.
The High Court held that the decision of the Tribunal that the entire receipts in the assessee 's business must be held to be sales turnover liable to tax under the Act must be upheld.
As mentioned hereinbefore, the High Court was dealing entirely with sample printed materials of order forms of bill books.
The Allahabad High Court had to consider this question in Commissioner of Sales Tax vs Uma Art Press, 56 STC 300.
The decision in that case rested on the facts of that case and in the nature of the contentions urged before us in this case, it would not be relevant to discuss the said decision in greater details.
In Chandra Bhan Gosain vs The State of Orissa & Ors., XIV STC 766 at 769, it was reiterated that in case of a composite contract how to determine whether there was sale of goods or there was works to be done depended upon the facts of each case, and the intention of the parties, what was the essence of the contract has to be found out.
This court had to consider in C.S.T., Gujarat vs M/s. Sabarmati Reti Udyog Sahakari Mandali Ltd., 38 STC 203, whether the contract was a works contract or contract for sale.
There the assessee had entered into a contract with the Public Works Department of the Govt.
of Gujarat for the manufacture and supply of kiln burnt bricks to that department.
The contract was found to be in a tender "for supply of materi als" containing a memorandum of the conditions.
The nature of the work was described as "manufacturing and supplying kiln burnt bricks for construction".
In the tender the assessee stated the condition and analysing the decision in the light of Chandra Bhan Gosain 's case, this Court held that the contract was one for sale and not a works contract.
315 Mr. Mohan further drew our attention to the observations of the English decision in Marcel (Furriers) Ltd. vs Tapper, There, the defendant, on behalf of his wife, ordered from the plaintiffs, a firm of furriers, a mutation mink coat.
The defendant 's wife selected skins of the colour she desired and specified the style of the coat she required, directing that it should be made with the skins running horizontally.
Her instructions were carried out, but the coat was eventually rejected by her.
The plain tiffs brought an action against the defendant claiming Pound 950 for work done and materials supplied in the making of the coat.
By his defence the defendant pleaded that the contract was one for the sale of goods of the value of Pound 10 or over and was unenforceable pursuant to section 4 of the Sale of Goods Act, 1893 of England by reason of the fact that there was no note or memorandum in writing of the contract signed by the party to be charged or his agent.
It was held that although a high degree of skill and craftsman ship might be required in making of the coat, the contract was no more than one for the making of an article for the special use of the customer by someone whose business it was to make it.
The nature of the transaction, therefore, was that it was one for the making and supply of a particular article at a price and not one for work and labour done and materials supplied, and there being no memorandum in writing to satisfy the requirements of section 4 of the Sale of Goods Act, 1893, the contract was unenforceable.
Hence, the principle following from the decision is that the nature of transaction has to be found out, whether it is making and supply of particular article or printing material.
Mr. Ramchandran, however, submitted before us that in view of the principles laid down by this Court in The State of Madras vs Gannon Dunkerley & Co. (Madras) Ltd., IX STC 353 and Hindustan Aeronautics Ltd. vs State of Karnataka, 55 STC 314, the High Court was right.
He submitted that the contract in essence was for supply of question papers which are not commercial commodities.
The blank papers ceased to be the property of the dealer, the moment questions were printed on these.
These are the exclusive properties of the University or other educational institutions, and were to be kept secret until the University chose to divulge these at the time of the examinations.
The dealer cannot deal with the printed question papers.
Upon printing he lost his capacity to contract, ceased to be the sole owner, and could not sell to anybody he chose.
He had to hand over the entire question papers to the University.
It was a special kind of job entrusted for confidence reposed and for the delicate matter of the job to be performed.
The work in connection therewith was predominantly 316 in the transaction.
The material and the skill in doing so, both are incidental.
In that view of the matter he submitted that the High Court was right, and indeed a contract for sale pre supposes the capacity in the dealer to contract with regard to the finished item.
For this, reliance was placed on the observations of this Court in The State of Madras 's case (supra), and also on Hindustan Aeronautics Ltd 's case (supra) at pages 320, 323 & 327.
The thing pro duced must have individual existence as the sole property of the party who produced it, which can be passed on for a price, in order to be a sale.
Reliance was placed on the observations in Patnaik & Co. vs The State of Orissa, XVI STC 364 and T.V. Sundram lyengar & Sons vs The State of Madras, 35 STC 24.
The test is whether work and labour are bestowed on anything that can properly become the subject of sale.
The court has to find out the primary object of the transaction and intention of the parties.
In this connec tion, it is necessary to rely on the observations of this Court in Hindustan Aeronautics Ltd 's case (supra) at pages 327,333 334 of the report.
The primary difference between a contract for work or service and a contract for sale is that in the former there is in the person performing or rendering service no property in the thing produced as a whole, notwithstanding that a part or even the whole of the material used by him may have been his property.
Where the finished product supplied to a particular customer is not a commercial commodity in the sense that it cannot be sold in the market to any other person, the transaction is only a works contract.
See the observation in The Court Press Job Branch, Salem vs The State of Tamil Nadu, 54 STC 383 and Commissioner of Sales Tax, M.P. vs Ratna Fine Arts Printing Press, 56 STC 77.
In our opinion, in each case the nature of the contract and the transaction must be found out.
And this is possible only when the intention of the parties is found out.
The fact that in the execution of a contract for work some materials are used and the property/goods so used, passes to the other party, the contractor undertaking to do the work will not necessarily be deemed, on that account, to sell the materials.
Whether or not and which part of the job work relates to that depends as mentioned hereinbefore, on the nature of the transaction.
A contract for work in the execu tion of which goods are used may take any one of the three forms as mentioned by this Court in The Government of Andhra Pradesh vs Guntur Tobaccos (supra).
317 In our opinion, the contract in this case is one, having regard to the nature of the job to be done and the confi dence reposed, for work to be done for remuneration and supply of paper was just incidental.
Hence, the entire price for the printed question papers would have been entitled to be excluded from the taxable turnover, but since in the instant case the deemed notes prepared by the assessee showed the costs of paper separately, it appears that it has treated the supply of paper separately.
Except the materials supplied on the basis of such contract, the contract will continue to be a contract for work and labour and no liabil ity to sales tax would arise in respect thereof.
The High Court was, therefore, fight in the view it took in Civil Appeals Nos. 2346 2347/78.
The facts in the other appeals are identical.
All these appeals are dismissed accordingly but without, in the facts and circumstances of the case, any order as to costs.
G.N. Appeals dismissed.
| IN-Abs | The respondent had entered into contracts with Universi ties and other educational institutions for printing of question papers for them.
In the demand notes prepared the respondent gave the charges for printing, blocks, packing handling, delivery, postal and also value of paper and value of packing materials separately in the relevant assessment years.
On re examination the Assessing Officer noticed that printing charges and block making charges escaped assessment and brought them to tax.
In respect of subsequent assessment also claims for exemption towards printing charges and block making charges were disallowed.
The appeals preferred by the Respondents were dismissed by the Appellate Assistant Commissioner, who reached a finding that the contracts were only for supply of printed question paper as a finished product and that there was no scope to disintegrate cost of paper with separate charges for printing and block making though the bills were made out in a different way.
The respondent preferred appeals to Sales Tax Appellate Tribunal.
The Tribunal held that the respondent was assessa ble only on the sale value of paper and that printing and block making charges were not to be included in the assess ment.
Against the Tribunal 's Orders, the appellant preferred tax cases before the High Court.
The High Court dismissed the cases and held that the contract between the assessee and the Universities is of highly confidential nature and that the printing of question papers could be entrusted only to those in whom the institutions got the highest confi dence, and that the price paid for such confidentiality and trust is not 302 the price for the sale of goods.
The present appeals by Special Leave are against the High Court 's Orders.
In this appeal, it was argued on behalf of the appellant that printing charges and block making charges are includi ble in the assessable turnover of the Respondent.
On behalf of the Respondent it was argued that the contract entered into between her and the educational institutions was a contract of work and labour and in the performance of the contract, indicentally she had to sell paper to them and hence except to the extent of the cost of paper she was not liable to pay sales tax in respect of the other amounts receive by her.
Dismissing the appeals, HELD: 1.1 Contract for work in the execution of which goods are used may take one of three forms.
The contract may be for work to be done for remuneration and for supply of material used in the execution of works in which the use of materials is accessory or incidental to the execution of the work; or it may be a contract for work and use or supply of materials, though not accessory to the execution of the contract, is voluntary or gratuitous.
In the last class there is no sale because though property passed it did not pass for a price.
Whether a contract is of the first or the second class must depend upon the circumstances; if it is of the first, it is a composite contract for work and sale of goods; where it is of the second category, it is a contract for execution of work not involving sale of goods.
[307H; 308A B] 1.2 In each case the nature of the contract and the transaction must be found out.
And this is possible only when the intention of the parties is found out.
The fact that in the execution of a contract for work some materials are used and the property/goods so used, passes to the other party, the contractor undertaking to do the work will not necessarily be deemed, on that account, to sell the materi als.
Whether or not and which part of the job work relates to that depends on the nature of the transaction.
[316G H] 1.3 Normally, it may be that the goods prepared by the assessee which could not be exhibited for sale, would not be decisive of the matter and could in certain circumstances be sales liable to sales tax, but in all circumstances it depends upon the nature of the sale and the nature of the transaction involved.
Printing of question papers at the 303 behest of University or educational institutions is rather a delicate and confidential type of work and the price paid for supplying such printed question papers or printed mat ters entails primarily the confidence, and secondly the skill and to a very small measure the material.
If that is the position, it cannot be categorised as entailing sale of goods but it is rather a contract for works done.
[309G H; 310A] Government of A.P. vs Guntur Tobaccos Ltd., XVISTC 240 relied on.
Hindustan Aeronautics Ltd. vs State of Kerala, [1984] ISCC 706 and P.T. Varghese vs State of Kerala, 37 STC 1171 approved.
Saraswati Printing Press vs CST, Eastern Division Nag put, X STC 286 and State of A.P. vs Sri Krishna Power Press, Vizianagaram, XI STC 498.
P.M. Venkatachalam Pillai vs State of Madras, XXIII STC 72; State of Orissa vs Ramnath Panda, XXVII STC 98; S.R.P. Works and Ruby Press vs State of A.P., XXX STC 195 and STO, Special Circle 11, Palghat vs I. V. Somasundaram, 33 STC 68.
A.S. Hameed Bharath Press vs State of Tamil Nadu, 54 STC 379; CST vs Uma Art Press, 56 STC 300; Chandra Bhan Gosain vs State of Orissa, XIV STC 766; CST vs M/s Sabarmati Reti Udvog Sanakari Mandali Ltd., 38 STC 203 and Marcel (Furri ers) Ltd. vs Tapper, referred to.
2.1 The primary difference between a contract for work or service and a contract for sale is that in the former there is in the person performing or rendering service no property in the thing produced as a whole, notwithstanding that a part or even the whole of the material used by him may have been his property.
Where the finished product supplied to a particular customer is not a commercial com modity in the sense that it cannot be sold in the market to any other person, the transaction is only a works contract.
[316E] 2.2 When the questions are set on a piece of paper and sent for printing, the University remains the owner until it divulges these to the intending candidates or the students.
But that is a matter which is relevant in the method of communication of the question to the candidates appearing in the examination.
The means employees for such communication entail use of mind, confidence, trust for the material, 304 paper and the technical skill of printing.
It is a combina tion of these various factors that results in printing the question papers and the payment made in the process entails a composite payment for all these.
Question papers as such, after being printed are neither available commercially nor available to any community commercial or otherwise save under specific circumstances for the candidates appearing at a particular time in an examination.
[308D E; 309C] Court Press Job Branch, Salem vs State of Tamil Nadu, 54 STC 382 and CST vs M.P.V. Ratna Fine Arts Printing Press, 56 STC 77 approved.
State of Madras vs Gannan Dunkerlay & Co. (Madras) Ltd., IX STC 353; Patnaik & Co. vs State of Orissa, XVI STC 364 and T.V. Sundaram lyengar & Sons vs State of Madras, 35 STC 24 referred to.
The contract in the present case is one, having regard to the nature of the job to be done and the confi dence reposed, for work to be done for remuneration and supply for paper was just incidental.
Hence, the entire price for the printed question papers would have been enti tled to be excluded from the taxable turnover, but since the demand notes prepared by the assessee showed the costs of paper separately, it appears that it has treated the supply of paper separately.
Except the materials supplied on the basis of such contract, the contract will continue to be a contract for work and labour and no liability to sales tax would arise in respect thereof.
[317A C]
|
ivil Appeal No. 1524 of 1982.
From the Judgment and Order dated 5.9.1977 of the Hima chal Pradesh High Court in F.A.O. No. 8 of 1975.
A.B. Rohtagi, Mrs. Urmila Kapoor, Miss section Janani and Naresh K. Sharma for the Appellant.
Miss A. Subhashini for the Respondents.
The Judgment of the Court was delivered by RANGANATHAN, J.
The appellant Vishwanath Sood undertook the construction of a Farmers ' Community Centre Building at Thanedhar by an agreement entered into with the Union of India and the State of Himachal Pradesh dated 20.6.1968.
Certain disputes arose between the parties to the agreement and in terms of clause 25 of the agreement, they were re ferred to a sole arbitrator.
The contractor submitted a claim of Rs. 1,28,000 while the respondents also submitted a counter claim.
By an award dated 20.3.1972, the abritrator awarded an amount of Rs.31,932 to the contractor and a sum of Rs.21,504 to the respondents.
The award was filed in the court.
The contractor filed an application in the court for modification or correction of the award in respect of three items of his claim ( 1, 8 and 9) and item No. 1 of the respondent 's counter claim.
The Department also filed its objections to the award and prayed that a sum of Rs.8,080.29 should be awarded in favour of the Department or the award remitted to arbitrator.
The 292 learned single Judge dismissed the objections of the re spondents.
So far as the appellant 's prayers were concerned, he allowed the same only in respect of item 1 of the re spondent 's counter claim.
He held that the arbitrator was not justified in granting to the Government a sum of Rs.20,000 against the contractor.
Both the contractor and the respondents preferred appeals to the Division Bench.
The Bench reversed the order of the learned single Judge.
It set aside the order of the learned single Judge in so far as the sum of Rs.20,000 was deleted thereby from the award of the arbitrator.
The award was restored to its original terms and the contractor was held entitled to interest at 6 per cent on the amount found due to him after adjusting the sum awarded by the arbitrator in favour of the Government against the sum awarded in favour of the contractor.
The contractor has preferred this appeal by special leave from the order of the Division Bench of the High Court.
Learned counsel for the appellant pressed the conten tions in respect of the four items to which he had objected before the learned single Judge and the Division Bench.
Three of these items pertain to the claims put forward by the contractor which were rejected by the arbitrator and held by the courts to have been rightly rejected.
The first claim (item No. 1) made by the contractor was of a sum of Rs. 12,720 which, according to him, was the loss incurred by him by reason of the Department 's delay in handing over the site to him for executing the contract.
The learned single Judge discussed this aspect of the matter at length.
He observed that, on this point, there was, on the one hand, oral evidence adduced on behalf of the Department while there was only the bare denial of the contractor on the other.
He pointed out that the arbitrator had fully consid ered the matter and that it was not open to the court to re assess the evidence and that there was no error apparent on the face of the record.
The second claim (item No. 8) was for a sum of Rs.6,172 being the amount kept as security with the respondent.
In respect of this item also the learned single Judge discussed the evidence which showed that the security amount had been properly adjusted by the Department which had been constrained to take up the work departmental ly at the cost and risk of the contractor.
He held that this was an aspect which had been considered by the arbitrator and a proper conclusion arrived at.
The third claim put forward by the petitioner (item No. 9) was for a sum of Rs.30,000, claimed as compensation for an amount spent by the contractor for the purchase of a truck for this work.
The learned single Judge here again pointed out that no material had been placed before 293 the arbitrator by the contractor to show that he was enti tled to the amount and that, in any event, having regard to the fact that the work was executed by the Department at the cost and risk of the contractor, there was no question of the contractor preferring any claim in respect of this item.
The above three claims of the petitioner were also rejected by the Division Bench which pointed out that the award made by the arbitrator was not a speaking award and that the face of the award did not show any error.
We do not think that so far as these claims are concerned, that the appellant has any arguable case at all.
As pointed out by the Division Bench of the High Court, the award was a non speaking award.
The arbitrator had considered the materials placed before him and had arrived at his conclusions.
The award does not on the face of it disclose any error, much less any error of law, which needs to be set fight.
We therefore, hold that the High Court was justified in affirming the award so far as the rejection of these three claims is concerned.
The position in regard to the counter claim of the respondents which was allowed by the arbitrator and the Division Bench stands on a different footing.
The respond ents ' claim before the arbitrator was that they were enti tled to receive from the contractor "Rs.24,000 on account of payment of 10 per cent compensation on the tendered amount for not executing the work in accordance with the terms and conditions of the agreement".
As against this claim the arbitrator awarded the respondents a sum of Rs.20,000.
The learned single Judge took the view that having regard to clause 2 of the contract (pertaining to the claim by the respondent) read with clause 25 it was clear that any com pensation under clause 2 could be adjudicated upon only by the superintending Engineer or the Development Commissioner and that it was not open to the arbitrator to have entered upon a reference in regard to this claim at all.
In order to appreciate the finding of the learned single Judge it will be useful to set out clauses 2 and 25 of the conditions of contract on which his decision was based: "Clause 2: Compensation for delay: The time allowed for carrying out the work as entered in the tender shall be strictly observed by the contractor and shall be deemed to be the essence of the contract on the part of the contractor and shall be reckoned from the fifteenth day after the date on which the order to commence the work is issued to the contractor.
The work shah throughout the stipulated period of the contract be proceeded with all due diligence and the contractor shall pay as compensation an amount 294 equal to one per cent, or such smaller amount as the Superintending Engineer (whose decision in writing shall be final) may decide on the amount of the estimated cost of the whole work as shown in the tender for every day that the work remains uncommenced, or unfinished, after proper dates.
And further, to ensure good progress during the execution of the work, the contractor shall be bound in all cases in which the time allowed for any work exceeds, one month (save for special jobs to complete one eighth of the whole of the work before one fourth of the whole time allowed under the contract has elapsed; three eighth of the work, before one half of such time has elapsed, and threefourth of the work, before three fourth of such time has elapsed.
However, for special jobs if a time schedule has been submitted by the Contractor and the same has been accepted by the Engineer in charge, the contractor shall comply with the said time schedule.
In the event of the con tractor failing to comply with this condition, he shall be liable to pay as compensation an amount equal to one per cent or such smaller amount as the Superintending Engineer (whose decision in writing shall be final) may decide on the said estimated cost of the whole work for every day that the due quantity of work remains incomplete; provided always that the entire amount of compensation to be paid under the provisions of this clause shall not exceed ten per cent, on the estimated cost of the work as shown in the tender." "Clause 25: Settlement of disputes by Arbitra tion: Except where otherwise provided in the contract, all questions and disputes relating to the meaning of the specifications, designs drawings and instructions hereinbefore men tioned and as to the quality of workmanship or materials used on the work or as to any other question, claim, matter or thing whatsoever, in any way arising out of or relating to the contract, designs, drawings, specifications, estimates, instruction, order, or these condi tions or otherwise concerning the works or the execution or failure to execute the same whether arising during the progress of the work or after the completion or abandonment thereof shall be referred to the sole arbitra tion of the person appointed by the Chief Engineer, Himachal Pradesh Public Works De partment . . " 295 The Division Bench did not agree with the view of the learned single Judge.
It pointed out that, while in the ordinary course, the rate of compensation payable by the contractor is one per cent of the amount of the estimated cost of the whole work, under clause 2, the Superintending Engineer is authorised to depart from this figure and deter mine the compensation at a smaller amount if there are any extenuating circumstances in favour of the contractor.
The question however was whether the compensation determined under clause 2 is excluded from the scope of arbitration under clause 25.
The Division Bench answered this question in the negative.
It pointed out that the sine qua non of clause 2 was that the contractor should have been guilty of delay in commencing the work or in completing it but the clause did not specify either the authority or the procedure for determining whether the contractor is responsible for the default.
Observing that there can be a serious dispute in a particular case as to the person who is responsible for the delay, the Bench took the view that the determination of this dispute cannot be excluded from the scope of clause 25.
The Bench observed that inasmuch as a bona fide dispute can be raised by the contractor in regard to his liability to compensation under clause 2 and no machinery is provided in clause 2 for the resolution of that dispute, there is ample justification for holding that resort can be had to arbitra tion under clause 25.
The statement in clause 2 that the decision of the Superintending Engineer is final, according to the Bench, merely constituted a declaration that no officer in the Department could disturb his quantification.
But this finality cannot be construed as extending to ex clude the jurisdiction of the arbitrator under clause 25.
On this view of the matter, the Division Bench found itself unable to agree with the learned single Judge that the arbitrator had traveled outside his jurisdiction in awarding a sum of Rs.20,000 as compensation to the Government against the contractor for the delay in executing the work.
It will be seen from the narration above that so far as this item was concerned, both parties proceeded on the footing that the claim of the Government was a claim under clause 2 and that the arbitrator had awarded the sum only in terms of clause 2.
This is also borne out by the fact that the claim of the Department was based on a percentage of the total cost of the work and the restriction of the claim to 10% also appears to have been the result of the proviso to clause 2.
The award, therefore, on a fair reading of it, contains a grant by the arbitrator of compensation to the Government in terms of clause 2.
It is therefore open to the parties to urge before this Court, as they did before the High Court also, that, on a proper construction of clauses 2 and 25, 296 this award was not justified.
It is in this respect that this counter claim of the Department stands on a different footing from the earlier claims of the contractor which have been rejected and which, we have held above, have been rightly rejected.
Learned counsel for the appellants contends that the terms of clause 2 clearly envisage the determination of the amount of compensation for the delay in the execution of the work only by the Superintending Engineer and specifically mentions that the decision of the Superintending Engineer in writing shah be final.
The opening words of clause 25: "Except where otherwise provided in the contract" clearly take out of the purview of clause 25 any dispute in respect of a claim under clause 2.
He submitted that the clause authorised only the Superintending Engineer to go into the question whether there is any delay or not and the reasons therefore and to determine the rate at which compensation should be charged from the contractor.
If the Engineer in charge levies a compensation under clause 2, the contractor can apply to the Superintending Engineer.
If the Superin tending Engineer finds that there was no fault on the part of the contractor at all he could waive the compensation under clause 2 and that cannot be challenged by the Depart ment before the arbitrator.
Per contra, where the Superin tending Engineer confirms that there has been a delay for which compensation should be charged, it will not be open to the contractor to challenge the conclusion before the arbi trator.
Learned counsel also submitted that even if clause 25 were to be held applicable, the question of submitting a dispute in this regard to the arbitrator could only arise if there had been a determination and a dispute under clause 2.
Clause 2 envisages that the Engineer in charge should, in appropriate cases, levy a compensation at the rate specified in that clause.
If he did, it was open to the contractor to dispute the same and approach the Superintending Engineer to reduce or waive the compensation for any reason whatsoever.
Or, it may be that, even where the Engineer in charge levied no compensation, the Superintending Engineer could, either on his own motion or on being moved by the department, after considering the facts charge a compensation with the quantum of which the department may not be satisfied in which event a dispute could arise.
But in the present case neither the Engineer in charge nor the Superintending Engineer had determined any liability at all under clause 2.
There was no compensation levied against which there was any protest by the contractor, and there was no matter submitted to the Superintending Engineer for determination.
In these circum stances, the submission of the learned counsel for the appellant is that there was no dispute at all between the parties on 297 the question of compensation and that a dispute cannot be said to arise merely because a counter claim is for the first time put forward by the Department before the arbitra tor.
On the other hand, the learned counsel for the Depart ment contended that clause 2 is in the nature of a penal clause which automatically takes effect irrespective of any default.
He described it as an "agreed penalty" clause.
He stated that the clause made the contractor liable for the penalty prescribed therein whenever there was a delay in the completion of the contract, whatsoever might have been the reason therefore, the question as to whether the contractor was at default or not being totally immaterial.
The Depart ment was, therefore, entitled to automatically deduct from the bills payable to the petitioner the compensation or penalty at the rate mentioned in clause 2 or such reduced amount as may be determined in a particular case by the Superintending Engineer and that if the contractor objected to this deduction that would give rise to a dispute which can be the subject matter of arbitration under clause 25.
He therefore submitted that the Division Bench has rightly construed the terms of the contract and confirmed the award made by the arbitrator.
We have gone through the judgment of the Division Bench of the High Court and we have also considered the arguments advanced on both sides.
With great respect, we find our selves unable to agree with the interpretation placed by the Division Bench on the terms of the contract.
Clause 2 of the contract makes the time specified for the performance of the contract a matter of essence and emphasises the need on the part of the contractor to scrupulously adhere to the time schedule approved by the Engineer in charge.
With a view to compel the contractor to adhere to this time schedule, this clause provides a kind of penalty in the form of a compensa tion to the Department for default in adhering to the time schedule.
The clause envisages an amount of compensation calculated as a percentage of the estimated cost of the whole work on the basis of the number of days for which the work remains uncommenced or unfinished to the prescribed extent on the relevant dates.
We do not agree with the counsel for the respondent that this is in the nature of an automatic levy to be made by the Engineer in charge based on the number of days of delay and the estimated amount of work.
Firstly, the reference in the clause to the require ment that the work shall throughout the stipulated period of the contract be proceeded with due diligence and the refer ence in the latter part of the clause that the compensation has to be paid "in the event of the contractor failing to comply with" the prescribed time 298 schedule make it clear that the levy of compensation is conditioned on some default or negligence on the part of the contractor.
Secondly, while the clause fixes the rate of compensation at 1 per cent for every day of default it takes care to prescribe the maximum compensation of 10 per cent on this ground and it also provides for a discretion to the Superintending Engineer to reduce the rate of penalty from 1 per cent.
Though the clause does not specifically say so, it is clear that any moderation that may be done by the Super intending Engineer would depend upon the circumstances, the nature and period of default and the degree of negligence or default that could be attributed to the contractor.
This means that the Superintending Engineer, in determining the rate of compensation chargeable, will have to go into all the aspects and determine whether there is any negligence on the part of the contractor or not.
Where there has been no negligence on the part of the contractor or where on account of various extraneous circumstances referred to by the Division Bench such as vis major or default on the part of the Government or some other unexpected circumstance which does not justify penalising the contractor, the Superintend ing Engineer will be entitled and bound to reduce or even waive the compensation.
It is true that the clause does not in terms provide for any notice to the contractor by the Superintending Engineer.
But it will be appreciated that in practice the amount of compensation will be initially levied by the Engineer in charge and the Superintending Engineer comes into the picture only as some sort of revisional or appellate authority to whom the contractor appeals for redress.
As we see it, clause 2 contains a complete machin ery for determination of the compensation which can be claimed by the Government on the ground of delay on the part of the contractor in completing the contract as per the time schedule agreed to between the parties.
The decision of the Superintending Engineer, it seems to us, is in the nature of a considered decision which he has to arrive at after con sidering the various mitigating circumstances that may be pleaded by the contractor or his plea that he is not liable to pay compensation at all under this clause.
In our opinion the question regarding the amount of compensation leviable under clause 2 has to be decided only by the Superintending Engineer and no one else.
The Division Bench has construed the expression in clause 2 in parenthesis that "the Superintending Engineer 's decision shall be final" as referring only to a finality qua the department; in other words, that it only constitutes a declaration that no officer in the department can determine the quantification and that the quantum of compensation levied by the Superintending Engineer shall not be 299 changed without the approval of the Government.
After refer ring to certain judicial decisions regarding the meaning of the word "final" in various statutes, the Division Bench concluded that the finality cannot be construed as excluding the jurisdiction of the arbitrator under clause 25.
We are unable to accept this view.
Clause 25 which is the arbitra tion clause starts with an opening phrase excluding certain matters and disputes from arbitration and these are matters or disputes in respect of which provision has been made elsewhere or otherwise in the contract.
These words in our opinion can have reference only to provisions such as the one in parenthesis in clause 2 by which certain types of determinations are left to the administrative authorities concerned.
If that be not so, the words "except where other wise provided in the contract" would become meaningless.
We are therefore inclined to hold that the opening part of clause 25 clearly excludes matters like those mentioned in clause 2 in respect of which any dispute is left to be decided by a higher official of the Department.
Our conclu sion, therefore, is that the question of awarding compensa tion under clause 2 is outside the purview of the arbitrator and that the compensation, determined under clause 2 either by the Engineer in charge or on further reference by the Superintending Engineer will not be capable of being called in question before the arbitrator.
We may confess that we had some hesitation in coming to this conclusion.
As pointed out by the Division Bench, the question of any negligence or default on the part of the contractor has many facets and to say that such an important aspect of the contract cannot be settled by arbitration but should be left to one of the contracting parties might appear to have far reaching effects.
In fact, although the contractor in this case might object to the process of arbitration because it has gone against him, contractors generally might very well prefer to have the question of such compensation decided by the arbitrator rather than by the Superintending Engineer.
But we should like to make it clear that our decision regarding non arbitrability is only on the question of any compensation which the Government might claim in terms of clause 2 of the contract.
We have already pointed out that this is a penalty clause introduced under the contract to ensure that the time schedule is strictly adhered to.
It is something which the Engineer incharge enforces from time to time when he finds that the contractor is being recalcitrant, in order to ensure speedy and proper observance of the terms of the contract.
This is not an undefined power.
The amount of compensation is strictly limited to a maximum of 10% and with a wide margin of discretion to the Superintending Engineer, who might not only reduce the percentage but who, we think, can even reduce it 300 to nil, if the circumstances so warrant.
It is this power that is kept outside the scope of arbitration.
We would like to clarify that this decision of ours will not have any application to the claims, if any, for loss or damage which it may be open to the Government to lay against the contrac tor, not in terms of clause 2 but under the general law or under the Contract Act.
As we have pointed out at the very outset so far as this case is concerned the claim of the Government has obviously proceeded in terms of clause 2 and that is the way in which both the learned single Judge as well as the Division Bench have also approached the ques tion.
Reading clauses 2 and 25 together we think that the conclusion is irresistible that the amount of compensation chargeable under clause 2 is a matter which has to be adju dicated in accordance with that clause and which cannot be referred to arbitration under clause 25.
As stated earlier, an alternative ground was urged by the learned counsel for the appellant that, no penalty under clause 2 having been imposed by the respondents in the first instance, no dispute had at all arisen which could have been referred to arbitration.
This point was not taken before the High Court and the relevant facts are not on record.
That apart, in the view we have taken, it is unnecessary to express any opinion on this argument and we refrain from doing so.
For the reasons above mentioned, we restore the judgment of the learned single Judge.
In the result, the amount of compensation of Rs.20,000 awarded by the arbitrator in favour of the Government will stand deleted.
The amount of interest payable to the contractor, if any, will be worked out on the basis of the award as modified by us above.
The appeal is allowed.
We however make no order as to costs in the circumstances of the case.
N.V.K. Appeal allowed.
| IN-Abs | The appellant undertook the construction of a Farmers ' Community Centre Building by an agreement entered into with the Union of India and the State of Himachal Pradesh, the respondents in the appeal.
The agreement dated June 20, 1968 provided, by Clause 2, for the payment of compensation for delay, if the contractor should have been guilty of delay in commencing the work or in completing it, the quantum of compensation to be deter mined by the Superintending Engineer and that his decision was final.
Clause 25 provided for settlement of disputes by arbitration.
It excluded from arbitration matters or dis putes in respect of which provision had been made elsewhere or otherwise in the contract.
Certain disputes arose between the parties, and in terms of clause 25 of the agreement they were referred to a sole arbitrator.
The Contractor submitted a claim in respect of 9 items, and the department filed a counter claim to the effect that they were entitled to receive from the Contractor a sum of Rs.24,000 on account of payment of 10 per cent compensation for not executing the work in accordance with the terms and conditions of the agreement.
The arbitrator gave his award, and the same was filed in the Court.
The Contractor filed objections for modification in respect of items 1, 8 and 9 of his claim and item No. 1 of the respondents ' counter claim.
The department also filed its objections.
The Single Judge dismissed the objections of the respondents and 289 allowed the appellants ' claim only in respect of item No. 1 of the respondents ' counter claim.
The single Judge took the view that a reading of clause 2 with clause 25 made it clear that any compensation under clause 2 could be adjudicated upon only by the Superintending Engineer or the Development Commissioner and that it was not open to the arbitrator to have entered upon a reference in regard to this claim at all.
Both parties filed appeals to the Division Bench.
The Bench reversed the order of the Single Judge and restored the award to its original terms.
It held that inasmuch as a bonafide dispute can be raised by the contractor in regard to his liability to compensation under clause 2 and as no machinery was provided in clause 2 for the resolution of such dispute, there is ample justification for holding that resort can be had to arbitration under clause 25.
On this view of the matter, the Bench did not agree with the Single Judge that the arbitrator had traveled outside his jurisdic tion in awarding compensation to the Government against the contractor for the delay in executing the work.
In the appeal to this Court it was contended on behalf of the appellants that the terms of Clause 2 clearly envis age the determination of the amount of compensation for the delay in the execution of the work only by the Superintend ing Engineer and specifically mentions that the decision of the Superintending Engineer in writing shall be final.
The opening words of Clause 25, "Except otherwise provided in the contract" clearly take out of the purview of Clause 25 any dispute in respect of a claim under Clause 2.
Even if Clause 25 be held applicable, the question of submitting a dispute in this regard to the arbitrator could only arise if there had been a determination and a dispute under Clause 2.
It was further submitted that there was no dispute at all between the parties on the question of compensation and that a dispute cannot be said to arise merely because a counter claim was for the first time put forward by the Department before the arbitrator.
On behalf of the respondent Department the appeal was contested by contending that Clause 2 was in the natore of a penal clause which automatically takes effect irrespective of any default.
The clause made the contractor liable for the penalty prescribed therein whenever there was a delay in the completion of the contract, whatsoever might have been the reason therefore, the question as to whether the con tractor was at default or not being totally immaterial.
The Department was, therefore, entitled to automatically deduct from the bills payable to the contractor, the compensation or penalty at the rate mentioned in Clause 2 290 or such reduced amount as may be determined in a particular case by the Superintending Engineer and that if the contrac tor objected to the deduction that would give risc to a dispute which can be the subject matter of arbitration under Clause 25.
Allowing the appeal, HELD: 1.
Clause 2 of the contract makes the time speci fied for the performance of the contract a matter of essence and emphasises the need on the part of the contractor to scrupulously adhere to the time schedule approved by the Engineer in charge.
With a view to compel the contractor to adhere to this time schedule, this clause provides a kind of penalty in the form of a compensation to the Department for default in adhering to the time schedule.
[297E F] 2.
Clause 2 contains a complete machinery for determina tion of the compensation which can be claimed by the Govern ment on the ground of delay on the part of contractor in completing the contract as per the time schedule agreed to between the parties.
The decision of the Superintending Engineer is in the nature of a considered decision which has to arrive at after considering the various mitigat ing circumstances that may be pleaded by the contractor or his plea that he is not liable to pay compensation at all under this clause.
[298E F] 3.
The question regarding the amount of compensation leviable under Clause 2 has to be decided only by the Super intending Engineer and no one else.
[298G] 4.
The opening part of Clause 25 clearly excludes mat ters like those mentioned in Clause 2 in respect of which any dispute is left to be decided by a higher official of the Department.
[299C] 5.
The question of awarding compensation under Clause 2 is outside the purview of the arbitrator and the compensa tion, determined under Clause 2 either by the Engineer in Charge or on further reference by the Superintending Engi neer will not be capable of being called in question before the arbitrator.
[299D] 6.
Clause 25 which is the arbitration clause starts with an opening phrase excluding certain matters and disputes from arbitration and these are matters or disputes in re spect of which provision has been made elsewhere or other wise in the contract.
These words can have reference only to provisions such as the one in paranthesis in Clause 2 291 by which certain types of determination are left to the administrative authorities concerned.
[299B C] 7.
The question of any negligence or default on the part of the contractor has many facets and to say that such an important aspect of the contract cannot be settled by arbi tration but should be left to one of the contracting parties might appear to have far reaching effects.
In the instant case, it is made clear that the decision regarding non arbitrability is only on the question of any compensation which the government might claim in terms of Clause 2 of the contract.
This is not an undefined power.
The amount of compensation is strictly limited to a maximum of 10 percent and with a wide margin of discretion to the Superintending Engineer.
It is this power that is kept outside the scope of arbitration.
[299E, F, H; 300A]
|
ivil Appeal No. 1048 of 1980.
From the Judgment and Order dated 11.3.80 of the Rajas than High Court in S.A. No. 52 of 1980.
section Ganesh and P.H. Parekh for the Appellant.
S.S. Khanduja for the Respondent.
The Judgment of the Court was delivered by SHARMA, J.
This appeal by special leave is directed against the decision of the Rajasthan High Court confirming the decree of eviction of the appellant from certain prem ises under section 13(1)(f) of the Rajasthan Premises (Control of Rent and Eviction) Act, 1950 (hereinafter referred to as the Act), on the ground that he had denied the title of the respondent landlord.
The appellant has been in possession of the structure in ques 332 tion since 1953, when he was inducted therein by the owner one Nawab M. Ali Khan.
In 1969 Nawab M. Ali Khan died, and it appears that some dispute arose between his legal repre sentatives and the present respondent No. 1.
It further appears that the dispute was finally settled in favour of the respondent No. 1 and according to the case of the appel lant he duly recognised him as his landlord and started paying rent.
In 1973 the appellant received a notice from the Municipal authorities asking him to remove the disputed structures on the ground that it was erected on Government land.
According to the appellant 's case, the notice was issued at the instance of the respondent No. 1, who was anxious to evict the appellant.
The appellant, in the situa tion, was forced to file a suit in the civil court challeng ing the validity of the notice and praying for injunction against the Municipal authorities from interfering with his possession.
The respondent No. 1 filed the present suit on the twin Founds of default in payment of rent and denial of his title.
The case of default in payment of rent was re jected but the suit was decreed on the ground of denial of title.
On appeal, the Additional District Judge confirmed the decree.
The appellant 's second appeal was also rejected by the High Court at the admission stage.
The appellant 's plaint in the earlier suit by which it is suggested that he challenged the respondent 's title was filed in the present case and marked as Ext.
The first appellate court has while recording its finding against the appellant observed that the statements in the plaint amount to disclaimer and, in any event, it appears that the appellant failed to acknowledge the land lord 's title therein and consequently he was liable to eviction under clause (f) of section 13(1) of the Act, which reads as follows: "13.
Eviction of tenants. (1) Not withstanding anything contained in any law or contract, no Court shall pass any decree, or make any order, in favour of a landlord, whether in execution of a decree or otherwise, evicting the tenant (xxx) so long as he is ready and willing to pay rent therefore to the full extent allowable by this Act, unless it is satisfied . (a). . . . . . . . . . . . . . . . .
(f)that the tenant has renounced his charac ter as such or denied the title of the landlord and the 333 latter has not waived his right or condoned the conduct of the tenant; or" We do not agree.
There is no statement in the plaint at all challenging the landlord 's right and there was no occasion for the appellant to deal with this aspect in view of the scope of his suit.
On the other hand, the pleading shows that he described the nature of his possession as that of a tenant and the interest of the present respondent No. 1, who was defendant No. 2 in that suit, as that of a landlord.
Mr. S.S. Khanduja, the learned counsel for the re spondent, relied on the last sentence of paragraph 1 of the plaint, as mentioned below, and contended that since the defendant No. 2 was not one of the heirs of the deceased Nawab M. Ali Khan, this sentence should be read as denial of his title: "He sold out some portion of his property in his life time and the remaining property came to be owned by his heirs i.e. defendants No. 2 to 6.
" Firstly it has to be noticed that although the respondent was wrongly described as an heir, his title to the property was acknowledged.
Further this sentence cannot be read in isolation.
The position is explained in paragraph 5 of the above noted plaint in the following terms: "5.
That the land where the stall type Kachhi shops of the plaintiffs have been constructed, the Defendant No. 2 has built his house after taking the land on a long term lease from Nawab Mukarram Ali Khan.
In between these there is a Pakka 'Dola '.
There is dispute about the ownership of the land between the Defendant No. 2 and the Defendant No. 3 to 6 since the death of Nawab Mukarram Ali Khan in the year 1969.
Later on the matter has been compromised in between the four heirs, the Defendant No. 2 developed a bad motive and he wants that anyhow the plaintiffs should be evicted from the premises as early as possible and he.
should occupy the same.
" The argument is that the title of the respondent (defendant No. 2 in the earlier case) was nowhere accepted in the plaint.
After mentioning the dispute between him and the legal representatives of the deceased Nawab the appellant did not proceed to clarify the position.
So far as 334 the statement in paragraph No. 1 of the plaint is concerned, the grievance is that the title of the landlord was denied, if not completely then at least in part by describing the defendants 3 to 6 as co owners with him.
We are not in a position to agree with the contention of the learned counsel that for these reasons the appellant has to be evicted.
Even interpreting the plaint in a manner as favourable to the landlord as may be possible, it has to be accepted that the document cannot be construed to clearly deny the respond ents ' title in unambiguous terms.
One thing that is conspic uous is that the appellant did not claim any title in him self.
We expressly described the character of his possession as that of a tenant.
Is it in this situation permissible to forfeit his lease on the ground of disclaimer of title? In providing disclaimer as a ground for eviction of a tenant in clause (f) of section 13(1) of the Act, the Legislature decided to give effect to the provisions of clause (g) of section 111 of the .
The principle of forfeiture on disclaimer is rounded on the rule that a man cannot appro bate and reprobate at the same time.
Since the consequence of applying the rule is very serious, it must be held that the denial has to be clear and in unequivocal terms.
The decision of this Court in Mohammad Amir Ahmad Khan vs Munic ipal Board of Sitapur and another, A.I.R. 1965 S.C. 1923, relied upon by the learned counsel for the appellant high lights this aspect.
The facts in that case would show that the tenant there had made statements against his landlord which were far more serious than those in the case before us and still was not penalised.
It may be appreciated that in the present case the 1973 suit was not directed against any of the defendants excepting the Municipality and the state ments in the plaint referred to above were made by way of giving the background in which the impugned notice by the Municipal officers had been issued.
No relief against the other defendants including the present respondent was prayed for.
Examining the entire plaint in this background we are of the opinion that the ground contemplated under section 13(1)(f) of the Act is not made out.
We, therefore, set aside the judgments of the courts below and dismiss the suit.
The appeal is accordingly allowed with costs through out.
N.P.V. Appeal allowed.
| IN-Abs | The appellant was inducted into the structure in ques tion by the owner in 1953.
In 1969, the owner died and some dispute arose between his legal representatives and the respondent.
The dispute was finally decided in favour of the respondent.
The appellant duly recognised him as landlord and started paying rent.
In 1973, in response to a notice received from the Municipal Authorities asking him to remove the disputed structure on the ground that it was erected on Government land, the appellant was forced to file a suit in the Civil Court, challenging the validity of the notice and praying for injunction against the Municipal authorities from inter fering with his possession.
The respondent thereafter filed a suit against the appellant on the grounds of default in payment of rent and denial of his title by him.
It was alleged that the appel lant had challenged the respondent 's title in the plaint filed in the earlier suit.
The case of default in payment of rent was rejected, but the suit was decreed on the ground of denial of title.
On appeal, the Additional District Judge confirmed the decree and held that the statements in the plaint amounted to disclaimer and, in any event, the appellant had failed to acknowledge the landlord 's title therein and consequently he was liable to eviction under cl.(f) of section 13(1) of the Act.
The appellant 's second appeal was also rejected by the High Court at the admission stage.
Allowing the appeal, HELD: In providing disclaimer as a ground for eviction of a tenant in cl.(f) of section 13(1) of the Rajasthan Premises (Control of Rent and Eviction) Act, 1950, the Legislature decided to give effect to the 331 provisions of cl.(g) of section 111 of the .
The principle of forfeiture on disclaimer is rounded on the rule that a man cannot approbate and repro bate at the same time.
Since the consequence of applying the rule is very serious, it must be held that the denial has to be clear and in unequivocal terms.
[334C D] In the instant case, the 1973 suit was not directed against any of the defendants excepting the Municipality and the statements in the plaint were made by way of giving the background in which the impugned notice by the Municipal officers had been issued.
No relief against the other de fendants including the present respondent was prayed for.
Even interpreting the plaint in a manner as favourable to the landlord as may be possible it has to be accepted that the document cannot be construed to clearly deny the re spondent 's title in unambiguous terms.
One thing that is conspicuous is that the appellant did not claim any title in himself.
He expressly described the character of his posses sion as that of a tenant.
Examining the entire plaint in this background the ground contemplated under section 13(1)(f) of the Act is not made out.
[334B, E F] Mohammad Amir Ahmad Khan vs Municipal Board of Sitapur and another, A.I.R. 1965 S.C. 1923, referred to.
|
ivil Appeal No. 506 of 1989 Etc.
From the Judgment and Order dated 5.12.1986 of the Allahabad High Court in C.M.W.P. No. 207 of 1980.
Dr. L.M. Singhvi and R. B. Mehrotra for the Appellants.
Anil Dev Singh and Mrs. section Dikshit for the Respondents.
The Judgment of the Court was delivered by SINGH, J.
Special leave granted.
The appellants are engaged in the business of manufac ture and sale of Indian made foreign liquor and country liquor, under licence granted to them under the Provisions of U.P. Excise Act.
The appellants have installed vats in their Breweries ' premises for the storage of liquor.
The liquor stored in vats is bottled and sold under the supervi sion of officers of the Excise Department.
The Inspector of Weights and Measures issued notices to the appellants call ing upon them to get their vats verified, calibrated and stamped in accordance with the provisions of the U.P. Weights and Measures (Enforcement) Act, 1959, (hereinafter referred to as the Act).
The appellants preferred appeals against the notice issued by the Inspector on the ground that the provision of the Act were not applicable to the appellants ' undertaking, manufacturing alcohol but the appeal was dismissed by the Controller of Weights and Meas ures.
The appellants made petitions under Article 226 of the Constitution before the High Court of Allahabad challenging the orders of the respondents.
Before the High Court the appellants contended that the provisions of the Act were attracted to the appellants ' undertaking only at the stage of sale and anything done in the process of manufacture and storage of liquor could not be 378 subjected to the provisions of the Act and the notice issued by the Inspector of Weights and Measures was without any authority of law.
It was further urged that the calibration of vats storing liquor was not necessary and the direction issued by the respondents was without any authority of law.
Similar petitions were filed by the manufacturers of Syn thetic Rubber and Campher.
All the three sets of petitions were disposed of by a Division Bench of the High Court by a common judgment and order dated December 5, 1985.
The Divi sion Bench allowed the petitions filed by the Manufacturers of Synthetic Rubber and Campher but it dismissed the peti tions filed by the manufacturers of liquor on the finding that the provisions of the Act and the Notification issued thereunder are applicable to the manufacturers of liquor in the distillery and the notices issued by the respondents for the calibration of the storage vats were legal and valid.
Aggrieved the appellants have preferred the present peti tions for special leave to appeal.
Dr. L.M. Singhvi, learned counsel for the appellants urged that the High Court committed error in holding that the storage vats are required to be calibrated under the provisions of the Act.
He added that the provisions of the Act would apply if measures are used for transaction in trade and commerce, but keeping alcohol in storage vats does not amount to transactions in trade or commerce.
Learned counsel emphasised that unless the storage vats are used in transaction for trade and commerce the provisions of the Act would not be attracted.
In order to appreciate the conten tion, we would briefly refer to the relevant provisions of the Act.
Section 7 of the Act imposes prohibition on use of weights and measures other than standard weights and meas ures.
It provides that no unit of mass or measure, other than the standard weights or measures shall be used in any transaction for trade or commerce or any dealing or contract or for any work to be done or goods to be sold or delivered.
Section 10 further imposes prohibition on the sale or use of unstamped commercial or measuring instrument in trade or commerce unless it has been verified or reverified and stamped in the prescribed manner by an Inspector with stamp of verification.
These provisions impose legislative prohi bition that no weight or measure or weighing or measuring instrument shall be used or be kept for use in any transac tion for trade or commerce or for being sold, unless it has been verified by the Inspector of the Department in the prescribed manner.
Section 2(jj) defines the expression "use in transaction for trade or commerce " which is as follows: 379 "2(jj) use in transaction for trade or com merce with its grammatical variation and cognate expressions, means use for the pur poses of determining or declaring the quantity of anything in terms of measurement of length, area, volume, capacity or weight in or in connection with (a) any contract, whether by way of sale, purchase, exchange or otherwise, or (b) any assessment of royalty; toll; duty or other dues ' or (c) the assessment of any work done or serv ices rendered, otherwise than in relation to research or scientific studies or in individu al households for house holds purposes" Under the aforesaid definition clause the legislature has given an artificial extended meaning to the expression "use in transaction for trade or commerce".
According to the definition it means use for the purposes of determining or declaring the quantity of anything in terms of measurement of length or capacity or weight in or in connection with the clauses (a) and (b) mentioned therein.
Clause (b) refers to any assessment of royalty; toil; duty or other dues.
Accord ing to the extended meaning given by the legislature the provisions of the Act would be attracted if the assessment of royalty; toll; duty or dues is to be determined on the basis of the quantity of anything in terms of measurement of length, area, volium or weight.
there is no dispute that for the purposes of determining excise duty on the liquor pro duced by a manufacturer the assessment is made on the basis of the volume of the liquor produced and sold by the appel lants.
Since volume of the liquor produced and stored in vats is connected with the assessment of excise duty, it is covered by the expression "use in transaction for trade or commerce".
Ordinarily, the storage of alcohol in vats by itself may not amount to transaction for trade or commerce but under the extended meaning of the expression under Section 2(jj) even the storage of liquor in vats would be covered by the expression "use in transaction for trade or commerce" as volume of the liquor is necessary to be deter mined in connection with the assessment of excise duty.
We are, therefore, in agreement with the view taken by the High Court.
The learned counsel for the appellants urged that the High Court failed to consider the effect of Notification dated 28.8.1961 which made the provisions of the Act ap plicable to an undertaking engaged in the manufacture of alcohol at the stage of sale only.
The Notification is as under: 380 NOTIFICATION "KHADYA TATHA RASAD VIBHAG NOTIFICATION NO.
UPWM 1(3) 28 2401/XXIX D 524 58 dated August 19, 1961, published in U.P. Gazette, Part I, dated 25th August, 1961, page 1537.
In exercise of the powers conferred by sub section (3) of Section 1 of the Uttar Pradesh Weights and Measures (Enforcement) Act, 1959 (U.P. Act No. V of 1959), the Governor of Uttar Pradesh is pleased to appoint the first day of October, 1961, as the date on which the provisions of the said Act shall come into force in the whole of Uttar Pradesh in respect of: (a) Undertaking engaged in the manufacture of alcohol in so far as they undertake the sale of alcohol; and (b) Departments of Government in so far as they undertake the levy of duties of excise on alcohol.
" By the aforesaid Notification the provisions of the Act were made applicable to an undertaking engaged in the manu facture and sale of alcohol with effect from October 1, 1961.
Emphasis was laid by the learned counsel for the appellants on the expression "in so far as they undertake the sale of alcohol".
He urged that provisions of the Act occurring in the aforesaid Notification have been made applicable to the appellants ' undertaking at the point of sale of alcohol.
Before the sale of alcohol the provisions of the Act are not attracted and as such the storage vats cannot be required to be calibrated under the law.
Having given our anxious consideration to the question, we do not find any merit in the submission.
The alcohol stored in the storage vats is essentially for the purpose of sale and there is no dispute that the appellants manufacture and store alcohol in storage vats for the purposes of sale.
There is further no dispute that the officers of the Excise Department measure storage vats as prescribed by Rule 75 1 of the Excise Mannual, Volume 1.
Since the volume of the storage vats is measured by the officers of the Excise Department, the provisions of the Act for the purpose of sale would be applicable to the storage vats also.
But if there be any doubt about the applicability of the provisions of the Act the same stood removed by the subsequent Notifi cations dated May 17, 1962 and July 18, 1967.
Under these Notifications the provisions of the Act have been made applicable to all the under 381 takings in so far as they relate to units of capacity in respect of those clauses of undertakings to which the Act has been made applicable.
Having regard to these facts the High Court, in our opinion, was fight in holding that the storage vats are covered by the provisions of the Act.
Learned counsel for the appellants then urged that excise duty is assessed at the point of sale as held by the High Court of Allahabad in M/s Mohan Meakins Breweries vs State of U.P., [1979] U.P. Tax Cases 1048, therefore, provi sions of the Act are applicable to the issue vats only and no calibration is necessary for the storage vats.
We find no merit in the submission.
In the aforesaid decision the High Court held that under the provisions of the U .P.
Excise Act excise duty is a charge essentially on the production or manufacture of an excisable article but for administrative convenience it is imposed at a stage subsequent to the stage of manufacture.
This itself would make it clear that pro duced material is the subject matter of excise duty, even though the assessment of duty is done at the point of sale for convenience sake.
The storage of alcohol is required to be measured by the officers of the Excise Department under the provisions of the Excise Manual to ensure that there is no pilferage or unauthorised removal of alcohol as that would adversely affect the assessment of duty.
Storage vats are intimately connected with the assessment of excise duty, therefore provisions of the Act are applicable to storage vats also.
We are, therefore, of the opinion that no exception can be taken to the view taken by the High Court.
The appeals fail and the same are accordingly dismissed.
There will be no order as to costs.
N.P.V. Appeals dis missed.
| IN-Abs | The appellants, were engaged in manufacture and sale of liquor, under licence granted to them under the U.P. Excise Act.
They installed vats in their Breweries ' premises for the storage of liquor.
The liquor stored in vats was bottled and sold under the supervision of officers of the Excise Department.
The Inspector of Weights and Measures issued notices to them for getting their vats verified, calibrated and stamped in accordance with the provisions of the U.P Weights and Measures (Enforcement) Act, 1959.
The appellants filed appeals against the notices issued by the Inspector on the ground that the provisions of the Act were not applica ble to the appellants ' undertaking, manufacturing alcohol.
The appeals were dismissed by the Respondent Controller of Weights and measures.
The appellants filed writ petitions before the High Court challenging the orders of the respond ents.
The High Court dismissed the petitions holding that the provisions of the Act and the Notifications issued thereun der were applicable to the manufacturers of liquor in the distillery, and the notices issued by the respondents for the calibration of the storage vats were legal and valid.
Aggrieved, the appellants filed appeals by special leave in this Court contending that the High Court committed error in holding that the storage vats were required to be cali brated under the provisions of the Act, that the provisions of the Act would apply if measures were used for transaction in trade and commerce, but keeping alcohol in storage vats did not amount to transactions in trade or commerce, and that unless the storage vats were used in transaction for trade and 376 commerce, the provisions of the Act were not attracted.
Dismissing the appeals, HELD: 1.1 Under the definition clause in section 2(jj) of the U.P. Weights and Measures (Enforcement) Act, 1959, the legislature has given an artificial extended meaning to the expression "use in transaction for trade or commerce".
Ac cording to the definition it means use for the purposes of determining or declaring the quantity of anything in terms of measurement of length or capacity or weight in or in connection with the cls.
(a) and (b) mentioned therein.
Clause (b) refers to any assessment of royalty; toll; duty or other dues.
Thus, according to the extended meaning, the provisions of the Act would be attracted if the assessment of royalty; toll; duty or dues is to be determined on the basis of the quantity of anything in terms of measurement of length, area, volume or weight.
[379C E] 1.2 There is no dispute that for the purposes of deter mining excise duty on the liquor produced by a manufacturer, the assessment is made on the basis of the volume of the liquor produced and sold.
Since volume of the liquor pro duced and stored in vats is connected with the assessment of excise duty, it is covered by the expression "use in trans action for trade or commerce".
[379E F] 1.3 Ordinarily, the storage of alcohol in vats by itself may not amount to transaction for trade or commerce but under the extended meaning of the expression under section 2(jj), even the storage of liquor in vats would be covered by the expression "use in transaction for trade or commerce" as volume of the liquor is necessary to be determined in con nection with the assessment of excise duty.
[379F G] 1.4 The alcohol stored in the storage vats is essential ly for the purpose of sale and there is no dispute that the appellants manufacture and store alcohol in storage vats for the purpose of sale, and the officers of the Excise Depart ment measure storage vats as prescribed by Rule 751 of the Excise Manual, Volume 1.
Since the volume of the storage vats is measured by the officers of the Excise Department, the provisions of the Act for the purpose of sale would be applicable to the storage vats also.
[380F G] By Notification dated 19.8.1961 the provisions of the Act were made applicable to an undertaking engaged in the manufacture and sale of alcohol with effect from October 1, 1961.
Any doubts about the 377 applicability of the provisions of the Act stood removed by the subsequent Notifications dated May 17, 1962 and July 18, 1967, making the provisions of the Act applicable to all the undertakings in so far as they relate to units of capacity in respect of those classes of undertakings to which the Act has been made applicable.
[380E, H; 381A] Therefore, having regard to the above facts the High Court was right in holding that the storage vats were cov ered by the provisions of the Act.
[381B]
|
Appeal No. 177 of 1954.
Appeal from the judgment and decree dated October 9, 1950 of the Bombay High Court in First Appeals Nos. 361 & 363 of 1948 from Original Decree arising out of the judgment and decree dated July 31, 1946, of the Court of Special Tribunal, Mangalvedhe in Special Suit No. 1322 of 1938.
L. K. Jha, Rameshwar Nath, J. B. Dadachanji and section N. Andley, for the appellant.
K. R. Bengeri and K. R. Chaudhari, for the respondent.
April 14.
The following Judgment of the Court was delivered by SINHA J. This is a defendants ' appeal by leave granted by the High Court of Judicature at Bombay from the decision of that Court, dated October 9, 1950, in two cross appeals from the decision of the Special Judge of the Special Tribunal Court at Mangalvedhe, dated July 31, 1946, in Special Suit No. 1322 of 1938.
Of the two cross appeals, the First Appeal No. 361 of 1948, by the appellants, was dismissed, and the First 481 Appeal No. 363 of 1948, by the plaintiff, was allowed.
The plaintiff respondent had instituted another suit, being suit No. 1894 of 1937, which was also tried along with Special Suit No. 1322 of 1938.
The former suit stands dismissed as a result of the judgment of the High Court, and no appeal has been brought against that judgment to this Court.
The suit out of which this appeal arises (Special Suit No. 1322 of 1938), was instituted under the provisions of the Sangli State Agriculturists Protection Act, granting certain reliefs from indebtedness to agriculturists of that State which was then outside what used to be called " British India ".
The suit as originally framed, prayed for accounts in respect of two mortgages, though there were really three mortgages, to be described in detail hereinafter, and for possession of the, lands comprised in those mortgages.
The first, defendant filed his written statement on January 6, 1940, contesting the suit mainly on the ground that the plaintiff had no title to the mortgaged properties in view of the events that had happened; that the mortgaged properties had been sold at auction and purchased by the defendant 's father who, thus, became the full owner thereof; and that he had sold most of the properties to other persons who were holding those properties as full owners.
Defelidant No. 3 who also represents the original mortgagee, filed a separate written statement supporting the first defendant.
Of the defendants who are transferees from the original mortgagees or their heirs only defendant No. 8 filed his written statement on March 26, 1940, substantially supporting the first defendants written statement and adding that he had purchased the bulk of the mortgaged properties after acquisition of full title by the mortgagees themselves more than 12 years before the institution of the suit, and that, therefore, it was barred by limitation.
The trial court dismissed the suit by its judgment dated November 26, 1941, with costs.
On appeal by the defeated plaintiff, the Special Bench of the High Court of Sangli State, by its judgment dated June 13, 1944, remanded the suit for a fresh trial after having permitted the plaintiff to amend the plaint so as to 482 include the relief for redemption.
It appears that during the pendency of the suit after remand, an application was made in February, 1945, for making substitution in place of defendant No. 2 who had died meanwhile, but the application was refused by the Court on the ground that the suit had abated as against that defendant.
After reframing the issues and rehearing the ,lase, the trial court, by its judgment and decree dated July 31, 1946, dismissed the suit as against defendants 6 to 9 who were holding portions of the mortgaged properties by sale deeds of the years 1919 and 1922, for more than 12 years, as barred by limitation under article 134 of the Limitation Act.
The Court decreed the suit in respect of the mortgaged portion of R. section No. 1735, having an area of 16 acres and 21 gunthas, as against defendant No. 3, and R. section No. 334 against defendant No. 1 's heirs.
Each party was directed to bear its own costs throughout.
From that decision, the defendants preferred a first appeal, being First Appeal No. 361 of 1948, and the plaintiff filed a crossings, being First Appeal No. 363 of 1948, in the High Court of Judicature at Bombay.
Both the appeals were heard together along with two other cross appeals arising out of the other suit mentioned above.
The High Court, by its judgment and decree dated October 9, 1950, dismissed the defendants ' appeal No. 361 of 1948, and allowed the plaintiff 's appeal No. 363 of 1948, with costs, holding that article 148 and not article 134 of the Limitation Act, applied to the suit, and that, therefore, it was not barred by limitation.
In the result, the plaintiff 's suit was decreed in its entirety.
Hence, this appeal by the defendants.
A number of Questions of fact and law have been raised by the learned counsel for the appellants, but before we proceed to deal with them, it is convenient to dispose of the preliminary points in bar of the suit.
At the fore front of his submissions, the learned counsel for the appellants contended that the suit was outside the jurisdiction of the Special Court created under the Sangli State Agriculturists Protection Act I of 1936.
With reference to the provisions of that Act, it was contended that the Act authorized the Special Court to 483 take accounts and to reopen closed transactions only up to the year 1915, and that as the transactions which were the subject matter of the suit, were of the years 1898, 1900 and 1901, the Special Court was not competent to go into those transactions and grant any relief to the agriculturist plaintiff.
In our opinion, there is no substance in this contention.
The Sangli Act referred to above, had chosen the year 1915 as the dateline beyond which the court was not competent to grant any relief to agriculturists, by way of reopening of closed transactions.
But that does not mean that the court itself was incompetent to grant any other relief in respect of transactions of a date prior to 1915.
If the legislature had intended to limit the jurisdiction of the Special Court, as contended on behalf of the appellants, nothing would have been easier than to say in express terms that the court 's jurisdiction to grant relief was limited to transactions of that year and after, but there are no such words of limitation in any part of the statute.
The operative portion of the statute does not contain any such provision.
In our opinion, therefore, the Special Court was competent to entertain the suit for redemption, though it would not be competent to reopen those transactions even if any such question of reopening closed transactions had been raised.
But it is manifest that no such question arose out of the pleadings in this case.
Hence, those words of limitation are wholly out of the way of the plaintiff.
It may be mentioned that no such plea of want of jurisdiction of the trial court, had been raised in the pleadings or in the issues in the courts below.
This ground was raised, for the first time, in the statement of case in this Court.
The preliminary objection to the jurisdiction of the trial court is, thus, overruled.
It was next contended that the suit was barred by limitation of one year under article 12 of the Limitation Act.
The point arose in this way.
The properties sought to be redeemed were mortgaged, as will presently appear, successively under three bonds of the years 1898, 1900 and 1901, by the plaintiff 's father, Gundi (omitting all reference to his brothers).
484 It appears that there was a decree for money of the year 1903, in favour of a third party who is not before us.
Gundi had been stied as the original defendant, but after his death, his place was taken by his brother Sadashiv as his heir and legal representative.
In execution of the decree, the mortgaged properties were auction purchased by the mortgagee 's Fulchand, son of the first defendant as it appears from the sale certificate, Exh.
D 56, dated October 31, 1907.
On the basis of this auction purchase, it, has been contended on behalf of the mortgagee that unless the sale were set aside, it would bind Gundi and his successor in interest, the plaintiff.
The High Court has held that article 12 is out of the way of the plaintiff because neither the plaintiff nor her father was a party to the sale.
If Gundi himself were a party to the execution proceedings, the sale as against him, would bind his estate and his successor in interest.
But it appears that Gundi was substituted by his brother Sadashiv in the execution proceedings.
If Sadashiv could not be the representative in interest of Gundi, as will presently appear, he could not have represented Gundi 's estate, and, therefore, the gale as against him, would be of no effect as against the plaintiff.
Bat it was argued in answer to this contention that the decision of the Privy Council in the case of Malkarjun Bin Shidramappa Pasare vs Narhari Bin Shivappa (1), is an authority for the proposition that even if the property was sold by substituting a wrong person as the legal representative of the judgment debtor, the sale would bind the estate of the judgment debtor as much as if the right legal representative had been brought on the record of the execution proceedings.
Assuming that the decision of the Privy Council in Malkarjun 's case (supra) is correct, and that it is not subject to the infirmities of an ex parte judgment, asimay well be argued, that decision is clearly distinguishable so far as the present case is concerned.
In Malkarjun 's case, the executing court had been invited to decide the question as to who was the true legal representative of the judgment debtor, and the court, after (1) (1900) L.B. 27 1, A. 216 485 judicially determining that controversy, had brought on record the person who was adjudged to be the true legal representative.
The sale was held to be of the property of the judgment debtor through his legal representative, after the adjudication by the court.
The Privy Council held that though the decision of the court on the question as to who was the true legal representative, was wrong, it was a decision given in that litigation which affected the judgment debtor and his true legal representative, unless set aside in due course of law.
In the present case, there was no such adjudication.
From the scanty evidence that we have on this part of the case, it appears that Gundi, the original defendant, had died and had been, without any controversy, substituted by his brother, Sadashiv.
The court had not been invited to determine any controversy as between Sadashiv and the true legal representative of Gundi deceased.
In execution proceedings, the property was sold as that of Sadashiv the substituted judgment debtor.
It was a moneysale and passed only the right title and interest of Sadashiv, if it bad any effect at all.
Malkarjun 's case (supra), therefore, is of no assistance to the appellants.
The plaintiff, Gundi 's daughter, not being affected in any way by the sale aforesaid, it is not necessary for her to sue for setting aside the sale.
She was entitled, as she has done, to ignore those execution proceedings, and to proceed on the assumption, justified in law, that the sale had not affected her inheritance.
The suit is, therefore, not barred by article 12 of the Limitation Act.
It was next contended that even if article 12 was not available to the defendants by way of a bar to the suit, the suit was certainly barred under article 134 of the Limitation Act.
Under article 134, the plaintiff has to sue to recover possession of immovable property mortgaged and, afterwards, transferred by the mortgagee for a valuable consideration, within 12 years from the date the " transfer becomes known to the plaintiff ".
On the other hand, it has been contended on behalf of the plaintiff that the usual 486 rule of 60 years ' limitation under, article 148 of the Limitation Act, governs the present case.
On this part of the case, the defendants suffer from the initial difficulty that the sale deeds relied upon by them in aid of the plea of limitation under article 134, have not been brought on the record of this case, and, therefore, the Court is not in a position to know the exact terms of the sale deeds.
This difficulty, the appellants sought to overcome by inviting our attention to the statements made in paragraph 8 of the plaint.
But those are bald statements giving the reasons why the defendants other than the original mortgagee, were being impleaded as defendants.
There is no clear averment in that paragraph of the plaint about the extent of the interest sold by those sale deeds and other transfers referred to therein.
The Court is, therefore, not in a position to find out the true position.
Those sale deeds themselves were the primary evidence of the interest sold.
If those sale deeds which are said to be registered documents, were not available for any reasons, certified copies thereof could be adduced as secondary evidence, but no foundation has been laid in the pleadings for the reception of other evidence which must always be of a very weak character in place of registered documents evidencing those transactions.
Article 134 of the Limitation Act contemplates a sale by the mortgagee in excess of his interest as such.
The legislature, naturally, treats the possession of such transferees as wrongful, and therefore, adverse to the mortgagor if he is aware of the transaction.
Hence, the longer period of 60 years for redemption of the mortgaged property in the hands of the mortgagee or his successor in interest, is cut down to the shorter period of 12 years ' wrongful possession if the transfer by the mortgagee is in respect of a larger interest than that mortgaged to him.
In order, therefore, to attract the operation of Art,. 134, the defendant has got affirmatively to prove that the mortgagee or his successor in interest has transferred a larger interest than justified by the mortgage.
If there is no such proof, the shorter period under article 134 is not available to the 487 defendant in a suit for possession after redemption.
A good deal of argument was addressed on the question as to upon whom lay the burden to prove the date of the starting point of limitation under that article.
It was argued on behalf of the defendants appellants that as it is a matter within the special knowledge of the plaintiff, the plaint should disclose the date on which the plaintiff became aware of the transfer.
On the other hand, it was contended on behalf of the plaintiff respondent that it is for the defendants to plead and prove the facts including the date of the knowledge which would attract the bar of limitation under article 134.
As we are not satisfied, for the reasons given above, that article 134 is attracted to the present case, it is not necessary to pronounce upon that controversy.
It is, thus, clear that if articles 12 and 134 of the Limitation Act, do not stand in the way of the plaintiff 's right to recover posses. ,ion, the only other Article which will apply to the suit, is article 148.
It is common ground that if that Article is applied, the suit is well within time.
Before dealing with the factual aspects of the case, it is necessary to deal with another plea in bar of the suit raised on behalf of the appellants.
It is contended that the suit is bad for defect of parties in so far as the heirs of the second defendant are concerned.
It appears from the order dated March 27, 1946, passed by the trial court during the pendency of the suit after remand, that the second defendant died on April 26, 1943, that is to say, while the appeal before the Bombay High Court was pending in that Court before remand.
The then appellant who was the plaintiff, did not take steps to bring on record the legal representatives of that defendant.
An attempt was made by the plaintiff later on to get his heirs substituted on the record, but the Court upheld the defendants objection and did not allow substitution to be made.
It was, therefore, noted that the appeal which was then pending in the High 'Court, had abated as against defendant No. 2, and that, the order of remand made after his death and in the absence of his legal representatives, would not affect them.
Therefore, it was 488 contended that the whole suit would abate, because, in the absence of the heirs of the deceased defendant No. 2, the suit was imperfectly constituted under 0. 34, r.
I of the Code of Civil Procedure.
That rule requires that " all persons having an interest either in the mortgage security or in the right of redemption shall be joined as parties. .
The original mortgagee.
under the three mortgages, was Kasturchand Kaniram.
The defendant No. 1 has contested this suit by filing a separate written statement of his own as the successor in interest of the original mortgagee.
It does not appear from the pleadings that the second defendant was a joint mortgagee with the first defen dant or his ancestors.
The only statement in the plaint in para.
8, with reference to the second defendant, is that the " Lands R. section No. 1735 has gone to the share of defendant No. 2.
Defendant No. 3 looks after all the transactions of defendant No. 2 and the shop running under the name of ' Kaniram Kasturchand ' has gone to the share of defendant No. 3 ".
Thus, it is not a case of the first defendant being joint with the other defendants including defendant No. 2 who is not now represented on the record.
If defendant No. 2 had any distinct interest, that, on the plaint, appears to be confined to R. section No. 1735.
In the written statement filed on behalf of the third defendant, it is stated in para.
9 that the mortgaged portion of R. section No. 1735 which, according to the plaint, was the property of the second defendant, was really in possession of the third defendant as owner.
It would, thus, appear that even in respect of that plot, the second defendant had no subsisting interest.
This claim of the third defendant is strengthened by the fact that the second defendant did not file any written statement challenging he statement aforesaid of the third defendant or claiming any interest in that plot or any other part of the mortgaged property.
The second defendant had remained ex parte throughout, apparently because he had no interest in the property to be redeemed.
In any view of the matter, his heirs are not parties to this suit, and any determination in this suit will not bind them.
But it does appear that 489 the second defendant had no subsisting interest, if he had any at any anterior period, in any portion of the mortgaged property.
It was also contended that the original defendant No. 8 died, and in his place defendants Nos.
8a to 8g were substituted.
It appears that of the seven persons substituted on the record as the legal representatives of the original defendant No. 8, only defendants 8e, 8f and 8g were served, and the others, namely, 8a, 8b, 8c and 8d were not served.
On those facts, it was contended that the suit for redemption was bad in the absence of all the necessary parties.
It was sought, at one stage of the arguments, to be argued that the suit had abated against defendant No. 8, and this argument, in the High Court, was met by the observation that under O. XXII, r. 4, Code of Civil Procedure, it was enough to bring on record only some out of the several legal representatives of a deceased party, on the authority of the judgment of the Bombay High Court in Mulchand vs Jairamdas (1).
But on the facts stated above, there was no room for the application of r. 4, O. XXII of the Code.
All the legal representatives, at any rate, all those persons who were said to be the legal representatives of the deceased defendant No. 8, had been substituted.
Thus, the requirements of O. XXTI had been fulfilled.
If, subsequently, some of the heirs, thus substituted, are not served, the question is not one of abatement of the suit or of the appeal, but as to whether the suit or the appeal was competent in the absence of those persons.
It does not appear that the absent parties were really necessary parties to the suit or the appeal in the sense that they were jointly interested with the others already on the record in any portion of the mortgaged property.
In what circumstances they were not served or ordered to be struck off from the record, does not clearly appear from the printed record before us.
The defendant No. 8e who happens to be the brother of the original defendant No. 8, has only filed a written statement claiming that he and his vendor, defendant No. 7, had been in possession for more than 12 years, and that (1) , 490 the suit was, on that count, barred by limitation.
None of the other defendants who had been brought on the record in place of the original defendant No. 8, has appeared in the suit or in the appeal to contest the claim of defendant No. 8e that he was in possession of that portion of the property, namely, 6 acres and 32 gunthas out of R. section No. 242 (old survey No. 233).
Renee, there was no question of abatement of the suit or the appeal.
The only question which may or may not be ultimately found to be material on a proper investigation, may be whether the decree to be passed in this case, would be binding on those who had not been served.
For ought we know it may be that they were not interested in the plot sought to be redeemed.
On these findings, it must be held that the preliminary objections raised on behalf of the defendants in bar of the suit, must be overruled.
Hence, the whole suit cannot be held to be incompetent for the reason that the heirs of defendant No. 2 have not been brought on the record.
Having, thus, disposed of the specific pleas in bar of the suit, we now turn to the contentions bearing on the factual aspects of the controversy.
It was contended that the plaintiff who is admittedly the daughter of Gundi, has not established her title to the mortgaged properties.
In this connection, it is convenient to set out the essential facts in relation to the three mortgage.
deeds in question.
The first mortgage is dated June 4, 1898, in favour of Kasturchand Kaniram, executed by Gundi, son of Appa, for the sum of Rs. 700, the amount borrowed by him, mortgaging 7 survey numbers with an aggregate area of 43 acres and 38 gunthas.
It was a mortgage with possession for a period of 4 years, with Gundi 's two brothers Sadashiv and Rama as sureties for the repayment of the amount borrowed which was the personal responsibility of Gundi under the terms of the document.
But the property mortgaged is admittedly the ancestral land of the three brothers.
The second mortgage between the same parties in respect of the same properties, bears the date May 25, 1900.
It secures a further advance of Rs. 300 to the mortgagor, the payment of which debt 491 is again assured by his two brothers Sadashiv and Rama as sureties.
The third mortgage bond is for a further advance of Rs. 200 to the mortgagor Gundi, with his brothers aforesaid again figuring as sureties.
It would, thus, appear that all the three mortgages are between the same parties as mortgagor and mortgagee, and the two brothers of the mortgagor join in executing the mortgages as sureties, the property given in mortgage belonging to all the three brothers.
The total advance of Rs. 1,200 under those three mortgages, was made to the principal debtor, Gundi.
It appears that, of the three brothers, Rama died first, and then Gundi, some time in 1903, survived by his two daughters the plaintiff and defendant No. 13.
The plaintiff 's case is that the common ancestor, Appa, in his lifetime, had effected a partition amongst his three sons aforesaid, giving them each specific portions of his lands, reserving a portion for the maintenance of his wife.
Those transactions are exhibits P 43, P 44, P 45 and P 46, all dated August 31 or September 1, 1892, and, apparently, forming parts of the same transaction.
These are formal documents giving details of the lands allotted to each one of the three brothers and to their mother by way of maintenance.
The common recital in these documents, is that the executant of the documents, Appa, had three sons Gundi, Sadashiv and Rama, in order of seniority " who cannot pull on together The document further recites: ".Hence, separation having been effected with your consent, (I have) divided in every way and given you the estate, the land, the assets etc.
, pertaining to the one third share.
The same are as under. " Then follow the details of the properties separately allotted to each of them.
The plaintiff 's case is that ever since 1892 the date of the documents aforesaid the three branches of the family had become separate in estate, if not also divided in all respects, and that on the death of Raina, Guildi and his brother Sadashiv inherited his one third share in equal moieties, that is to say , on the death of their mother and their brother, the two brothers became owners of half and half of the ancestral 492 property left by Appa who appears to have died soon after the alleged partition.
The plaintiff 's case further is that the principal mortgagor in all those three transactions aforesaid, was Gundi, and his two brothers had joined only as sureties by way of additional security in favour of the mortgagee, It has been contended on the other hand on behalf of the defendants appallants that, in the first instance, the documets of 1892, referred to above, do not evidence an actual partition by metes and bounds, but only represent an arrangement by way of convenience for more efficient and peaceful management of the family property, and that, alternatively, if those documents are claimed to have the efficacy of partition deeds, they are inadmissible in evidence for want of registration.
The courts below have held that those documents are inadmissible in evidence as regular deeds of partition which they purport to be, in view of the provisions of the Registration Act.
But those transactions have been used for the collateral purpose of showing that from that time, the three brothers became separate in estate, and evidencing the clear intention on the part of each one of them to live as separated members, each with one third share in the paternal estate.
In this connection, reliance was placed on behalf of the appellants ' upon what was alleged to be the subsequent conduct of the three brothers after 1892, as evidenced by the three mortgage bonds themselves and the saledeed exhibit D 54 dated June 17, 1909.
By the last named document, Sadashiv purported to sell to Fulchand Kasturchand, son of the original mortgagee, practically the whole of the mortgaged properties, for a sum of Rs. 1,500.
The recitals in the sale deed would certainly make it out that the three brothers were joint in estate, and that the sale deed was being executed to pay off the personal loans of Gundi and Rama during the Years 1900 to 1903, plus the loans taken by the vendor himself.
Finally, the deed proceeds to make the following very significant declaration as to the status of the members of the so called joint family: "As I have sold to you my right, title and interest in the above said lands, neither I nor my heirs and 493 executors of my will have any right whatsoever over the said property.
As I am the male heir in the joint family by survivorship nobody except me has any interest in the aforesaid lands.
I have sold to you whatever interest I had in the said, lands.
" It was further contended that even strangers to the family treated the brothers as joint in estate as shown by the execution proceedings and the sale certificates of the years 1903 to 1907, whereby Sadashiv was substituted as the sole heir and legal representative of the defendant Gundi, in the suit for money which resulted in the, auction sale referred to above, of the ear 1907.
If the transaction of the year 1892, is admissible in evidence, for the purpose for which the document was used in the courts below, namely, to prove separation in estate, there is no room for ambiguity, and the position is clear that the three brothers had become separate.
Further recitals in those documents that specific portions of the ancestral property had been allotted to the three brothers separately, being in the nature of a partition deed by the father in his life time, and being unregistered, are inadmissible in evidence to prove such a partition.
But the plaintiff 's case does not depend upon proof of actual partition by metes and bounds.
In the absence of any ambiguity, the later transactions would not be relevant except to show that there was a subsequent reunion amongst the brothers, which is no party 's case.
But it was argued on behalf of the appellants that those documents exhibits P series aforesaid are not admissible in evidence even for the limited purpose of showing separation in estate.
The question, therefore, is whether those documents " purport or operate to create, declare, assign, limit or extinguish, whether in present or in future, any right, title or interest, whether vested or contingent, of the value of one hundred rupees and upwards, to or in immovable property", within the meaning of section 17(1) (b) of the Registration Act.
No authority has been cited before us in support of this contention.
Partition in the 63 494 Mitakshara sense may be only a severance of the joint status of the members of the coparcenary, that is to say, what was ' once a joint title, has become a divided title though there has been no division of any properties by metes and bounds.
Partition may also mean what ordinarily is understood by partition amongst co sharers who may not be members of a Hindu coparcenary.
For partition in the former sense, it is not necessary that all the members of the joint family should agree, because it is a matter of individual volition.
If a coparcener expresses his individual intention in unequivocal language to separate himself from the rest of the family, that effects a partition, so far as he is concerned, from the rest of the family.
By this process, what was a joint tenancy, has been converted into a tenancy in common.
For partition in the latter sense of allotting specific properties or parcels to individual coparceners, agreement amongst all the coparceners is absolutely necessary.
Such a partition may be effected orally, but if the parties reduce the transaction to a formal document which is intended to be the evidence of the partition, it has the effect of declaring the exclusive title of the coparcener to whom a particular property is allotted by partition, and is, thus, within the mischief of section 17(1) (b), the material portion of which has been quoted above.
But partition in the former sense of defining the shares only without specific allotments of property, has no reference to immovable property.
Such a transaction only affects the status of the member or the members who have separated themselves from the rest of the coparcenary.
The change of status from a joint member of a coparcenary to a separated member having a defined share in the ancestral property, may be effected orally or it may be brought about by a document.
If the document does not evidence any partition by metes and bounds, that is to say, the partition in the latter sense, it does not come within the purview of section 17(1) (b), because so long as there has been no partition in that sense, the interest of the separated member continues to extend over the whole joint property as before.
Such a transaction 495 does not purport or operate to do any of the things referred to in that section.
Hence, in so far as the documents referred to above are evidence of partition only in the former sense, they are not compulsorily registrable under section 17, and would, therefore, not come within the mischief of section 49 which prohibits the reception into evidence of any document " affecting immoveable property ".
It must, therefore, be held that those documents have rightly been received in evidence for that limited purpose.
Lastly, it was contended that if those documents of the year 1892 are admissible to prove separation amongst the three brothers, then, oil the death of one of the three, namely, Rama, and of their mother, the entire ancestral properties including the mortgaged properties, vested in the two brothers in equal shares.
Both by the auction purchase of the year 1906 (D 57 D) and the sale deed (exhibit D 54 of the year 1909), Sadashiv 's moiety share in the mortgaged property, was purchased by Fulchand aforesaid.
The plaintiff, therefore, could only claim the other moiety share of her father, Gundi.
In our opinion, there is no answer to this contention because it is clear upon a proper construction of the three mortgage bonds and on the plaintiff 's own case that the entire ancestral properties and not only Gundi 's share, had been mortgaged.
The appeal will, therefore, be allowed to the extent of the half share rightly belonging to Sadashiv, and the decree for possession after redemption will be confined to the other half belonging to the plaintiff 's father.
In the result, the appeal is allowed to the extent indicated above.
As success between the parties, has been divided, they are directed to bear their own costs throughout.
Appeal allowed in part.
| IN-Abs | This was an appeal by the defendants in a suit for possession on redemption of certain mortgages instituted in the Court of the Special judge exercising jurisdiction under the Sangli State Agriculturists Protection Act (1 of 1936).
Their case was that the mortgaged properties had been sold at auction and purchased by their father who had sold most of them to other persons more than 12 years before the institution of the suit and as such the suit was barred by limitation.
The trial Court dismissed the suit.
On appeal the High Court of Sangli permitted the plaintiff to amend the plaint originally filed so as to include the relief for redemption and remanded the suit.
The trial court, thereafter, decreed the suit in part, holding that the claim in respect of portions only of the mortgaged properties was barred by limitation.
Both the parties appealed to the High Court of Bombay and the appeals were heard together.
The High Court dismissed the defendant 's appeal and allowed the plaintiff 's appeal holding that article 148 and not article I34 Of the Limitation Act applied.
In the result, the plaintiff 's suit was decreed in its entirety.
Held, that the preliminary objection that the Special judge had no jurisdiction under the Sangli State Agriculturists Protection Act to entertain the suit must be overruled.
The fixing of ,915 as the date line by the Act had reference to such reliefs as could be had only by way of reopening of closed transactions and could not, therefore, preclude the Special Judge from granting other reliefs in respect of transactions entered into prior to 1915.
Nor could it be contended in bar that the plaintiff was bound in the first instance to set aside an auction sale of the mortgaged properties in execution of a money decree in which she was not substituted in place of her deceased father as his true heir and legal representative nor made a party and no controversy was raised by the parties nor decided by the Court as to who was the true legal representative.
The plaintiff was entitled to ignore the sale and the suit was not barred under article 12 of the Limi tation Act.
480 Malkarjun Bin Shidramappa Pasare vs Narhari Bin Shivappa, (1900) L.R. 27 I.A. 216, doubted and distinguished.
In order that article I34 of the Limitation Act might be attracted to a suit for possession on redemption, it was necessary for the defendant to prove affirmatively that the mortgagee or his succesor in interest had transferred a larger interest than was justified by the mortgage.
Where, as in the present case, this was not done, article 134 could not apply and the only other article which could apply was article 148 Of the Limitation Act.
Under the Mitakshara School of Hindu Law partition may be either (1) a severance of the joint status of the coparcenary by mere defining of shares but without specific allotments or (2) partition by allotment of specific properties by metes and bounds according to shares.
The latter, if reduced to writing becomes compulsorily registrable under section I7(1)(b) of the Indian Registration Act but the former does not.
Consequently, in the present case such unregistered docu ments as were adduced by the plaintiff for the limited purpose of proving partition in the former sense did not fall within the mischief Of section 49 of the Indian Registration Act and were admissible in evidence.
|
tions (C) Nos.
331 47 of 1984.
(Under Article 32 of the Constitution of India. ) Rajinder Sachar and K.T. Anantharaman for the Petitioners.
Narayan B. Shetty, G.B. Pai, S.S. Shroff, Mrs. P.S. Shroff, Miss Girja Krishan, S.A. Shroff, Mrs. Pallavi Shroff, O.C. Mathur and A.M. Dittia for the Respondents.
The Judgment of the Court was delivered by 365 DUTT, J.
In these writ petitions, the petitioners are former officers and employees of the Caltex Oil Refining (India) Ltd., which has since been amalgamated with the Hindustan Petroleum Corporation Limited.
The complaint of the petitioners is with regard to the inter se fitment of the officers and employees of the Caltex Oil Refining (India) Ltd. and the other two Companies which have also been amalgamated with Hindustan Petroleum Corporation Ltd., namely, ESSO Standard Refining Company of India Ltd. and Lube India Ltd. In 1974, the Undertakings in India of ESSO Eastern Inc. that is, ESSO Standard Refining Company of India Ltd. (for short 'ESSO ') and Lube India Ltd. (for short 'LIL ') were acquired by the ESSO (Acquisition of Undertakings in India) Act, 1974 and vested in Hindustan Petroleum Corporation Ltd. (for short 'HPCL '), a Government Company.
In 1977, the shares of Caltex Oil Refining (India) Ltd. and Undertakings in India of Caltex (India) Ltd. were acquired by the Caltex (Acquisition of Shares of Caltex Oil Refining (India) Ltd. and the Undertakings in India of Caltex (India) Ltd. Act, 1977 and vested in Caltex Oil Refining (India) Ltd. (for short 'CORIL '), a Government Company.
On May 5, 1978, by the order of the Company Law Board, CORIL was amalgamated with HPCL.
By an order dated June 17, 1978, the Central Government appointed a one man Committee of Mr. B.B. Tandon, IAS (Retd.), for the purpose of examining the problems arising out the the integration of the management staff of CORIL and HPCL.
The said Committee was to make recommendation inter alia on the following: (i) fitment in equivalent Groups; (ii) criteria to be adopted for determination of seniori ty and fixation of inter se seniority; and (iii) placement in appropriate positions.
In September, 1970, the Tandon Committee submitted a report to the Central Government recommending that for equating positions in the two companies and fitting them in equivalent groups, the following two principles should be followed: 1.
The principle of functional similarity 2.
The principle of co equal responsibility.
366 We shall have occasion to refer to the report of the Tandon Committee later in this judgment, for much reliance has been placed by the petitioners on the report.
While the report of the Tandon Committee was under the consideration of the Central Government, HPCL appointed two functional directors for the purpose of formulating a rationalisation scheme.
In this connection, we may refer to a letter dated July 28, 1979 of the Central Government whereby it advised HPCL that the pay scales and perquisites of management and employees in the nationalised oil companies should be ratio nalised and fitted into the pay scales of the Indian Oil Corporation, hereinafter referred to as 'IOC ', a public sector Company.
Further, it was stated in the said letter that the guiding principle to be adopted for the purpose was to find out the equivalence, that is to say, the equality of duty and also the equality of responsibility.
On July 7, 1980, a circular letter was issued by HPCL annexing thereto a rationalisation scheme consisting of two pans.
In the first part, the past service benefits that would be admissible to each employee of CORIL on the basis of existing pay scales and in the second pan, details were given of the rationalised conditions of service, payscales, perquisites and retirement benefits.
In the circular it was stated as follows: "In relation to your fitment or fixation of salary in the proposed rationa lised scales, should you have any grievance you will be at liberty to represent your case to a Grievance Committee, which has been specially constituted for the purpose.
I am directed to request you to signify your acceptance of this offer within 30 days from the date of receipt of this letter by returning the duplicate copy of this letter duly signed by you.
On receipt of your acceptance, consequent letters will be issued.
" In the scheme the pay scales of ESSO, LIL and CORIL sought to be equated with the pay scales of HPCL are as follows: From ESSO To : HPCL HPCL Salary Group Salary Group Salary Scale RS.
E 7, E 8 A 750 40 1150 50 1550 E 6 B 1050 50 1450 60 1750 367 E 5, E 5A C 1450 60 1690 65 1950 E 4 D 1600 65 2120 E 3 E 1850 100 2350 E 2 F 2000 100 2500 O & E 1 & Unclassified G 2250 100 2750 General Manager H 2500 100 3000 From : LIL To : HPCL HPCL Salary Group Salary Group Salary Scale L 7 A 750 40 1150 50 1550 L 6 B 1050 50 1450 60 1750 L 5 C 1450 60 1690 65 1950 L 4 D 1600 65 2120 L 3 E 1850 100 2350 L 2 F 2000 100 2350 L 1 G 2250 100 2750 General Manager H 2500 100 3000 From CORIL To : HPCL HPCL Salary Group Salary Group Salary Scale R 6 A, R 6 B A 759 40 1150 50 1550 R 7 A, R 7 B B 1050 50 1450 60 1750 R 8 C 1450 60 1690 65 1950 R 9 D 1600 65 2 120 R 10 E 1850 100 2350 R R 12 G 2250 100 2750 General Manager H 2500 100 3000 So far as CORIL is concerned, it appears that it has 10 grades, while HPCL has 8 Grades.
For, the purpose of equa tion of these 10 grades of CORIL with 8 Grades of HPCL, some compression has been made in the lower Grades, namely, R6 A and R6 B have been clubbed together and equated with Grade A of HPCL.
Again Grades R7 A and R7 B of CORIL have been clubbed together and equated with Grade B of HPCL.
In ESSO, .the
Grades E 7 and E 8 have been clubbed together and equated with Grade A of HPCL.
In the Salary Group of ESSO, the Grades E 5 and E SA have been shown to be two different Grades, but it is not disputed before us that these two Grades are really one Grade.
368 The complaint of the petitioners is that in the matter of fitment/ integration of the officers of CORIL, that is, the petitioners, and the officers of ESSO/LIL into HPCL/IOC Grades, gross disparities have been made to the prejudice of the officers of CORIL.
It is the case of the petitioners that the officers of CORIL have been fitted by HPCL consist ently in one or two Grades lower in HPCL vis a vis their counterparts in ESSO/LIL, performing similar duties and having similar responsibilities and status.
It is urged on behalf of CORIL that in integrating the officers CORIL with those of ESSO and LIL, HPCL did not make any attempt to equate all the positions held by the officers of CORIL with those held by the officers of ESSO/LIL.
It is submitted that before any fitment can be made into any scale of pay, it is incumbent to make an equation of posts and without such equation the officers of CORIL could not be fitted into the pay scales of HPCL along with the officers of ESSO and LIL.
In support of the contention that HPCL has not made any equation of posts before fitment in HPCL/IOC scales of pay, Mr. Sachar, learned Counsel appearing on behalf of the petitioners, has placed much reliance on the Tandon Commit tee 's Report.
In the said report, the post of General Sales Representative of ESSO has been equated with the post of Retail Development Supervisor of CORIL.
In the scheme pre pared by HPCL, the post of General Sales Representative of ESSO (E 6) and that of Depot Superintendent (E 6) have been placed in the Salary Group B of HPCL, while the post of Retail Development Supervisor (R6 A) and Depot Superintend ent/Relief Depot Superintendent (R6 B) of CORIL have been placed in the Salary Group A of HPCL.
In Tandon Committee 's Report, it has been observed that the functional similari ties and the responsibility carried by both these function aries, namely, Retail Development Supervisor of CORIL and General Sales Representative of ESSO, are alike.
Further, it has been observed that since these two posts are congruent, they can be fitted in the same Group, that is, in Group B of the new HPCL Grade Structure representing IOC scales of pay.
The post of Depot Super intendent A (R7 B) and that of Mar keting Representative (R7 A) of CORIL have been placed in the Salary Group B of HPCL, but similar posts of ESSO being E 5/E 5A have been placed in the Salary Group C of HPCL.
It is thus complained that the scheme, which has been prepared by HPCL, is arbitrary and is not based on a proper equation of posts.
On the other hand, it is the case of HPCL that before the rationalisation scheme was finalised.
HPCL Employees Management 369 Staff Association and CORIL Staff Association submitted their written submissions on December 6, 1977 and July 17, 1977 respectively.
These representations were considered by the Government and after several meetings between the Chief Executives of HPCL and CORIL and the Secretary and other senior officers of the Ministry and Bureau of Public Enter prise, Government formulated the guidelines for rationalisa tion and communicated its decision to both CORIL and HPCL by its letter dated July 28, 1979.
With a view to giving a further opportunity to the employees of erstwhile ESSO and CORIL group of officers, the Chairman of HPCL appointed two Committees to submit their recommendations as to the equiva lence and fitment of existing officers on the basis of IOC 's scales of pay in accordance with the Government guidelines.
HPCL considered the reports submitted by the said two Com mittees and also different methods of fitment and equiva lence of different pay scales of ESSO, LIL and CORIL with the pay scales of IOC and, keeping in view all these factors including the submissions made by the Officers ' Association through their representations, HPCL approved the proposal of rationalisation of pay scales, allowances and perquisites.
Accordingly, an offer letter dated July 7, 1980 together with the terms and conditions of new appointment as per the rationalisation scheme was sent to each of the employees.
The further case of HPCL is that without exception every one of the CORIL Management Employees accepted the fresh terms offered to them by the said letter dated July 7, 1980.
It is, accordingly, contended by Mr. Pai, learned Coun sel appearing on behalf of HPCL, that the impugned rational isation scheme having been finalised after repeated consul tations with the officers of CORIL and their Association and all the officers of CORIL having accepted in writing the said scheme, they are precluded from challenging the same.
Another fact, upon which reliance has been placed on behalf of HPCL, is an order of this Court dated December 17, 1979 passed in Civil Appeal No. 3214 of 1979 whereby HPCL challenged the judgment of the Delhi High Court quashing a circular dated March 8, 1978 issued by the Board of Direc tors of CORIL, on the writ petition filed by the employees of CORIL being Writ Petition No. 426 of 1978.
Two other appeals being Civil Appeal No. 3212 of 1979 and Civil Appeal No. 35 186 of 1979 were also filed by the officers of CORIL and Bharat Petroleum Corporation Ltd. respectively.
The said order is as follows: "The petitioner Corporation will be at liberty to frame a 370 scheme, if it wishes to do so, in accordance with the judg ment of the High Court under appeal.
If the scheme is framed, it will not be implemented for a period of three weeks from the date of its framing and the respondents will be at liberty within the period of 3 weeks to apply to this Court for stay.
This order will be without prejudice to the rights and contentions of the petitioner Corporation in the appeal.
" Admittedly, no application was made to this Court by the officers of CORIL praying for stay of the rationalisation scheme within a period of three weeks.
Relying on the said order of this Court and also on the fact that no application for stay was made to this Court within the period allowed, it is submitted on behalf of HPCL that the petitioners accepted the rationalisation scheme which is also evidenced by their written acceptance.
If they had any objection to the scheme, they would have surely made a representation to this Court in the said Civil Appeal No. 3214 of 1979 which was then pending.
In the writ petition, the petitioners have emphatically denied the allegation of HPCL that discussions were made with individuals and groups of Management Staff of CORIL with regard to the rationalisation scheme.
As to the accept ance of the rationalisation scheme, the case of the peti tioners is that on July 12, 1980 a news item appeared in the Bombay edition of the Times of India to the effect that under the scheme of rationalisation, the services of nearly 950 officers of HPCL would be terminated, and that such officers would simultaneously be reappointed on the basis of public sector salary.
In view of the said news, the peti tioners filed an application in this Court in the said Civil Appeals praying for stay or suspension of the operation of the said offer letter dated July 7, 1980 and for restraining HPCL from terminating the services of the Management Staff of CORIL pending the disposal of the Civil Appeals.
HPCL filed an affidavit in opposition to the said application of the petitioners to the effect that no decision had been taken by HPCL to terminate the services of the officers of CORIL.
Accordingly, this Court disposed of the said applica tion recording that in view of the said affidavit of HPCL, no order was needed to be passed.
Further, the case of the petitioners is that in spite of the said order of this Court, the petitioners still apprehended that HPCL would terminate the services of the petitioners in the event of their refusal to accept the said scheme and, as such, the petitioners under duress were forced to signify their con sent to the said scheme.
371 We have considered the explanation of the petitioner justifying the acceptance of the said offer letter dated July 7, 1988 and the rationalisation scheme sent therewith and also the contention of HPCL in that regard.
In our opinion, the apprehension of the petitioners that in the event of their refusal to accept the scheme, their services will be terminated cannot be rejected on the face of it.
It may be that there was no reasonable basis for such apprehen sion, but the plea that because of such apprehension the petitioners had no other alternative than to accept the scheme, cannot be disbelieved.
At the same time, we do not also put any blame on HPCL for implementing the said scheme which was accepted by the petitioners and other officers of CORIL.
Instead of disposing of these writ petitions on this technical grounds, we may proceed to consider the respective contentions of the parties on merits.
The main grievance of the petitioners appears to be that in the rationalisation scheme a compression has been made at the lower level, namely, Grades R6 A and R6 B have been clubbed together and instead of placing them in the Salary Group B of HPCL, as has been done for the equivalent Grade E 6 of ESSO, they have been placed in the Salary Group A of HPCL.
Similarly, the Grades R7 A and R7 B have been clubbed together and placed in Salary Group B of HPCL, while the equivalent Grade of ESSO has been placed in the Salary Group C of HPCL.
The contention of the petitioners is that the compres sion should have been made at the higher grades, namely, Grades R11 and R12 and the Grade of General Manager.
This is not for this Court to say whether the compression should have been made in the lower grades or in the higher grades.
By such compression, Grades R6 A and R7 A have been upgraded and the persons placed in those Grades have been benefited by such upgradation.
There is much substance in the conten tion made on behalf of HPCL that if compression had been made in the upper grades, there would be much complications and, moreover, such compression in the upper grades was not convenient to be made in view of functional differences.
The Grade of General Manager cannot be clubbed together with a lower grade.
In the circumstances, we are unable to accept the contention of the petitioners that the compression should have been made in the higher grades of CORIL.
The most important question that requires consideration is whether in framing the rationalisation scheme HPCL has really made the equation of posts of CORIL with those of ESSO/LIL.
It is the 372 positive case of the petitioners that no such equation has been made and the fitment of the officers of CORIL and those of ESSO/LIL in the IOC/HPCL scales of pay have been made without the equation of posts, which is a sine qua non for integration of officers coming from different sources.
The petitioners have mainly relied upon the recommendation of the Tandon Committee that General Sales Representative of ESSO has been equated with the post of Retail Development Supervisor of CORIL.
In the scheme prepared by HPCL, the post of General Sales Representative of ESSO and that of Depot Superintendent have been placed in the Salary Group B of HPCL, while the post of Retail Development Supervisor and Depot Superintendent/Relief Depot Superintendent of CORIL have been placed in the Salary Group A of HPCL.
As against this, the contention of HPCL is that the two Committees that were appointed by the Chairman of HPCL considered the different methods of fitment and equivalence of different pay scales of ESSO, LIL and CORIL with the pay scales of IOC.
Except the bare allegation, no material has been produced before us on behalf of HPCL to show that the said Committees had, as a matter of fact, considered the question of equation of posts on the basis of the principle as laid down by the Central Government while referring the matter to the Tandon Committee, namely, functional similari ty and co equal responsibility.
In the affidavits filed on behalf of HPCL, no particulars have been given with regard to the functional equivalence or otherwise of the different grades of these officers of CORIL, ESSO and LIL.
It is also not stated what happened to the consideration by the Govern ment of the Tandon Committee 's report.
There can be no doubt that the Government is not bound to accept the recommenda tion of the Tandon Committee but, at the same time, the equation of posts has to be made on the principle of func tional equivalence and co equal responsibility.
As no mate rials have been produced in that regard on behalf of HPCL, it is difficult for us to hold that the different grades of posts have been compared before placing the officers of these companies in the IOC/HPCL scales of pay.
While it is not within the domain of the Court to make the equation of posts for the purpose of integration, it is surely the concern of the Court to see that before the integration is made and consequent fitment of officers in different grades/scales of pay is effected, there must be an equation of different posts in accordance with the principle stated above.
As there is no evidence or material in support of such equation of posts, it is difficult to accept the ra tionalisation scheme with regard to the placing of the officers of CORIL in different IOC/HPCL grades of pay.
373 The petitioners approached the Grievance Committee, but the Grievance Committee did not consider the objections of the petitioners to the said scheme.
In our opinion, there is much substance in the contention made on behalf of HPCL that it was not the business of the Grievance Committee to con sider the propriety or otherwise of the rationalisation scheme, but if any officer has not been placed in the proper grade, the Grievance Committee may place such officer in the proper grade in accordance with the rationalisation scheme.
Be that as it may, in the view which we take, namely, that there has been no equation of posts, the rationalisa tion scheme cannot be accepted in full.
The prayer of the petitioners in the writ petition is for a declaration that the said scheme is violative of Articles 14 and 16 of the Constitution of India and for a writ, order or direction in the nature of mandamus directing HPCL to remove the discrim ination against the petitioners in regard to the impugned rationalisation scheme.
The question is whether we should set aside the scheme after the lapse of about eight years.
During these eight years, by virtue of implementation of the scheme, many changes have taken place with regard to the positions and ranks of the officers of HPCL including the petitioners and to set aside the whole scheme at this stage would surely affect the service structure of HPCL.
We are also not obliv ious of the order of this Court dated July 20, 1984 record ing the statement made in the affidavit of HPCL that if this Court would ultimately decide the matter in favour of the petitioners, HPCL would accord to them all the benefits which they would be entitled to.
That is an undertaking given by HPCL, but we should also look to the interest of several officers of HPCL who would be affected, if the scheme is set aside.
In the circumstances, without setting aside the scheme, we direct HPCL to appoint a Committee consisting of high officials of HPCL and Central Government, other than those who were in the previous Committees, within one month from date for the purpose of considering the question of equation of posts on the basis of functional similarity, equivalence and co equal responsibility, that is to say, whether on that basis Grades R6 A and R6 B of CORIL, either jointly or separately, can be equated with the Grade E 6 of ESSO and, similarly, Grades R7 A and R7 B of CORIL, either jointly or separately, can be equated with Grade E 5/E 5A of ESSO.
In considering the question of equation of posts, the respond ents shall also take into its consideration the report of the Tandon Committee.
Such consideration shall be 374 made within six months from today.
If such equation is found to be in favour of the petitioners, HPCL shall give effect to the same.
But, in view of the lapse of about eight years for which the petitioners are also to some extent responsi ble, the date or dates from which the consequential benefit will be given effect to and also the quantum of such benefit will be such as may be deemed fit and proper by the respond ents, having regard to the financial involvement and the changes that have taken place.
We make it clear that, in no event, promotions and the existing positions of the officers of HPCL, by virtue of the implementation of the impugned scheme, will be interfered with.
The writ petitions are disposed of as above.
There will be no order as to costs.
P.S.S Petitions allowed.
| IN-Abs | ESSO Standard Refining Company of India Ltd. and Lube India Ltd. were acquired by the ESSO (Acquisition of Under takings in India) Act, 1974 and vested in the Hindustan Petroleum Corporation Ltd.
In 1978 Caltex Oil Refining India Ltd., another Government company was amalgamated with HPCL.
Consequent upon this integration of management staff of CORIL and HPCL, dispute arose as to their fitment in equiva lent groups and fixation of inter se seniority.
The Tandon Committee appointed to examine the issues recommended the application of the principles of (1) functional similarity, and (2) co equal responsibility, for equating positions in the two companies.
The HPCL appointed two functional direc tors for framing a rationalisation scheme.
In the said scheme for the purpose of equation of 10 grades of CORIL with 8 grades of HPCL some compression was made in the lower grades, namely, R6 A and R6 B of CORIL were clubbed together and equated with grade A of HPCL.
Again, grade R7 A and R7 B were clubbed together and equated with grade B of HPCL.
The complaint of the petitioners, former officers and employees of CORIL, was that the rationalisation scheme was arbitrary, in that the fitment of officers of CORIL and those of the ESSO/LIL in the HPCL scales of pay had been made without the equation of posts, which was a sine qua non for integration of officers coming from different sources, so much so that they had been consistantly fitted in one or two grades lower in HPCL vis a vis their counterparts in ESSO/LIL performing similar duties and having similar re sponsibilities and status; that in the Tandon Committee report, the post of General Sales Representative of ESSO had been equated with the post of Retail Development Supervisor of CORIL on the principle of functional similarity and co equal responsibility; that since these two posts were con gruent, they should have been fitted in the same group, that is, in Group B of the new HPCL 363 Grade structure, whereas in the said scheme the post of General Sales Representative of ESSO (E 6) and that of Depot Superintendent (E 6) have been placed in the Salary Group B of HPCL, while the post of Retail Development Supervisor (R6 A) and Depot Superintendent/ Relief Depot Superintendent (R6 B) of CORIL have been placed in Salary Group A of HPCL.
It is further averred that the post of Depot Super intend ent A (R7 B) and that of Marketing Representative (RT A) of CORIL have been placed in the Salary Group B of HPCL, but similar posts of ESSO being E 5/E5A have been placed in Salary Group C of HPCL; that the compression should have been made at the higher grades namely, grades R 11 and 12 and the grade of General Manager, and that the petitioners were forced to signify their consent to the said scheme under duress.
They, therefore, prayed for a declaration that the said scheme was violative of Articles 14 and 16 of the Constitution of India.
For the respondents, it was contended that the two committees that were appointed by the Chairman of HPCL considered the different methods of fitment and equivalence of different pay scales of ESSO, LIL and CORIL with the pay scales of IOC, that the reports submitted by these two committees were considered by the HPCL along with the sub missions made by the officers ' association through their representations before approval, that the terms and condi tions of the new appointments as per the rationalisation scheme were circulated to each of the CORIL employees with its letter dated July 7, 1980 and they having accepted in writing the said scheme they were precluded from challenging the same.
Allowing the writ petitions, HELD: 1.
While it is not within the domain of the Court to make the equation of posts for the purpose of integra tion, it is surely the concern of the Court to see that before the integration is made and consequent fitment of officers in different grades/scales of pay is effected, there must be an equation of different posts in accordance with the principle Of functional equivalence and co equal responsibility.
[372G H] In the instant case, no evidence or material has been placed before the Court on behalf of the HPCL in support of such equation of posts.
The rationalisation scheme with regard to the placing of the officers of CORIL in different IOC/HPCL grades of pay, therefore, cannot be accepted in full.
[372H] 364 2.
This is not for the Court to say whether the compres sion should have been made in the lower grades or in the higher grades.
By such compression, grades R6 A and R7 A have been upgraded and the persons placed in those grades have been benefitted.
If compression had been made in the upper grades there would have been much complications in view of the functional differences, for the grade of General Manager cannot be clubbed together with a lower grade.
The contention that the compression should have been made in the higher grades of CORIL cannot, therefore, be accepted.
[371F G] 3.
The apprehension of the petitioners that in the event of their refusal to accept the scheme, their services will be terminated cannot be rejected.
It may be that there was no reasonable basis for such apprehension, but the plea that because of such apprehension the petitioners had no other alternative than to accept the scheme, cannot be disbe lieved.
[371B] 4.
Having regard to the interest of several officers of HPCL who would be affected if the scheme is set aside, and in view of the fact that during the eight years in which the scheme had been in operation many changes had taken place with regard to the positions and ranks of the officers of HPCL including petitioners, HPCL is directed to appoint a committee consisting of high officials of HPCL and Central Government, other than those who were in the previous com mittees, within one month for the purpose of considering the question of equation of posts on the basis of functional similarity, equivalence and co equal responsibility, and to give effect to the same.
Promotions and the existing posi tions of the officers of HPCL by virtue of the implementa tion of the impugned scheme, not to be interfered with.
[373D, F G; 374B]
|
ivil Appeal No. 2705 of 1977.
From the Judgment and Order dated 28.10.1975 of the Madras High Court in Tax Case No. 492 of 1975.
AND Civil Appeal No. 512(NT) of 1989.
From the Judgment and Order dated 13.2.1978 of the Madras High Court in Tax Case No. 332 of 1975.
R. Mohan and R.A. Perumal for the Appellant.
A.T.M. Sampath for the Respondent in C.A. No. 2705 of 1977.
Mrs. Janaki Ramachandran for the Respondent in C.A. No. 5 12 (NT) of 1989.
The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J.
The question involved in these two matters is the same.
So we ant leave in SLP 2440 of 1979 and proceed to dispose of both the appeals together.
The respondent assessee in each of these cases acquired a reserve forest.
It is common ground that the acquisition was effected with a view to raise a coffee and cardamom plantation thereon.
For doing this, the assessee had to clear a portion of the forest and in the process fell the unwanted trees standing thereon as natural growth.
The cut trees were sold by the assessee in the form of firewood as well as in the form of cut sizes of timber as well as sleep ers.
Some of the growth was also converted into charcoal and the resultant charcoal sold.
On these facts, the question arose in each of these cases whether the price 411 realised by the assessee on the sale of firewood, timber, sleepers and charcoal was assessable to sales tax.
We are concerned with the assessment year 1969 70.
The assessee 's turnover, in respect of these items in the case of Shanmugha Estate was Rs.3,00,396.16 which included a turnover in charcoal of Rs.86,829.24.
In the case of Shakti Estate, the disclosed turnover was as follows: Firewood 1,98,687.08 Sized timber 83,490.89 Sleepers 28.
164,00 _____________ 3,10,47.97 _____________ The Deputy Commercial Tax Officer added 5% towards omissions and assessed a turnover of Rs.3,25,859.07.
The further facts disclosed in the case of Shakti Estate are these.
The assessee is a firm of 10 individuals.
It had not purchased the forest but had got a lease which entitled them to enjoy the usufruct of the forest by its exploita tion.
Clause (4) of the partnership deed recites that "the firm will carry on the development and exploitation of the lands".
The firm had been functioning for the past 7 years and had been paying sales tax on its sales of firewood, timber and sleepers.
But for the first time in assessment year 1968 69, it put forward a claim that the above turnover was not assessable in its hands.
The full facts in the case of Shanmugha Estate are not on record but, except for the fact that this was a case of a purchase of a forest by the assessee, and that the plantation does not seem to have started yielding crops, the facts are broadly similar to those in the case of Shakti Estate.
The assessing officers and the first appellate authorities held the turnover in question to be taxable.
But the Tribunal reversed this and held that the turnover was not liable for assessment to sales tax.
The High Court had dismissed the revision filed by the State in the case of Shakti Estate in respect of assessment year 1968 69 by a short order which read: "We are of the view that the Tribunal was right in its order.
This was a case of a lease.
It did not involve any sale of trees.
Merely because the trees cut were sawn to sizes, that would not by itself make out a sale.
" 412 In respect of assessment year 1969 70 also, the States revision was dismissed following the above order.
In the case of Shanmugha Estate the department challenged the Tribunals finding only in respect of sales of sized timber.
The suggestion that the sizing of trees into timber or their conversion into sleepers would make a difference was not accepted by High Court, which, following the decision of the Kerala High Court in Kuttirayin & Co. vs State, [1976] 38 STC 282, affirmed the Tribunals order by its judgment re ported in (1979) 43 STC 226.
The State appeals from the judgments in both the cases.
The answer to the question posed depends on the inter pretation of the expressions "dealer" and "business", as defined under the Tamil Nadu General Sales Tax Act.
These definitions read thus: "Business includes: (i) any trade, or commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture whether or not such trade, commerce, manufacture, adventure or concern is carried on with a motive to make gain or profit and whether or not any profit accrues from such trade, com merce, manufacture, adventure or concern; and (ii) any transaction in connection with, or incidental to ancillary to such trade, com merce, manufacture, adventure Or COnCern.
" "Dealer means: any person who carries on the business of buying, selling, supplying or distributing goods, directly or otherwise, whether for cash or for deferred payment, or for commission, remuneration or other valuable consideration and includes (i) a local authority, company or Hindu undi vided family, firm or other association of persons which carries on such business; (ii) a casual trader . . " It is seen that, in the case of Shakti Estate, the planta tion has 413 started functioning and there is turnover in coffee and cardamora to the extent of Rs.58,000 while it is stated that the Shanmugha Estate has not yet started deriving income from its plantation.
The principal contention of the asses sees is that they are, or may, no doubt, become, dealers in coffee or cadamore or other crops grown, or to be grown, on the estates but that they are by no means dealers in fire wood, timber, sleepers or charcoal.
They say that their intention in acquiring the forest or rights therein was not to deal in the forest produce whether as firewood, timber, charcoal or otherwise but to start a plantation thereon.
That business could not be started or carried on without clearing the forest trees and so the activity of clearing the jungle was one that was not only unconnected with the assessees business as such but was something the assessees were constrained to indulge in.
This amounted to nothing more than a mere realisation by an owner of a part of his property to the best advantage and cannot be described as a trading activity or as partaking of the character of an adventure or concern in the nature of trade.
We do not, however, think that the above contention of the assessees can be accepted.
The facts show that each of the assessees has acquired a huge forest area which contains a large number of trees.
When the asseessee purchased the forest or got it on lease for starting a plantation thereon, it was aware of the existence of trees (some of them quite valuable) on the land and the price paid must inevitably have included some value for these trees as well.
The asses sees also knew full well that before they could start the plantation, as well as during the running of it, they would have to clear the forest in stages by cutting off the trees standing thereon and disposing of the same from time to time.
Each of these assessees is a firm the purpose of which is to carry on business.
It will be quite proper and natural to infer that the intention of the assessees at the time of purchase included not only an intention to grow and sell coffee and cardamom and other crops but also an intention to dispose of the trees standing on the land to the best advan tage in the circumstances.
Indeed the lease deed in the case of Shakti Estate clearly talks of an intention of "develop ment and exploitation of the lands", words which cannot be merely confined to the cultivation of commercial crops thereon.
In the face of such a declared purpose, it is of no relevance whether the exploitation and development was under the terms of a lease deed or a purchase deed and the dis tinction made by the High Court between the two would appear immaterial.
The extent of the lands acquired or leased out is so vast that the clearance has to be done in stages and the sale of forest trees extends over several years.
Indeed, it is bound to be a 414 recurring feature even after the plantation starts working as there will always be a certain number of trees retained in the plantation as shade trees and the like.
The nature of the task undertaken by the assessee is really one in the nature of a venture to carry out sustained, systematic and organised activities in the nature of business.
These activ ities do not merely cover the running of a plantation.
They commence right from the beginning when the assessee went in for the land with a view to developing it.
They fully in tended, as a first stage in the business which they intended to start, to exploit the trees standing on the land to the maximum advantage.
Moreover, they did not merely sell the forest trees haphazardly.
They took steps to exploit them in a commercial manner.
When the trees yielded timber, the assessee not only had them sawn and cut to sizes but even converted them into sleepers and sold them.
They reduced a part of the jungle growth to charcoal and sold the same.
Taken all together, one is left in no doubt that when the assessees went in for a purchase or lease of the forest for starting a plantation they also knowingly let themselves in for engaging in a trade in the forest produce.
The fact that the assessees are business entities, the size of the tract developed, the extent and value of the trees standing on the land, the inevitability of the jungles having to be cleared and the standing trees disposed of before commercial crops could be grown, the manner in which the forest trees were disposed of are all, we think, insignia that mark out the entire set of activities as a concern in the nature of trade.
It is true that, in the area of income tax law, it has been held that no adventure in the nature of trade can be spelt out where all that a person does amounts to a mere realisation of his capital assets.
It has been held thus that an owner of a huge estate who does not want to retain it any longer cannot be taxed on the surplus accruing to him on the sale of his capital assets even though he might carry out the realisation to best advantage in a commercial manner such as by forming a company, developing the lands, plotting them out, advertising them for sale, waiting for a favour able market and selling them over a period of several years.
But this line of cases is of no help in the context of the facts of the present case and in the view we have taken above of the assessees transactions.
Here the assessees did not merely realise the value of a capital asset belonging to them.
They went in for the acquisition of an asset fully realising its potentialities for exploitation not merely as a plantation but also, incidentally, by disposing of the existing growth on the land.
It seems impossible to say that they did not intend to do this also while going in for the acquisition.
If one purchases an asset with a view to turn it to account in such manner, we 415 think, one is certainly carrying out an adventure in the nature of trade.
Moreover, we have also to give full effect to the defi nitions in the statute we are concerned with.
The definition of a "business" also includes "any transaction in connection with or incidental to or ancillary" to a trade and thus, even on the assessees own arguments, these activities were incidental and ancillary to the business which the assessee was carrying on or definitely intended to carry on.
It is also immaterial, on this definition, that the assessees may not have had a "motive of making a profit or gain" on these sales though on the facts, it is clear that such motive must have existed and, in any event could not be ruled out.
The reference to a "casual" dealer in the second definition also renders it immaterial that the assessees may not have in tended to be regular dealers in sleepers, timber, firewood or charcoal but that this was something casual or incidental to the acquisition and exploitation of a forest for running a plantation.
Before concluding, we may refer to the decisions cited before us.
The decisions of the High Court in the present cases and in Kuttirayin 's case (supra) support the assesses contention but, for reasons given above, we are unable to accept them as correct.
The decision of the Madras High Court in L.N. Plantation Co. vs State, [1981] 47 STC 210 supports the department 's contention and we approve of the same.
In Tamil Nadu Trading Co. vs State, [1981] 52 STC 7 the Madras High Court was dealing with a case where the assessee was found to be a dealer in timber.
But, in the course of their judgment, the Court made the following observations which support the case of the department: "Even if it were to be assumed, without ac cepting, for the sake of argument, that the assessee purchased the land for the purpose of coffee plantation, the sale of timber and firewood fall under "any transaction" in connection with or incidental or ancillary to the business of coffee plantation and would therefore, fail within the definition of "business" under section 2(d) of the Act.
" We agree.
There decisions of this Court were also referred to by counsel.
State vs Burmah Shell, [1973] 31 STC 426 and Dis trict Controller of Stores vs Assistant Commercial Tax Officer, [1976] 37 STC 423 were cases where an assessee, carrying on a business, had to dispose of unserviceable or useless material and such disposals were held taxable 416 as "business" sales, the transactions being incidental or ancillary to the principal business carried on by the asses see.
The disposals effected by the Shakti Estate whose plantation business had started in full swing will certainly fall squarely within the principle of these decisions.
But, as we have discussed above, in our view, even the sales effected before the plantation started yielding results would be covered by the definitions as the venture undertak en by the assessee has to be considered as an integral whole and there can be no doubt that the sale of the forest pro duce was part of the activities in the contemplation of the assessees right from the beginning.
As against the above decisions, reliance was placed, on behalf of the assessees, on Deputy Commissioner vs Palampa dam Plantation, [1969] 24 STC 231 where, it is said, it was held that an assessee could not be held taxable as a dealer on the sale of trees of spontaneous growth in a plantation.
But that decision clearly turned on the specific language of the definition of "dealer" contained in section 2(viii)(e) of the Kerala General Sales Tax Act, 1963, and does not lay down any general proposition as contended for on behalf of the assessees.
For the reasons discussed above, we allow the appeals and set aside the order of the High Court and Tribunal in these cases.
In the result, the turnovers in dispute in the two cases before the High Court will stand included in the assessees turnover and the assessments modified accordingly.
We, however, make no order regarding costs.
N.V.K. Appeals allowed.
| IN-Abs | The respondent in each of the appeals is the assessee.
It was a firm of 10 individuals.
They acquired a reserve forest, by a lease which entitled them to enjoy the usufruct of the forest by its exploitation.
The partnership deed provided that the firm will carry on the development and exploitation of lands.
The acquisition was effected with a view to raise a coffee and cardamom plantation thereon.
For doing this, the assessee had to clear a portion of the forest and in the process fell the unwanted trees standing thereon as natural growth.
The cut trees were sold by the assessee in the form of firewood as well as in the form of cut sizes of timber as well as sleepers.
Some of the growth was also converted into charcoal and the resultant charcoal sold.
The firm had been functioning for the past 7 years and had been paying sales tax on its sale of firewood, timber and sleepers.
But for the first time in the assessment year 1968 69, it put forward a claim that the above turnover was not assessable in its hands.
The assessing officer and the first appellate authori ties held that the turnover in question to be taxable.
But the Tribunal reversed this decision, and held that the turnover was not liable for assessment to sales tax.
The High Court dismissed the revision petition filed by the State.
It held that it was a case of a lease.
It did not involve any sale of trees.
Merely because the trees were sawn to sizes, would not by itself make out a sale.
The suggestion that the sizing of trees into timber of their conversion into sleepers could make a difference was not accepted by the High Court, which following the decision of the Kerala High Court in Kuttiravin & Co. vs State of Kera la, [1976] 38 STC 282 affirmed the Tribunal 's order.
409 The State appealed to this Court.
Allowing the appeals and setting aside the order of the High Court and Tribunal, the Court, HELD: l(a) The fact that the assessees are business entities, the size of the tract developed, the extent and value of the trees standing on the land, the inevitability of the jungles having to be cleared and the standing trees disposed of before commercial crops would be grown, the manner in which the forest trees were disposed of, are all insignia that mark out the entire set of activities as a concern in the nature of trade.
[414D E] l(b) In the area of income tax law, it has been held that no adventure in the nature of trade can be spelt out where all that a person does a mounts to a mere realisation of his capital assets.
[414E F] l(c) The assessees in the instant case, did not merely realise the value of a capital asset belonging to them.
They went in for the acquisition of an asset fully realising its potentialities for exploitation not merely as a plantation but also, incidentally, by disposing of the existing growth on the land.
[414G H] l(d) If one purchases an asset with a view to turn it to account in such manner, one is certainly carrying out an adventure in the nature of trade.
[414H; 415A] 2(a) The definition of 'business ' in the T.N. General Sales Tax Act, 1959, includes 'any transaction in connection with or incidental to or ancillary ' to a trade.
The activi ties carried on by the assessee were incidental and ancil lary to the business which the assessee was carrying on or definitely intended to carry on.
It is also immaterial, on this definition, that the assessee may not have had a 'm otive of making a profit or gain ' on these sales, though on the facts, it is clear that such motive must have existed and, in any event, could not be ruled out.
[415B C] 2(b) Even the sales effected before the plantation started yielding results would be covered by the definition, as the venture undertaken by the assessee has to be consid ered as an integral whole and there can be no doubt that the sale of the forest produce was part of activities in the contemplation of the assessees right from the beginning.
[416B] 410 Kuttiravin & Co. vs State, [1976] 38 STC 282, over ruled.
L.N. Plantation Co. vs State, [1981] 47 STC 210; Tamil Nadu Trading Co. vs State, [1981] 52 STC 7, approved.
Deputy Commissioner vs Shree Shamungam Estates, [1979] 43 STC 226 Mad.
reversed State vs Surmah Shell, [1973] 31 STC 426; District Controller of Stores vs Assistant Commercial Tax Officer, [1976] 37 STC 423 referred to, Deputy Commis sioner vs Palampadam Plantation, [1969] 24 STC 231, distin guished.
|
vil Appeal No. 19531954 of 1980.
From the Judgment and Order dated 23.1.1980 of the Bombay High Court in S.C.A. No. 240 of 1974.
N.M. Ghatate for the Appellants.
B. Kanta Rao for the Respondents.
The Judgment of the Court was delivered by SHARMA, J.
These appeals arise out of a proceeding under the C.P. and Berar Letting of Houses and Rent Control Order, 1949 (hereinafter referred to as the Rent Control Order) initiated by Shah Gokuldas, appellant in C.A. No. 1954 of 1980 (respondent in the other appeal) for permission to determine the lease of Bhagwanji, the original tenant.
After the death of Bhagwanji during the pendency of the case, Rashiklal and others, the appellants in C.A. No. 1953 of 1980 were substituted as his legal representatives.
The landlord 's prayer was based on alleged wilful default in payment of rent and bona fide requirement under sub clauses (ii) and (vi) respectively of Clause 13(3) of the Rent Control Order.
The allegations were denied by the tenant and the Rent Controller dismissed the application.
The landlord 's appeal was also rejected by the appellate authority, the Resident Deputy Collector.
The landlord thereafter approached the High Court which confirmed the impugned orders so far as the ground of bona fide necessity was concerned, but allowed the application under Article 227 of the Constitution of India holding that the tenant was a habitual defaulter in payment of rent and, therefore, liable to eviction.
The appellants in C.A. No. 1953 of 1980 have challenged the order of their eviction and the landlord Shah Gokuldas has appealed against the finding of the courts below negativing his case of bona fide requirement.
So far as C.A. No. 1954 of 1980 is concerned, both the Rent Controller and the Resident Deputy Collector have on a careful consideration of all the relevant circumstances held that the landlord 442 applicant has failed to prove his case of bona fide require ment.
The High Court while confirming the finding has again considered the materials on the record.
The learned counsel for the landlord has not been able to point out any accept able ground for interfering with the concurrent findings of the three courts and C.A. No. 1954 of 1980 is, therefore, dismissed.
So far as the other appeal is concerned, the High Court has disagreed with the view of the Rent Controller which was affirmed by the appellate court.
It has been contended on behalf of the appellants Rashiklal and others that having regard to the conduct of the parties in payment and receipt of rent of several months at a time, it should be held that there was an implied agreement between them to do so and the landlord is now not entitled to insist on the rent to be paid every month.
Reliance was placed on the decision of this Court in S.P. Deshmukh vs Shah Nihal Chand Waghajibai Gujarati, 5.
The case of the landlord has been that rent was payable on the expiry of each month, and since this was not done the tenant was liable to eviction.
The landlord filed a schedule in the trial court showing the intervals at which rents had been paid by the tenant during the period of 2 years immediately preceding the filing of the case.
The schedule indicates that the rent was paid, according to the alleged stipulation, only for a brief period, and the rent for the rest of the period was paid in lump sums represent ing the rent of several months together.
Admittedly the accumulated rents were accepted by the landlord without any objection at any point of time and the tenant had no occa sion to assume that the landlord was aggrieved by the manner in which rents were being paid.
The question arises as to whether in these circumstances the High Court was entitled to reverse the concurrent finding of the two courts below.
The tenant denied in express terms and arrangement pleaded by the landlord as mentioned above and asserted that rent was payable at his convenience.
Mr. Kanta Rao, the learned counsel for the landlord contended that a plea about an alleged agreement to pay rent at the convenience of the tenant has to be rejected as untenable in law.
According to the learned counsel an inference of implied agreement is possible by the conduct of the parties only if it is shown that the rent was being paid and accepted on a fixed inter val, as for example, if it could be shown that the rent was always paid after every 3 months (or for that matter every 2 months or every 4 months) then a clear cut 443 pattern emerges on the basis of which an implied agreement can be assumed to have come in existence.
No such inference is permissible from mere irregular and erratic payment.
Reliance was placed on the decisions of Pandurang Tukaram Rajkondawar vs Balaram Madhaorao Chavan, [1985] Mh.
L.J. 109; Shishir Hari Mahajan vs Banarasibai Rodmal Sharma and another, [1982] Mh.
L.J. 908 and Nathuji Narayanrao Udapure vs Narendra Vasanjibhai Thakkar and another, [1981] Mh.
L.J. 446.
The relevant provisions of the Rent Control Order require a tenant to be "habitually in arrears with the rent" as a condition for the grant of the permission by the au thority to the landlord to determine the lease.
It is sig nificant to note that the condition mentioned in the Rent Control Order is different from the condition in several other statutes where mere non payment of rent for a particu lar period, has been provided as adequate ground for evic tion of the tenant.
The question whether the tenant was a "habitual defaulter" arose before the Supreme Court in S.P. Deshmukh 's case (supra) and was answered in the negative in the following words: "Normally, a monthly tenant is under an obli gation to pay rent from month to month but this obligation is subject to a contract to the contrary.
Such a contract need not be re flected in a formal document and can be spread out from the conduct of the parties, spread over a fairly long period of time.
The evi dence in the case, which was believed by the two tribunals of fact, shows that the tenant has been paying rent at an interval of 3 or 4 months, which the landlord has been willingly accepting and always without even so much as a murmer.
We do not see any reason for holding that unless the rent was paid and accepted at a fixed period of interval, no such implied agreement can be inferred.
In the S.P. Desh mukh 's case (supra) the rent had been paid at the varying interval of 3 or 4 months.
The crucial test appears to be the conduct of the landlord in receiving the rent offered belatedly.
If he receives the same under a protest and warns the tenant to be regular in payment in the future, he cannot be assumed to have agreed to a modified agreement in this regard.
But if he, without any objection and without letting the tenant know his thought process, continues to receive rent at intervals of several months, he cannot be allowed to spring a surprise on the tenant by suddenly starting a proceeding for eviction.
Having lulled the tenant in the belief that things 444 were all fight, the landlord was under a duty to serve him with a notice demanding regular payment, if he wished to insist upon it.
In the case before us there was no objection whatsoever, raised on behalf of the landlord against the delayed payments.
We, therefore, hold that the High Court was not fight in reversing the concurrent finding of the two courts below.
Accordingly the impugned judgment is set aside, that of Resident Deputy Collector is restored and the appeal is allowed with costs throughout.
Before closing, however, we would like to observe that in view of the atti tude of the parties disclosed in the present case the appel lant should hereafter pay the rent regularly in the succeed ing month failing which he may be liable to be adjudged a habitual defaulter.
N.V.K.
C.A. No. 1953/80 allowed and C.A. No. 1954/80 dismissed.
| IN-Abs | The landlord filed a petition for eviction of his tenant on the ground of wilful default in payment of rent and bona fide requirement under sub clauses (ii) & (vi) respectively of Clause 13(3) of the C.P. and Berar letting of Houses and Rent Control Order, 1949.
The landlord alleged that the rent was payable on the expiry of each month, and pleaded that as the tenant paid the rent in lump sums representing the rent of several months together, he had committed wilful default and was liable for eviction.
The tenant contested the peti tion and pleaded that the accumulated rents were accepted by the landlord without any objection, and consequently he had no occasion to assume that the landlord was aggrieved by the manner in which the rents were paid.
The tenant further asserted that the rent was payable at his convenience.
The Rent Controller dismissed the application of the landlord both on the ground of bona fide requirement and wilful default.
The Appellate Authority the Resident Deputy Collector confirmed the order of the Rent Controller in appeal.
The landlord thereafter approached the High Court under Article 227 of the Constitution.
The High Court while con firming the order of the Rent Controller in so far as the ground of bona fide necessity was concerned, held that the tenant was a habitual defaulter in payment of rent, and was therefore, liable for eviction.
The tenants appellants in CA No. 1953 of 1980 challenged the order of their eviction, while the landlord appellant in CA No. 1954 of 440 1980 challenged the order rejecting his eviction application on the ground that he failed to prove his case of bona fide requirement.
Allowing Civil Appeal No. 1953 of 1980, and dismissing Civil Appeal No. 1954 of 1980 the Court, HELD: 1.
The relevant provisions of the Rent Control Order require a tenant to be "habitually in arrears with the rent" as a condition for the grant of the permission by the authority to the landlord to determine the lease.
This condition in the Rent Control Order is different from the condition in several other statutes where mere nonpayment of rent for a particular period, has been provided as adequate ground for eviction of the tenant.
[443C] 2.
The crucial test to determine whether the tenant was a 'habitual defaulter ' is the conduct of the landlord in receiving the rent offered belatedly.
If he receives the same under a protest and warns the tenant to be regular in payment in the future, he cannot be assumed to have agreed to a modified agreement in this regard.
But if he, without any objection and without letting the tenant know his thought process, continues to receive rent at intervals of several months, he cannot be allowed to spring a surprise on the tenant by suddenly starting a proceeding for eviction.
[443G H] In the instant case, there was no objection whatsoever, raised on behalf of the landlord against the delayed pay ments.
The High Court, therefore was not right in reversing the concurrent finding of the two courts below.
The judgment is set aside, and that of the Resident Deputy Collector is restored.
[444B] S.P. Deshmukh vs Shah Nihal Chand Waghajibai Gujarati, , followed.
Pandurang Tukaram Rajkondawar vs Salaram Madhaorao Chavan, [1985] Mh.
L.J. 169; Shishir Hari Mahajan vs Sanara siobai Rodmal Sharma and Anr., [1982] MH.
L.J. 908 and Nathuji Narayanrao Udapure vs Narendra Vasanjibhai Thakkar and Anr., [1981] MH.
L.J. 446, referred to.
Both the Rent Controller and the Resident Deputy Collector have on a careful consideration of all the rele vant circumstances held that the landlord has failed to prove his case of bona fide requirement.
The High Court while confirming the finding has again considered the 441 materials on the record.
No acceptable ground for interfer ing with the concurrent findings of the three Courts has been shown.
Civil Appeal No. 1954 of 1980 has therefore to be dismissed.
[441H; 442A B]
|
ivil Appeal No. 2820 of 1984.
From the Order dated 25.4.84/4.5.84 of the Customs Excise and Gold (Control) Appellate Tribunal, New Delhi in Appeal No. F.D. (SB)(T) A. 999/80 C in Order No. 223/84.
Harish N. Salve, Mrs. P.S. Shroff, J.M. Patel and S.A. Shroff for the appellant.
B. Dutta, Additional Solicitor General, Ms. Indu Malho tra and C.V.S. Rao for the respondent.
The Judgment of the Court was delivered by 385 SABYASACHI MUKHARJI, J.
This is an appeal under Section 35L of the (hereinafter referred to as 'the Act ') from the order passed and judgment delivered on 25th April, 1984/4th May, 1984 by the Customs, Excise and Gold (Control) Appellate Tribunal, New Delhi (hereinafter referred to as 'the Tribunal ').
The question involved is whether the crude PVC film is dutiable.
The appellant is, inter alia, a manufacturer of crude PVC films for the purpose of use in final products such as leather cloth and laminate jute mattings and PVC tapes both insula tion and adhesive.
The said crude PVC films are manufactured by the appellant in a continuous process in the factory premises of the appellant which are licensed premises under the Act.
The appellant filed classification list No. XIV/75 dated 20th November, 1975 in respect of crude PVC films used for lamination with jute and for tapes claiming that the said PVC films were non excisable on the ground that the same were nonmarketable intermediate products used exclu sively for captive consumption.
The said classification was approved by the Assistant Collector, Central Excise on 9th December, 1977.
There was an order passed by the Appellate Collector on 14th June, 1974 holding that crude PVC films were not mar ketable and were not liable to excise duty.
It is necessary to refer to the Tariff Entry involved in this case.
Tariff Item 15 A(2) of the Central Excise Tariff reads as follows: "Articles made of plastics, all sorts includ ing tubes, rods, sheets, foils, sticks, other rectangular or profile shapes.
whether lami nated or not, and whether rigid or flexible, including levy flat tubings and polyvinyl chloride sheets, not otherwise specified.
" The same crude PVC films which have been manufactured by the appellant and used in the manufacture of some other end product were subject matter of adjudication by the concerned authorities in the period 1.3.1970 to 29.5.1971.
The Appel late Collector of Central Excise in an order dated 14th January, 1974 held that the said PVC films manufactured by the appellant are not marketable intermediate products and hence not liable to duty.
The Appellate Collector, Central Excise in his order noted the contentions of the appellant that the appellant had produced sufficient evidence to prove that the crude PVC sheets which were the subject matter of the Show Cause Notice in that case and which are also the subject matter of the present show cause notice were not known in the market as PVC sheets nor were 386 these marketable as PVC sheets.
After reference to the rival contentions, the said Appellate Collector in his order held, inter alia, as follows: "PVC films/sheets for the clearance of which demand letters are issued are not marketable as the same are neither embossed nor printed nor any finishing Work is done when compared to PVC films/sheets which are marketed by them.
It was further stated that the tensile strength of PVC sheets which is marketed by the appellants is as per the international standards laid down by A.S.T.M./I.S.I. and is much higher than the crude PVC sheets manufac tured by them as an intermediate product for further manufacture of leather cloth.
As such, it was contended that the product manufactured by the appellants is not liable to central excise duty.
Shri Patel further stated that it was not necessary to prove from technical angle that the curde PVC sheets manufactured by the appellants for manufacturing leather cloth are different from PVC sheets which are manufactured by them and sold in the market as such.
Crude PVC sheets used in the appellants ' factory for further manufacture of leather cloth can be distinguished from PVC sheets which are marketed by them as such by naked eye.
Moreover, all the processes which are required in case of PVC sheets which are marketed by the appellants so as to make these sheets marketable are not carried out in the case of crude PVC sheets which are used by the appellants in their factory for the manufac ture of leather cloth . . " The Appellate Collector further held in the said order that from the technical point of view, crude PVC sheets are different from marketable PVC sheets inasmuch as the tensile strength of crude PVC sheets is much lower than that of marketable PVC sheets.
He further held that: "This is so because marketable PVC sheets are passed through the calender at very high temperature and at a slow speed to that gela tion/curing fusion takes place while in the case of crude PVC sheets, the same are passed through the calender at very fast speed and lower temperature with the result that gela tion fusion in the course of heating and ageing is not formed resulting in lower ten sile strength.
When these crude PVC sheets are coated with textile 387 fabrics, the two layers are passed through the rollers at slow speed and at high temperature and it is only at this stage that the GEL is properly formed and resin particles become swollen by diffusion of plasticizer into them that they touch each other.
As heating progresses, the swollen particles begin to weld together, resulting in the required degree of strength.
" Thereafter, the Classification List was filed in respect of crude PVC films manufactured for use in adhesive tapes on 9th December, 1975 and the said list was approved by the Assistant Collector of Central Excise after making an in quiry in that behalf.
On 15th February, 1977, however, a Show Cause Notice was issued by the Assistant Collector, calling upon the appellant to show cause as to why crude PVC films should not be classified under teriff Item 15A(2) and appropriate duty not recovered under Rule 10 of the Central Excise Rules, as these then stood, read with Rule 173 J of the Central Excise Rules.
There was a corrigendum issued on February 23, 1977 to the said Show Cause Notice dated 15th February, 1977 substituting the words 'Rule 10 ' by the words 'Rule 10A '.
A reply was given by the appellant to the said Show Cause Notice.
In the said reply, the appellant stated as follows: "We have repeatedly pointed out that the issue of "Crude Film" has been decided by the Appel late Collector and also by the Assistant Collector while approving classification.
However, the Superintendent persisted in pressing us for giving information about production figures of 'Crude Film ' possibly with a view to raise demand.
We had requested the Superintendent to let us know the provi sion under which he required us to give the information in regard to a product which was non excisable.
He was not able to clarify this and tried to invoke wrong sections and rules according to us.
The present action of re classification, in order to make the product excisable some how or other, seems to us to be a continuation of the matter which the Super intendent was not able to enforce on us.
There is no change in the market terminology of "PVC Film".
Our product is not known in the market as "PVC Film".
Even technically also a further process is required to be carried out on our product before it is "PVC Film" as is known to the market.
The various decisions of Supreme Court on this point are well known to the Department.
It is also known 388 that the Appellate Collector 's decision is binding on you.
The principles of natural justice cannot be served by serving a show cause notice on us in order to change the Appellate Collector 's decision in some manner or other.
We have an uneasy feeling that an attempt is being made to some how bring the product under excise duty.
" There was an order passed on 16th February, 1978 by the Assistant Collector confirming the Show Cause Notice.
On 10th October, 1979 an appeal was preferred by the appellant against the order of the Assistant Collector dated 16th February, 1978 which was rejected by the Appellate Collector of Central Excise.
On 6th February, 1980 a revision applica tion was preferred, by the appellant to the Joint Secretary, Government of India.
That was transferred to the Tribunal and by the impugned order, the Tribunal has rejected the appeal under challenge.
The Tribunal in the order has set out the contentions and observed that the question for determination was whether crude PVC film fell for classification under Item 15A(2) of the Central Excise Tariff or not.
A submission was made that the Appellate Collector had held that the crude PVC sheets were not marketable and had not acquired the character and status of PVC films as known to the market.
It was contended on behalf of the appellant that only marketable PVC film would fall within the said item.
On the other hand, the Department 's contention was that there was nothing to show that the film/sheet was crude and the test of marketability was not relevant.
According to the Tribunal, the crude PVC films/sheets would fall under the Tariff Item.
The Tribunal was of the view that the tariff entry did not spell out whether it covered only finished film/sheet or whether it covered also crude film/sheet.
The Tribunal came to the conclusion that the tariff item covered all types of films/sheets.
The Tribunal also came to the conclusion that the concept of marketability was not relevant and all sorts of crude films would be covered by the entry.
The Tribunal was of the view that the Appellate Collec tor 's observations were made entirely in different context.
In that view of the matter, the Appellate Collector 's order was confirmed subject to the modification that duty in respect of clearances prior to the issue of the Show Cause Notice was restricted to the period permissible in terms of Rule 10 read with Rule 173 J, that is to say, for 12 months.
In other words, the Tribunal 's view was that if the descrip tion of the 389 goods in question fell into the entry, it was dutiable in the intermediate list and as such the goods had become goods as known to the market and the question of marketability or being capable of being sold in the market was not relevant.
In support of this appeal, on behalf of the appellant, it was contended by Shri Harish Salve that it was only the 'goods as specified in the Schedule ' to the Central Excise that could be subject to the duty.
It appears to us that under the Central Excise Act, as it stood at the relevant time, in order to be goods as specified in the entry the first condition was that as a result of manufacture goods must come into existence.
For articles to be goods these must be known in the market as such or these must be capable of being sold in the market a goods.
Actual sale in the market is not necessary, user in the captive consumption is not determinative but the articles must be capable of being sold in the market or known in the market a goods.
That was necessary.
This has been clearly spelt out by this Court in Union of India vs Delhi Cloth & General Mills, [1963] Supp.
1 SCR 586.
There this Court held that excise duty being leviable on the manufacture of goods and not on their sale, the manufacturer could not be taxed unless manufacturing process resulted in production 'of goods as known in the market ' (empahsis supplied).
In that case, the respondents, who were manufacturers of vegetable products known as Vanas pati, were assessed to excise duty under Item 23 of the First Schedule to the , on what the taxing authorities called the manufacture of 'r efined oil ' from raw oil which according to them fell within the description of "vegetable non essential oils, all sorts, in or in relation to the manufacture of which any process is ordinarily carried on with the aid of power".
The common case made by the respondents in their petition under Article 226 of the Constitution challenging the imposition was that for the purpose of manufacturing Vanaspati they purchased groundnut and til oil from the market and subjected them to different processes before applying hydrogenation to produce Vanaspati and that nothing that they produced at any stage was covered by that item.
Affidavits by experts were filed by both the parties and the High Court found in favour of the respondents and allowed the petitions.
The Union of India appealed.
It was urged on its behalf before this Court that before finally producing Vanaspati the respondents produced at an intermediate stage what was known as 'refined oil ' in the market and although they might not sell it and although Vanaspati, when produced, was liable to excise duty under another item, that could not affect their liability.
It was held that excise duty being leviable on the 390 manufacture of goods and not on their sale, the petitioners in that case no doubt be liable if they produced 'refined oil ', as known in the market, at an intermediate stage.
But the Court found that it was clear that there could be no 'refined oil ' as known in the market without deodorisation according to the specification of the Indian Standards Institute and the affidavits of the experts.
Since, however, the process of deodorisation was admittedly applied in the respondents ' factories only after hydrogenation was com plete, they could not be said to produce 'refined oil ' at any stage.
Nor could the respondents be held to manufacture some kind of 'non essential vegetable oil '.
K.C. Das Gupta, J., who spoke for the Court, at page 595 of the report, observed as follows: "On a consideration of all these materials we have no doubt about the correctness of the respondents ' case that the raw oil purchased by the respondents for the purpose of manufac ture of Vanaspati does not become at any stage "refined oil" as is known to the consumers and the commercial community." After considering the definition of the word 'manufac ture ' and several authorities and Words and Phrases, Perma nent Edition, Vol. 18, from a judgment of the New York Court and also other relevant authorities, this Court held that the definitions made it clear that to become "goods" an article must be something which can ordinarily come to the market to be bought and sold.
(Emphasis supplied).
In that view of the matter this Court agreed with the High Court and dismissed the appeal.
Therefore, the first principle that emerges is that excise was a duty on goods as specified in the Schedule.
In order to be goods an article must be some thing which can ordinarily come to the market and is brought for sale and must be known to the market as such.
Therefore, the marketability in the sense that the goods are known in the market or are capable of being sold and purchased in the market is essential.
This principle was again reiterated by this Court in South Bihar Sugar Mills Ltd., etc.
vs Union of India & Ors.
, ; , where this Court held that the gas generated by the appellant companies in that case was kiln gas and not carbon dioxide as known to the market, i.e., to those who deal in it or who use it.
Therefore, the kiln gas in question is neither carbon dioxide nor com pressed carbon dioxide known as such to the commercial community and could not attract duty under Item 14 H of the First Schedule.
It was held by this Court that the duty being on the manufacture and not on the sale, the mere fact that kiln gas generated by those concerns was not actually 391 sold did not make any difference if what they generated and used in their manufacturing process was carbon dioxide.
Justice Shelat speaking for the Court at page 31 of the report observed: "The Act charges duty on manufacture of goods.
The word "manufacture" implies a change but every change in the raw material is not manu facture.
There must be such a transformation that a new and different article must emerge having a distinctive name, character or use.
The duty is levied on goods.
As the Act does not define goods, the legislature must be taken to have used that word in its ordinary, dictionary meaning.
The dictionary meaning is that to become goods it must be something which can ordinarily come to the market to be bought and sold and is known to the market.
(emphasis supplied).
That it would be such an article which would attract the Act was brought out in Union of India vs Delhi Cloth & General Mills Ltd., [1963] Suppl 1 SCR 586.
" In that view of the matter, the Court came to the conclusion that the gas generated by these concerns was kiln gas and not carbon dioxide as known to the trade, i.e., to those who deal in it or who use it.
It must be capable of being sold in the market and known in the market as such.
Then only it would be dutiable.
This view was reiterated again in Union Carbide India Ltd. vs Union of India, where Pathak, J. as the learned Chief Justice then was, speaking for the Court observed that in order to attract excise duty the article manufactured must be capable of sale to a consumer.
The expression "goods manufactured or produced" must refer to goods which are capable of being sold to the consumer.
This Court observed as follows: "It does not seem to us that in order to attract excise duty the article manufactured must be capable of sale to a consumer.
Entry 84 of List I of Schedule VII to the Constitu tion specifically speaks of "duties of excise on tobacco and other goods manufactured or produced in India . ", and it is now well accepted that excise duty is an indirect tax, in which the burden of the imposition is passed on to the ultimate consumer.
In that context, the expression "goods manufactured or produced" must refer to articles which are capable of being sold to a consumer.
In Union of India vs 392 Delhi Cloth & General Mills, this Court con sidered the meaning of the expression "goods" for the purposes of the and observed that "to become 'goods ' an article must be something which can ordinarily come to the market to be bought and sold", a definition which was reiterated by this Court in South Bihar Sugar Mills Ltd. vs Union of India.
" It is necessary in this connection to reiterate the basic fundamental principles of excise.
The Judicial Commit tee of the Privy Council in Governor General in Council vs Province of Madras, , this Court observed at page 1287 of the report that excise duty was primarily a duty on the production or manufacture of goods produced or manufactured within the country.
This Court again in Re The Bill to Amend section 20 of the , And Sec tion 3 of the ; , at page 822 of the report referring to the aforesaid observations of the Judicial Committee reiterated that taxable event in the case of duties of excise is the manu facture of goods and the duty is not directly on the goods but on the manufacture thereof.
Therefore, the essential ingredient is that there should be manufacture of goods.
The goods being articles which are known to those who are deal ing in the market having their identity as such.
Section 3 of the Act enjoins that there shall be levied and collected in such manner as may be prescribed duties of excise on all excisable goods other than salt which are produced or 'man ufactured ' in India.
"Excisable goods" under section 2(d) of the Act means goods specified in the Schedule to the Central Tariff Act, 1985 as being subject to a duty of excise and includes salt.
Therefore, it is necessary, in a case like this, to find out whether there are goods, that is to say, articles as known in the market as separate distinct identi fiable commodities and whether the tariff duty levied would be as specified in the Schedule.
Simply because a certain article falls within the Schedule it would not be dutiable under excise law if the said article is not "goods" known to the market.
Marketability, therefore, is an essential ingre dient in order to be dutiable under the Schedule to Central Tariff Act, 1985.
It appears from the facts as aforesaid before that the crude PVC films as produced by the appellant in this case were not known in the market and could not be sold in the market and was not capable of being marketable.
The learned Solicitor General submitted before us that the Tri 393 bunal was right in considering that as the article fell within the Entry the marketability was irrelevant and the Tribunal was right in not considering whether the articles in question, namely, crude PVC films used in this case, were marketable or capable of being sold and used in the market.
Mr Harish N. Salve on the other hand submitted that as it was found that the goods were not marketable by the Appellate Collector in the order of 1974 and no evidence was adduced before the Tribunal to the contrary and the Tribunal refused to consider the question of marketability no useful purpose would be served in remanding the matter to the Tribunal.
The appeal should be allowed and no duty should be charged.
As mentioned before, the Appellate Collector has on 14.1.
1974 held that the crude PVC sheets/films which formed the subject matter of the appeal are manufactured by the appellant for the production of leather cloth in the factory are not marketable as PVC sheets and had allowed the appeal because he found that: " . because PVC sheets of the gauges manufactured by the appellants are invariably either embossed or printed or both.
The nature of embossing may be with an engraving roll or with a mirror finished roller or a mat finish.
The manufacture or PVC sheets marketable as such involves the following processing se quences, namely: Polyvinyl chloride resin is formulated with plasticizer, colorants, heat stabilizers, etc.
and the formulation is thoroughly mixed.
When homogeneous, this mix is fed through a two roll mill to give heavy sheet stock, which in turn is fed to the calender, where it is reduced to the desired width, thickness etc.
The temperature at which PVC sheets which are marketed as such are passed through the calender is about 178o C (330 350x) and the speed of the roller is adjusted accordingly.
The speed of the roller and the temperature at which the sheets are passed through the calender are important factors in order to achieve the minimum stand ard of tensile strength of the sheets.
Gela tion, i.e., the change of state from the liquid to the solid condition that occurs during the heating and/or ageing, when the plasticizer has been absorbed by the resin to an extent resulting in a dry but weak and crumbly mass, and thereafter within normal proportions of resin and plasticizer, this state is 394 attained when the resin particles have become so swollen by diffusion of plasticizer into them that they touch each other, is an impor tant process in the case of PVC sheets which are marketed as such.
As heating progresses the swollen particles begin to weld together, resulting in some degree of strength.
After the GEL is formed in such PVC sheets and resins get fused with plastisizer, they are further subjected to the processing of finish ing, embossing/printing.
On the other hand, crude PVC sheets manufactured by the appel lants for production of leather cloth in their factory are passed through the rollers at a temperature of 130o 1400 (280 F) and the speed of the roller is, therefore, faster.
Due to low temperature and faster speed of the rollers fusion is not completed in such crude plasticizers thus resulting in the tensile strength of such crude PVC sheets which is much less than the tensile strength of the PVC sheets which are marketable as such.
The tensile strength of PVC sheets which are marketed as such and the crude PVC sheets which are used by the appellants in their factory for the manufacture of leather cloth are as under: (1) Marketable PVC sheets Thickness Tensile strength Per cm.
in Kgs.
Longitudinal Transverse 0.08 mm 239 185 O. 10 mm 230 201 O. 15 mm 268 2 13 0.20 mm 230 200 (2) Crude PVC sheets Thickness Tensile strength Per cm.
sq. kgs.
Longitudinal Transverse O. 11 mm 127 98 0.22 mm 144 107 The thickness of crude PVC sheets of O. 11 mm ultimately comes to 10 mm when it is coated with textile fabrics and rolled.
Similarly, the thickness of crude PVC sheets of 0.22mm ultimately comes to when it is coated with fabrics and rolled.
395 The idea behind producing crude PVC sheets at low temperature and at high speed of the rollers is that when such crude PVC sheets are coated with textile fabrics and passed through a coating machine, high temperature is required to be maintained and the speed at which the rollers move has also got to be slow so that these partially fused crude PVC sheets are eventually fully fused at the time of coating these sheets with textile substrates.
No finishing, embossing or printing is done in case of such crude PVC sheets.
I, therefore, hold that the crude PVC sheets manufactured by the appellants are used by them in the manu facture of leather cloth in their factory are not marketable as PVC sheets and as such the same are not liable to duty under Item 15A(2) of the said Schedule.
" In view of the Appellate Collector 's order dated 14.1.1974 it was the duty of the revenue to adduce evidence or proof that the articles in question were goods.
No evi dence or proof was produced.
The Tribunal went wrong in not applying the proper test.
The test of marketability or capable of being marketed was not applied by the Tribunal.
In that view of the matter that there being no contrary evidence found by the Tribunal in this case subsequent to the finding by the Appellate Tribunal, we are of the opinion that the appeal should be allowed and no excise duty should be charged under section 15A(2) of the Central Excise Tariff on the Crude PVC sheets.
In the facts and circumstances of the case, there will be no order as to costs.
T.N.A. Appeal allowed.
| IN-Abs | The appellant is a manufacturer of Crude PVC films for the purpose of use in final products such as leather cloth and laminate jute mattings and PVC tapes both insulation and adhesive.
The films manufactured by the appellant were subject matter of adjudication by the Excise authorities during the period commencing from 1st March, 1970 to 29th May, 1971.
The Appellate Collector of Central Excise by an order dated 14.1.1974 held that the appellant had produced sufficient evidence to prove that the said Crude PVC films were not marketable and were therefore not liable to excise duty.
On 20.11.1975 the appellant filed a classification list in respect of Crude PVC films used for lamination with jute and for tapes claiming that the said PVC films were non excisable on the ground that the same were non marketa ble intermediate products used exclusively for captive consumption.
On 9.12.1975 the classification list was ap proved by the Assistant Collector, Central Excise.
On 15.2.1977, however, the Assistant Collector issued a show 383 cause notice calling upon the appellant to show cause as to why the aforesaid films should not be re classified as excisable under Item No. 15A(2) of the Central Excise Tariff Schedule and appropriate duty not recovered under Rule 10 of the Central Excise Rules, as these then stood, read with Rule 173 J.
By a corrigendum, dated 23.2.1977, to the said show cause notice Rule 10 A was substituted in place of Rule 10.
The appellant contested the notice but the Assistant Collector vide his order dated 16th February, 1978 confirmed the said show cause notice by holding that the said PVC films were classifiable under Item No. 15A(2) and directed the appellant to pay duty at the appropriate rate on past clearances under Rule 10 A read with Rule 173 J.
The appeal filed against the aforesaid order was reject ed by the Appellate Collector of Central Excise on 10th October, 1979.
A revision was preferred before Customs, Excise and Gold (Control) Appellate Tribunal.
The Tribunal confirmed the order of the Appellate Collector and held that the goods in question fell under Tariff Item No. 15A(2) and were dutiable in the intermediate list and the question of marketability or being capable of being sold in the market was not relevant, but modified the order to the extent that duty in respect of clearances prior to the issue of show cause notice was restricted to the period permissible in terms of Rule 10 read with Rule 173 J viz. 12 months.
In the statutory appeal to this Court under Section 35 L, of the the question for consideration was whether the Crude PVC film was dutiable under Item No. 15A(2).
Allowing the appeal, HELD: 1.
In view of the Appellate Collector 's order holding that the Crude PVC films were not marketable goods and there being no contrary evidence found by the Tribunal subsequent to the finding by the Appellate Collector no excise duty should be charged under Item No. 15A(2) of the Central Excise Tariff on the Crude PVC Sheets.
The Tribunal went wrong in not applying the proper test.
The test of marketability or capable of being marketed was not applied by the Tribunal.
[395D E] 2.
Under the Central Excise Act, as it stood at the relevant time, in order to be goods as specified in the entry the first condition was that as a result of manufac ture goods must come into existence.
For articles to be goods these must be known in the market as such or these 384 must be capable of being sold in the market as goods.
Actual sale in the market is not necessary, user in the captive consumption is not determinative but articles must be capa ble of being sold in the market or known in the market as goods.
Taxable event in the case of duties of excise is the manufacture of goods and the duty is not directly on the goods but on the manufacture thereof.
The manufacturer could not be taxed unless manufacturing process resulted in pro duction 'of goods as known in the market '.
The expression "goods manufactured or produced" must refer to goods which are capable of being sold to the consumer.
[389B C; 391F] Union of India vs Delhi Cloth and General Mills, [1963] Suppl.
1 S.C.R. 586; South Bihar Sugar Mills Ltd. etc.
vs Union of India & Ors, ; ; Union Carbide India Ltd. vs Union of India, ; Governor General in Council vs Province of Madras, [1945] 7 F.C.R. 179; In Re. the Bill to Amend section 20 of the and Section 3 of the , ; applied.
Simply because a certain article falls within the Schedule it would not be dutiable under excise law if the said article is not 'goods ' known to the market.
Marketabil ity, therefore, is an essential ingredient in order to be dutiable under the Schedule to the Central Tariff Act, 1985.
[392F G] 3.1.
In the instant case, the Crude PVC films as pro duced by the appellant were not known in the market and could not be sold in the market and were therefore not capable of being marketable.
[392G H]
|
ivil Appeal No. 1347 of 1981 From the judgment and Order dated 24.1.
1981 of the Madras High Court in C.R.P. No. 44 of 1981.
B.N. Nayar, T.V.S.N. Chaff, K. Srinivasan, C.H. Badri Nath, R.K. Gupta and Ms. Sudha Srivastava for the Appel lants.
U.R. Lalit and Ambrish Kumar for the Respondent.
The Judgment of the Court was delivered by KANIA, J.
This is an appeal filed by Special Leave under Article 136 of the Constitution by the appellants who are the tenants against the respondent landlady.
The appellants are a partnership firm and are the ten ants of premises situate at No. 6 Kasi Chetty Street, G.T. Madras.
They carry on business there.
The respondent filed an eviction petition being H.R.C. No. 641 of 1975 in the Court of Small Causes, Madras against the appellants and one other partnership firm, carrying on business in the name and style of M/s. Adeshwar Glass Mart on the ground that the appellants had unlawfully and without the consent of the respondent sublet the said shop let out to the said M/s. Adeshwar Glass Mart and were liable to be evicted for unlaw ful subletting under the provision of Section 10(2)(ii)(a) of the Tamil Nadu Buildings (Lease and 419 Rent Control) Act, 1960 (hereinafter referred to as "the said Rent Act").
M/s. Adeshwar Glass Mart were also joined by the respondent herein as respondents in the eviction petition on the ground that they were unlawful sub tenants.
The Trial Court held this ground established and passed a decree for eviction as sought by the respondent.
The appel lants preferred an appeal against this decision to the Appellate Authority under Section 23 of the said Rent Act, being the Court of Small Causes at Madras.
The said appeal was numbered as H.R.A. 156 of 1979.
The Appellate Authority dismissed the said appeal upholding the finding of unlawful subletting by the appellants.
The appellants then preferred a Civil Revision Petition being C.R.P. No. 44 of 1981 in the High Court of Judicature at Madras against the aforesaid decision.
This Revision Petition was dismissed by the then learned Chief Justice of the Madras High Court.
It is against the decision the present appeal is directed.
Mr. Nayar, learned counsel for the appellants has urged before us that the impugned judgment must be set aside as the eviction petition was filed against the appellants firm and one other partnership firm, M/s. Adeshwar Glass Mart without joining any of the partners of the said firms as respondents or serving them as partners and hence, the eviction petition was not maintainable at all.
He placed strong reliances on the decision of this Court in Chhotelal Pyarelal, the partnership firm and others vs Shikharchand, In that case an eviction petition was filed by the respondent landlord against the appellant a partnership firm under clause 13(3)(iv) and (vii) of the Central Provinces and Berar Letting of Houses and Rent Control Order, 1949.
The appellant raised a preliminary objection that the application against the partnership firm was not maintainable without joining its partners as re spondents.
It was held by this Court that it is only by virtue of the provisions of order 30 of the Code of Civil Procedure, 1908, that a firm can sue and be sued in its own name without the partners being impleaded.
It was pointed out by Mr. Nayar that the Code of Civil Procedure was not applicable to the proceedings under the said Rent Act either and hence, the ratio laid down in the aforesaid decision was directly applicable to the case before us.
In our view, it is not open to Mr. Nayar to raise this contention at this stage at all.
This contention is not one which would have been fatal to the eviction petition.
Had this contention been raised in the Trial Court or even in the first Appel late Court, it would have been open to the respondent to amend the eviction petition and join the partners as re spondents.
In the aforesaid decision in Chhotelal Pyarelal 's case, relied upon by Mr. Nayar the objection to the main tainability of the 420 petition was raised at the earliest stage and was wrongly negatived by the Trial Court.
In fact, this Court observed as follows: "But we agree with the Division Bench of the High Court that this cannot by itself result in the dismissal of the application.
It would be merely a case of misdescription of the respondents to the application and this misde scription can be corrected at any stage of the proceedings.
There can be no doubt that the partners of the firm are before the Court though in a wrong name." In the case before us, no such objection has been raised at all till the stage of Special Leave and it is surely not open to the appellants to raise such an objection at a very late stage and thereby delay matters for a number of years.
This contention must, therefore, be negatived.
It was next submitted by Mr. Nayar that there was no evidence in the case to come to the conclusion that the appellants had sublet the shop to M/s. Adeshwar Glass Mart.
In our view, there is no substance in this contention.
There is evidence to show that M/s. Adeshwar Glass Mart was carry ing on business at the said premises and that firm was carried on business in the said premises even for some time during which the appellants firm had ceased to carry on the business there.
Moreover, although a notice was given by the respondent to the appellants and M/s. Adeshwar Glass Mart to produce their income tax returns, assessment orders as well as account books and ledgers for the relevant period, these were not produced.
It was surely open to the Trial Court from these circumstances to come to the conclusion that had the account books and ledgers been produced, they would have shown that rent was received by the appellants from M/s. Adeshwar Glass Mart which would justify the finding of subletting.
In these circumstances, this contention of Mr. Nayar must fail.
Although Mr. Nayar wanted us to undertake detailed scrutiny of the evidence and to reappreciate the same, we fail to see how we are called upon to do so in an appeal under Article 136 of the Constitution.
In the result, the appeal fails and is dismissed with costs.
G.N. Appeal dis missed.
| IN-Abs | The appellants are tenants of the premises belonging to the Respondent, and have been carrying on business as a partnership firm in the said premises.
The respondent filed an eviction petition against the appellant firm and another firm, on the ground that the appellant had unlawfully and without the consent of the Respondent sub let the premises to the other firm.
The Trial Court passed a decree for eviction, against which the appellants preferred an appeal to the Appellate Authority.
The Appellate Authority dis missed the appeal and upheld the finding of unlawful sub letting by the appellants.
The appellants preferred a Civil Revision petition before the High Court, which was also dismissed.
The present appeal by special leave is against the High Court 's decision.
On behalf of the appellants, it was contended that since the eviction petition had been filed without joining the partners of the other firm (the sub tenant) the eviction petition was not maintainable at all.
Dismissing the appeal, HELD: 1.
The objection that the eviction petition was filed against the appellants firm and the other firm, was not maintainable as it had been filed without joining any of the partners of the said other firm as respondents or serv ing them as partners, had not been raised at all till the stage of special leave and it is not open to the appellants to raise such an objection at a very late stage and thereby delay matters for a number of years.
[419F; 420C] 418 Chhotelal Pyarelal, the partnership firm and others vs Shikharchand, , distinguished.
There is evidence to show that the other firm was carrying on business at the said premises and that the said firm carried on business in the said premises even for some time during which the appellants firm had ceased to carry on the business there.
Moreover, although a notice was given by the respondent to the appellants and the other firm to produce their income tax returns, assessment orders as well as account books and ledgers for the relevant period, these were not produced.
It was open to the Trial Court, from these circumstances, to come to the conclusion that had the account books and ledgers been produced, they would have shown that rent was received by the appellants from the other firm which would justify the finding of subletting.
[420D F]
|
Civil Appeal No. 532(NT) of 1989.
From the Judgment and Order dated 4.2.
1987 of the Allahabad High Court in S.T.R. No. 298 of 1986.
AND Civil Appeal No. 533 (NT) of 1989.
From the Judgment and Order dated 26.3.
1987 of the Allahabad High Court in Sales Tax Revision No. 454 of 1986.
S.C. Manchanda, R.S. Rana and Ashok K. Srivastava for the Appellant.
R.C. Mishra and Dr. Meera Aggarwal for the Respondent in C.A. No. 532 of 1989.
Raja Ram Aggarwal, Vijay Hansaria and Sunil K. Jain for the Respondent in C.A. No. 533 of 1989.
The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J.
Special leave granted and these appeals are disposed of by the judgment herein.
These appeals are from the judgments and orders of the High Court of Allahabad dated 4th February, 1987 and March 26, 1987 respectively.
These involve a common question.
The facts of the appeal arising out of Special Leave Petition No. 1293 of 1988 and the facts of the appeal arising out of Special Leave Petition No. 1296 of 1988 are similar.
In order to appreciate the contentions raised herein, it would be appropriate to deal with the facts of the appeal arising out of Special Leave Petition No. 1293 of 1988.
The assessee is engaged in repairing and refilling of cotton bowl on the shafts which are used as part of calendering machine in the textile industry.
The cotton bowl is a shaft made of steel on which a thick layer of cotton is pasted and 425 affixed.
It is used in the textile finishing industries as an essential part of calendering machine.
In the course of its use the cotton pasted on the shaft loses its thickness and shape and after some time it requires repairing and refilling.
The assessee in this case moved an application under section 35 of the U.P. Sales Tax Act, 1948 (hereinaf ter called 'the Act ').
It may be mentioned that Section 35 was added by the U.P. Sales Tax (Amendment and Validation) Act No. 23 of 1976.
Section 35 of the said Act has been amended by Section 31 of the U.P. Act 12 of 1979.
Section 35 provides for determination of disputed ques tions by moving an application before the Commissioner of Sales Tax.
The relevant part of the said section as it stood at the relevant time was as follows: "35.
Determination of disputed questions (1) If any question arises, otherwise than in a proceeding pending before a court or before an Assessing Authority under Section 7 or Section 21, whether, for the purposes of this Act, (a) any person or association of persons, society, club, firm company, corporation, undertaking or Government Department is a dealer; or (b) any particular thing done to any goods amounts to or results in the manufacture of goods within the meaning of that term; or (c) any transaction is a sale or purchase and, if so, the sale or purchase price, as the case may be, therefore; or (d) any particular dealer is required to obtain, or to apply for the renewal of registration ; or (e) any tax is payable in respect of any particular sale or purchase and, if so, the rate thereof, the person or the dealer concerned may, after depositing the fee specified in Section 32, submit an application to the Commissioner of Sales Tax, along with such documents as may be prescribed.
426 (2) The Commissioner of Sales Tax shall, after giving the applicant an opportunity of being heard, decide, as he deems fit, the question so arising: Provided that, before giving such decision, the Commissioner of Sales Tax may, in his discretion, ask an officer subordinate to him to make such inquiries as he considers necessary for the decision of the question.
(3) No decision of the Commissioner of Sales Tax under this section shall affect the validity or operation of any order passed earlier by any Assessing Authority, Appellate Author ity, Revising Authority or the Tribunal.
(4) No question which arises from an order already passed, in the case of the applicant, by any authority under this Act or the Tribunal, shall be entertained for determination under this section.
(5) A decision given by the Commissioner of Sales Tax under this section shall, subject to an appeal to the Tribunal, be final.
(6) XXX XXX XXX.
" The question that arises in these appeals before us is the true interpretation of sub section (5) of section 35 of the Act, namely, whether a revision shall lie to the High Court from the decision of the Commissioner under section 35 of the Act which has been the subjectmatter of an appeal before the Tribunal.
The respondent dealer moved an applica tion under section 35 of the Act and the decision was ren dered in terms of the said section.
The decision, inter alia, included the questions whether the job of repairing and refilling of cotton bowl and the process involved there in amounted to "manufacture" or "sale" within the meaning of the Act.
The Commissioner of Sales Tax by his order dated 10th June, 1985 decided both the questions against the assessee.
Aggrieved thereby the assessee had preferred an appeal before the Sales Tax Tribunal.
The Tribunal by its order dated 14th November, 1985 allowed the appeal in part.
The Tribunal held that the process of repairing and refill ing of cotton bowls of the customers did not amount to "manufacture" as defined under section 2(e i) of the Act.
It further held that such an activity of the assessee amounted to "sale" as defined under section 2(h) of the Act as amend ed by the U.P. Sales Tax Amendment and Validation Act, 1985.It is against this decision of the Sales Tax Tribunal that the Commissioner of Sales Tax had preferred revision to the High Court.
The High Court went into the question whether further revision lay to the High Court.
The High Court, noticed of the terms of section 35 noted hereinbefore which provided by sub section 5 of section 35 that a decision given by the Commissioner of Sales Tax under that section, subject to an appeal to the Tribunal, shah be final.
(Emphasis supplied) The High Court examined the question whether further revi sion lay and answered it in the negative.
Therefore, we were concerned in these appeals with the question whether at the relevant time in terms of section 35 of the Act any further revision lay to the High Court from the decision of the Commissioner which has been the subject matter of appeal before the Tribunal.
The High Court came to the conclusion that having regard to the scheme of the provisions and the amendment made by the U.P. Act 12 of 1979 and in view of the decision of the Division Bench of the High Court in Indo Lube Refineries vs Sales Tax Officer, Sector I, Gorakhpur, [1987] 66 STC 145 no further revision lay to the High Court from the order of the Tribunal.
In that view of the matter, the High Court dismissed the revision.
Aggrieved thereby, the Commissioner has come up in appeal before this Court in these two appeals.
Shri Manchanda for the appellants and Shri Raja Ram Agarwal for the respondents both submitted that the judgment under appeal is not correct though for different reasons.
It is necessary to refer to the scheme of the Act and the amendments from time to time effected therein.
Broadly speaking, the assessment is made by the Sales Tax Officer in terms of section 3 and other allied sections.
Section 9 of the Act deals with appeals and provides that any dealer or other person aggrieved by the order made by the Assessing Authority other than an order mentioned in section 10 A, may, within 30 days from the date of the service of the copy of the order or appeal to such authority, as may be pre scribed, request the appellate authority in writing for summary disposal of his appeal.
The other consequential provisions of law need not at the present moment be examined in detail.
Section 10 provides for Sales Tax Tribunal.
The section was substituted at first by Act 12 of 1979 and thereafter by Act 22 of 1984.
After the substitution by the Act 12 of 1979 the Act has provided that there shall be a Sales Tax Tribunal consisting of a President and such other members as the State Government may from time to time deem it necessary to appoint from amongst persons who have been, or who are qualified to be judges of the High Court and persons who hold or have held a post not below the rank of Deputy Commissioner of Sales Tax provided that when the 428 Tribunal consisted of one or more persons who have been judges of a High Court then he or one of them should be appointed the President.
Sub section (5) of Section 10 authorises the Tribunal, as the case may be, to confirm, cancel or vary such order.
Sub section (2) of Section 10 stipulates that any person aggrieved by an order passed by an appellate authority under section 9 or by the revising authority under section 10 B or by a decision given by the Commissioner of Sales Tax under section 35 may, within six months from the date of service of the copy of such order or decision on him, prefer an appeal to the Tribunal.
Sub section 10(a) of Section 10 provides that an appeal against the order of the Appellate Authority under section 9 shall be heard and disposed of, inter alia, (i) by a bench of one member, whether such order is passed by an Assistant Commis sioner (Judicial), the amount of the tax, fee or penalty in dispute does not exceed five thousand rupees; and (ii) by a bench of two members, in any other case.
An appeal against the order passed under section 10 B should be heard and disposed of by a bench of two members.
An appeal against an order passed under section 35 shall be heard and disposed of by a bench of three members.
The President has the power to direct an appeal to be heard and decided by a larger bench and transfer an appeal from one bench to another.
There was a subsequent amendment by section 10 of the U.P. Act 22 of 1984.
Section 10 as it stands after amendment by Act 22 of 1984 is as follows: "10.
Sales Tax Tribunal (1) There shall be a Sales Tax Tribunal consisting of such members, including a President, as the State Government may, from time to time, deem it necessary to appoint from amongst (a) the persons who are qualified to be Judges of the High Court; and (b) the persons belonging to the Uttar Pradesh Sales Tax Service who hold or have held a post not below the rank of Deputy Commissioner of Sales Tax: Provided that: (i) where the Tribunal consists of one or more persons who is or are members of the Uttar Pradesh Higher Judicial Service, then he or the senior most amongst them shall be appointed President; 429 (ii) no person shall be appointed from amongst advo cates unless he has paid income tax on income from such profession (exclusive of all other incomes) in each of the five consecutive years preceding such appointment.
(1 A) The State Government may prescribe such other qualifi cations or conditions for the appointment of the President and other members of the Tribunal as it may deem fit.
(1 B) The provisions of Rule 56 of the Uttar Pradesh Funda mental Rules shall continue to apply to every member of the Tribunal including the President, whether appointed before or after the commencement of the Uttar Pradesh Sales Tax (Amendment and Validation) Act, 1983, as they apply to any other Government servant: Provided that a member of the Tribunal including the President, appointed before the commence of the Uttar Pradesh Sales Tax (Amendment and Validation) Act, 1983, may continue as such till he attains the age of sixty years.
(2) Any person aggrieved by an order passed by an Appellate Authority under Section 9, other than an order referred to in sub section (4 A) of that said section, or by the Revis ing Authority under section 10 B or by the Commissioner of Sales Tax under sub section (3) of section 4 A or by a decision given by the Commissioner of Sales Tax under Sec tion 35 may, within six months from the date of service of the copy of such order or decision on him, prefer an appeal to the Tribunal: Provided that where the disputed amount of tax, fee or penalty does not exceed one thousand rupees, the appellant may, at his option, request the Tribunal in writ ing for summary disposal of his appeal, whereupon the Tribu nal may decide the appeal accordingly.
Explanation For the purpose of this sub section, the expression 'any person ' in relation to any order passed by an authority other than the Commissioner of Sales Tax, 430 includes the Commissioner of Sales Tax.
(2 A) The manner and procedure of summary disposal of appeal shall be such as may be prescribed.
(3) Section 5 of the , shall apply to appeals or other applications under this section.
(4) The Tribunal may at any stage, after giving the appel lant a reasonable opportunity of being heard, dismiss the appeal.
(5) The Tribunal may, if it has not already dismissed the appeal under sub section (4), after calling for and examin ing the relevant records, and after giving the parties a reasonable opportunity of being heard or as the case may be, after following the procedure prescribed under subsection (2 A) (a) confirm, cancel or vary such order, or (b) set aside the order and direct the assessing or appellate or revisional authority or the Commissioner of Sales Tax, as the case may be, to pass a fresh order after such further inquiry, if any, as may be specified, or (c) order such amount of tax, fee or penalty or other money as may have been realised in excess of the due amount to be refunded according to the provisions of this Act.
Explanation The power to vary an order referred to in clause (a) includes the power to vary the order by reducing or enhancing the amount of assessment or penalty.
(6) Where an appeal under this section has been filed, the Tribunal may, on the application of the appellant moved within thirty days from the filing of such appeal, after giving the parties a reasonable opportunity of being heard, stay the operation of the order appealed against or the recovery of the disputed amount of any tax, fee or penalty payable,or refund of the amount due, or proceedings for re assessment, under the order appealed against till the dis posal of the appeal: 431 Provided that: (i) no application for stay of recovery of any disput ed amount of tax, fee or penalty shall be entertained unless the applicant has furnished satisfactory proof of the pay ment of not less than one third of such disputed amount in addition to the amount required to be deposited under sub section (1) of Section 9; (ii) the Tribunal may, or special and adequate reasons to be recorded in writing, waive or relax the requirement of clause (i) regarding payment of one third of such disputed amount.
(8) No order passed under this section for the stay of recovery of tax, fee or penalty shall remain in force for more than thirty days unless the appellant furnishes ade quate security to the satisfaction of assessing authority concerned for payment of the outstanding amount.
(9) The members of the Tribunal shall sit in such benches of one, two or more members as may be constituted from time to time, and do such work of the Tribunal as may, subject to sub section (1) and the rules, be allotted to them by order, or in accordance with the directions of the President of the Tribunal.
(10)(a) An appeal against the order of appellate authority under section 9 shall be heard and disposed of (i) by a bench of two members, where such order is passed by a Deputy Commissioner (Appeals) or the amount of tax, fee or penalty in dispute exceeds ten thousand rupees; (ii) by a single member in any other case.
(b) An appeal against an order passed under Section 10 B shall be heard and disposed of by a bench of two members.
(c) An appeal against an order passed under sub section (3) of Section 4 A or a decision given under Section 35, which shall be filed before the President shall be heard and 432 disposed of by a bench of three members.
(d) The President may, if he so thinks fit (i) direct an appeal to be heard and decided by a larger bench; (ii) transfer an appeal from one bench to another bench.
(11) The place of sitting and procedure of, and the manner of presenting appeals and other documents to the Tribunal shall, subject to the rules, be such as the Tribunal may deem fit to adopt.
(12) The decision of case heard by a bench shall be in accordance with the opinion of the majority.
Where the members are equally divided the President of the Tribunal may (a) if he was not a member of such bench, give his own opinion or refer the case for the opinion of another member, whereupon the case shall be decided in accordance with such opinions, or (b) from a larger bench.
" The section has been set out in extend in order to appreciate the contentions raised.
As will be apparent from the aforesaid sub section 10(c) that an appeal against an order passed or a decision given under section 35 shall be filed before the President and shall be heard and disposed of by a bench of three members.
So far as revision is concerned, this was the subject matter of section 11 of the Act.
The Sales Tax Act of 1948 under went an amendment in 1984 so far as revision is concerned and as it stands today and so far as it is material for the present purpose, is as follows: "11.
Revision by High Court in special cases (1) Any person aggrieved by an order made under subsection (4) or sub section (5) of section 10, other than an order under sub section (2) of that section summarily dis 433 posing of the appeal, or by an order passed under Section 22 by the Tribunal may, within ninety days from the date of service of such order, apply to the High Court for revision of such order on the ground that the case involves any question of law: Provided that, where such order was served on the person concerned at any time before the date of commencement of this section, as substituted by the Uttar Pradesh Taxa tion Laws (Amendment and Validation) Act, 1978 (hereinafter in this section referred to as the said date), and the period of one hundred and twenty days for making the appli cation as referred to in this sub section, as it existed before the said date, had not expired on the said date the person aggrieved may apply for revision within sixty days from the said date.
" The other sub sections are not relevant for the present purpose.
Section 10 A deals with orders against which no appeal or revision lies and Section 10 B stands for revision by the Commissioner of Sales Tax.
Section 11, as mentioned herein before, stands for revision by the High Court and has been amended from time to time.
In the aforesaid background the question posed in these appeals will have to be examined in the light of the deci sion of the High Court.
The High Court in its judgment under appeal after analysing the provisions of Section 35 observed that the Commissioner entered into the determination of the disputed questions.
Sub clause (2) of Section 35 of the Act, according to the High Court, enjoins on the Commissioner to decide the questions referred to him as he deems fit after giving the applicant an opportunity of being heard.
Under sub clause (5) of Section 35 it has been stated that the decision given by the Commissioner of Sales Tax shall sub ject to an appeal to the Tribunal, be final.
The High Court while examining the section noticed that when an appeal against the order passed under Section 35 of the Act is before the Tribunal, the appeal is to be heard and disposed of by a bench of three members, although in regard to other appeals before the Tribunal these can be disposed of even by a single member or by a bench consisting of two members.
The High Court noted that under subclause (5) of section 35 of the Act prior to its amendment brought out by U.P. Act No. 12 of 1979, an appeal used to lie to the High Court against the order of the Commissioner of the Sales Tax.
By the 434 aforesaid amendment brought out by U.P. Act No. 12 of 1979 under clause (5) of section 35 the words "High Court" have been deleted and substituted by the word "Tribunal".
The learned Judge of the High Court observed that an appeal before the Tribunal was specially treated by the legislature and it was enjoined that it should be disposed of by a bench of not less than three members.
The learned Judge noted that the Division Bench of the High Court in the case of Indo Lube Refineries vs Sales Tax Officer, Sector l, Gorakhpur, [1987] 66 STC 145 had taken the view that an order passed by the Commissioner under Section 35 of the Act was an adminis trative order and in so doing he did not act as a Tribunal.
In this connection reference may be made to the Division Bench decision of the High Court of Allahabad in Indo Lube Refineries (supra).
There the petitioner filed a writ peti tion contending that as the order of the Commissioner of Sales Tax had become final under sub section (5) of section 35 of the U.P. Sales Tax Act, 1948, it was binding on the Revenue as well as the petitioner and it was open to the Sales Tax Officer who was inferior in hierarchy to ignore the order of the Commissioner in passing the assessment order.
Dismissing the petition, it was held by the High Court that the Sales Tax Act had made a clear distinction between judicial proceedings which had to be conducted and concluded in accordance with sections 7, 9, 10, 10 B, 21 and 35 and the High Court noted that the proceedings under sections 7 to 10 B were of different character than the one contemplated under section 35, and it excluded a proceeding pending before a court or before an assessing authority under section 7 or section 21.
It was a type of miscellane ous jurisdiction, it was held, to be exercised only in given circumstances or situations.
In respect of proceedings under section 7, which will take within itself an appeal and revision, the legislature had not made the Commissioner a final arbiter.
The Sales Tax Officers or the assessing authority while determining the turnover with a view to assess tax liability acts as a tribunal.
Likewise, the appellant authority under section 9 and the Tribunal under section 10 of the Act are tribunals.
The Commissioner did not act as a tribunal while dealing with an application under section 35.
The nature of his jurisdiction is adminis trative according to the High Court.
The legislature, ac cording to the High Court, has used the language "otherwise than in a proceeding pending before a court or before an assessing authority under section 7 or 21" deliberately with a view to maintain and preserve the sanctity of the judicial proceedings under the Act.
The word "final" used in sub section (5) of section 35 is only with regard to the pro ceedings contemplated by that section and the order of the Commissioner 435 would be final.
But this will not bar the other authorities under the Act from deciding the controversy before it on its own by looking to the evidence and considering the question of law which comes before it.
Therefore, the High Court rejected the submission that the order of the Commissioner of Sales Tax is binding in the assessment proceedings and those proceedings have to be decided in accordance with the same.
It is difficult to accept the position that under sec tion 35 which empowers the Commissioner to determine disput ed questions and the Commissioner under sub section (2) after giving the parties opportunity of being heard, decides a question, his order can be called to be an administrative order.
In our opinion, the very language of the section which enjoins a decision by the Commissioner envisages that the decision is quasi judicial or judicial and cannot be characterised as administrative.
Whether that decision will be binding on other party and what will be the effect of the decision of the Commissioner of Sales Tax in pending assess ment proceedings is another matter and we are not concerned in these appeals with that question.
We are concerned with the question whether on the language of the section a revi sion is entertainable from the decision of the Commissioner which has been subjected to an appeal to the Tribunal.
In our opinion, in view of the language used specifically in the absence of a provision that such a revision will be maintainable, such revision will not be.
Sub section (5) of section 35 after the amendment states that the decision of the Commissioner of Sales Tax under this section shall, subject to an appeal to the Tribunal, be final.
In view of the language of that section, in our opinion, it cannot contemplated a further revision to the High Court against a decision of the Tribunal.
In Kydd vs Watch Committee of City of Liverpool, , 331 32, Lord Lorebum, L.C., construing the provisions of section 11 of the Police Act, 1890 of England which provided an appeal to quarter sessions as to the amount of a constable 's pension, and also stipu lated that the court shall make an order which shall be just and final, observed: "Where it says, speaking of such an order, that it is to be final, I think it means there is to be an end of the busi ness at quarter sessions . . " The Judicial Committee in Maung Ba Thaw vs Ma Pin, [1933 34] 61 LR Indian Appeals 158 while dealing with the Provincial Insolvency 436 Act observed that when a fight of appeal was given to any of the ordinary courts of the country, the procedure, orders and decrees of that court would be governed by the ordinary rules of the Civil Procedure Code and therefore an appeal to Privy Council was maintainable by the decision of the High Court.
Here in the instant case the right of appeal has been given under the Act not to any ordinary court of the country under the Code of Civil Procedure but to the courts enumer ated under the Sales Tax Act and the revision is contemplat ed under the provisions of the Sales Tax Act. 'Final ' in the section means that it is final and under the Act subject to the limited procedure contemplated under the Act.
The inten tion of the legislature, in our opinion, in the amended scheme of the Act is clear and manifest and meaningful and the scheme of the Act is to regulate the determination of the question as to the assessability and liability and questions in connection thereto.
The observations of Lord Lorebum, L.C. were referred to in South Asia Industries Pvt. Ltd. vs S.B. Sarup Singh, , where this Court observed at page 766 of the report that the expression "final" prima facie meant that an order passed on appeal under the Act was conclusive and no further appeal lay.
A right to revision under the Act is a right given by the Act.
In this connection, observations in M/s. Jetha Bai and Sons, Jew and others vs M/s. Sunderdas Rathenai and others, may be relied on.
We have noted that section 11 of the Act after the amendment stipulated that any person being aggrieved by an order made under sub section (4) or sub section (5) of Section 10, other than an order under sub section (2) of that section summarily disposing of the appeal, or by an order passed under Section 22 by the Tribunal, may apply for revision.
Where an appeal is not disposed of summarily but by a decision, as in this case, and where the appeal is contemplated in such a situation, to be heard by a bench of three Judges, in our opinion, if any further revision would have laid from the decision of the Tribunal then such deci sion of the Commissioner would not have been made final by sub section (5) of Section 35.
It may be mentioned that the Tribunal after exhaustively considering the contentions of the case allowed the appeal in part and the order of the Commissioner of Sales Tax was modified by holding that the process of repairing and refilling of the cotton bowls of the customers did not amount to "manufacture" as defined in Section 2(e 1) of the Act, as amended by the U.P. Sales Tax (Amendment and Validation) Act, 1985 with effect from 2nd February, 1985.
In the scheme of the Act, in our opinion, it was enjoined that such an appeal is to be heard by a bench of three judges.
437 Where it was provided that the decision of the Commissioner would be final subject to an appeal to the Tribunal, in our opinion, it would be incorrect to contemplate that in such a situation a further revision under Section 17 lay to the High Court.
Revision to the High Court in special cases under Section 11 is contemplated on the ground that the case involved a question of law.
It may be mentioned that the High Court had mentioned that under sub clause (5) of sec tion 35 of the Act prior to its amendment that an appeal used to lie to the High Court against an order of the Com missioner of Sales Tax.
By the aforesaid amendment brought forward by the U.P. Act 12 of 1979 under clause (5) of Section 35 the words "High Court" have been deleted and substituted by the word "Tribunal".
It appears that the High Court was right, therefore, in holding that an appeal to the Tribunal against an order of the Commissioner lies.
So far as the appeal before the Tribunal against the order passed under section 35 is concerned, special treatment has been provided for by the legislature.
The Tribunal has come in place of the High Court in hearing the appeal.
In such a situation to contemplate when the language of the section envisages that the order of the Commissioner would be final, subject to an appeal to the Tribunal that a further revision lay to the High Court would be unwarranted.
As mentioned hereinbefore, we have to find out the intention of the Legislature in such a situation.
The intention of the Legis lature is a slippery phrase as observed in Aron Salomon vs A. Salomon and Company Ltd., ; , 38 see also observations in Lord Howard De Walden vs Inland Revenue Commissioners, [1948] All England Reports page 825.
In such cases it is better to find out the intention of the legisla ture from the words used by the natural meaning of the words and spirit and reason of the law.
See Cross on Statutory Interpretation, Second Edition, page 21.
Having regard to the scheme manifested from the amend ment, that is to say, to make the Commissioner 's decision final, subject to an appeal to the Tribunal where the Tribu nal is enjoined to hear such an appeal by a bench of three members and where revision is provided only in special cases, in our opinion, it would be improper to interpret the spirit and reason of that law in such a way as to enjoin that a further revision lay to the High Court under section 11 of the Act.
In our opinion, therefore, the High Court was right that no further revision in such a situation lies to the High Court.
This, however, does not eliminate the cor rection by the High Court.
In an appropriate case by exer cise of a writ of certiora under Article 226 of the Consti tution it exercises superintendence over all courts and tribunals throughout the 438 territory.
See in this connection Re Gilmore 's Application, [1957] 1 All England Reports 796.
We are not concerned with that situation in these appeals.
In that view of the matter it appears to us that the High Court is right in so far as it held that no revision lay to the High Court.
These appeals, therefore, fail and are dismissed.
Par ties will pay and bear their own costs.
N.V.K. Appeals dismissed.
| IN-Abs | The assessee respondent in the appeals was engaged in the repairing and refilling of cotton bowls on the shafts which are used as part of calendering machine in the textile industry.
The cotton bowl is a shaft made of steel on which a thick layer of cotton is pasted and affixed.
It is used in the textile finishing industries as an essential part of the calendering machine.
In the course of its use the cotton pasted on the shaft loses its thickness and shape and after sometime it requires repairing and refilling.
The assessee moved an application under section 35 of the U.P. Sales Tax Act, 1948 and the decision inter alia included the question whether the job of repairing and refilling of cotton bowl and the process involved therein amounted to "manufacture" or "sale" within the meaning of the Act.
The Commissioner of Sales Tax decided both these ques tions against the assessee, and the assessee preferred an appeal before the 422 Sales Tax Tribunal.
The Tribunal allowed the appeal in part.
It held that the process of repairing and refilling of cotton bowl of the customers did not amount to "manufacture" as defined under section 2(e i) of the Act.
It further held that such an activity of the assessee amounted to "sale" as defined under section 2(h) of the Act as amended by the U.P. Sales Tax Amendment and Validation Act, 1985.
The:Commissioner of Sales Tax preferred a revision to the High Court which went into the question whether a fur ther revision lay to the High Court.
It came to the conclu sion having regard to the scheme of the provisions contained in section 35 and the amendment made by the U.P. Act 12 of 1979, and the earlier Division Bench decision of the High Court in Indo Lube Refineries vs Sales Tax Officer, [1987] 66 S.T.C. 145 (All) that no further revision lay to the High Court from the order of the Tribunal.
The High Court accord ingly dismissed the revision.
The Commissioner appealed by special leave to this Court.
On the question: whether a revision shall lie to the High Court from the decision of the Commissioner under section 35 of the U.P. Sales Tax Act which has been the subject matter of an appeal before the Tribunal.
Dismissing the Appeals, the Court, HELD: 1.
The very language of section 35 of the U.P. Sales Tax Act, 1948 which enjoins a decision by the Commis sioner envisages that the decision is quasi judicial or judicial and cannot be characterised as administrative.
The question is whether on the language of the section a revi sion is entertainable from the decision of the Commissioner which has been subjected to an appeal to the Tribunal.
In view of the language used specifically in the absence of a provision that such a revision will be maintainable such revision will not be.
[435C E] 2.
Sub section (5) of section 35 after the amendment states that the decision of the Commissioner of Sales Tax under this section shall, subject to an appeal to the Tribu nal, be final.
In view of the language of that section, it cannot contemplate a further revision to the High Court against a decision of the Tribunal.
[435E F] Indo Lube Refineries vs Sales Tax Officer Sector l.
Gorakhpur, [1987] 66 STC 145, approved.
423 3.
In the instant case, the right of appeal has been given under the Act not to any ordinary Court of the country under the Code of Civil Procedure but to the courts enumer ated under the Sales Tax Act, and the revision is contem plated under the provisions of the Sales Tax Act.
[436B] 4.
"Final" in section 35 means that it is final and under the Act subject to the limited procedure contemplated under the Act.
The expression 'final ' prima facie means that an order passed under the Act was conclusive and no further appeal lay.
A right to revision under the Act is a right given by the Act.
[436C D] Kydd vs Vatch Committee of City of Liverpool, , 331 32; Maung Ba Thaw vs Ma Pin, [1933 34] 61 LR Indian Appeals 158; South Asia Industries Pvt. Ltd. vs S.B. Sarup Singh, and M/s. Jetha Bai and Sons Jew and others vs M/s. Sunderdas Ratheni and others; , , referred to.
Revision to the High Court in special cases under section 11 is contemplated on the ground that the case involved a question of law.
[437B] 6.
Having regard to the scheme of the U.P. Sales Tax Act, 1948 manifested from the amendment, to make the Commis sioner 's decision final, subject to an appeal to the Tribu nal where the Tribunal is enjoined to hear such as appeal by a Bench of three members and where revision is provided only in special cases, it would be improper to interpret the spirit and reason of that law in such a way as to enjoin that a further revision lay to the High Court under section 11 of the Act.
The High Court was, therefore, right that no further revision in such a situation would lie to the High Court.
[437F G] 7.
This, however, does not eliminate correction by the High Court.
In an appropriate case by exercise of a writ of certioraris under Article 226 of the Constitution it exer cises superintendence over all Courts and Tribunals through out the territory.
[437G H] Re Gilmore 's Application, [1957] 1 All England Reports 796, referred to.
The intention of the legislature is a slippery phrase.
It is better to find out the intention of the legis lature from the words used by the natural meaning of the words and the spirit and reason of the law.
[437E] 424 Aron Salomon vs A. Salomon and Company Ltd., ; ,38; Lord Howard De Walden vs Inland Revenue Commis sioners,[1948] 2 All England Reports page 825.
referred to.
Cross Statutory Interpretation (Second Edn.) p. 21.
referred to.
|
ivil Appeal No. 525 of 1989.
From the Judgment and Order dated 11.12.1985 of the Calcutta High Court in Civil Rule No. 2716 of 1981 Shankar Ghosh and Rathin Das for the Appellant.
D.P. Mukherjee, and G.S. Chaterjee for the Respondent.
The Judgment of the Court was delivered by 399 RAY, J.
Special leave granted.
Heard learned counsel for both the parties.
This appeal on special leave arises out of an applica tion for preemption filed under the provisions of Section 8 of West Bengal Land Reforms Act, 1955 (West Bengal Act X of 1956) by the respondent, Md. Nasiruddin to pre empt the land sold to the appellant, Abdulla Kabir by a Kobala dated May 16, 1974 by a co sharer having 1/4th interest in plot No. 115/852 appertaining to Khatian No. 1944 on the ground of his being co sharer in the said holding.
The land in ques tion i.e. plot No. 115/852 measuring 0.3 cents was owned by one Sarat Chandra Dutta, son of Amulaya Ratan.
Sarat Chandra Dutta was an agriculturist and he used to keep his agricul tural implements in the said property.
He also possessed along with the said land other agricultural lands as agri culturist and in occupancy raiyati interest.
During R.S. operation also the said property was recorded in his name as 'Raiyat Sthitiban ' and the classification of land was re corded as 'Bari ' i.e. homestead of the said agriculturist.
On September 20, 1967, Sarat Chandra Dutta, owner of the said plot of land, sold the same by a registered Kobala to four persons namely Sisir Kumar Mondal, Naba Kumar Mondal, Madhusudan Mondal and Purmlakshmi Mondal.
Thereafter on October 28, 1968 Sisir Kumar Mondal and Naba Kumar Mondal sold their shares to Nurunessa Khatun, predecessor of the respondent petitioner.
On the basis of this Kobala Nurunessa Khatun became co sharer in respect of the said land.
After the death of Nurunessa Khatun her heirs including the eldest son, the respondent petitioner, inherited the right of occupancy as co sharer.
On May 16, 1974, Purnalakshmi sold her 1/4th interest to the appellant, Abdulla Kabir by Kobala (Exh. l(b).
It is the case of the respondent petitioner that as no notice of the said sale was served on his mother, Nurunessa Khatun, he could not know of the said sale earli er.
However, on taking certified copy of the said sale on May 3, 1977, the respondent petitioner filed an application for pre emption under Section 8 of the West Bengal Land Reforms Act after depositing the requisite sum as required to be deposited under the said Act.
This application was registered as Misc.
Case No. 36 of 1977 in the Court of Munsif, 2nd Court, Bolpur.
The appellant contested the case by filing a written objection contending inter alia that the respondent petitioner was neither co sharer of the holding nor an adjoining land owner.
The disputed property is non agricultural tenancy.
The petition for preemption is barred by limitation as the respondent petitioner was all along aware of the said sale and the story of his coming to know of such sale after taking copy of sale deed on May 3, 1977 was absolutely false.
400 The distuted deed does not contain the recital that the respondentpetitioner was an adjoining land owner.
The peti tion for pre emption in such circumstances was liable to be dismissed.
Three issues were framed by the Trial Court i.e.: (1) Whether the case land is non agricultural and whether section 8 of the West Bengal Land Reforms Act will be ap plicable in this case; (2) Whether the petitioner was a co sharer in respect of case holding from before purchase of the disputed land; (3) Whether the case is barred by limitation? The Trial Court held that the petitioner respondent was a cosharer and was entitled to pre empt; the application for pre emption was not barred by limitation as it was filed within a period of three years of knowledge of the same as no notice of sale was served on the petitioner respondent.
The Trial Court further held that the subject matter of the sale was recorded as "Bastu" in the Kobala dated May 16, 1974 (Exh. l(b) and "Bari" in the R.S. Record of Right (Exh.
3(h) and though Sarat Chandra Dutta, the owner of the land was an agriculturist yet this homestead land being not included in the raiyat holding could not be treated as agricultural land according to the provisions of West Bengal Land Reforms Act because of the nonagricultural use as evident from the R.S. Record of rights.
The land is non agricultural land and as such the application for pre emp tion under Section 8 of the said Act was not maintainable.
The Misc.
Case was, therefore, dismissed.
Against the said judgment and order, Misc.
Appeal No. 84 of 1980 was filed by the respondent in the 2nd Court of the Addl.
District Judge, Birbhum.
The appellate court reversed the findings of the trial court and held that the suit property was recorded as of raiyati interest in the R.S. Record of rights and the suit land being the homestead of Sarat Chandra Dutta who was an agriculturist, it was agri cultural land according to the provisions of the said Act and the application for pre emption under Section 8 of the West Bengal Land Reforms Act was maintainable.
The appellate court further upheld the findings of the trial court that the application was not barred by limitation and the appel lant (respondent herein) was a co sharer of the said land.
The Misc.
Appeal was, therefore, allowed and the judgment of the trial court was set aside.
401 Against this judgment and order of the appellate court, the appellant, Abdulla Kabir filed a petition in revision being C.R. No. 2716 of 1981 in the High Court at Calcutta.
During the pendency of the said Revisional case the respond ent pre emptor made an application for amendment of the relief claimed in the application for pre emption by adding an alternative relief for pre emption under Section 24 of the West Bengal Non Agricultural Tenancy Act.
After hearing both the parties, the amendment was allowed subject to the payment of costs quantified at Rs. 1,000.
Thereafter, on December 11, 1985 the Civil Rule was discharged by holding that: " . .
I am not satisfied that the finding recorded by the appellate court based as it is on an assessment of evidence, suffers from any jurisdictional defect or error, so as to entitle this Court to interfere in revision.
This Court cannot enter into evidence and come to its conclusion.
" It has also been held that in view of the amendment of the petition even if it is held that the land was non agri cultural land, preemption could be granted under Section 24 of the Non Agricultural Tenancy Act.
Against this judgment and order, the instant appeal on special leave has been preferred in this Court.
Dr. Ghosh, learned counsel appearing on behalf of the appellant has contended in the first place that the land in question has been recorded as "Bari, teen khanna ghar" in the R.S. Record of rights i.e. it is not agricultural land.
The land is used for non agricultural purposes though the right of the owner of the land has been recorded as agricul turist "raiyat sthitiban.
" He further contended that as the 'bari ' or the homestead is not situated on the agricultural land in the holding held by a Raiyat, it cannot be treated as agricultural land.
It is non agricultural land used for non agricultural purposes and the provisions of Section 8 of the Land Reforms Act are not applicable to such a holding as has been held by the trial court.
The finding of the High Court to the effect that there was no error of jurisdiction is wholly unwarranted and as such the appeal should be allowed.
Dr. Ghosh next contended referring to the decision in Eyachhin Ali Naskar and Ant.
vs Golap Gazi, that the nature of the holding whether it is agricultural or non agricultural has to be determined with reference to the user of the land 402 comprised in the holding.
The land in question is used for nonagricultural purposes and it does not form a part of his raiyati holding comprising of Agricultural land.
Therefore, it cannot be treated as agricultural land under the West Bengal Land Reforms Act.
The land being recorded as "Bastu" in the R.S. Record of rights, it is to be treated as non agricultural land.
Dr. Ghosh next submitted that the High Court did not give a definite finding whether Section 8 of the Land Re forms Act or Section 24 of the West Bengal Non Agricultural Tenancy Act was applicable in this case.
Mr. Ghosh, there fore, submitted that there has been an error of jurisdiction and the appeal should be allowed.
Dr. Ghosh has lastly contended that Section 3A was inserted by West Bengal Land Reforms (Amendment) Act, 1981 and assent of the President to the same was published in the Gazette on 24th March, 1986.
Referring to this provision he submitted that the matter should be sent back and the appel lant should be permitted to take such defences in view of the amended provisions as are available to him and the matter should be re heard by the trial court.
He drew the notice of the court to the decisions in Dwarka Nath Prasad Atal vs Ram Rati Devi, and Luigi Ambrosini Ltd. vs Bakare Tinko and Another, A.I.R. 1929 PC 306.
We are unable to accept the contentions made on behalf of the appellant for the reasons stated hereinbelow.
The land in question which is 1/4th share of plot No. 115/852 has been recorded in the R.S. Record of rights as "Raiyat Sthitiban" i.e. the original owner of the said land Sarat Chandra Dutta was a raiyat and the classification of the land has been recorded as "bari".
The entry in the record of right is presumed to be correct and this has not been challenged by any body.
It, therefore, appears that the land in question is the homestead land of Sarat Chandra Dutta who is on agriculturist being recorded as raiyat.
Section 2(6) of the West Bengal Land Reforms Act, 1955 defines holding as: "holding" means the land or lands held by a raiyat and treated as a unit for assessment of revenue.
" Section 2(7) defines land as under: 403 "land" means agricultural land other than land comprised in a tea garden which is retained under sub section (3) of section 6 of the West Bengal Estates Acquisition Act, 1953, and includes homesteads but does not include tank.
Explanation: "Homestead" shall have the same meaning as in the West Bengal Estates Acquisi tion Act, 1953" So according to the above provisions the homestead of an agriculturist is agricultural land.
It has been found by the courts below that the land in question is a homestead land recorded as "Bari" in the R.S. record of rights.
The owner of the said land Sarat Chandra Dutta is also recorded as a raiyat i.e. "raiyat sthitiban".
In other words, it is the homestead of a raiyat i.e. an agriculturist.
The trial court held that this R.S. record of right is not erroneous as the same has not been challenged by any body in the petition.
Rather the respondentpetitioner supported the contention that "Sarat Chandra Dutta, the owner of plot No. 115/852 was mainly an agriculturist and his main source of living was agriculture.
" The learned Munsif however, held that since the said homestead is not included in the holding of the raiyat i.e. the homestead does not stand on the agricultural land included in his holding, the homestead land cannot be treated as agricultural land relying on the decision in Eyachhin Ali Naskar and Anr.
vs Golap Gazi (supra).
This finding of the trial court has been negatived by the lower appellate court as well as by the High Court and it has been held that the said homestead land is agricultural land.
This finding, in our view, is quite valid and legal.
It has been observed by the Calcutta High Court in Eyachhin Ali Naskar and Anr.
vs Golap Gazi that: " . .
It is thus obvious that the nature of the holding has to be determined with reference to the user of its land or lands under the said Act.
Section 2(6) of the West Bengal Land Reforms Act defines "holding" as the land or lands held by a raiyat and treated as a unit for assessment of revenue.
Under clause (7) of Section 2 of the same Act "land" in the Act means agricultural land other than land comprised in a tea garden which is re tained under subsection (3) of Section 6 of the West Bengal Estate Acquisition Act, 1953 and includes homesteads.
" It has been further observed that: 404 " . .
In a case where as here the holding is recorded as bastu and the non agricultural user is also evident, as appearing from the revisional record of rights wherein it has been stated that there are two huts standing thereon, the land cannot be treated as land to which the provisions of the Land Reforms Act will be applicable, as the Act applies to agricultural lands only.
" This observation of the High Court has been made wrongly in as much as the High Court did not take notice of the amended provision of the West Bengal Non Agricultural Tenan cy Act, 1949 amended by Act 8 of 1974.
Section 2(4)(a) defines non agricultural land as land used for purposes not connected with agriculture or horticulture but does not include a homestead to which the provisions of the West Bengal Land Reforms Act, 1955 apply.
Taking notice of this provision it is crystal clear that homestead land does not fall within the province of non agricultural land both under the Non Agricultural Tenancy Act as well as under the West Bengal Land Reforms Act, 1955.
In that view of the matter the whole basis of the observation of the High Court to the effect "that where the holding is recorded as bastu and the non agricultural user is also evident, as appearing from the revisional record of rights wherein it has been stated that there are two huts standing thereon, the land cannot be treated as land to which the provisions of the Land Reforms Act will be applicable as the Act applies to agricultural lands only" is wrong.
The judgment is per incuriam.
As has been stated hereinbefore that the definition of land as given in the West Bengal Land Reforms Act, 1955 refers to agricultural land and includes homestead.
Explanation to sub section 7 of section 2 further provides that "Homestead shall have the same meaning as in the West Bengal Estates Acquisition Act, 1953.
" Section 2(g) of the West Bengal Estates Acquisition Act, 1953 defines; "Homestead" means a dwelling house together with any court, yard, compound, garden, out house, place of worship, family graveyard, library, office, guest house, tanks, wells, privies, latrines, drains and boundary walls annexed to or appertaining to such dwelling house ;" Therefore, on a conspectus of the aforesaid provisions, it obviously follows that homestead of an agriculturist even though the same is included in the holding of the raiyat but not on the agricultural land still it is to be treated as agricultural land being the homestead of the agriculturist under the provisions of the West Bengal Land Reforms 405 Act read with West Bengal Estates Acquisition Act and West Bengal Non Agricultural Tenancy Act.
Therefore, the applica tion under Section 8 of the West Bengal Land Reforms Act filed by the respondentpetitioner as a co sharer of the said holding for pre emption of the land purchased by a stranger i.e. the appellant is maintainable under law as has been rightly held by the lower appellate court as well as High Court.
The application for pre emption under Section 8 of West Bengal Land Reforms Act was properly allowed by lower appellate court and the said order was maintained by High Court.
There is no infirmity in this finding and we uphold the same.
As regards the second contention it appears that by amendment an alternative relief under Section 24 of the West Bengal NonAgricultural Tenancy Act has been inserted in the application for preemption.
It also appears that the said application for amendment was allowed after hearing both the parties and that no objection to the said application for amendment was taken at the time of hearing of the applica tion for amendment nor at the final hearing of the Revision Case any objection was raised on this score.
Moreover, we have already held that Section 8 of West Bengal Land Reforms Act is applicable to this case.
The appellant therefore, cannot be permitted to raise this question anew in this Court.
The last submission advanced on behalf of the appellant is, also, in our considered opinion, of no substance.
Sec tion 3A which has been introduced by West Bengal Land Re forms (Amendment) Act, 1981 is quoted hereinbelow: "3 A. Rights of all non agricultural tenants and undertenants in non agricultural land to vest in the State (1) The rights of all non agricultural tenants and undertenants under the West Bengal Non Agricultural Tenancy Act, 1949 (West Bengal Act XX of 1949), shall vest in the State free from all encumbrances and the provisions of sections 4, 5 and 5A of Chapter II of the West Bengal Estates Acquisi tion Act, 1953 (West Bengal Act I of 1954), shall, with such modification as may be neces sary, apply mutates mutant to non agricultural tenants and under tenants within the meaning of the West Bengal Non Agricultural Tenancy Act, 1949 as if such non agricultural tenants and under tenants were intermediaries and the land held by them were estates and a person holding under a nonagricultural tenant or under tenant were a raiyat.
406 (2) On the vesting of the estates and rights of intermediaries in any non agricultural land under sub section (1), the provisions of Chapter IIS of this Act shall apply.
(3) Every intermediary whose estates or inter ests have vested in the State under sub sec tion (1), shall be entitled to receive an amount to be determined in accordance with the provisions of section 14V of this Act.
" The said section refers to the vesting of the interest of nonagricultural tenants by treating them as intermedi aries and a right of retention of such non agricultural lands within the ceiling limit has been provided therein.
This provision has nothing to do with the questions involved in this appeal.
There is nothing to show that the nonagri cultural land in plot No. 115/852 has vested in the State and the same has not been retained by the owner nor there is any thing to show that the original owner, Sarat Chandra Dutta had in his possession non agricultural land exceeding the ceiling limits even assuming for arguments sake that the land in question is non agricultural land.
But we have held hereinbefore that the land being homestead of an agricultur ist is agricultural land.
Therefore, the amended provision of Section 3 A of the said Act does not require considera tion in the instant appeal in the background of the facts and circumstances of the case and the issues involved here in.
The submission made on behalf of the appellant that the matter should be sent back to the trial court for giving the defendant an opportunity to raise issues on the amended provision for hearing and deciding the same by the court, is not tenable.
In the circumstances it is needless to consider the decision in Dwarka Nath Prasad Atal vs Ram Rati Devi (supra).
In that case an application was filed under Section 24 of West Bengal NonAgricultural Tenancy Act asking for pre emption in respect of the property mentioned in Schedule A of the application.
The appellant resisted the respond ent 's claim for pre emption on various grounds including the ground that the property involved in the proceedings being agricultural land civil court in which the respondent had filed her application for pre emption had no jurisdiction to entertain the application for pre emption by reason of the provisions of the West Bengal Land Reforms Act.
The learned Subordinate Judge held that the property involved in the proceeding was agricultural land and so Section 24 of West Bengal Non Agricultural Tenancy Act was not attracted and civil court had no jurisdiction to entertain the applica tion.
The application was dismissed.
The order was set aside on appeal holding that the land was non agricultural land and the Subordinate 407 Judge had jurisdiction to entertain the application.
The judgment having been confirmed in appeal by the High Court of Calcutta, the petitioner filed an appeal on special leave before this Court.
It had been held that since the judgment was rendered only on the preliminary question whether the court had jurisdiction to entertain the application and the other issues raised therein were not decided by the trial court, the lower appellate court over ruled the said finding but instead of remanding the matter to the trial court for decision on the other issues, disposed of the matter on merits whereas on the other issues the appellant might desire to lead evidence but that opportunity was denied to him.
It was in the interest of justice that the appellant should be afforded an opportunity of being heard on the other issues.
In that view of the matter the case was re manded for disposal.
The decision in Luigi Ambrosini, Ltd. vs Bakare Tinko and Another (supra) does not apply to this case as the facts of that case are different from the facts of the instant case.
As stated hereinbefore that this ruling has no applica tion to the facts of this case inasmuch as the application was not decided on a preliminary issue but the same has been decided on all the issues raised.
Therefore, there is no question for remanding the matter for decision on the other issues.
We therefore, find no substance in this contention advanced by the learned counsel for the appellant.
For the reasons aforesaid we do not find any infirmity nor any illegality in the findings arrived at by the High Court.
We, therefore, dismiss this appeal and uphold the judgment and order of the High Court.
In the facts and circumstances of the case, there will be no order as to costs.
N.V.K. Appeal dis missed.
| IN-Abs | An application for pre emption was filed under the provisions of section 8 of the West Bengal Land Reforms Act, 1955 by the respondent to pre empt a plot of land sold to the appellant by a Kobala dated May 16, 1974 by a co sharer having 1/4 interest in the plot.
The land in question was owned by an agriculturist and he used to keep his agricultural implements in the said property.
He also possessed other agricultural lands as agriculturists and in occupancy raiyati interest.
The suit property was recorded in his name as 'Raiyat Sthitiban ' and the classification of land was recorded as 'Bari ' i.e. homestead of the said agriculturist.
On September 20, 1967 the land was sold by a registered Kobala to 4 persons, and on October 28, 1968 one of the persons sold his share to the predecessor of the respondent.
On the basis of this Kobala it was alleged that he was a co sharer.
The respondent filed an application for pre emption under section 8 of the West Bengal Land Reforms Act, 1955.
The appellant contested the same contending in the written statement that the respondent was neither co sharer of the holding nor an adjoining owner and that the disputed proper ty is non agriculture tenancy, that the petition was barred by limitation as the respondent was all along aware of the sale of the property and that the story of his coming to know only after taking copy of the sale deed was absolutely false.
397 The Trial Court held that the respondent was a co sharer and was entitled to pre empt, the application of pre emption was not barred by limitation as it was filed within a period of 3 years of the knowledge of the same as no notice of the sale was served on the respondent.
The Trial Court further held that the land was non agricultural land and as such the application for pre emption under section 8 was not main tainable.
The miscellaneous case was accordingly dismissed.
The respondent filed an appeal, and the Additional District Judge reversed the findings of the Trial Court, and held that the suit property was recorded as raiyati interest in the R.S. Record of Rights and being the homestead land of an agriculturist, the application for pre emption under section 8 was maintainable.
The appeal was allowed and the judgment of the trial court was set aside.
The appellant filed a revision petition in the High Court.
During its pendency he made an application for amend ment claiming alternative relief for pre emption under section 24 of the West Bengal NonAgricultural Tenancy Act, 1949.
The High Court held that even if the land was non agricultural land, pre emption could be granted under sec tion 24 of the W.B. Non Agricultural Tenancy Act, but dis missed the petition on the ground that there was no juris dictional defect or error entitling the Court to interfere in revision.
In the appeal to this Court by special leave, it was contended on behalf of the appellant that the land has been recorded as in the R.S. Record of rights as non agricultural land, and that the Trial Court had rightly held that Section 8 of the Land Reforms Act was not applicable to such a holding.
The decision of the High Court to the effect that the finding recorded by the Appellate Court to the contrary suffered from no jurisdictional error was therefore wholly unwarranted.
Relying on Eyachhin Ali Naskar vs Golap Gazi, it was contended that nature of holding had to determined with reference to the user of land comprised in the holding.
Dismissing the appeal, HELD: 1.
The application for pre emption under section 8 of West Bengal Land Reforms Act was properly allowed by the lower appellate court and the said order was maintained by High Court.
There is no infirmity in this finding, and the same is upheld.
[400G H] 398 2.
The definition of land as given in section 2(7) of the West Bengal Land Reforms Act, 1955 means agricultural land, and includes homesteads.
But, homestead land does not fail within the province of non agricultural land both under the Non Agricultural Tenancy Act as well as under the West Bengal Land Reforms Act, 1955.
Eyachhin Ali Naskar and Anr.
vs Golap Gazi, per incuriam & over ruled.
[404E F] 3.
On a conspectus of the provisions contained in sec tion 2(8) W.B. Estates Acquisition Act 1953 & section 2(4)(a) W.B. NonAgricultural Tenancy Act, 1974 it follows that 'Homestead ' of an agriculturist even though the same is included in the holding of the raiyat but not on the agri cultural land, still it is to be treated as agricultural land being the homestead of the agriculturist under the provisions of the West Bengal Land Reforms Act read with West Bengal Estates Acquisition Act and West Bengal Non Agricultural Tenancy Act.
[404G H; 405A] 4.
There is nothing to show that the non agricultural land in the instant case has vested and the same has not been retained by the owner, nor is there anything to show that the original owner had in his possession non agricul tural land exceeding the ceiling limits, even assuming that the land is non agricultural land.
But the land being home stead of an agriculturist is agricultural land.
Therefore, the amended provision of section 3A of the West Bengal Land Reforms Act does not require consideration in this matter.
[406C E] Dwarka Nath Prasad Atal vs Ram Rati Devi, and Luigi Ambrosini, Ltd. vs Bakara Tinko and Another, A.I.R. 1929(PC) 306, distinguished.
|
vil Appeal Nos.
2665 72 (NT) of 1981 etc.
From the Judgment and Order dated 9.1.1980 of the Madras High Court in Tax Case Nos. 894, 895 of 1977, 591, 942,968, 975 of 1979 and W.P. Nos. 4951 and 4952 of 1978.
section Padmanabhan, R. Mohan and R.A. Perumal for the Appel lant.
T.A. Ramachandran, A.K. Sen, Mrs. J. Ramachandran, Inbarajan, P.N. Ramalingam, A.T.M. Sampath and A.V.V. Nair for the Respondents.
The Judgment of the Court was delivered by RANGANATHAN, J.
All these civil appeals and special leave petitions raise a common question as to the interpre tation of an expression used in the .
Some of these matters arise out of judgments of the High Court in Tax Revision cases and some out of judgments in writ petitions but the point involved is the same.
1n view of the pendency of the appeals, we grant leave in the spe cial leave petitions after condoning the delay in filing some of them and proceed to dispose of all the appeals by a common order.
The respondents are all dealers in hides and skins carrying on business in the State of Tamil Nadu.
As is well known, raw hides and skins undergo various processes such as cutting, tanning, dyeing, dressing and finishing before they get converted into finished leather and assume a condition fit for the manufacture of various kinds of leather arti cles.
The dispute in these appeals is in regard to two items of goods that are sold by these assessees viz. leather splits and coloured leather.
The splits are the cut pieces, often small and irregular, obtained in the process of cut ting raw of tanned hides and skins either with a view to reduce their thickness or with a view to give them a regular shape.
Coloured leather is obtained when the tanned hides and skins are dyed with various colours.
The assessee, inter alia, deal in these two items, their manner of such dealing varying from case to case.
Some of them obtain the leather splits in the process of cutting and sell them while 449 some purchase the cuttings and sell them as such.
So also, the coloured leather is obtained by some of the assessees in the process of finishing and they sell them while others purchase the coloured leather and sell them as such.
The assessees ' claim is that these two items fall in the list of "goods of special importance in inter State trade and com merce" set out in section 14 of the (the 'CST Act ') and that, therefore, the assessee is enti tled, in respect of their sales, to the concessions avail able under section 15 of the CST Act viz. the benefits of single point taxation and of a smaller rate of tax.
The sole ques tion in these appeals is whether the High Court was right in upholding this claim.
The principal judgment of the High Court on this point has been reported as Mahi Traders vs State of Tamil Nadu, [1980] 45 S.T.C. 327.
The relevant entry in section 14 of the CST Act reads: "14(1)(iii) hides and skins, whether in a raw or dressed state.
" The short case of the department is: (a) that leather splits or cuttings are "scrap" and do not qualify any longer to be described as hides and skins; and (b) that coloured leather is a totally new and sophisticated product known as leather and can no longer be described merely as hides and skins.
The department 's case is best explained in a passage from the order of the Board of Revenue which accepted the depart ment 's contention.
It observed: "The contentions have been examined with reference to the connected records.
The splits are only pieces of leather obtained in the process of getting leather of uniform thick ness from dressed skins.
Such splits cannot be treated as dressed hides and declared goods.
The expression "raw or dressed skin" in sec tion 14 of the has a distinct connotation and it cannot be extended to leather bits obtained in a process.
These splits are of much lesser value and cannot be equated to dressed skins.
In 27 S.T.C. page 385 the Orissa High Court has held that if steel plates are cut to sizes, they cease to be the original product.
What should be con sidered is whether those leather splits are commercially understood as dressed hides and skins.
If they are understood only as just skins as claimed, there is no need to call them as splits in commercial parlance.
The Courts have repeatedly ruled that the entries in the Act 450 should be treated only as understood by the Trade.
These splits were produced before the Board at the time of hearing.
They were found to be thin pieces which can be utilised only for miscellaneous purposes.
The contention that these leather splits continue to be dressed skins and are declared goods of inter state importance, is untenable.
The assessing officer was therefore right in treating these splits as scraps and taxing them at the multi point rate, and in the absence of 'C ' forms, at 10%.
As regards the coloured skins, once the dressed skins bought are split and the upper layer of uniform size is coloured or dyed, such coloured skins become different products.
They are finished leather sold as coloured skins and not as dressed skins.
They are commercially different, and are treated and dealt with in trade circles as different products.
The process of dyeing or colouring changes the commercial nature of the dressed skins.
There are different patterns of dyeing and colouring.
The complete piece may be dyed or coloured uniformly with a single colour or with a pattern of colours, depending upon the requirements of the prospective consumers in the market.
As the dressed skins are subjected to process, first by splitting and secondly by colouring they become different products.
Pieces of coloured and dyed leather were produced before the Board at the time of hearing.
Some pieces were coloured With a single colour on one side and dyed on the reverse.
They can be used straightaway for manufacturing leather goods.
They were also in patterns.
The contention that no change is involved has therefore no force.
Both the Appellate Assistant Commissioner and the Assessing Officer were not therefore correct in allowing exemption.
" On the other hand, on behalf of the assessees, refer ence is made to certain circulars of the authorities which contain a contemporaneous exposition of the meaning of the entry in question, reliance is placed on the decision of the Sales Tax Appellate Tribunal to the contrary and it is emphasised that, to say that the one item is called scraps and the other is called leather is not sufficient to take them out of the description "hides and skins, in a raw or dressed state".
It is submitted that cuttings of hides and skins do not cease to be hides and skins merely because they are small pieces and can be loosely described as "scraps".
So far as coloured leather is concerned, according 451 to the assessee, the question is not whether the coloured skin is described as leather or whether it is a new product different from hides and skins, as understood generally, but what exactly is the scope of the expression used in entry (iii) of section 14(1).
The submission is that hides and skins are generally described as leather even as soon as tanning is done but the entry in the statute goes much beyond this stage.
It takes in all categories of hides and skins right from their raw condition, through various stages of their tanning and other processing, right upto the stage when they receive the final finishing touches.
We have heard learned counsel on both sides at length and come to the conclusion that the assessees are entitled to the benefit of Ss. 14 and 15 of the CST Act in respect of the two items in question.
As far as the first item is concerned, it is common ground that leather splits are nothing but cut pieces of hides and skins.
We fail to see how they cease to be hides and skins.
It is no doubt true that they are cheaper and have a separate name but the name only indicates that they are cut pieces.
It is not because they have ceased to be hides and skins and constitute a different commercial commodity that they are called 'scraps '.
Some of the dealers purchase and sell such splits and such turnover is considerable.
There is no material to suggest that they are useless or worthless articles.
A loose description of them as 'scrap ' cannot deprive them of the benefit of section 14 of the Act.
Turning to coloured leather, we may, at the outset, refer to a very important circumstances referred to by the respondents.
When the CST Act came into force on 1.4.1957, a question was raised regarding the meaning of the expression 'hides and skins in dressed state ' used in section 14.
The matter was referred to the leather development wing of the Ministry of Commerce and Industry which gave the following opinion: "Hides and Skins are obtained from either slaughtered or dead animals.
The raw hides and skins thus obtained are known to be in the Green State.
These are easily putrescible; if proper precautions are not taken they would easily rot and decay.
Since tanneries are not always located very near the source of raw hides and skins, the question of preserving them for a temporary period till they reach a tanning centre assumes importance.
Raw hides and skins are 'cured ' by either wet salting, dry salting or drying.
In the 'cured state ' the raw materials can be preserved for a temporary period.
In the third state of tempo rary preserva 452 tion, the hides and skins are 'picked '.
During the next stage they are tanned in which state they can be preserved almost indefinitely.
These tanned hides and skins are processed further to yield Dressed Hides and Skins which are ready for use. 'Dressed ' or finished material could also be preserved almost indef initely.
From the above, it will be seen that the expression 'Hides and Skins in the raw or dressed State ' refers at one end to the raw material obtained from the slaughtered or dead animals and at the other end to the tanned and finished material; the expression, therefore, seems to include the other intermediate stages indicated in the previous paragraphs.
Dress ing, according to the authoritative interpre tations, would mean the conversion of tanned hides and skins by further suitable processing into leathers of different types which are ready for use" (vide SBT/ .
18(495/14) of November 11, 1957).
It would seem though this is not quite clear from the record, that this opinion held the field for quite some time until the assessments presently in question were made.
Even here, as pointed out by the High Court, the departmental view was not quite consistent.
The Deputy Commercial Tax Officer, in some of the cases, was willing to concede that coloured leather, notwithstanding the colouring, continued to be dressed hides and skins but thought that leather splits should be brought to multipoint tax.
The Assistant Commissioner, on the contrary, took the view that splits would continue to be hides and skins.
It was the Board of Revenue that decided that both items would fall outside the purview of item (iii) in section 14(1).
It has been pointed out by this court in Desh Bandhu Gupta and Ors.
vs Delhi Stock Exchange, ; , and Varghese vs ITO, that a contemporane ous exposition by the administrative authorities is a very useful and relevant guide to the interpretation of the expressions ' used in a statute.
Considering that the above clarification was sought for at the earliest point of time when a doubt arose as to the scope of the expression used by the statute and given after considering the technicalities of the processes employed in the manufacture of finished leather by the department fully conversant with this branch of trade and in the context of the provisions of this very statute, the terms of the statute can well be construed by reference to such exposition, in the absence of anything in the statute 453 to indicate the contrary.
Indeed, "such interpretation should be shown to be clearly wrong before it is overturned.
" Can it then be said that the view expressed above is clearly wrong? We think not; on the contrary, it is seen to be quite correct.
The statutory expression refers to "hides and skins in a dressed state".
The guidelines issued for identification of 'finished ' leather for exports by the Indian Standards Institution (ISI) refer to as many as 19 operations or processes undergone during manufacture of 'finished leather ' but 'dressing ' is not one of them.
A glossary of terms relating to hides, skins and leather published by the I.S.I. in 1960 contains the following definitions: CRUSTS: (Crust Leather) Tanned hides and skins without any finish.
CURRYING: A series of dressing and finishing processes applied to leather after tanning in the course of which appropriate amounts of oils and greases are incorporated in the leather to give it increased tensile strength, flexibility and resisting properties.
DRESSED RIDES: Tanned hides, curried or other wise finished, for various purposes, such as belting, harness and saddlery, travel goods and for upholstery.
DRESSING LEATHER: Vegetable tanned hides which may be dressed to suit the purpose for which they are to be used, such as for harness, saddlery and other mechanical purposes.
LEATHER: The skin or hide of animals prepared by tanning, which still retains its original fibrous structure more or less intact, but from which hair or wool may or may not have been removed and which has been treated so as to be imputrescible even after treatment with water.
The earlier glossary of such terms published by the British Standards Institution defines 'dressing ' as a "general term for the series of processes employed to con vert certain rough tanned hides and skins and/or crust leather into leather ready for use.
" Also, "Leather" is defined as "a general term for hide or skin which still retains its original fibrous structure more or less intact, and which has 454 been treated so as to be imputrescible even after treatment with water.
" The hair or wool may or may not have been removed.
Certain skins, similarly treated or dressed, and without the hair removed, are termed 'fur '.
The Dictionary of Leather Terminology published by the Tanners ' Council of America, describes leather as "the hide and skin of any animal or any portion of such skin, when tanned, tawed or otherwise dressed for use.
" The above definitions show that hides and skins acquire the name of 'leather ', even if the hair or wool has not been removed therefrom, as soon as they receive some treatment which prevents them from putrefaction after treatment with water.
Dressing is a stage much later than tanning.
Indeed, from the definitions quoted above, it will be seen that it is practically the same as giving finishing touches to the leather and making it suitable for the manufacture of par ticular types of goods.
Sri Sen invited our attention, apart from the contempo raneous exposition by the Department, to the findings of the Tribunal in this regard in an earlier case which had not been appealed against by the Department.
The Tribunal had said: "We have carefully considered the records as well as the arguments.
We have seen the speci mens of the articles sold.
Bits of the same are also on record.
We have carefully scruti nised the same.
We are unable to say that what the appellants had sold is not leather or in other words dressed hides and skins.
The fact that the appellant has done some more finish ing would not take away the resultant product from the classification.
We do find that the clarification issued by the Board of Revenue, Madras and the Govt.
of India supports the appellants case.
The expert opinion which only says that the resultant product has undergone some chemical changes observed as under: It is, surely a different product, because it is a finished leather.
It however, retains the leathery properties of the dressed leather.
Hence the expert opinion also fully supports the appellants case inasmuch as it concedes that the resultant product is 'finished leath er '.
It is because the issue in appellant 's case is not whether the appellant was selling a different product 455 from the one it purchased, but whether the appellant was selling tanned leather.
In this case, we do not find any factual basis even to cast any doubt upon the appellant 's claim.
It is a pity that the assessing authority should have followed the audit objections without the application of his own mind.
Leather from the stage of raw skins to the stage of dressed hides and skins may undergo various stages of changes.
Under the classification for the purposes of section 14 of the , the various stages are irrelevant.
For the purposes of Tamil Nadu General Sales Tax Act, 1959, only two stages that are rele vant are the skins at the raw stage and the skins in the form of dressed hides and skins (or tanned hides and skins).
The appellant purchases semifinished leather and undertakes further process of finishing with a view to colour the hides and skins for certain uses of skins.
He says that he purchased the same tanned hides and skins and sold the tanned hides and skins.
According to him the products purchased and sold are not different even under the classification by way of the dichot omy between raw and dressed hides and skins under the Tamil Nadu General Sales Tax Act.
Under the , the appellant is in a much better position, because all the hides and skins are brought together in one entry.
Whether raw or dressed, the product falls under the same entry.
" We are of opinion that this represents the correct view of the scope of the entry in question.
The same conclusion is further borne but by the litera ture referred to before us by Sri Ramachandran.
7 of the Encyclopedia Brittanica, under the word "dress", ex plains that the verb has various applications which can be deduced from its original meaning and that "it is thus used not only of the putting on of the clothing but of the pre paring and finishing of leather . . "Vol. 17, under the head "leather" details the various processes applied in the treatment of hides and skins at all stages, pre tanning, tanning and post tanning.
Dyeing or colouring is a process which follows tanning but precedes "finishing" (i.e. dress ing) in order to make it suitable for the purpose for which it is required in commercial usage.
of the "Wealth of India", a publication of the Council of Scientific and Industrial Research (1966), dealing with leather under "Industrial Products" explains that "hides and skins are liable to putrefaction and loss unless 456 suitably treated and converted into leather.
" Structurally, hides and skins have a thick middle layer called corium, which is converted to leather by tanning.
The operations involved in leather manufacture however fall into three groups.
Pre tanning operations include soaking, liming, deliming, bating and pickling, and post tanning operations are splitting and shaving, neutralising, bleaching, dyeing, fat liquoring and stuffing, setting out, samming, drying, staking and finishing.
These operations bring about chemical changes in the leather substance and influence the physical characteristics of the leather, and different varieties of commercial leather are obtained by suitably adjusting the manufacturing operations.
These processes need not be gone into in detail but the passages relied upon clearly show that hides and skins are termed 'leather ' even as soon as the process of tanning is over and the danger of their putrefaction is put an end to.
The entry in the CST Act, however, includes within its scope hides and skins until they are 'dressed '.
This, as we have seen, represents the stage when they undergo the process of finishing and assume a form in which they can be readily utilised for manufacture of various commercial articles.
In this view, it is hardly material that coloured leather may be a form of leather or may even be said to represent a different commercial commod ity.
The statutory entry is comprehensive enough to include the products emerging from hides and skins until the process of dressing or finishing is done.
We are, therefore, of the view that the High Court was right in holding that 'splits ' and 'coloured leather ' con tinue to be hides and skins eligible for special treatment under the CST Act.
All the appeals, therefore, fail and are dismissed.
We however make no order as to costs.
G.N. Appeals dis missed.
| IN-Abs | The respondents are dealers in hides and skins.
They deal among other things in splits and coloured leather.
The splits are the cut pieces, small and irregular, obtained in the process of cutting raw or tanned hides and skins either with a view to reduce their thickness or to give them a regular shape.
Coloured leather is obtained when the tanned hides and skins are dyed with various colours.
The claim of the respondents is that these two items fail in the list of "goods of special importance in inter State trade and com merce" set out in section 14 of the and, therefore, entitled to the concessions available under section 15 of the Act, namely the benefits of single point taxation and of a smaller rate of tax.
Such claims were allowed by the assessing authority in respect of coloured leather and in respect of splits he disallowed the claims.
The Appellate Assistant Commissioner upheld the order of the assessing authority.
The Board of Revenue negativated the contention that leather splits continued to be dressed skins under declared goods of inter State importance and held that these splits are to be treated as 'scraps ' or to be taxed at the multiple rates.
As regards coloured leather the Board held that these are commercially different products and that the exemption granted was not correct.
The tribunal, in certain cases, had held that the assessee was entitled to the con cessions claimed in respect of both items.
The respondents moved the High Court by way of Writ Peti tions 446 and tax revision cases and the High Court upheld the claim of the respondents, holding that 'splits ' and 'coloured leather ' continue to be hides and skins eligible for special treatment under the .
The present appeals by special leave are against those judgments of the High Court.
The contentions of the appellant State were that the leather splits or cuttings are "scrap" and do not qualify any longer to be described merely as hides and skins and that coloured leather is a totally new and sophisticated product known as leather and can no longer be described merely as hides and skins and as such cannot qualify for exemption.
On behalf of the respondents, a reference was made to certain circulars of the authorities which contain a contem poraneous exposition of the meaning of the entry in question and contended that, to say that one item being called scraps and the other as leather would not be sufficient to take them out of the description "hides and skins, in a raw or dressed state" and cuttings of hides and skins would not cease to be hides and skins merely because they are small pieces and can be loosely described as "scraps".
As for coloured leather, it was contended that the exact scope of the expression used in entry (iii) of section 14(1) which re ferred to 'hides and skins whether in a raw or dressed state ' would have to be looked into.
Dismissing the appeals, HELD: 1.1.
The High Court was right in holding that 'splits ' and 'coloured leather ' continue to be hides and skins eligible for special treatment under the .
[456E] 1.2 A contemporaneous exposition by the administrative authorities is a very useful and relevant guide to the interpretation of the expressions used in a statute.
Consid ering that the clarification was sought for from the Minis try of Commerce at the earliest point of time when a doubt arose as to the scope of the expression used by the statute and given after considering the technicalities of the proc esses employed in the manufacture of finished leather by the department fully conversant with this branch of trade and in the context of the provisions of this very statute, the terms of the statute can well be construed by reference to such exposition, in the absence of anything in the statute to indicate the contrary.
Indeed, such interpretation should be shown to 447 be clearly wrong before it is overturned.
The view of the Ministry was that the expression 'hides and skins in the raw or dressed State ' refers at one end to the raw material obtained from the slaughtered or dead animals and at the other end to the tanned and finished material; the expres sion, therefore, seems to include the other intermediate stages as well. 'Dressing ' according to the authoritative interpretations, would mean the conversion of tanned hides and skins by further suitable processing into leathers of different types which are ready for use.
[452F H; 452B D] Desh Bandhu Gupta and Ors.
vs Delhi Stock Exchange, ; ; Verghese vs I.T.O., , relied on.
Mahi Traders vs State of Tamil Nadu, [1980] 45 STC 327, approved.
Definitions in this regard show that hides and skins acquire the name of 'leather ' even if the hair or wool has not been removed therefrom, as soon as they receive some treatment which prevents them from putrefaction after treat ment with water. 'Dressing ' is a stage much later than tanning.
Indeed, from the definitions it is clear that it is practically the same as giving finishing touches to the leather and making it suitable for the manufacture of par ticular types of goods.
The findings of the Tribunal in this regard in an earlier case, which had not been appealed against by the Department, that under the , the appellant is in a much better position, because all the hides and skins are brought together in one entry, and whether raw or dressed, the product falls under the same entry, seems to be the correct view of the scope of the entry in question.
[454B D; 455E] Glossary of terms relating to hides, skins and leather published by ISI in 1960: Dictionary of Leather Terminology published by the Tanners ' Council of America.
Encyclopedia Britannica Vol. 7 and, 'Wealth of India '.
, a publica tion of the Council of Scientific and Industrial Research, 1966, relied on.
Hides and skins are termed 'leather ' even as soon as the process of tanning is over and the danger of their putrefaction is put an end to.
The entry in the , however, includes within its scope hides and skins until they are 'dressed '.
This represents the stage when they undergo the process of finishing and assume a form in which they can be readily utilised for manufacture of various commercial articles.
In this view, it is hardly material that coloured leather may be a form of leather or may even be said to represent a different commer 448 cial commodity.
The statutory entry is comprehensive enough to include the products emerging from hides and skins until the process of dressing or finishing is done.
[456C E]
|
ivil Appeal No. 3482 of 1987.
From the Judgment and Order dated 10.3.1983 of the High Court of Gujarat in Special Civil Application No. 1294 of 1977 S.K. Dholakia, P.C. Kapur and R.C. Bhatia for the Appellant.
A. Subba Rao, C.V. Subba Rao and Mrs. Sushma Suri for the Respondents.
The Judgment of the Court was delivered by K.N. SAIKIA, J.
This appeal by special leave is from the judgment of the High Court of Gujarat in Special Civil Application No. 1294 of 1977 under Article 226 of the Con stitution of India.
The Government of India Ministry of Foreign Trade an nounced through public notice No. 196 ITC(PN)/69 dated 8th December, 1969 a scheme for registration of contracts in volving deliveries extending over a period of not less than 12 months for cash assistance, hereinafter referred to as 'the scheme '.
The Government decided to extend the scope of the scheme as was announced by letter No. 12 (22/67EAC) dated 4th February, 1970, hereinafter referred to as 'the 1970 scheme ', stating inter alia, in paragraph 3 that the registered exporter of export products under a contract involving deliveries extending over a period of not less than 12 months, registered by the banks in terms of para graph 3 of the public notice dated 8th December, 1969 will be eligible for claiming cash assistance at the same per centage as was prevailing on the date of the Firm contract so registered provided that the bank attested invoice which is normally produced for the purpose 'of claiming cash assistance, bears a further attestation from the negotiating bank to the effect that exports effected in this invoice is against a contract registered with them giving the Registra tion number and date.
If during the currency of the regis tered contract the rate of 505 cash assistance is reduced by Government, the higher rate of cash assistance existing on the date of the Firm contract would be admissible on exports under the said contract.
If, on the other hand there is an increase in the rate of cash assistance percentage during the currency of the registered contract, exports made during the contract would not normal ly be eligible for the benefit of the increased rate; in special cases where the operation of this rule is likely to affect an exporter adversely, Government would be prepared to consider the matter on merits.
It was also stated in paragraph 5 that the registered exporter would be entitled to claim cash assistance as and when the exports are made against the registered contracts and the application would be submitted to the disbursing authority in accordance with the policy and procedure announced from time to time by that Ministry.
By letter No. 12(4)72 EAC dated 20th April, 1972 on the subject of Amendment No. 53 the cash assistance scheme on export of engineering goods was modified to the effect that an additional cash assistance of 5% of the f.o.b. value will be allowed on all exports made to North American and South American countries and to New Zealand and these facilities of normal cash assistance and additional cash assistance will be allowed on exports effected during the period from 1.4.1972 to 30.9.72, the later date being included.
By letter No. 12(13)/73 EAC dated 16th June, 1973 referring to Amendment No. 59 it was announced that cash assistance on transmission towers will be made admissible on exports thereof made during the period from Ist October 1974 upto and including 31st March, 1973 at the rate of 25% of the f.o.b. value.
The appellant is a company registered or deemed to be registered under the for exporting Line Towers Galvanised; Mild Steel Towers, hereinafter called 'Transmission Towers ', (Item No. A. 27.1) by entering into contracts with the National Electricity Board of the State of Malaysia, a public utility service of Malaysian Govern ment, briefly called 'the N.E.B. ' which had invited a global tender in October 1971 for design, fabrication and supply of Transmission Towers, and the appellant 's tender submitted on January 29, 1972 was accepted by them, and pursuance thereto a contract was entered into on May 17, 1972.
The said con tract was duly registered with the Central Bank of India, Lal Darwaza, Ahemdabad on May 30, 1972 and was allotted registration No. 50/1.
Subsequently, the NE.B. having needed more Transmission Towers more contracts entered into and the same were registered as follows: 506 section No. Date of Offer Date of acceptance Date of regis tration of the offer of the contract with the bank.
1 2 3 4 1.
29.1.1972 17.5.1972 30.5.1972 2A. 29.1.1972 20.6.1972 26.7.1972 2B. 31.8.1972 27.10.1972 13.11.1972 3.
28.4.1973 5.6.1973 15.6.1973 (Telex 31.5.1973) In respect of the exports made pursuant to two of the afore said contracts, namely No. 1 and 2(A), the respondents paid to the appellants a cash assistance of Rs.3,48,555 but refused to pay the claimed amount of Rs.4,10,784.93p in respect of the exports made pursuant to the other two con tracts and instead demanded refund of aforesaid Rs.3,48,555 already received by the appellant.
By letter dated 10.3.1975 to the appellant the Controller of Imports and Exports informed that the exports made during the extended delivery period of the contract were not covered under the provisions of paras 56 64 of Part B of Import Trade Control Policy Volume II, April 1972 March 1973 and as such no cash assist ance could be granted on exports made after March, 1974.
The Deputy Chief Controller of Imports and Exports rejecting the appellant 's appeal vide his letter dated 30.6.1976 informed the appellant that the benefit of regis tration on export in execution of the supplementary contract was additional quantity at increased rates and could not be allowed under Government Policy.
The appellant 's second appeal was also rejected by the Chief Controller of Imports and Exports vide his letter dated 8th January, 1977 stating that after execution of the supplementary order there was increase in quantity of goods to be supplied as well as price as on the date of execution of the supplementary order, and the import policy did not provide for protection of benefits under the scheme for registration of contracts on the cases where there was increase in the value of con tract.
The appellant 's review petition was also rejected by letter dated 19th July 1977 stating that as per provision of the policy contained in the relevant Policy Book, if there was an increase in the value of contract on account of price escalation clause or renegotiation on the ground of increase in prices of raw materials, protection to registered con tract was not available.
507 The appellants thereafter moved an application under Article 226 of the Constitution of India in the Gujarat High Court which partly allowed the petition restraining the respondents from enforcing the demand for the refund of the amount already paid by way of cash assistance and rejecting the appellant 's claim in so far as the contracts entered into in the context of the offers made subsequent to April 1972 because the cash assistance declared as on April 1, 1972 and thereafter was in terms made available upto a specific date.
The exports under the two concerned contracts namely No. 2 B and 3 were admittedly made after July 1974, though in case of contract No. 2 B the date of offer was 31.8.1972 and the date of acceptance was 27.10.1972 and the date of registration 13.11.1972, and in the case of contract No. 3 date of offer was 28.4.1973 and date of acceptance of 5.6. 1973 and date of registration was 15.6.1973.
Learned counsel for the appellant, Mr. S.K. Dholakia, first, submits, that the appellants are entitled to cash assistance in respect of these two contracts also inasmuch as the scheme of registration of contracts for cash assist ance dated 8th December, 1969 as also that of 4th February, 1970 were not time bound and did not prescribe any period for export to be eligible under the scheme; that it was only the subsequent scheme that prescribed a period; and that the appellant exported TransmissiOn Towers pursuant to the contracts entered into during the earlier period but due to increased demand subsequent supplementary contracts had to be entered into, and for price escalation and other diffi culties actual exports were delayed.
He relies on Section 1, Part B of Import Control Policy Volume II April 1972March 1973, "Import Policy for Registered Exporters, Registration of Export Contracts," contained in paragraph 56 64 thereof.
Secondly, the learned counsel submits that cash assistance scheme of 1969 as well as that of February 1970 were based on the Government 's policy of long term assistance to ex porters and it was with that end in view that the scheme of registration of contracts with the banks was introduced.
Relying on paragraph 3 of the 1970 scheme, he emphasises that it was the date of the Firm contract which was to be reckoned and not the date of export of the products.
Relying on paragraph 6 of the scheme he submits that it envisaged contracts involving deliveries extending over a period of not less than 12 months and contracts for export were to be registered by the banks in the manner prescribed.
As regard the Government 's policy of assisting the exports for the purpose of augmenting foreign exchange earnings of the country he submits that the deprivation of cash assistance to the exporter who registered their contracts would defeat the very purpose of the scheme.
508 Mr. C.V. Subba Rao learned counsel for the respondents demurs submitting that it could not be said that once the contracts were registered cash assistance would be available irrespective of the date of the exports.
We are inclined to agree with this submission.
Paragraph 10 of the scheme dated 4th February, 1970 reads: "Cash assistance is sometimes announced upto a specified date.
Exports effected after the specified date even though the contract has been got registered in terms of the provision of this letter will not be eligible for cash assistance.
" This paragraph made it quite clear that exports effected after the specified date would not be eligible for cash assistance, Consistently with this paragraph in the subse quent schemes the periods were prescribed.
The amended scheme dated 20th April 1972 prescribed the period from 1.4.1972 to 30.9.1972 and the amended scheme dated 16th June 1973 applicable to this case, prescribed the period from Ist October, 1972 upto and including 3 Ist March, 1973.
In other words, exports of Transmission Towers made after the pre scribed period would not be eligible to assistance under the prevalent scheme.
The word 'amendment ' would imply that the scheme of 1969 stood amended.
If that be so, there could arise no question of granting cash assistance to different exports under the original scheme and the prevalent amended scheme at the same time.
1n reply Mr. Dholakia submits that at different stages the respondents gave different reasons for refusing to pay cash assistance to the appellants.
However, in view of the unequivocal language of paragraph 10 of the 1970 scheme and clear prescription of the different periods during the subsequent amended schemes and the admitted facts that the export in respect of these two contracts were made only after July 1974, we see no reason to allow the appellant 's claim.
Whether the Government 's policy was conductive to maximisation of exports and foreign exchange earning is entirely a different matter.
In the result we find no merits in this appeal and it is accordingly rejected, leaving the parties to bear their own costs.
| IN-Abs | In 1969, the Govt.
of India announced, through public notice a scheme for registration of contracts involving deliveries extending over a period of not less than 12 months for cash assistance m respect of certain exports.
The scope of the scheme was extended in 1970, allowing cash assistance at the same percentage as was prevailing on the date of the firm contract so registered provided the invoice was attested by the Banks concerned.
It was also provided that even if the rate of cash assistance is reduced by Govt.
the higher rate that existed on the date of the Firm con tract would be admissible.
And in case of increase in the rate, exports made during the contract would normally be eligible for the benefit of the increased rate.
It was also made clear that if the rate is likely to affect an exporter adversely, Govt. would consider its matter on merits.
In 1972 the cash assistance scheme on export of engi neering goods was modified allowing additional cash assist ance of 5% of the f.o.b. value on all exports effected during 1.4.72 to 30.9.72 to certain countries.
It was fur ther announced that in respect of transmission towers ex ported from Ist Oct. 1972 till 31st March, 1973 cash assist ance would be at the rate of 25% of the f.o.b. value.
The appellant company entered into contracts with the National Electricity Board of Malaysia and in respect of some of the exports of transmission towers, the appellant received cash assistance and in respect of others, it was denied on the ground that the exports made during the ex tended delivery period of the contract were not covered under the Import Trade Control Policy and as such no cash assistance could be granted on exports made after March, 1974.
The appeal preferred by the appellant was rejected by the Deputy 502 503 Chief Controller of Imports and Exports on the ground that the benefit of registration on export in execution of the supplementary contract was additional quantity at increased rates and could not be allowed under Govt.
policy.
The second appeal was rejected by the Chief Controller of Im ports & Exports, stating that after execution of the supple mentary order there was increase in quantity of goods to be supplied as also price on the date of execution of the supplementary order and the import policy did not provide for protection of benefits where there was increase in the value of contract.
The review petition filed by the appel lant was also rejected.
Thereafter the appellant moved the High Court under Article 226 of the Constitution.
The High Court partly allowed the petition restraining the respondents from en forcing the demand for the refund of the cash assistance already paid and rejected the appellant 's claim in respect of contracts, entered into in the context of the offers made subsequent to April 1972, since the cash assistance declared as on April 1, 1972 and thereafter was in terms made avail able upto a specific date.
This appeal by special leave is against the High Court 's judgment.
On behalf of the appellant, it was contended that at different stages, the respondents gave different reasons for refusing to pay cash assistance.
Dismissing the appeal, HELD: 1.1 There could arise no question of granting cash assistance to different exports under the original scheme and the prevalent amended scheme at the same time.
[508E] 1.2 Paragraph 10 in the 1970 scheme made it quite clear that exports effected after the specified date would not be eligible for cash assistance.
Consistently with this para graph, in the subsequent schemes the periods were pre scribed.
The amended scheme dated 20th April, 1972 pre scribed the period from 1.4.72 to 30.9.72 and the amended scheme dated 16th June 1973 applicable to this case, pre scribed the period from 1st October 1972 upto and including 31st March 1973.
In other words, exports of Transmission Towers made after the prescribed period would not be eligi ble to assistance under the prevalent scheme.
The word 'amendment ' would imply that the scheme of 1969 stood amend ed.
[508C E] 504 1.3 In view of the unequivocal language of paragraph 10 of.
the 1970 scheme and clear prescription of the different periods during the subsequent amended schemes and the admit ted facts that the export in respect of these two contracts were made only after July 1974, there is no reason to allow the appellant 's claim.
Whether the Government 's policy was conducive to maximisation of exports and foreign exchange earning is entirely a different matter.
[508F G]
|
vil Appeal No. 1294 (NT) of 1975.
From the Judgment and order dated 16.7.74 of the Bombay High Court in I.T. Reference No. 22 of 1965.
S.C. Manchanda, M.K. Sashidharan and Ms. A. Subhashini for the Appellant.
Harish.
N. Salve, Parveen Kumar and V. Gambhir for the Respondent.
The Judgment of the Court was delivered by RANGANATH MISRA, J.
This appeal is by special leave and is directed against the judgment of the Bombay High Court dated 16.7.1974 on a reference made under Section 66(1) of the Income Tax Act, 1922.
The year of assessment is 1951 52 corresponding to the accounting year ending 31.3.1951.
The question referred by the Tribunal to the High Court at the instance of the Revenue was: "Whether on the facts and in the circumstances of the case, the assessee company could not be held to be a company in which the public were substantially interested within the meaning of Explanation of section 23A(1) by reason of the fact that the shares of the company carrying not less than twenty five per cent of its voting power were not, in fact, freely trans ferable by holders to other members of the public for a large part of the previous year even though they were freely transferable as at the end of the previous year? " Initially the company was incorporated as a private limited company at Jaipur on 24.12.1942 and was known as Messrs Rajputana Investment Company Private Limited.
Under articles 4, 81 and 82 of the Articles of Association of the company there was restriction on the transfer of the shares of the Company by the shareholders to other 573 members of the public.
These articles were deleted at an extraordinary general meeting of the Company held on 26th March, 1951, and following the deletion, the restriction on transfer of shares was removed.
So was the limit of number of shareholders.
On the basis of the amendment the assessee claimed relief under section 23A(1) of the 1922 Act by pleading that all the statutory requirements were satisfied.
The income Tax Officer refused to accept the stand of the asses see on the ground that while the Explanation contained in section 23A(1) of the Act required that in course of the previous year the shares were freely transferable by the holders to other members of the public, the company came to satisfy the requirement only for four or five days of the year.
The Appellate Assistant Commissioner adopted the same view whereupon the assessee appealed to the Tribunal.
The Tribu nal accepted the stand of the assessee and allowed the appeal, whereupon at the instance of the Revenue the afore said question was referred and the case was stated to the High Court under section 66(1) of the 1922 Act.
The High Court found for the assessee and against the Revenue.
That has led to the present appeal by special leave.
As pointed out above, the short point for consideration in this appeal is as to whether the assessee satisfied the requirements of the Explanation to section 23A(1) of the Act so as to be entitled to the tax benefit.
This Court pointed out in the case of C.I.T.v.
Arco (P) Ltd., [19631 "Section 23A was enacted to prevent evasion of liability to pay super tax by shareholders of certain classes of companies taking advantage of the disparity between the rates of super tax payable by individuals and by the compa nies.
The rates of super tax applicable to companies being lower than the highest rates applicable to individual assessees, to prevent individual assessees from avoiding the higher incidence of super tax by the expedient of transferring to companies the sources of their income, and thereby securing instead of divi dends the benefit of the profits of the compa ny, the Legislature by Act XXI of 1930, as modified by Act VII of 1939, enacted a special provision in section 23A investing the Income tax Officer with power, in certain contingencies prescribed in the section to order that the undistributed balance of the assessable income reduced by the amount of taxes and the divi dends shall be deemed to have been distributed at the date of the general meeting.
" 574 The Explanation provided: "For the purpose of this sub section , a company shall be deemed to be a company in which the public are substantially interested if shares of the company (not being shares entitled to a fixed rate of dividend, whether with or without a further right to participate in profits) carrying not less than twenty five per cent of the voting power have been allotted unconditionally to, or acquired unconditionally by, and are at the end of the previous year beneficially held by, the public (not including a company to which the provi sions of this sub section apply) and if any such shares have in the course of such previ ous year been the subject of dealings in any stock exchange in the taxable territories or are in fact freely transferable by the holders to other members of the public." The only question that has engaged the attention of the Tribunal and the High Court at the instance of the respec tive parties is as to whether the shares were freely trans ferable by the holders to other members of the public in the course of the previous year.
As we have already pointed out, the Income Tax Officer and the first appellate authority held that the terms in the Explanation required that the shares should have been freely transferable by the share holders to other members of the public at every point of time during the previous year and transferability should be established by actual transfer.
The Tribunal and the High Court took the view that it was not necessary that as a fact there should have been some transfer of such shares but transferability as an incidence should have been at every point of time during the whole of the previous year.
That being the short question on which this appeal can be effec tively disposed of, there is no necessity to refer to other aspects which had been canvassed at earlier stages.
Indisputably, until 26th of March, 1951, the shares were not freely transferable in view of the three provisions in the Articles and with the deletion of those, free transfera bility of the shares was acquired.
There has been no dispute before us that the requirement "if any such shares have been in the course of such previous year" would also apply to the last requirement "are in fact freely transferable by the holders to other members of the public".
The only conten tious aspect is as to whether "in the course of such previ ous year" would mean throughout the year or any part of it.
575 There is no direct authority indicating the true meaning of this requirement in the Explanation one way or the other.
The purpose of enacting section 23A, as pointed out in Afro 's case, was to control evasion of tax.
The Explanation has reference to the point of time at two places: the first one has been stated as "at the end of the previous year" and the second, which is in issue, is "in the course of such previous year".
Counsel for the Revenue has emphasised upon the feature that in the same Explanation reference to time has been expressed differently and if the legislative intention was not to distinguish and while stating "in the course of such previous year" it was intend ed to convey the idea of the last day of the previous year, there would have been no necessity of expressing the posi tion differently.
There is abundant authority to support the stand of the counsel for the Revenue that when the situation has been differently expressed the legislature must be taken to have intended to express a different intention. 'Course ' ordinarily conveys the meaning of a continuous progress from one point to the next in time or space and conveys the idea of a period of time; duration and not a fixed point of time.
"In the course of such previous year" would, therefore, refer to the period commencing with the beginning of the previous year and terminating with the end of the previous year.
If that be the meaning of the phrase "in the course of such previous year", it would necessarily mean that free transferability of the shares by the holders to other members of the public should be present throughout the previous year.
Admittedly that was not the position in this case as transferability was acquired only on 26th of March, 195 1.
We are of the view that the Tribunal and the High Court went wrong in holding that the conditions re quired by the Explanation were satisfied and the benefit under the section was available to the assessee.
The appeal is allowed.
The order of the High Court approving the view taken by the Appellate Tribunal is set aside and the question referred to the High Court is an swered thus: "On the facts and in the circumstances of the case, the assessee company could not be held to be a company in which the public were substantially interested within the meaning of the Explanation to section 23A(1) by reason of the fact that for a large part of the previous year the shares] 576 were not freely transferable though they were so transfer able at the end of the previous year." and against the assessee.
Parties are directed to bear their own costs throughout.
T.N.A. Appeal allowed.
| IN-Abs | Under articles 4, 81 and 82 of the Articles of Associa tion of the respondent assessee company there was restric tion on the transfer of the shares of the company by the shareholders to the other members of the public.
These articles were deleted at an extraordinary general meeting of the Company held on 26th March, 1951 and consequently the shares of the Company acquired free transferability.
For the accounting year ending 31st March, 1951 the assessee company claimed tax benefit u/s 23A(1) on the ground that by reason of the fact that its shares had acquired free transferabili ty 'in the course of the previous year ' the company had become 'a company in which public are substantially inter ested '.
The Income Tax Officer rejected the claim of the asses see company by holding that while Explanation to Section 23A(1) requires that the shares should have been freely transferable by the shareholders to the other members of the public at every point of time during the previous year and transferability should be established by actual transfer; the Company satisfied the requirement only for four or five days of the previous year.
571 On appeal the Appellate Assistant Commissioner affirmed the view taken by the Income Tax Officer.
The assessee company appealed to the ,Tribunal against the decision of the Appellate Assistant Commissioner.
The Tribunal accepted the contention of the assessee and allowed the appeal.
A reference under Section 66(1) of the Income Tax Act, 1922 was made to the High Court at the instance of the Revenue which approved the view taken by the Appellate Tribunal, and held that the conditions required by the Explanation to Section 23A(1) were satisfied and the benefit thereunder was available to the assessee company.
In the appeal by Special leave by the Revenue to this Court on the question: whether the assessee had satisfied the requirements of the Explanation to Section 23A(1) of the Act, and was entitled to the tax benefit claimed.
Allowing the appeal and setting aside the order of the High Court, HELD: 1.
The Tribunal and the High Court went wrong in holding that the conditions required by the Explanation to Section 23A(1) were satisfied and the benefit under the said section was available to the assessee.
[575F] 2.
The assessee company could not be held to be a compa ny in which the public were substantially interested within the meaning of the Explanation to Section 23A(1) by reason of the fact that for a large part of the previous year the shares were not freely transferable, though they were so transferable at the end of the previous year.
[574G1 3.
The word 'Course ' ordinarily conveys the meaning of a continuous progress from one point to the next in time or space and conveys the idea of a period of time; duration and not a fixed point of time.
The expression 'in the course of such previous year ' would refer to the period commencing with the beginning of the previous year, and terminating with the end of the previous year.
Therefore, it would necessarily mean that free transferability of the shares by the holders to other members of the public should be present throughout the previous year.
This was not the position in the instant case, as the transferability was acquired only on the 26th of March, 1951.
[575D F] 4.
The Explanation to Section 23A(1) has reference to the point of time at two places: the first one has been stated as 'at the end of the 572 previous year ' and the second is 'in the course of such previous year '.
When the situation has been differently expressed the legislature must be taken to have intended to express a different intention.
[575B D] C.I.T.v.
Arco (P) Ltd. , referred to.
|
Appeal No. 150 of 1954.
Appeal from the judgment and decree dated March 21, 1950, of the Court of Judicial Commissioner at Ajmer in Civil First Appeal No. 13 of 1948, arising out of the judgment and decree dated March 30, 1948, of the Court of Sub Judge 1st Class, Ajmer, in Civil Suit No. I of 1947.
Tarachand Brijmohan Lal, for the appellant.
section section Deedwania and K. L. Mehta, for the respondents.
April 15.
The Judgment of the Court was delivered by SARKAR J.
This appeal arises out of a suit for the redemption of a mortgage dated August 1, 1899.
The property mortgaged was a four roomed shop with certain appurtenances, standing on a piece of land measuring 5 yards by 15 yards in Naya Bazar, Ajmere.
The mortgage was created by Purshottamdas who is now dead and was in favour of Dhanrupmal, a respondent in this appeal.
The mortgage instrument stated that the property had been usufructuarily mortgaged in lieu of Rs. 6,300 of which Rs. 5,750 had been left with the mortgagee to redeem a prior mortgage on the same and another property.
It also provided that on redemption of the prior mortgage, the possession of the shop would be taken over and retained by the mortgagee, Dhanrupmal, who would appropriate its rent in lieu of interest on the money advanced by him and the possession of the other property covered by the prior mortgage, being a share in a Kachery would be made over to the mortgagor, Purshottamdas.
The provisions in the mortgage instrument on which the present dispute turns were in these terms: 511 " I or my heirs will not be entitled to redeem the property for a period of 85 years.
After the expiry of 85 years we shall redeem it within a period of six months.
In case we do not redeem within a period of six months, then after the expiry of the stipulated period, 1, my heirs, and legal representatives shall have no claim over the mortgaged property, and the mortgagee shall have no claim to get the mortgage money and the lagat (i. e., repairs) expenses that may be due at the time of default.
In such e, case this very deed will be deemed to be a sale deed.
There will be no need of executing a fresh sale deed.
The expenses spent in repairs and new constructions will be paid along with the mortgage money at the time of redemption according to account produced by the mortgagee.
" The mortgagee, Dhanrupmal, duly redeemed the earlier mortgage and, went into possession of the shop while possession of the Kacheri was delivered to the mortgagor.
On April 12, 1939, Dhanrupmal assigned his rights under the mortgage to Motilal who died later, and whose estate is now represented by his sons, who are the other respondents in this appeal. 'The estate of Purshottamdas, the original mortgagor, is now represented by his son, the appellant.
On January 2, 1947, the appellant filed the suit in the Court of the Sub Judge, Ajmere, against the respondents.
The suit was contested by the sons of Motilal, the assignee of the mortgage, who are the only respondents appearing in this appeal and whom we shall hence, hereafter refer to as the respondents.
They said that the suit was premature as under the mortgage contract there was no right of redemption for eighty five years after the date of the mortgage, that is to say, till August 1, 1984.
The learned Sub Judge, purporting to follow a decision of the Judicial Commis sioner, Ajmere, to whom he was subordinate, held that the provision postponing redemption for eightyfive years was invalid as it amounted to a clog on the equity of redemption.
He, therefore, passed a preliminary decree for redemption.
On appeal, the learned Judicial Conmmissioner, Ajmere, held, that the decision 512 which the Sub Judge had purported to follow was, distinguishable.
He examined a large number of cases on the subject and came to the conclusion that the provision in question did not amount to a clog on the equity of redemption.
He, therefore, allowed the appeal and dismissed the appellant 's suit.
From this decision the appeal to this Court arises.
It is admitted that the case is governed by the Transfer of Property Act.
Under section 60 of that Act, at any time after the principal money has become due, the mortgagor has a right on payment or tender of the mortgage money to require the mortgagee to reconvey the mortgage property to him.
The right conferred by this section has been called the right to redeem and the appellant sought to enforce this right by his suit.
Under this section, however, that right can be exercised only after the mortgage money has become due.
In Bakhtawai Begum vs HusainiKhanam (1), also the same view was expressed in these words: " Ordinarily, and in the absence of a special condition entitling the mortgagor to redeem during the term for which the mortgage is created, the right of redemption can only arise on the expiration of the specified period.
" Now, in the present case the term of the mortgage is eighty five years and there is no ' stipulation entitling the mortgagor to redeem during that term.
That term has not yet expired.
The respondents, therefore, contend that the suit is premature and liable to be dismissed.
The appellant 's answer to this contention is that the covenant creating the long term of eightyfive years for the mortgage, taken along with the provision that the mortgagor must redeem within a period of six months thereafter or not at all and the other terms of the mortgage and also the circumstances of the case, is really a clog on the equity of redemption and is therefore invalid.
He contends that, in the result the mortgage money had been due all along and the suit was not premature.
(1) (1913) L.R. 41 I.A. 84, 89.
513 The rule against clogs on the equity of redemption is that, a mortgage shall always be redeemable and a mortgagor 's right to redeem shall neither be taken away nor be limited by any contract between the parties.
The principle behind the rule was expressed by Lindley M. R. in Santley vs Wilde (1) in these words: " The principle is this: a mortgage is a conveyance of land or an assignment of chattles as a security for the payment of a debt or the discharge of some other obligation for which it is given.
This is the idea of a mortgage: and the security is redeemable on the payment or discharge of such debt or obligation, any provision to the contrary notwithstanding.
That, in my opinion, is the law.
Any provision inserted to prevent redemption on payment or performance of the debt or obligation for which the security was given is what is meant by_ a clog or fetter on the equity of redemption and is therefore void.
It follows from this, that "once a mortgage always a mortgage ".
The right of redemption, therefore, cannot be taken away.
The Courts will ignore any contract the effect of which is to deprive the mortgagor of his right to redeem the mortoage.
One thing, therefore, is clear, namely, that the term in the mortgage contract, that on the failure of the mortgagor to redeem the mortgage within the specified period of six months the mortgagor will have no claim over the mortgaged property, and the mortgage deed will be deemed to be a deed of sale in favour of the mortgagee, cannot be sustained.
It plainly takes away altogether, the mortgagor 's right to redeem the mortgage after the specified period.
This is not permissible, for " once a mortgage always a mortgage " and therefore always redeemable.
The same result also follows from section 60 of the Transfer of Property Act.
So it was said in Mohammad Sher Khan vs Seth Swami Dayal (2) : "An anomalous mortgage enabling a mortgagee after a lapse of time and in the absence of redemption to enter and take the rents in satisfaction of the interest.
would be perfectly valid if it did not also hinder an (1) (2) (1921) L.R. 49 1,A. 60, 65.
514 existing right to redeem.
But it is this that the present mortgage undoubtedly purports to effect.
It is expressly stated to be for five years, and after that,period the principal money became payable.
This, under section 60 of the Transfer of Property Act, is the event on which the mortgagor had a right on payment of the mortgage money to redeem.
The section is unqualified in its terms, and contains no saving provision as other sections do in favour of contracts to the contrary.
Their lordships therefore see no sufficient reason for withholding from the words of the section their full force and effect.
" Under the section, once 'the right to redeem has.
arisen it cannot be taken away.
The mortgagor 's right to redeem must be deemed to continue even after the period of six months has expired and the attempt to confine that right to that period must fail.
The term in the mortgage instrument providing that the mortgage can be redeemed only within the six months and not thereafter must be held period of to be invalid and ignored.
The learned Judicial Commissioner took the same view and this has not been challenged in this appeal on behalf of the respondents.
With this term however this case is not really con cerned.
Learned advocate for the appellant directed his attack on the term in the instrument of mortgage that it will not be redeemable for eighty five years.
He contended that this term amounts to a clog on the equity of redemption.
We wish to observe here that the learned advocate did not contend that the invalidity, as we have earlier held, of the term taking away the right to redeem the mortgage after the period of six months makes the term fixing the period of the mortgage at eighty five years invalid.
This latter term stands quite apart.
It only fixes the time when the principal sum is to become due, that is, when the right to redeem will accrue and has, therefore, nothing to do with a term which provides when that right will be lost.
The invalidity of one does not make the other also invalid.
The term providing that the right to redeem will arise after eightyfive years does not, of course, take 515 away the mortgagor 's right to redeem and is not, therefore, in that sense, a clog on the equity of redemption.
It does, however prevent accrual of the right to redeem for the period mentioned.
Is it then, in so far as it prevents the right to redeem from accruing for a time, a clog ? As we have already said, the right to redeem does not arise till the principal money becomes due.
When the principal sum is to become due must of course depend on the contract between the parties.
In the present case the parties have agreed that the right to redeem will arise eightyfive years after the date of the mortgage, that is to say, the principal money will then become due.
The appellant says that he should be relieved from this bargain that he has made.
This is the contention that has to be examined.
The rule against clogs on the equity of redemption no doubt involves that the Courts have the power to relieve a party from his bar 'gain.
If he has agreed to forfeit wholly his right to redeem in certain circumstances, that agreement will be avoided.
But the Courts have gone beyond this.
They have also relieved mortgagors from bargains whereby the right to redeem has not been taken away but restricted.
The question is the term now under consideration such that a Court will exercise its power to grant relief against it ? That depends on the extent of this power.
It is a power evolved in the early English Courts of Equity for a special reason.
All through the ages the reason has remained constant and the Court 's power is therefore limited by that reason.
The extent of this power has, therefore, to be ascertained by having regard to its origin.
It will be enough for this purpose to refer to two authorities on this question.
In a very early case, namely, Vermon vs Bethell Earl of Northington L. C. said, " This court, as a court of conscience, is very jealous of persons taking securities for a loan, and converting such securities into purchases.
And therefore I take it to be an established rule, that a mortgagee can never provide at the time of making the (1) ; , 113; ; ,839.
516 loan for any event or condition on which the equity of redemption shall be discharged, and the conveyance absolute.
And there is great reason and justice in this rule, for necessitous men are not, truly speaking, free men, but, to answer a present exigency, will submit to any terms that the crafty may impose upon them.
" In comparatively recent times Viscount Haldane L. C.repeated the same view when he said in G. and C. Kreglinger vs New Patagonia Meat and Cold Storage Company Ltd. (1): This jurisdiction was merely a special application of a more general power to relieve against penalties and to could them into mere securities.
The case of the common law mortgage of land was indeed a gross one.
The land was conveyed to the creditor upon the condition that if the money he had advanced to the feoffor was repaid on a date and at a place named, the fee simple would revest in the latter, but that if the condition was not strictly and literally fulfilled he should lose the land forever.
What made the hardship on the debtor a glaring one was that the debt still remained unpaid and could be recovered from the feoffor notwithstanding that he had actually forfeited the land to the mortgagee.
Equity, therefore, at an early date began to relieve against what was virtually a penalty by compelling the creditor to use his legal title as a mere security.
My Lords, this was the origin of the jurisdiction which we are now considering, and it is important to bear that origin in mind.
For the end to accomplish which the jurisdiction has been evolved ought to govern and limit its exercise by equity judges.
That end has always been to ascertain, by patrol evidence if need be, the real nature and substance of the transaction, and if it turned out to be in truth one of mortgage simply, to place it on that footing.
It was, in ordinary cases, only where there was conduct which the Court of Chancery regarded as unconscientious that it interfered with freedom of contract.
The lending of money, on mortgage or otherwise, was looked 517 on with suspicion, and the court was on the alert to discover want of conscience in the terms imposed by lenders.
" The reason then justifying the Court 's power to relieve a mortgagor from the effects of his bargain is its want of conscience.
Putting it in more familiar language the Court 's jurisdiction to relieve a mortgagor from his bargain depends on whether it was obtained by taking advantage of any difficulty or embarrassment that he might have been in when he borrowed the moneys on the mortgage.
Was the mortgagor oppressed ? Was he imposed upon ? If he was, then he may be entitled to relief.
We then have to see if there was anything unconscionable in the agreement that the mortgage would not be redeemed for eightyfive years.
Is it oppressive ? Was he forced to agree to it because of his difficulties ? Now this question is essentially one of fact and has to be decided on the circumstances of each case.
It would be wholly unprofitable in enquiring into this question to examine the large number of reported cases on the subject, for each turns on its own facts.
First then, does the length of the term and in this case it is long enough being eightyfive years itself lead to the conclusion that it was an oppressive term ? In our view, it does not do so.
It is not necessary for us to go so far as to say that the length of the term of the mortgage can never by itself show that the bargain was oppressive.
We do not desire to say anything on that question in this case.
We think it enough to say that we have nothing here to show that the length of the term was in any way dis advantagous to the mortgagor.
It is quite conceivable that it was to his advantage.
The suit for redemption was brought over forty seven years after the date of the mortgage.
It seems to us impossible that if the term was oppressive, that was not realised much earlier and the suit brought within a short time of the mortgage.
The learned Judicial Commissioner felt that the respondents ' contention that the suit had been brought as the price of landed property had gone up after the war, was 66 518 justified.
We are not prepared to say that he was wrong in this view.
We cannot also ignore, as appears from a large number of reported decisions, that it is not uncommon in various parts of India to have long term mortgages.
Then we find that the property was subject to a prior mortgage.
We are not aware what the term of that mortgage was ' But we find that mortgage included another property which became freed from it as a result of the mortgage in suit.
This would show that the mortgagee under this mortgage Was not putting any pressure on the mortgagor.
That conclusion also receives support from the fact that the mortgage money under the present mortgage was more than that under the earlier mortgage but the mortgagee in the present case was satisfied with a smaller security.
Again, no complaint is made that the interest charged, which was to be measured by the rent of the property, was in any manner high.
All these, to our mind, indicate that the mortgagee had not taken any unfair advantage of his position as the lender, nor that the mortgagor was under any financial embarrassment.
It is said that the mortgage instrument itself indicates that the bargain is hard, for, while the mortgagor cannot redeem for eighty five years, the mortgagee is free to demand payment of his dues at any time he likes ' This contention is plainly fallacious.
; There is nothing in the mortgage instrument permitting the mortgagee to demand any money, and it is well settled that the mortgagee 's right to enforce the mortgage and the mortgagor 's right to redeem are co extensive.
Then it is said that under the deed the mortgagee can spend any amount on repairs to the mortgage property and in putting up new constructions there and the mortgagor could only redeem after paying the expenses for these.
We are unable to agree that such is the effect of the mortgage instrument.
We cannot lose sight of the fact that the mortgaged shop and the area of the land on which it stood were very small.
It was not possible to spend a large.
sum on repairs or construction there.
Furthermore, having agreed to 85 years as the term of the mortgage, the parties must 519 have imagined that during this long period repairs and constructions would become necessary.
It is only such necessary repairs as are contemplated by the instrument and we do not consider that it is hard on the mortgagor to have to pay for such repairs and construction when he redeems the property and gets the benefit of the repairs and construction.
Neither do we think that there is anything in the contention that under the document the mortgagor was bound to accept whatever was shown in the mortgagee 's account as having been spent on the repairs and con struction.
That is not, in our view, the effect of the relevant clause which reads, " The expenses spent in repairs and new constructions will be paid. according to the account produced by the mortgagee.
" All that it means is that in claiming moneys on account of repairs and construction the mortgagee will have to show from his account that he spent these moneys.
It is really a safeguard for the mortgagor.
It was also said that all the terms in the deed were for the benefit of the mortgagee and that showed that the bargain was a hard one.
We do not think that all the terms were for the benefit of the mortgagee, or that what there was in the instrument was for his benefit and indicated that the mortgagee had forced a hard bargain on the mortgagor.
We have earlier said how the bargain appears to us to have been fair and one as between parties dealing with each other on equal footing.
We have no evidence in this case of the circumstances existing at the date of the mortgage as to the pecuniary condition of the mortgagor or as to anything else from which we may come to the conclusion that the mortgagee had taken advantage of the difficulties of the mortgagor and imposed a hard bargain on him.
It was said that the fact that the property was subject to a prior mortgage at the date of the mortgage in suit indicates the impecunious position of the mortgagor.
We are unable to agree with this contention.
Every debtor is not necessarily impecunious.
The mortgagor certainly derived this advantage from that mortgage that he was able to free from the earlier mortgage the kacheri and he has been in enjoyment of it ever since.
520 That, to our mind, indicates that the bargain had been freely made, There was nothing else to which our attention was directed as showing that the bargain was hard.
We, therefore, think that the bargain was a reasonable one and the eighty five years term of the mortgage should be enforced.
We then come to the conclusion that the suit was premature and ' must fail.
In the result we dismiss this appeal with costs.
Appeal dismissed.
| IN-Abs | The rule against clogs on the equity of redemption embodied in section 60 of the Transfer of Property Act empowers the Court not only to relieve a mortgagor of a bargain whereby in certain circumstances his right to redeem the mortgage is wholly taken away, but also where that right is restricted.
The extent of this latter power is, however, limited by the reason that gave rise to it, namely, the unconscionable nature of the bargain, which, to a court of equity, would afford sufficient ground for relieving the mortgagor of his burden, and its exercise must, therefore, depend on whether the bargain, in the facts and circumstances of any particular case, was one imposed on the mortgagor by taking advantage of his difficult and impecunious position at the time when lie borrowed the money.
Vermon vs Bethell, ; ; and D. and C. Kreglinger vs New Patagonia Meat and Cold Storage Company, Ltd., , relied on.
Santley vs Wilde, (1913) L. R. 41 I. A. 84 and Mohammad Sher Khan vs Seth Swami Dayal, (1912) L. R. 49 I. A. 60, refer red to.
Consequently, in a suit, for redemption where the mortgage deed, by two distinct and independent terms provided that (1) the mortgage shall not be redeemed for eightyfive years and (2) that it could be redeemed only after that period and within six months thereafter, failing which the mortgagor would cease to have any claim on the mortgaged property and the mortgage deed would be deemed to be a deed of sale in favour of the mortgagee, and it was clearly evident from the facts and circumstances of the case that the bargain was quite fair and one as between parties dealing with each other on an equal footing : Held, that the term providing for a period of eightyfive years was not a clog on the equity of redemption, and the mere length of the period could not by itself lead to an inference that the bar.
gain was in any way oppressive or unreasonable.
The term was enforceable in law and the suit for redemption, filed before the expiry of the period was premature.
Held, further, that the term that on the failure of the mortgagor to redeem within the specified period of six months, he 65 510 would lose his right to do so and the mortgage deed was to be deemed to be a deed of sale in favour of the mortgagee, was clearly a clog on the equity of redemption and as such invalid but its invalidity could not in any way affect the validity of the other term as to the period of the mortgage, that stood clearly apart.
|
: Criminal Appeal Nos. 486 to 489 of 1984.
From the Judgment and Order dated 5.4.1984 of the Bombay High Court in Criminal Revision Application No. 166/83 and Criminal Revision No. 234 of 1983 respectively.
M.C. Bhandare, A.M. Khanwilkar and Mrs. H. Wahi for the Appellants.
S.B. Bhasme and R.A. Gupta for the Respondents.
K. JAGANNATHA SHETTY, J.
These four appeals, by leave, arise out of the common judgment of Bombay High Court dated April 5, 1984 in Criminal Revision Applications 166 and 234 of 1983.
Criminal Appeal Nos. 486 and 487 of 1984 have been preferred by an Organisation called "Stree Atyachaar Virodhi Parishad".
It is an association committed to prevent atroci ties on women.
Criminal Appeal Nos. 488 and 489 of 1984 are by the State of Maharashtra.
563 The case relates to the death of a newly married girl called Chanda.
On June 15, 1981, Chanda was married to Ramesh.
The eider brother of Ramesh is called Dilip and Nathumal is their father.
The marriage of Ramesh and Chanda took place at Nerparsopant, District Yavatmal.
On the next day of the marriage, the bride and groom returned to the house of the latter at Arvi.
On June 19, 1981, they had gone to Amravati to have prayers in the Devi Tampie.
They came back in the same evening.
The day follow ing was a fateful day.
At about 2.30 PM on June 20, 1981, Chanda was seen with flames on the first floor of the resi dential building, with frantically crying for help.
That attracted some of the neighbours from the ground floor.
They rushed to rescue Chanda.
Three of them are: Bhanrao, Ballu alias Nandu and Ramdas.
They extinguished the flame which was practically engulfing Chanda.
The inmates in the house, however, did not render any such help.
Dilip who was on the first floor was seen coming down the stairs.
Shortly, thereafter two doctors came and the police also arrived.
Chanda was taken to Ervin Hospital at Amravati in an uncon scious condition.
She died in the hospital at about 9.00 pm on the same day.
Before the death, her dying declaration was said to have been recorded by the Executive Magistrate.
It was stated therein that when she was preparing tea in the kitchen, her saree caught fire accidentally and consequently she received the burn injuries.
The parents of Chanda were informed of the death.
They suspected foul play by the in laws of Chanda.
They lodged a report at Amravati Police Station complaining that Chanda 's death might have been the outcome of tension due to demand of dowry.
The Crime Branch of the CID investigated the case and charge sheeted Dilip and Nathumal under sec.
306 read with sec.34 IPC.
It was alleged that the Chanda has commit ted suicide by burning herself and Dilip and Nathumal abet ted her.
An investigation of the case revealed that Chanda had hostile atmosphere soon after her marriage.
She was not treated well in her husband 's house.
Vijay, her brother and Mani Chand, father have given statements that the in laws demanded unreasonable dowry which could not be complied with.
Even at the wedding ceremony, it seems, that they behaved badly on the payment of insufficient dowry.
After the marriage, when Vijay came to take his sister back home as per custom, he was not even permitted to meet her.
Kamala Bai, the maid servant accompanying Chanda was also sent back.
She has also 564 given detailed version about the unfavourable atmosphere around Chanda.
In addition to the statements of witnesses, there is a report of the Chemical Analyser and post mortem report.
These indicate that the death of Chanda could not be by accidental fire.
The trial court after considering all the facts and circumstances appearing on record and after heating the counsel for accused and Public Prosecutor was of priraa facie opinion that it was not a suicide but homicidal death.
Accordingly, the charge under sec.
302 IPC was framed against Dilip.
Nathumal, however, was discharged holding that the allegations against him do not justify the framing of any charge.
There were two revision applications before the High Court of Bombay.
The State filed a revision challenging the validity of discharge of Nathumal.
Dilip on his part ques tioned the correctness of the charge framed against him and demanded his discharge also.
The High Court dismissed the revision preferred by the State while accepting the revision of Dilip.
The High Court was of opinion that the charge under sec.
302 against Dilip was misconceived and there is not even a case against him to frame charge under sec.
306 IPC.
He was accordingly discharged.
The primary question for consideration before us, is whether the High Court was justified in interfering with the charge framed by the trial court against Dilip? The next question to be considered is whether it is necessary to put Nathumal also on trial with the material on record.
We have perused the judgments of the courts below and heard counsel on both sides.
We gave our anxious considera tion to the material on record.
Section 227 of the Code of Criminal Procedure having beating on the contentions urged for the parties, provides: "227.
Discharge If, upon considera tion of the record of the case and the docu ments submitted therewith, and after hearing the submissions of the accused and the prose cution in this behalf, the judge considers that there is no sufficient ground for pro ceeding against the accused, he shall dis charge the accused and record his reasons for so doing.
" 565 Section 228 requires the judge to frame charge if he consider that there is ground for presuming that the accused has committed the offence.
The interaction of these two sections has already been the subject matter of considera tion by this Court.
In State of Bihar vs Ramesh Singh, ; , Untwalia, J., while explaining the scope of the said sections observed (at 259): "Reading the two provisions together in juxta pesition, as they have got to be, it would be clear that at the beginning and the initial stage of the trial the truth, veracity and effect of the evidence which the Prosecu tor proposes to adduce are not to be meticu lously judged.
Nor is any weight to be at tached to the probable defence of the accused.
It is not obligatory for the judge at that stage of the trial to consider in any detail and weigh in a sensitive balance whether the facts, if proved, would be incompatible with the innocence of the accused or not.
The standard finding regarding the guilt or other wise of the accused is not exactly to be applied at the stage of deciding the matter under sec.
227 or sec.
228 of the Code.
At that stage the court is not to see whether there is sufficient ground for conviction of the accused or whether the trial is sure to end in his conviction.
Strong suspicion against the accused, if the matter remains in the region of suspicion, cannot take the place of proof of his guilt at the conclusion of the trial.
But at the initial stage if there is a strong suspicion which leads the court to think that there is ground for presuming that the accused has committed an offence then it is not open to the court to say that there is no sufficient ground for proceeding against the accused.
" In Union of India vs Prafulla Kumar Samal & Anr., ; at 234 35, Fazal Ali, J., summarised some of the principles: "(1) That the Judge while consider ing the question of flaming the charges under sec.
227 of the Code has the undoubted power to sift and weigh the evidence for the limited purpose of finding out whether or not a prima facie case against the accused had been made out.
(2) Where the material placed before the Court disclose grave suspicion against the accused which has not been properly explained, the Court will be fully justified in 566 framing a charge and proceeding with the trial.
(3) The test to determine a prima facie case would naturally depend upon the facts of each case and it is difficult to lay down a rule of universal application.
By and large, however, if two views are equally possible and the Judge is satisfied that the evidence produced before him while giving rise to some suspicion but not grave suspicion against the accused, he will be fully within his right to discharge the accused.
(4) That in exercising his jurisdic tion under the present Code is a senior and experienced Judge cannot act merely as a Post Officer or a mouth piece of the prosecution, but has to consider the broad probabilities of the case, the total effect of the evidence and the documents produced before the Court, any basic infirmities appearing in the case and so on.
This however, does not mean that the Judge should make a roving enquiry into the pros and cons of the matter and weigh the evidence as if he was conducting a trial.
" These two decisions do not lay down different princi ples.
Prafulla Kumar case has only reiterated what has been stated in Ramesh Singh case.
In fact, sec.
227 itself con tains enough guidelines as to the scope of enquiry for the purpose of discharging an accused.
It provides that "the Judge shall discharge when he considers that there is no sufficient ground for proceeding against the accused".
The 'ground ' in the context is not a ground for conviction, but a ground for putting the accused on trial.
It is in the trial, the guilt or the innocence of the accused will be determined and not at the time of framing of charge.
The Court, therefore, need not undertake an elaborate enquiry in sifting and weighing the material.
Nor it is necessary to delve deep into various aspects.
All that the Court has to consider is whether the evidenciary material on record if generally accepted, would reasonably connect the accused with the crime.
No more need be enquired into.
So much is, we think, established law.
To be fair to the accused, we have examined the material on record and also perused the statements of some of the witnesses.
From the report of the Chemical Analyser, it will be seen that kero sene residue was found on each and every garment of the deceased.
The post mortem report also indicates, 567 besides burn injuries, that Chanda had sustained contusions on the back shoulders.
According to the doctor who conducted the postmortem, those contusions might have been caused with the blunt rounded object.
The learned Judge of the High Court has not adverted to these facts although the conten tion of the Public Prosecutor in this regard has been no ticed.
Not merely that, the events that proceeded the death of Chanda did not receive any consideration.
The statements of brother and father of Chanda and also that of Kamala Bai the maid servant of Chanda have been ignored.
The conduct of Dilip which was highlighted in the context and circumstances, was brushed aside with little significance.
It is said that Dilip was coming down from the staircase when Chanda was crying for help.
The manner in which he went on at that time, if true, did not bring him credit.
The High Court, however, said: "That the accused was passive is neither here nor there.
It all depends upon the mental response and reaction of an indi vidual whether he faces the risk and attempt to extinguish the flames or quietly watches the incident.
By no interpretation could it be stretched to show that the accused either actively committed the act of burning or ac tively aided the commission of suicide.
" Counsel for the State was very critical of the attitude adopted by the High Court in dealing with the case.
His criticism to some extent is not unjustified.
It may not be out of place to mention that "dowry" which is a deep rooted social evil appears to be the cause of ever so many unfortunate death of young ladies.
It is an offence brutal and barbaric.
It is generally committed inside the house and more often with a circumstance to give an impres sion that it was a suicidal death.
There will be all round attempt to cover up such offence by the family members rather than to expose it.
The Government has come forward with legislations from time to time to protect women and to punish those who commit attrocities on them.
In 1961 the Dowry Prohibition Act (Act 28 of 196 1) was passed prohibit ing the taking or giving dowry.
By the Criminal Law (Second Amendment) Act, 1983 (Act 46 of 1983) Chapter XX A was introduced in the Penal Code with sec.
498 A creating a new offence of cruelty.
It provides for punishment to husband or his relatives if they harass a woman with a view to coerce her to meet any unlawful demand for property.
Section 174 of the Criminal Procedure Code was also amended to secure post mortem in 568 case of suicide or death of a woman within seven years of her marriage.
Section 113 A has been introduced in the Evidence Act, 1872 raising presumption of cruelty as defined under sec.
498 A IPC against the husband or his relatives if the wife commits suicide within a period of seven years from the date of her marriage.
These provisions reflect the anxiety of the representatives of our people to deal firmly the menace of dowry deaths.
Again, there are sweeping changes made in the Dowry Prohibition (Amendment) Act, 1984.
A new offence called 'Dowry death ' has been created by introducing sec.
304 B in the Penal Code.
It raised presump tion of culpability against the husband or relative hitherto unknown to our jurisprudence.
It provides that where the death of a woman is caused by any bums or bodily injury or otherwise than under normal circumstances within seven years of her marriage and it is shown that soon before her death she was subjected to cruelty or harassment by her husband or any relative of her husband for or in connection with any demand for dowry, such death shall be called 'dowry death '.
The section also provides hat such husband or relative shall be deemed to have caused her death and shall be pun ished with imprisonment for a minimum of seven years but which may extend to life imprisonment.
We are referring to these provisions not that they are attracted to the present case.
It is only to emphasize that it is not enough if the legal order with sanction alone moves forward for protection of women and preservation of societal values.
The criminal justice system must equally respond to the needs and notions of the society.
The inves tigating agency must display a live concern and sharpen their wits.
They must penetrate into every dark corner and collect all the evidence.
The Court must also display great er sensitivity to criminality and avoid on all counts "soft justice".
In the instant case the trial court has considered every material on record in support of the charge framed.
The trial court has also given reasons why a charge under sec.
302 IPC is warranted against Dilip even though the police charge sheeted him under sec.
306 IPC.
The High Court has gone on a tangent mainly relying on the dying declaration as if it has been conclusively proved to be the true and faith ful version of the deceased.
Apart from that, we are unable to compromise ourselves with the approach made and the opinion expressed by the High Court in respect of many of the matters.
We wish to add a word regarding interference by the High court against a charge framed by the Sessions Court.
Section 227 which 569 confers power to discharge an accused was designed to pre vent harassment to an innocent person by the arduous trial or the ordeal of prosecution.
How that intention is to be achieved is reasonably clear in the section itself.
The power has been entrusted to the Sessions Judge who brings to bear his knowledge and experience in criminal trials.
Be sides, he has the assistance of counsel for the accused and Public Prosecutor.
He is required to hear both sides before framing any charge against the accused or for discharging him.
If the Sessions Judge after hearing the parties frames a charge and also makes an order in support thereof, the law must be allowed to take its own course.
Self restraint on the part of the High Court should be the rule unless there is a glaring injustice stares the Court in the face.
The opinion on any matter may differ depending upon the person who views it.
There may be as many opinions on a particular matter as there are courts but it is no ground for the High Court to interdict the trial.
It would be better for the High Court to allow the trial to proceed.
The counsel for the State was equally critical upon the discharge of Nathumal.
It was argued that Nathumal being the manager of the family ought to have taken care of Chanda and without his connivance, none would have demanded dowry and put Chanda on fire.
It is true that it is his obligation as manager of the family to protect Chanda and safeguard her rights.
We have no doubt that he has failed to perform his moral obligation.
But that by itself without anything more is not sufficient to frame a charge against him.
We, there fore, agree with the discretion exercised by the trial court and leave it at that.
In the result and for the reasons stated, we allow the criminal appeals to the extent indicated only as against Dilip.
We set aside the order of the High Court and restore that of the trial court.
The appeals against Nathumal are dismissed.
His discharge is confirmed.
We direct the court to proceed with the trial expeditiously.
Before parting with the case, we must place on record the useful service rendered by 'Stri Atyachar Virodhi Pari shad ' in this case.
It is a social welfare organisation.
It has come up to this Court spending its own money by prefer ring the appeals.
We very much appreciate the object of the organisation and the assistance rendered P.S.S. Appeals allowed partly.
| IN-Abs | The deceased was seen in flames on the first floor of her in laws house crying for help within five days of her marriage with the younger brother of the respondent.
While neighbours rushed to her rescue and extinguished the flames, the inmates of the house did not render any such help.
The respondent who was on the first floor was seen coming down the stairs.
The deceased succumbed to the burn injuries in the hospital on the same day.
In her dying declaration recorded by the Executive Magistrate, she stated that when she was preparing tea in the kitchen her saree caught fire accidently.
The parents of the deceased suspected foul play by her in laws and lodged a report with the police.
An investiga tion.of the case revealed that the deceased had met hostile atmosphere soon after her marriage.
The parents gave state ments that the in laws demanded unreasonable dowry which could not be complied with and that at the wedding ceremony they had behaved badly on the payment of insufficient dowry.
Her brother who had gone to bring her back home was not permitted to meet her.
The maid servant sent along with her was also sent back.
The respondent and his father were charge sheeted under section 306 read with section 34 I.P.C.
The trial court came to a prima facie conclusion that it was not a suicide but homici dal death.
Accordingly, a charge under section 302 I.P.C. was framed against the respondent.
The respondent 's father was, however, discharged.
561 The High Court dismissed the revision petition of the State against the respondent 's father.
Wile accepting the respondent 's revision it took the view that the fact that the accused was passive was of no consequence that it all depends upon the mental response and reaction of an individ ual whether he faces the risk and attempts to extinguish the flames or quietly watches the incident, that it does not show that the accused actively committed the act of burning or actively added the commission of suicide, and held that the charge under section 302 against him was not made out, and there was not even a case against him to frame charge under section 306 I.P.C.
The appellant, a social welfare organisation and the State preferred appeals to the Supreme Court.
On the question: Whether the High Court was justified in interfering with the charge framed by the trial court against the respondent, and whether it was necessary to put his father also on trial with the material on record.
Partly allowing the criminal appeals, HELD: 1.
The High Court was not justified in interfering with the charge framed by the trial court against the re spondent accused.
The trial court had considered every material on record in support of the charge framed.
It had also given reasons why a charge under section 302 I.P.C. was warranted against the respondent even though the police had charge sheeted him under section 306 I.P.C. Section 227 Cr.
P.C. which confers power to discharge an accused was designed to pre vent harassment to an innocent person by the arduous trial or the ordeal of prosecution.
The power has been entrusted to the Sessions Judge who brings to hear his knowledge and experience in criminal trials.
If he after hearing the parties frames a charge and also makes an order in support thereof, the law must be allowed to take its own course.
State of Bihar vs Ramesh Singh, ; and Union of India vs Prafulla Kumar Samal & Anr., ; at 234 35, referred to.
Self restraint on the part of the High Court should he the rule unless there is glaring injustice staring the Court in the face.
In the 562 instant case, it had discharged the respondent mainly rely ing on the dying declaration as if it has been conclusively proved to be the true and faithful version of the deceased.
It did not advert to the report of the Chemical Analyser in which he found kerosene residue on each and every garment of the deceased, and the post mortem report which indicated that besides burn injuries the deceased had sustained contu sions on the back shoulders which might have been caused with a blunt round object.
The events that preceded the death of the deceased also did not receive any considera tion.
The statements of brother, father and the maid servant of the deceased have been ignored.
The respondent was seen coming down from the staircase when the deceased was crying for help.
The manner in which he went on at that time, if true, did not bring him credit.
The approach made by the High Court, therefore, cannot be accepted.
[569C; 566H; 567A C] 4.
Although it was the moral obligation of respondent 's father as manager of the family to protect the deceased and safeguard her life and he had failed to perform that obliga tion, that by itself without anything more is not sufficient to frame a charge against him.
The discretion exercised by the trial court in discharging him was, therefore, correct.
[569E]
|
ivil Appeal No. 2984 of 1983.
From the Judgment and Order dated 19.5.1982 of the Patna High Court in Appellate Decree No. 275 of 1981.
554 Govind Mukhoty and K.N. Rai for the Appellant.
F.S. Nariman and Ranjit Kumar for the Respondents.
The Judgment of the Court was delivered by SHARMA, J.
The question which arises in this appeal by special leave is whether the default by a tenant in payment of rent for the period before the Bihar Buildings (Lease, Rent and Eviction) Act, 1947 (hereinafter referred to as the Bihar Rent Act), was extended and became applicable, can be the basis for holding him a defaulter within the meaning of clause (d) of section 11(1) of the Bihar Rent Act, 1947 and, therefore, liable to be evicted.
The building in question is in Danapur Cantonment area near the town of Patna.
The appellant was inducted as a tenant therein by the owner one Janki Devi under a document of lease for a fixed period.
Since the deed was not executed in accordance with the requirements of law it remained inoperative.
After the period was over, Janki Devi institut ed a suit on 10.12.1968 for eviction of the appellant and for a decree for arrears of rent for the period May to August 1968, which was registered as Title Suit No. 3 17 of 1968.
The Bihar Rent Act was not then applicable to Danaput Cantonment.
During the pendency of the case on 14.2.1970 the provisions of the Bihar Rent Act were extended to this area.
Presumably in view of the fact that the lease deed could not be treated to be valid in the eye of law, a prayer for withdrawal of the relief for eviction was made by the plain tiff and was allowed with leave to file a fresh suit.
A decree for arrears of rent, however, was passed.
The present suit was filed on 28.5.1974 for eviction of the appellant on the grounds of bona .fide personal necessity and default in payment of rent for the periods May to July, October and November 1968, December 1969 to Febru ary 1970, and December 1973 to April 1974.
The trial court decreed the suit on both the grounds.
On appeal by the appellant, the learned Subordinate Judge reversed the find ing on the question of bona fide personal necessity but affirmed the decree on the ground of default.
The High Court has by the impugned judgment maintained the decree.
The appellant denied the allegation that he has defaulted in payment of rent.
The first appellate court on a consideration of the evidence held that the appellant did default in payment of rent for 555 May, June, July, October and November 1968, and December 1969 to February 1970, and on that basis decreed the suit.
It has been contended on behalf of the appellant that non payment of rent for the period before 14.2.1970 (when the Bihar Rent Act was not applicable to the Cantonment area) is not relevant, and since the rent of less than a month in February 1970 remained unpaid after the Bihar Rent Act was extended, it could not be legitimately made the basis for the decree of eviction.
The High Court agreed with the appellant that the Bihar Rent Act did not apply to the Cantonment area with retrospective effect, but proceeding further it said that in view of the decision in Kapur Chand Jain vs B.S. Grewal and others; , , it must be held that the Act, although prospective in its application, takes into account the default in payment of rent of the earlier period.
There is no manner of doubt that the Act was applied to the area concerned on 14.2.1970 with prospective effect.
The question whether the Legislature intended to include previous default of the tenant in payment of rent within the grounds for eviction has to be answered by construing the language of the relevant provisions in the Bihar Rent Act.
Although in Kapur Chand 's case (supra) a similar dispute was raised, it is not permissible to apply the decision irre spective of the difference in language of the two statutes.
It is true that section 9 of the Punjab Security of Land Tenures Act, 1953 (hereinafter referred to as the Punjab Act) which was relevant in the reported case also dealt with the grounds for eviction of a tenant, but there was clear indi cation in the section that the grounds for eviction included the earlier default also.
The relevant portion of the sec tion, as quoted in the judgment, reads as follows: "9(1) Notwithstanding anything contained in any other law for the time being in force, no land owner shall be competent to eject a tenant except when such tenant: (i) is a tenant on the area reserved under this Act or is a tenant of a small landowner; or (ii) fails to pay rent regularly without sufficient cause; or (iii) is in arrears of rent at the commence ment of this Act; or 556 Explanation For the purposes of clause (iii), a tenant shall be deemed to be in arrears of rent at the commencement of this Act, only if the payment of arrears is not made by the tenant within a period of two months from the date of notice of the execu tion of decree or order, directing him to pay such arrears of rent.
" It will be seen that clause (iii) in unambiguous terms refers to the arrears of rent for the period before the commencement of the Punjab Act.
Dr. Y.S. Chitale, learned counsel for the landlord Respondent, contended that the judgment of this Court rested on the interpretation of clause (ii) of section 9(1) of the Punjab Act which did not contain any words similar to those in clause (iii).
Strongly relying on the following observation: "In our opinion, the conduct of the tenant prior to the coming into force of the new section can be taken into account.
No doubt a statute must be applied prospectively.
But a statute is not applied retrospectively because a part of the requisite for its action is drawn from a moment of time prior to its passing.
The clause in question makes a par ticular conduct the ground for an application for eviction.
" It was urged that the Bihar Act contained similar provisions and the ratio in Kapur Chand 's case is fully applicable.
In view of vital difference in the language of the two Acts, we do not find ourselves in a position to accept the argument.
Having regard to the scheme of the Punjab Act and the language used therein specially the words mentioned in clause (iii) of section 9(1) it is apparent that the Act took into consideration the earlier default in payment of rent within the grounds for eviction.
There was no dispute in Kapur Chand 's case about the construction of the section.
The point which was raised before this Court was whether the past conduct of the tenant could be legitimately taken into account by the statute which was prospective in application.
And this point was answered in favour of the landlord.
In the case before us the appellant is not contending that the past conduct of a tenant cannot be taken into account by the Legislature if it so intends.
The question is whether such an intention can be spelled out from section 11(1)(d) of the Bihar Rent Act which reads as follows: 557 "11.
Eviction of tenants.
(1) Notwithstanding anything contained in any contract or law to the contrary but subject to the provisions of the and to those of section 12, where a tenant is in possession of any building, he shall not be liable to eviction therefrom except in execution of a decree passed by the Court on one or more of the following grounds: (d) where the amount of two months ' rent lawfully payable by the tenant and due from him is in arrears by not having been paid within the time fixed by contract or, in the absence of such contract, by the last day of the month next following that for which the rent is payable or by not having been validly remitted or deposited in accordance with section 13 ;" 7.
Dr. Chitale has streneously contended that even independent of the Bihar Rent Act the tenant appellant was under a duty to regularly pay the monthly rent by the corre sponding succeeding month, under the provisions of the Transfer of Property Act, and if he defaulted in due per formance of his duty he must be presumed to be made liable for eviction by the Legislature while enacting section 11(1)(d).
He emphasised that clause (d) was not saddling the tenant with a new duty which was not there earlier.
The Act intends to deprive the erring tenant negligent in payment of rent from its benefits and there is, therefore, no reason to hold that his earlier conduct is not to be taken into account.
The argument does not appear to be sound inasmuch as it ignores the following words towards the end of clause (d), quoted above, which appear to us to be very illuminating: ". or by not having been validly remitted or deposited in accordance with section 13;" 8.
Ordinarily where a tenant offers the rent which is refused by the landlord without any justifiable reason the tenant is held to have fully performed his duty.
Under the Bihar Rent Act, however, the position is a little different.
Even on the refusal by the landlord to accept rent lawfully offered by the tenant, the tenant is under a further duty as mentioned in section 13(1) to remit such rent by postal money order 558 to the landlord.
Where a bona fide doubt arises as to the person who is entitled to receive rent the tenant is permit ted by section 13(2) to deposit the rent in the prescribed man ner.
The latter part of section 11(1)(d), quoted above, deals with cases attracting section 13.
The result is that if a tenant has made a proper offer to pay the rent and the landlord has unreasonably refused to accept it, the tenant cannot escape the liability of eviction under clause (d) unless he proves that he had further remitted the rent by postal money order.
This position is fully settled.
If the situation is analysed in this light it will be seen that clause (d) can be held to apply only where section 13 of the Bihar Rent Act is attracted.
If section 13 cannot be applied to a particular situation, clause (d) also would not apply.
section 13 could not obviously be applicable before the Act was extended to the area in ques tion.
Consequently it must be held that the default for the earlier period cannot be the basis for a decree of eviction under section 11(1)(d).
Mr. F.S. Nariman, who also argued on behalf of the respondent, feebly suggested that the extension of the Bihar Rent Act to the Cantonment area may be held to be applicable with retrospective effect in view of sub sections (2) and (4) of section 3 of the .
Dr. Chitale also referred to the observa tion in paragraph 8 of the judgment in Smt.
Sant Kaur and another vs Ganesh Chaudhary, AIR 1949 Patna 137 on the question of retrospectivity.
We do not find any merit in the argument.
The language of the Bihar Rent Act is clear and does not admit any doubt about its prospective nature.
So far as section 3 of the Cantonments Act is concerned, sub section (2) merely permits the Central Government to extend any rent enactment from an earlier date subject to certain limita tions, and sub section (4) is irrelevant in the present context as its scope is limited to dealing with orders and decrees passed before the extension of a rent law to a Cantonment area.
When this was pointed out to Mr. Nariman, he did not further pursue with his argument, and Dr. Chitale in express terms conceded that the Bihar Rent Act could not be interpreted to have been extended to the Cantonment area with retrospective effect.
In that view, we need not detain ourselves further on this point.
Mr. Nariman lastly urged that the appellant also defaulted in payment of rent for December 1973 to April 1974, a period of five months, after the Act was applied to the cantonment area, and the impugned decree, therefore, should not be disturbed.
On behalf of the appellant it was suggested that in view of the finding in paragraph 12 of the judgment of the first appellate court it should be presumed that the 559 respondents ' case of default for the subsequent period was rejected.
We have been taken through the judgments of the first appellate court and the High Court and we find that the controversy with respect to the alleged default for the later period has been left undetermined.
Since the question is dependent on an appraisal of the evidence led by the parties, we are of the view that the case should be remitted to the first appellate court for the decision on the ques tion whether the plaintiff landlord has proved the defend ent tenant 's default in payment of rent for the period December 1973 to April 1974.
If the learned Subordinate Judge comes to the conclusion that the tenant did default within the meaning of section 11(1)(d) of the Bihar Buildings (Lease, Rent and Eviction) Act, 1947 for two months or more during this period, he would decree the suit; otherwise the suit would be dismissed.
In the result, the appeal is allowed, the judgments of the High Court and the first appellate court are set aside and the case is remitted to the first appellate court for fresh decision in the light of the observations made above.
The costs shall follow the final result in the suit.
G.N. Appeal al lowed.
| IN-Abs | The appellant was inducted as a tenant in the building in question under a document of lease.
Since the deed was not executed in accordance with the requirements of law, it remained inoperative.
After the lease period the owner instituted a suit for eviction of the appellant and for a decree for arrears of rent.
During the pendency of the suit the provisions of the Bihar Rent Act were extended to the area, and as such the prayer for withdrawal of the relief for eviction was allowed with leave to file a fresh suit.
However, decree for arrears of rent was passed.
Thereafter a fresh suit was filed.
The Trial Court decreed the suit on both the grounds of personal necessity and default in pay ment of rent.
On appeal the Subordinate Judge reversed the finding on the question of bona fide personal necessity, but affirmed the decree on the ground of default.
The High Court, on appeal maintained the decree.
The present appeal by special leave, is against the High Court 's judgment.
On behalf of the appellant, it was contended that non payment of rent (when the Bihar Rent Act was not applicable to the area) is not relevant and so it could not be legiti mately made the basis for the decree of eviction.
It was submitted on behalf of the respondent that even independent of the Bihar Rent Act the appellant was under a duty to regularly pay the monthly rent and for the default, he must be presumed to be made liable for eviction under Section 11(1)(d) of the Act.
Allowing this appeal, HELD: 1.
There is no manner of doubt that the Act was applied to the area concerned on 14.2.1970 with prospective effect.
The ques 553 tion whether the Legislature intended to include previous default of the tenant in payment of rent within the grounds for eviction has to be answered by construing the language of the relevant provisions in the Bihar Rent Act.
[555C D] 2.
Ordinarily where a tenant offers the rent which is refused by the landlord without any justifiable reason the tenant is held to have fully performed his duty.
Under the Bihar Rent Act, however, the position is a little different.
Even on the refusal by the landlord to accept rent lawfully offered by the tenant, the tenant is under a further duty as mentioned in section 13(1) to remit such rent by postal money order to the landlord.
Where a bona fide doubt arises as to the person who is entitled to receive rent the tenant is permitted by section 13(2) to deposit the rent in the prescribed manner.
The latter part of section 11(1)(d), quoted above, deals with cases attracting section 13.
The result is that if a tenant has made a proper offer to pay the rent and the landlord has unreasonably refused to accept it, the tenant cannot escape the liability of eviction under clause (d) unless he proves that he had further remitted the rent by postal money order.
This position is fully settled.
If the situation is analysed in this light it will be seen that clause (d) can be held to apply only where section 13 of the Bihar Rent Act is attracted.
If section 13 cannot be applied to a particular situation, clause (d) also would not apply.
Section 13 could not obviously be applicable before the Act was extended to the area in ques tion.
Consequently it must be held that the default for the earlier period cannot be the basis for a decree of eviction under section 11(1)(d).
[557G H; 558A C] K.C. Jain vs
B.S. Grewal & Ors., ; distinguished.
Since the question is dependent on an appraisal of the evidence led by the parties, the case should be remitted to the first appellant court for the decision on the ques tion whether the landlord has proved the tenant 's default in payment of rent for the period from December 1973 to April 1974.
If the Subordinate Judge comes to the conclusion that the tenant did default within the meaning of section 11(1)(d) of the Act for two months or more during this period, he would decree the suit; otherwise the suit would be dismissed.
[559B C]
|
ivil Appeal No. 1017 of 1975.
From the Judgment and Order dated 10.10.1974 of the Karnataka High Court in Civil Revision Petition No. 187 of 1974.
N.B. Datar and Ravi P. Wadhwani for the Appellant.
P.R. Ramasesh, S.S. Padmaraj, Naresh Kaushik and Ms. Lalitha Kaushik for the Respondents.
Respondent No. 1 is the landlord and K. Gopal Krishna to whom notice was given by this Court and has appeared pursuant thereto is 580 the person who was inducted as a tenant by respondent No. 1 in the said premises immediately on an appeal by respondent No. 1 being allowed by the First Additional District Judge, Bangalore as set out hereinafter.
We direct that K. Gopal Krishna be joined as respondent No. 2 in the appeal.
The appellant was one of the eight tenants in the build ing belonging to the respondent No. 1, in respect of a shop admeasuring 9 ' x 17 '.
The shop of the appellant was one of the four shops on the ground floor of the building facing Belepet Main Road, Bangalore City.
The other premises in the said building comprised four office premises on the first floor.
The respondent No. 1 filed eight eviction petitions in the Court of the 1st Munsiff, Bangalore seeking eviction of the tenants in the said building on the ground that the building was bona fide required by him for the immediate demolition and reconstruction as contemplated under Section 21(1)(j) of the Karnataka Rent Control Act, 1961 (hereinaf ter referred to as "the Karnataka Rent Act").
In the evic tion petition against the appellant, respondent No. 1 spe cifically stated that the appellant might occupy the prem ises corresponding to the original tenement in the new building after it was built.
1t may be mentioned that subse quently, respondent No. 1 filed an application for amending the averment in the eviction petition to delete the words 'corresponding portion '.
He also filed an application for leave to withdraw his offer set out earlier.
Both these applications were rejected.
The appellant and one other tenant filed memoranda consenting to a decree being passed in pursuance of Section 21(1)(j) of the Karnataka Rent Act.
Pursuant to the memorandum filed by the appellant, wherein it was stated that the key was also handed over to the landlord, the court passed an order allowing the eviction petition against the appellant under Section 21(1)(j) of the Karnataka Rent Act.
After the reconstruction of the building was commenced, the appellant gave a notice to respondent No. 1 of his intention to occupy the corresponding shop in the new building and stated that he was agreeable to pay the fair rent in respect of the said shop as contemplated under Section 27 of the Karnataka Rent Act.
It may be mentioned that, in the meantime, respondent No. 1 got the plans of the proposed new building altered from time to time and in these revised plans dimensions of the shops proposed to be con structed in the new building were altered.
In the meantime, curiously enough, respondent No. 1 who had got the eviction decree filed an appeal in the Court of the First Additional District Judge, Bangalore, challenging the eviction decree in terms of section 21(1)(j) of the Karnataka Rent Act passed by the First Munsiff, Bangalore on the ground that the said 581 decree had been passed by consent and the court had no jurisdiction to pass any decree by consent under Section 21(1)(j) of the Karnataka Rent Act.
This appeal was allowed by the learned Additional District Judge.
Immediately on the appeal being allowed, respondent No. 1 inducted respondent No. 2 as the tenant in a shop in the new or reconstructed building reasonably corresponding to the shop occupied by the appellant in the old building and respondent No. 2 started business therein in the name and style of Sri Cut piece Centre.
The appellant preferred a Revision Petition to the High 'Court against this decision.
In the said revision petition, the appellant has joined as respondent No. 2, K. Gopal Krishna.
The said revision petition was allowed by the High Court.
The High Court inter alia held that the decree passed by the learned Munsiff under Section 21(1)(j) of the Karnataka Rent Act was not a decree passed by consent but was a valid decree passed by a competent court after appli cation of mind.
In respect of the objections raised by respondent No. 2, it was held by the High Court that since the demolition and reconstruction were in pursuance of an order of eviction passed under sub clause (j) of Section 21(1) of the Karnataka Rent Act, there cannot be any doubt that the landlord is liable to place the tenants in vacant possession of the reconstructed building as provided in the Act.
It was ' further held that since the lease in favour of the second respondent came into existence and the second respondent occupied the new building during the pendency of the proceedings arising out of the landlord 's eviction petition under Section 21(1)(j) of the Karnataka Rent Act, the rights of the second respondent are subject to the rights of the original tenants conferred on them under Sections 27 and 28 of the Karnataka Rent Act.
(See: Sreeni vasa Rao vs Narasimhiah, [1972] 1 Mysore Law Journal p. 490).
Subsequent to this order of the High Court allowing the revision petition of the appellant, the appellant filed an application under Sections 27 and 28 of the Karnataka Rent Act before the Trial Court for permitting him to occupy the said shop premises which had been given by respondent No. 1 in the possession of respondent No. 2 as a tenant.
The Trial Court allowed this application filed by the appellant and held that the appellant was entitled to get the said shop occupied by respondent No. 2 which admeasured 9 ' x 16 ' in place of the old one.
On revision, by the impugned order, the High Court set aside the order passed in favour of the appellant, taking the view that the appellant was not enti tled to claim the shop occupied by respondent No. 2 and respondent No. 1, the landlord, was only required to give to the appellant a tenement, that is, any tenement in the newly constructed 582 building.
The appellant claims to be entitled to be put in possession of the shop admeasuring 9 ' x 16 ' facing the Belepet Main Road occupied by respondent No. 2 whereas respondent No. 1 has offered to the appellant only a shop behind this shop admeasuring 11 ' 6" x 8 ' 6" which is not facing the main road, namely, the Belepet Main Road.
It is this claim of the appellant which was accepted by the Trial Court but rejected by the High Court on revision.
The order of the High Court is challenged before us in this appeal.
In order to appreciate the contentions raised by the appellant, we may set out the relevant provisions of the Karnataka Rent Act.
Section 21 of the said Act protects tenants against eviction.
The relevant portion of the said section runs thus: "21.
Protection of tenants against eviction.
(1) Notwithstanding anything to the contrary contained 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 other authority in favour of the landlord against the tenant: Provided that the court may on an application made to it, make an order for the recovery of possession of a premises on one or more of the following grounds only, namely: X X X X (j) that the premises are reasona bly and bona fide required by the landlord for the immediate purpose of demolishing them and such demolition is to be made for the purpose of erecting a new building in place of the premises sought to be demolished: X X X X Section 27 of the said Act runs thus: "27.
Tenant 's right to give notice to the landlord of his intention to occupy tenement in new building.
Where decree for eviction has been passed by a Court 583 on the ground specified in clause (j) of the proviso to subsection (1) of Section 21 and the work of demolishing the premises and of the erection of a new building has been com menced by the landlord, the tenant may, within six months from the date on which he delivered vacant possession of the premises to the landlord, give notice to the landlord of his intention ' to occupy the new building on its completion on the following conditions, name ly: (a) that he shall pay to the landlord the fair rent in respect of the building: X X X X" The rest of the provisions of this Section are not material for our purpose.
Sub section (1) of Section 28 of the said Act runs thus: "28.
Landlord to intimate the tenant, date of completion and tenant 's right to occupy the new building.
(1) On receipt of notice from the tenant under section 27, the landlord shall, not less than three months before the date on which the erection of the new building is likely to be completed, intimate the tenant the date on which the said erection shall be completed.
On the said date, the tenant shall be entitled to occupy the building.
X X X X" In the case before us the decree against the appellant was passed under the provisions of Section 21(1)(j) of the Karnataka Rent Act.
The appellant tenant gave notice of his intention to occupy the tenement in the new building as required under the provisions of Section 27 of the said Act.
This is the undisputed position.
In view of this, under the provisions of Section 28 of the said Act, the appellant became entitled to occupy a tenement in the new building.
The only question before us is as to what is the nature of the tenement to which he is entitled.
There is nothing specific in this connection in the language of sub section (1) of Section 28.
However, a fair commonsense reading of the provisions of sub section (1) of Section 28 would show that a tenant against whom eviction decree has been passed under Section 584 21(1)(j) and who has given notice as contemplated under Section 27 of the Act would be entitled to a tenement in the new building which could be said to be reasonably comparable to or to reasonably correspond to the tenement in respect of which the decree was passed.
It appears to us that the learned Judge of the High Court who delivered the impugned judgment has based it on the consideration of a question which really was not material, namely, whether the appellant was entitled to get an identical shop in the new building, whereas the real question was as to whether he was entitled to a comparable shop.
On the facts of the present case, it can be seen that the original shop occupied by him admeas ured 17 ' x 9 ' and was facing the Belepet Main Road.
The shop which respondent No. 1 has offered to the appellant was only admeasuring 11 ' 6" x 8 ' 6" and was not facing the Belepet Main Road but was on the rear of the new building.
We fail to see how this shop can be considered as comparable to shop originally occupied by the appellant.
Moreover, it is not as if comparable shops were not available.
In fact, respondent No. 1 constructed several shops of 9 ' x 16 ' facing the Belepet Main Road, one of which he has given in a hurried manner, as set out earlier, to respondent No. 2, probably with a view to forestall the claim of the appellant.
In these circumstances, we fail to see how the appellant could be compelled to accept the shop offered by respondent No. 1, which is in no way comparable.
The provisions referred to earlier clearly suggest that, at the least, the appellant was entitled to a shop as reasonably corresponding to the original shop occupied by him as the circumstances would permit.
It may be clarified here that it is not the appel lant 's case that he is entitled to an identical shop but that he was entitled to a comparable shop.
It was submitted by Mr. Kaushik, learned counsel for respondent No. 2 that as far as the shop given to him is concerned, which is claimed by the appellant, he has already obtained tenancy of the said shop from respondent No. 1 and there is no reason why his tenancy should be disturbed.
It is urged by him that there are a number of similar shops constructed by respond ent No.1 landlord facing the Belepet main Road and there is no reason why his shop should be picked out for being given to the appellant.
In our view, whatever might be the merits of this submission, it is not open now to respondent No. 2 to make this submission or resist the claim of the appel lant.
Respondent No. 2 was joined as a party in the revision petition disposed by a Division Bench of the Mysore High Court as set out earlier, which was between the same parties and which decision in which we have already discussed to in some detail earlier (reported in Sreenivasa Rao vs Narasim hiah, [1972] 1 Mysore Law Journal p. 490).
In that case, the High Court held that the rights of respondent No. 2 are 585 subject to the rights of the original tenants conferred upon them under Sections 27 and 28.
This decision has not been challenged by respondent No. 2 in any proceedings and has now become final as against him.
In view of this, it is not open to him now to raise any of the contentions which he has sought to raise.
It was open to him to make any submission which he wanted to make in that case or to file an appeal against the judgment in so far as it adversely affected him but he has not chosen to do so and it is not now open to him to raise these contentions.
We are of the view that the appellant is entitled to be handed over the possession of the shop occupied by respondent No. 2.
Before parting with the case, we may mention that the learned counsel for the appellant referred to a couple of decisions given by High Courts holding that under provisions similar to those we have discussed earlier, a tenant is not entitled to identical premises in the newly constructed building, but in the view which we have taken, as set out earlier, these decisions are of no relevance.
In the result, the appeal is allowed with costs against respondent No. 1 and respondent No. 1 is directed to put the appellant in possession of the said shop occupied by re spondent No. 2 as a tenant and respondent No. 2 is directed to hand over his shop for the aforesaid purpose.
There will be no order as to costs as between the appellant and re spondent No. 2.
G.N. Appeal al lowed.
| IN-Abs | The appellant was one of the eight tenants in the build ing belonging to Respondent No. 1, who filed eviction peti tions against all the 8 tenants on the ground that the building was bona fide required by him for immediate demoli tion and construction as contemplated under Section 21(1)(j) of the Karnataka Rent Control Act.
In the petition against the appellant, it was specifically stated that he might occupy the premises corresponding to the original tenement in the new building after it was built.
The application of Respondent No. 1 for deletion of the words "corresponding portion" and for leave to withdraw the offer made earlier, were rejected.
Upon a memorandum filed by the appellant consenting to a decree being passed in pursuance of Section 21(1)(j) of the Act, the Court passed an order allowing the eviction petition against the appellant.
After the reconstruction work commenced, appellant gave a notice to Respondent No. 1 of his intention to occupy the corresponding shop in the new building, agreeing to pay the fair rent as contemplated under Section 27 of the Act.
Meanwhile Respondent No. 1 who got the eviction decree, filed an appeal before the District Judge, challenging the eviction decree on the ground that the Court had no juris diction to pass any decree by consent under Section 21(1)(j) of the Act.
The District Judge allowed the appeal.
Immedi ately thereafter Respondent No. 1 inducted Respondent No. 2 as a tenant in a shop in the reconstructed building reasona bly corresponding to the shop occupied by the appellant in the old building, and Respondent No. 2 started his business in the shop.
The appellant preferred a Revision Petition to the High Court against the order of the District Judge, and in the Revision Petition the appellant impleaded the second Respondent also.
The High Court allowed the Revision Petition and held that the decree passed by the Munsiff under Section 21(1)(j) of the Act was not a 577 578 decree passed by consent but was a valid decree passed by a competent Court after application of mind.
It was also held that the landlord was liable to place the tenants in vacant possession of the reconstructed building as provided in the Act, and that the rights of the second Respondent were subject to the rights of the original tenant conferred on them under Sections 27 and 28 of the Act.
After the High Court 's order, the appellant filed an application under Sections 27 and 28 of the Act before the trial court seeking permission to occupy the shop premises which was in possession of Respondent No. 2.
The trial court allowed the application.
On revision, the High Court set aside the order of the trial court, taking the view that the appellant was not entitled to claim the shop occupied by Respondent No. 2 and Respondent No. 1 was required to give the appellant any tenement in the newly constructed build ing.
Against this order of the High Court the appellant has filed this appeal by special leave.
On behalf of the appellant, it is claimed that he is entitled to be put in possession of the shop facing the Main Road and occupied by Respondent No. 2, whereas he was of fered a shop not facing the Main Road.
Allowing the appeal, HELD: 1.1 The appellant is entitled to be handed over the possesssion of the shop occupied by respondent No. 2.
[585B] 1.2 Under the provisions of Section 28 of the said Act, the appellant became entitled to occupy a tenement in the new building.
Although there is nothing specific in the language of sub section (1) of Section 28 to that effect, a fair, commonsense reading of the provisions of subsection (1) of Section 28 would show that a tenant against whom eviction decree has been passed under Section 21(1)(j) and who has given notice as contemplated under Section 27 of that Act would be entitled to a tenement in the new building which could be said to be reasonably comparable to or to reasonably correspond to the tenement in respect of which the decree was passed.
The High Court based its judgment on the consideration of a question which really was not materi al, namely, whether the appellant was entitled to get an identical shop in the new building, whereas the real ques tion was as to whether he was entitled to a comparable shop.
[583G H; 584A B] 1.3 The original shop occupied by the appellant admeasured 579 17 ' x 9 ' and was facing the Main Road.
The shop which re spondent No. 1 offered to the appellant was admeasuring only 11 ' 6" X 8 ' 6" and was not facing the Main Raod but was on the rear of the new building.
This shop cannot be considered as comparable to the shop originally occupied by the appel lant.
Moreover, it is not as if comparable shops were not available.
In fact, respondent No. 1 constructed several shops of 9 ' X 16 ' facing the Main Road, one of which he has given away in a hurried manner, to respondent No. 2, proba bly with a view to forestall the claim of the appellant.
In these circumstances, the appellant could not be compelled to accept the shop offered by respondent No. 1, which is in no way comparable.
The appellant was entitled to a shop reason ably corresponding to the original shop occupied by him as the circumstances would permit.
It was not the appellant 's case that he is entitled to an identical shoo but that he was entitled to a comparable shop.
It is not open now to respondent No. 2 to resist the claim of the appellant.
Respondent No. 2 was joined as a party in the revision petition wherein the High Court held that the rights of respondent No. 2 are subject to the rights of the original tenant conferred upon him under Sections 27 and 28.
This decision has not been challenged by respondent No. 2 in any proceedings and has now become final as against him.
[584C E, G; 585A] Sreenivasa Rao vs Narasimhaiah, , referred to.
|
ICTION: Writ Petition (CRL) Nos.
1566/86, 186/85,192/86,338/88 & 649/87.
(Under Article 32 of the Constitution of India.) R.K. Jain, Rangarajan, Mrs. Urmila Sirur, Mohd. Naseem, Rakesh K. Khanna, P.K. Jain, Mukul Mudgal, Sanjay Parikh, B.P. Singh, P. Krishna Rao, B.K. Prasad, Ms. Malini Poduwal, Lalit Kumar Gupta, Manoj Swarup, Harish Salve, Rajiv Garg, Rajiv Shakdhar, N.D. Garg, L.K. Gupta (Amicus curiae), M. Veerappa and Dalveer Bhandari for the Petitioners.
K. Parasaran, Attorney General, B. Datta, Additional Solicitor General, V.C. Mahajan.
T.U. Mehta, Anand Prakash, Ms. A Subhashini, A.K. Srivastava, S.K. Bhattacharya, M.N.Shroff, Ms. Sushma Ralhan.
Mahabir Singh, AV.
Rangam and R.S. Suri for the Respondents.
519 A.K. Goel, Ajit Pudissery and Mrs. Jayamala Singh for the Interveners.
The following Judgments of the Court were delivered: OZA, J.
These matters came up before us because of the conflict in the two decisions of this Court:(i) T.V. Va theeswaran vs State of Tamil Nadu, ; Sher Singh & Others vs The State of Punjab, ; and observations in the case of Javed Ahmed Abdul Hamid Pawala vs State of Maharashtra, ; In Vatheeswaran 's case, a Bench of two Judges of this Court held that two years delay in execution of the sentence after the judgment of the trial court will entitle the condemned prisoner to ask for commutation of his sentence of death to imprisonment for life.
The Court observed that: "Making all reasonable allowance for the time necessary for appeal and consideration of reprieve, we think that delay exceeding two years in the execution of a sentence of death should be considered sufficient to entitle the person under sentence of death to invoke article 21 and demand the quashing of the sentence of death." In Sher Singh 's case which was a decision of a three Judges ' Bench it was held that a condemned prisoner has a right of fair procedure at all stages, trial, sentence and incarceration but delay alone is not good enough for commu tation and two years rule could not be laid down in cases of delay.
It was held that the Court in the context of the nature of offence and delay could consider the question of commutation of death sentence.
The Court observed: "Apart from the fact that the rule of two years run in the teeth of common experience as regards the time generally occupied by pro ceedings in the High Court, the Supreme Court and before the executive authorities.
We are of the opinion that no absolute or unqualified rule can be laid down that in every case in which there is a long delay in the execution of a death sentence, the sentence must be substituted by the sentence of life imprison ment.
There are several other factors which must be taken into account while considering the question as to whether the death sentence should be vacated.
A convict is undoubtedly entitled to pursue all remedies lawfully open to him to get rid 520 of the sentence of death imposed upon him and indeed, there is no one, be he blind, lame, starving or suffering from a terminal illness, who does not want to live.
" It was further observed: "Finally, and that is no less important, the nature of the offence, the diverse circum stances attendant upon it, its impact upon the contemporary society and the question whether the motivation and pattern of the crime are such as are likely to lead to its repetition, if the death sentence is vacated, are matters which must enter into the verdict as to wheth er the sentence should be vacated for the reason that its execution is delayed.
The substitution of the death sentence by a sen tence of life imprisonment cannot follow by the application of the two years ' formula, as a matter of "quod erat demonstrandum".
In Javed 's case, it was observed that the condemned man who had suffered more than two years and nine months and was repenting and there was nothing adverse against him in the jail records, this period of two years and nine months with the sentence of death heavily weighing on his mind will entitle him for commutation of sentence of death into im prisonment for life.
It is because of this controversy that the matter was referred to a five Judges ' Bench and hence it is before us.
Learned counsel for the petitioners at length has gone into the sociological, humane and other aspects in which the question of sentence of death has been examined in various decisions and by various authors.
It is however not disputed that in Bachan Singh etc.
vs State of Punjab etc.
; , constitutionality of sentence of death has been upheld by this Court.
Learned counsel has at length referred to the opinion of Hon.
Mr. Justice P.N. Bhagwati, as he then was, which is the minority opinion in Bachan Singh 's case.
In his opinion Justice P.N. Bhagwati has conducted a detailed research and has considered the materi al about the various aspects of sentence of death.
Learned Attorney General appearing for the respondents also referred to some portions of the judgment but contended that howsoev er condemned the sentence may be but its constitutional validity having been accepted by this Court all this study about looking at it from various angles is not of much consequence.
He also contended that the opinion has been drifting and the statistics reveal that 521 at one time there was a trend towards abolition of death sentence and then a reverse trend started and therefore all this, so far as the present case is concerned, is not neces sary.
One of the contentions advanced by learned counsel for the petitioners was that apart from all other considerations it is clear that this is a sentence which if executed is not reversible and even if later on something so glaring is detected which will render the ultimate conclusion to be erroneous the person convicted and executed could not be brought back to life and it was on this basis that it was contended that although the law provides for the sentence and it has been held to be constitutional but still the Courts should be slow in inflicting the sentence and in fact it was contended that courts are in fact slow in awarding the sentence.
In Bachan Singh 's case, it was observed: "To sum up, the question whether or not death penalty serves any penological purpose is a difficult, complex and intractable issue.
It has evoked strong, divergent views.
For the purpose of testing the constitutionality of the impugned provision as to death penalty in Section 320, Penal Code, on the ground of reasonableness in the light of Articles 19 and 21 of the Constitution, it is not necessary to express any categorical opinion, one way or the other, as to which of these two antitheti cal views, held by the Abolitionists and Retentionists, is correct.
It is sufficient to say that the very fact that persons of reason, learning and light are rationally and deeply divided in their opinion on this issue, is a ground among others, for rejecting the petitioners ' argument that retention of the death penalty in the impugned provisions, is totally devoid of reason and purpose.
If, notwithstanding the view of the Abolitionists to the contrary, a very large segment of people the world over, including sociologists, legislators, jurists, judges and administra tors still firmly believe in the worth and necessity of capital punishment for the pro tection of society, if in the perspective of prevailing crime conditions in India, contem porary public opinion channalised through the people 's representatives in Parliament, has repeatedly in the last three decades, rejected all attempts, including the one made recently, to abolish or specifically restrict the area of death penalty, if death penalty is still a recognised legal sanction for murder or some types of murder in most of the civilised countries in the world, if the framers of the Indian Constitution were fully aware of the existence of death 522 penalty as punishment for murder, under the Indian Penal Code, if the 35th Report and subsequent Reports of the Law Commission suggesting retention of death penalty, and recommending revision of the Criminal Proce dure Code and the insertion of the new sec tions 235(2) and 354(3) in that Code providing for pre sentence hearing and sentencing proce dure on conviction for murder another capital offences were before the Parliament and pre sumably considered by it when in 1972 73, it took up revision of the Code of 1898, and replaced it by the Code of Criminal Procedure, 1973, it cannot be said that the provisions of death penalty as an alternative punishment for murder, in section 302, Penal Code, is unrea sonable and not in public interest.
Therefore, the impugned provision in section 302, vio lates neither the letter nor the ethos of Article 19.
" We are in entire agreement with the view expressed above.
It is not necessary to go into the jurisprudential theories of punishment deterrent or retributive in view of what has been laid down in Bachan Singh 's case, with which we agree but the learned counsel at length submitted that the modern theorists of jurisprudence have given a go bye to the retributive theory of punishment although in some coun tries it is recognised on a different principle i.e. to pacify the public anger whereas some theorists have tried to put both the theories together.
So far as the deterrent theory of punishment is concerned even about that doubts have been expressed as regards the real deterrent effect of punishment.
The absence of determent effect has been at tributed to various causes sometimes long delay itself as public memory is always short.
When the convict is utlimate ly sentenced and executed people have forgotten the offence that he has committed and on this basis it is sometimes felt that it has lost its importance.
In the present case we are not very much concerned with all these questions except to some extent the question of delay and its effect.
It was also contended that this sentence is a sentence which is irreversible thereby meaning that if ultimately some mistake in convicting and executing the sentence is detected after the sentence is executed there is no possi bility of correction.
After all the criminal jurisprudence which is in vogue in our system even otherwise eliminates all possibilities of error as benefit of doubt at all stages goes in favour of accused.
Apart from it there are only a few offences where sentence of death is provided and there too the manner in which the 523 law has now been changed ultimately the sentence of death is awarded in the rarest of rare case.
Therefore not much could be made of the possibility of an error.
The offences in which sentence of death is provided are under Sections 120 B (in some cases), 121, 132,302,307 (in some cases) and 396.
The law as it stood before 1955 the Court was expected to give reasons if it chose not to pass a sentence of death as normally sentence of death was the rule and alternative sentence of imprisonment of life could only be given for special reasons.
As Section 367 clause (5) in the Code of Criminal Procedure, 1898 stood: "If the accused is convicted for an offence punishable with death, and the Court sentences him to any punishment other than death, the Court shall in its judgment state the reasons why the sentence of death was not passed." Section 367 clause (5) of Cr.
P.C. was amended in 1955 and after the amendment discretion was left to the courts to give either sentence.
Section 367 clause (5) after the amendment reads: "In trials by jury, the Court need not write a judgment, but the Court of Sessions shall record the heads of the charge to the jury: Provided that it shall not be neces sary to record such heads of the charge in cases where the charge has been delivered in English and taken down in shorthand.
" Thus the legislature dropped that part of the sub clause which made it necessary for the Court to state reasons for not awarding sentence of death.
Thus after the amendment the legal position was that it was the discretion of the Court to award either of the sentences.
In the Code of Criminal Procedure 1973 Section 354 clause (3) has now been introduced and it has been provided that in all cases of murder, life imprisonment should be given unless there are special reasons for giving sentence of death.
This provision Sec.
354 clause (3)reads: "When the conviction is for an offence punish able with 524 death or in the alternative with imprisonment for life or imprisonment of a term of years, the judgment shall state the reasons for the sentence awarded, and, in the case of sentence of death, the special reasons for such sen tence.
" It is thus clear that before 1955 sentence of death was the rule, the alternative sentence had to be explained by rea sons.
Thereafter it was left to the discretion of the court to inflict either of the sentences and ultimately in the 1973 Code normal sentence is imprisonment for life except for the special reasons to be recorded sentence of death could be passed.
It is therefore clear that this indicates a trend against sentence of death but this coupled with the decisions ultimately wherein sentence of death has been accepted as constitutional go to show that although there is a shift from sentence of death to lesser sentence but there is also a clear intention of maintaining this sentence to meet the ends of justice in appropriate cases.
It is there fore clear that in spite of the divergent trends in the various parts of the World there is consistent thought of maintaining the sentence of death on the statute book for some offences and in certain circumstances where it may be thought necessary to award this extreme penalty.
As stated generally that it is awarded in the rarest of rare cases and in this accepted position of law, in our opinion, it is not necessary to go into the academic question about sociologi cal and humane aspects of the sentence and detailed examina tion of the jurisprudential theories.
It was also contended though not very seriously that in ultimate analysis out of the two sentences imprisonment for life or death it has been left to the discretion of the courts.
On the one hand it was suggested that there are no norms laid down for exercise of discretion but on the other hand it was also admitted that it is very difficult to lay down any hard and fast rule and apparently both the sides realised that the attempt that was made by this Court in enumerating some of the circumstances but could not lay down all possible circumstances in which the sentence could be justified.
In Machhi Singh and others vs State of Punjab, it was observed that: "In this background the guidelines indicated in Bachan Singh 's case, will have to be culled out and applied to the facts of each individu al case where the question of imposing of death sentence arises.
The following proposi tions emerge from Bachan Singh 's case: (i) The extreme penalty of death need not be inflicted 525 except in gravest cases of extreme culpabili ty.
(ii) Before opting for the death penalty the circumstances of the 'offender ' also require to be taken into consideration along with the circumstances of the 'crime '.
(iii) Life imprisonment is the rule and death sentence is an exception.
In other words death sentence must be imposed only when life imprisonment appears to be an altogether inadequate punishment having regard to the relevant circumstances of the crime, and provided, and only provided, the option to impose sentence of imprisonment for life cannot be conscientiously exercised having regard to the nature and circumstances of the crime and all the relevant circumstances.
(iv) A balance sheet of aggravating and mitigating circumstances has to be drawn up and in doing so the mitigating circum stances have to be accorded full weightage and a just balance has to be struck between the aggravating and the mitigating circumstances before the option is exercised.
In order to apply these guidelines inter alia the following questions may be asked and answered: (a) Is there something uncommon about the crime which renders sentence of imprisonment for life inadequate and calls for a death sentence? (b) Are the circumstances of the crime such that there is no alternative but to impose death sentence even after according maximum weightage to the mitigating circum stances which speak in favour of the offender? If upon taking an overall global view of all the circumstances in the light of the afore said ' proposition and taking into account the answers to the questions posed hereinabove, the circumstances of the case are such that death sentence is warranted, the court would proceed to do so.
" In ultimate analysis it could not be disputed and was not seriously disputed that the circumstances in which the extreme penalty 526 should be inflicted cannot be enumerated in view of complex situation in society and the possibilities in which the offence could be committed and in this context in ultimate analysis it is not doubted that the Legislature therefore was right in leaving it to the discretion of the judicial decision as to what should be the sentence in particular circumstances of the case.
But the Legislature has put a further rider that when the extreme penalty is inflicted it is necessary for the court to give special reasons thereof.
In the matter before us we are mainly concerned with a) delay in execution of the sentence of death; b) what should be the starting point for computing this delay?; c) what are the rights of a condemned prisoner who has been sentenced to death but not executed? and d) what could be the circum stances which could be considered alongwith the time that has been taken before the sentence is executed.
The main theme of the arguments on the basis of delay has been the inhuman suffering which a condemned prisoner suffers waiting to be executed and the mental torture it amounts to and it is in this background also that the par ties argued at length about the starting point which should be considered for computing delay in execution of the sen tence.
On the one hand according to the petitioners the mental torture commences when the trial court i.e. the Sessions Court pronounces the judgment and awards capital punishment.
However, learned counsel also conceded that even the condemned prisoner knows that the judgment pronounced by the Sessions Court in the case of capital punishment is not final unless confirmed by the High Court.
Mainly therefore it was contended that the real mental torture commences after the death sentence is confirmed by the High Court and therefore to consider the question of delay the time should be computed from the date of the High Court judgment.
On the other hand learned Attorney General contended that even if the judgment of confirmation by the High Court is passed in which capital punishment is awarded, invariably comes to this Court and this Court ordinarily grants leave and ap peals are heard at length and it was therefore contended that the delay in execution of the sentence really could be considered after the pronouncement of the final verdict by this Court and it is only after the final verdict is pro nounced that it could be said that the judicial process has concluded.
It is no doubt true that sometimes in these procedures some time is taken and sometimes even long time is spent.
May be for unavoidable circumstances and sometimes even at the instance of the accused but it was contended and rightly so that all this delay upto the final judicial process is taken care of while 527 the judgment is finally pronounced and it could not be doubted that in number of cases considering the time that has elapsed from the date of the offence till the final decision has weighed with the courts and lesser sentence awarded only on this account.
As early as in 1944, the Federal Court in Piare Dusadh and others vs The King Emperor, [1944] Federal Court Reports 61 observed: "It is true that death sentences were imposed in these cases several months ago, that the appellants have been lying ever since under the threat of execution, and that the long delay has been caused very largely by the time taken in proceedings over legal points in respect of the constitution of the courts before which they were tried and of the valid ity of the sentences themselves.
We do not doubt that this court has power, where there has been inordinate delay in executing death sentences in cases which come before it, to allow the appeal in so far as death sentence is concerned and subsitute a sentence of transportation for life on account of the time factor alone, however right the death sentence was at the time when it was originally im posed." Similarly in State of Uttar Pradesh vs Lalla Singh and others, ; Sadhu Singh vs State of U.P., AIR 1978 SC 1506; State of U.P. vs Sahai, AIR 1981 SC 1442 and Joseph Peter vs State of Goa.
Daman & Diu, ; while finally deciding the matter the courts have taken notice of the delay that has occurred in the judicial proc ess.
It was contended that Article 21 contemplates not only a fair procedure but also expeditious procedure and in this context it was contended that observations be made so that judicial process also is concluded as expeditiously as possible.
Learned Attorney General has filed compilation of rules of various High Courts and it is not disputed that practically in all the High Courts, a confirmation case where the sentence of death is awarded by the Sessions Court and the case is pending in the High Court for confirmation time bound programme is provided in the rules and it could be said that except on some rare occasion the High Court has disposed of a confirmation case between six months to one year and therefore it could not be said that there is no procedure provided for expeditious disposal of these cases.
At the Sessions level also the normal procedure of the Sessions trial is that it is taken up day to day although after coming into force of the Code of 528 Criminal Procedure in 1973 where the number of offences triable by the Sessions Court have been increased but there is sometimes a slight departure from the normal rule which is the cause to some extent for some slackness in the Ses sions trial but attempt is always made and it is expected that Sessions case where offences alleged is one which is punishable with death should be given top priority and normally it Is given top priority and it is expected that the trials must continue day to day unless it is concluded.
Although it is well known that sometimes it is at the in stance of the advocates appearing for defence also that this normal rule is given a go bye but ordinarily it is expected that these cases must be tried expeditiously and disposed of.
Even in this Court although there does not appear to be a specific rule but normally these matters are given top priority.
Although it was contended that this reference before us a Bench of five Judges, was listed for heating after a long interval of time.
We do not know why this reference could not, be listed except what is generally well known the difficulty of providing a Bench of five Judges but ordinarily it is expected that even in this Court the matters where the capital punishment is involved will be given top priority and shall be heard of and disposed of as expeditiously as possible but it could not be doubted that so long as the matter is pending in any Court before final adjudication even the person who has been condemned or who has been sentenced to death has a ray of hope.
It therefore could not be contended that he suffers that mental torture which a person suffers when he knows that he is to be hanged but waits for the Dooms Day.
The delay therefore which could be considered while considering the question of commutation of sentence of death into one of life imprisonment could only be from the date the judgment by the apex court is pronounced i.e. when the judicial process has come to an end.
After the matter is finally decided judicially, it is open to the person to approach the President or the Gover nor, as the case may be, with a mercy petition.
Some times person or at his instance or at the instance of some of his relatives, mercy petition and review petitions are filed repeatedly causing undue delay in execution of the sentence.
It was therefore contended that when such delay is caused at the instance of the person himself he shall not be entitled to gain any benefit out of such delay.
It is no doubt true that sometimes such petitions are filed but a legitimate remedy if available in law, a person is entitled to seek it and it would therefore be proper that if there has been undue and prolonged delay that alone will be a matter at tracting the jurisdiction of this Court, to consider the question of the execution of the 529 sentence.
While considering the question of delay after the final verdict is pronounced, the time spent on petitions for review and repeated mercy petitions at the instance of the convicted person himself however shall not be considered.
The only delay which would be material for consideration will be the delays in disposal of the mercy petitions or delay occurring at the instance of the Executive.
So far as the scope of the authority of the President and the Governor while exercising jurisdiction under Article 72 and Article 16 1 are concerned the question is not at all relevant so far as the case in hand is concerned.
But it must be observed that when such petitions under Article 72 or 161 are received by the authorities concerned it is expected that these petitions shall be disposed of expedi tiously.
It was also contended that when capital punishment is awarded the sentence awarded is only sentence of death but not sentence of death plus imprisonment and therefore if a condemned prisoner has to live in jail for long in substance it amounts to punishment which is sentence of death and imprisonment for some time and this according to the learned counsel will amount to double jeopardy which is contrary to Article 20 and the imprisonment cannot be justified in law.
Section 366 of the Code of Criminal Procedure provides: "366.
Sentence of death to be submitted by Court of Session for confirmation (1) When the Court of Session passes a sentence of death, the proceedings shall be submitted to the High Court, and the sentence shall not be executed unless it is confirmed by the High Court.
(2) The Court passing the sentence shall commit the convicted person to jail custody under a warrant.
" This no doubt authorises the Court of Sessions to commit a person sentenced to death to jail custody under a warrant.
But this Section does not contemplate how long he has to be in jail.
Clause (1) of Section 366 provides that when the Court of Sessions passes a sentence of death the proceedings shall be submitted to the High Court and the sentence shall not be executed unless it is confirmed by the High Court.
It is therefore apparent that sub clause (2) provided for committing the convicted person to jail awaiting the confir mation of the sentence by the High Court.
It is also clear that when a person is committed to jail awaiting the execu tion of the sentence of death, it is not imprisonment but the prisoner has to be kept secured till the 530 sentence awarded by the court is executed and it appears that it is with that purpose in view that sub clause (2) of Section 366 simply provided for committing the convicted person to jail custody under a warrant.
The question about solitary confinement or keeping the condemned prisoner alone under strict guard as provided in various jail manuals was considered by this Court in Sunil Batra vs Delhi Administration, ; and consid ering the question of solitary confinment it was observed: "In our opinion sub section
(2) of section 30 does not empower the jail authorities in the garb of confining a prisoner under sentence of death, in a cell apart from all other prisoners, to impose solitary confinement on him.
Even jail discipline inhibits solitary confinment as a measure of jail punishment.
It completely negatives any suggestion that because a pris oner is under sentence of death therefore and by reason of that consideration alone, the jail authorities can impose upon him addition al and separate punishment of solitary con finement.
They have no power to add to the punishment imposed by the Court which addi tional punishment could have been imposed by the Court itself but has in fact been not so imposed.
Upon a true construction, sub section
(2) S.30 does not empower a prison authority to impose solitary confinment upon a prisoner under sentence of death.
" In the same judgment, it was further observed: "What then is the nature of confinement of a prisoner who is awarded capital sentence by the Sessions Judge and no other punishment from the time of sentence till the sentence becomes automatically executable? Section 366(2) of the Cr.
P.C. enable the Court to commit the convicted person who is awarded capital punishment to jail custody under a warrant.
It is implicit in the warrant that the prisoner is neither awarded simple nor rigorous imprisonment.
The purpose behind enacting sub section
(2) of S.366 is to make avail able the prisoner when the sentence is re quired to be executed.
He is to be kept in jail custody.
But this custody is something different from custody of a convict suffering simple or rigorous imprisonment.
He is being kept in jail custody for making him available for execution of the sent 531 ence as and when that situation arises.
After the sentence becomes executable he may be kept in cell apart from other prisoners with a day and night watch.
But even here, unless special circumstances exist, he must be within the sight and sound of other prisoners and be able to take food in their company.
If the prisoner under sentence of death is held in jail custody, punitive deten tion cannot be imposed upon him by jail au thorities except for prison offences.
When a prisoner is committed under a warrant for jail custody under section 366(2) Cr.
P.C. and if he is detained in solitary confinement which is a punishment prescribed by section 73 IPC, it will amount to imposing punishment for the same offence more than once which would be viola tive of Article 20(2).
But as the prisoner is not to be kept in solitary confinement and the custody in which he is to be kept under section 30(2) as interpreted by us would preclude detention in solitary confinement, there is no chance of imposing second punishment upon him and therefore, section 30(2) is not violative of Article 20.
" It is therefore clear that the prisoner who is sentenced to death and is kept in jail custody under a warrant under Section 366(2) he is neither serving rigorous imprisonment nor simple imprisonment.
In substance he is in jail so that he is kept safe and protected with the purpose that he may be available for execution of the sentence which has been awarded and in this view the aspect of solitary confinement has already been dealt with in the above noted case but it must be said that the life of the condemned prisoner in jail awaiting execution of sentence must be such which is not like a prisoner suffering the sentence but it is also essen tial that he must be kept safe as the purpose of the jail custody is to make him available for execution after the sentence is finally confirmed.
It was contended that the delay in execution of the sentence will entitle a prisoner to approach this Court as his right under Article 21 is being infringed.
It is well settled now that a judgment of court can never be challenged under Article 14 or 21 and therefore the judgment of the court awarding the sentence of death is not open to chal lenge as violating Article 14 or Article 21 as has been laid down by this Court in Naresh Shridhar Mirajkar and Ors.
vs State of Maharashtra and Anr.
, ; and also in A.R. Antulay vs
R.S. Nayak and 532 another; , the only jurisdiction which could be sought to be exercised by a prisoner for infringement of his rights can be to challenge the subsequent events after the final judicial verdict is pronounced and it is because of this that on the ground of long or inordinate delay a condemned prisoner could approach this Court and that is what has consistently been held by this Court.
But it will not be open to this Court in exercise of jurisdiction under Article 32 to go behind or to examine the final verdict reached by a competent court convicting and sentencing the condemned prisoner and even while considering the circum stances in order to reach a conclusion as to whether the inordinate delay coupled with subsequent circumstances could be held to be sufficient for coming to a conclusion that execution of the sentence of death will not be just and proper.
The nature of the offence circumstances in which the offence was committed will have to be taken as found by the competent court while finally passing the verdict.
It may also be open to the court to examine or consider any circum stances after the final verdict was pronounced if it is considered relevant.
The question of improvement in the conduct of the prisoner after the final verdict also cannot be considered for coming to the conclusion whether the sentence could be altered on that ground also.
So far as our conclusions are concerned we had delivered our Order on October 11, 1988 and we had reserved the rea sons to be given later.
Accordingly in the light of the discussions above our conclusion is as recorded in our Order dated October 11, 1988, reproduced below: "Undue long delay in execution of the sentence of death will entitle the condemned person to approach this Court under Article 32 but this Court will only examine the nature of delay caused and circumstances ensued after sentence was finally confirmed by the judicial process and will have no jurisdiction to re open the conclusions reached by the Court while finally maintaining the sentence of death.
This Court, however, may consider the question of inordi nate delay in the light of all circumstances of the case to decide whether the execution of sentence should be carried out or should be altered into imprisonment for life.
No fixed period of delay could be held to make the sentence of death inexecutable and to this extent the decision in Vatheeswaran 's case cannot be said to lay down the correct law and therefore to that extent stands overruled." 533 K. JAGANNATHA SHETTY, J In Bachan Singh vs State of punlab, , this Court pronounced that the provision of death penalty as an alternative punishment for murder, under sec.302 IPC is valid and constitutional.
Sarkaria, J. who spoke for the majority view held that the provisions relating to imposition of death sentence and the procedure prescribed thereof would ensure fairness and reasonableness within the scope of Article 21.
It was also observed that by no stretch of imagination it can be said that death penalty under sec.
302 either per se or because of execution by hanging constitutes an unreasonable, cruel or unusual punishment Nor the mode of its execution has a degrading punishment which would defile the "dignity of the individual ' within the preamble to the Constitution.
The learned Judge, however, cautioned (at 751): "A real and abiding concern for the dignity of human life postulates resistance to taking a life through law 's instrumentali ty.
That ought not to be done save in the rarest of rare cases when the alternative option is unquestionable foreclosed.
" (Empha sis supplied) Bachan Singh case has thus narrowly tailored the sen tencing discretion of courts as to death sentence.
Death sentence cannot be given if there is any mitigating circum stance in favour of the accused.
All circumstances of the case should be aggravating.
It is in the gravest of grave crimes or in the rarest of rare cases, the death sentence may be awarded.
There is no offence in the penal code carry ing mandatory death penalty.
Section 303 IPC carrying the mandatory punishment has been declared unconstitutional in Mithu vs State of Punjab, ; So much so, the death sentence is now awarded only in miniscule number of cases.
All the accused in these cases belong to that limited and exceptional category.
The trial court convicted them under sec.
302 IPC and sentenced them to death.
The High Court confirmed their conviction and sentence.
This Court dismissed their special leave petitions or appeals and subsequent review petitions.
Their mercy petitions to the President and/or the Governor were also rejected.
They have now moved writ petitions under Article 32 of the Constitu tion.
They are not seeking to overturn the death sentence on the ground that the Court has illegally inflicted it.
Obvi ously, that they can not do.
The judgment of the court has become final.
Under Article 141, it shall be binding on all Courts.
Under Article 142, it shall be enforceable through out the territory of India.
Under Article 144 all authori ties, 534 civil and judicial, in the territory of India shall act in aid of this Court.
The judicial verdict pronounced by court in relation to a matter cannot be challenged on the ground that it violates one 's fundamental right.
The judgment of a court cannot be said to affect the fundamental rights of citizens (See Naresh Sridhar Mirajkar 's case, The petitioners, however, contend that this Court must set aside the death penalty and substitute a sentence of life imprisonment in view of the prolonged delay in the execution.
The dehumanising factor prolonged delay with the mental torture in solitary confinement in jail, according to them, has rendered the execution unconstitutional under Article 21.
There are also some other subsidiary contentions to which I will presently refer.
We have earlier dismissed all but one petition giving our unanimous conclusion stating therein that we would give our reasons later.
Here are my own reasons in support of that conclusion: The question whether prolonged delay renders death sentence inexecutable and entitles the accused to demand the alternate sentence of life imprisonment has arisen amid the diversity of judicial decisions in (i) T.V. Vaitheeswaran vs State of Tamil Nadu, ; (ii) Sher Singh vs State of Punjab; , ; and (iii) Javed Ahmed Abdul Hamid Pawala vs State of Maharashtra, ; Vaitheeswarn case was decided by a two Judge Bench, where Chinnappa Reddy, J. said (at 359): "We find no impediment in holding that the dehumanising factor of prolonged delay in the execution of a sentence of death has the constitutional implication of depriv ing a person of his life in an unjust, unfair and unreasonable way as to offend the consti tutional guarantee that no person shall be deprived of his life or personal liberty except according to procedure established by law.
The appropriate relief in such a case is to vacate the sentence of death.
" There then the learned Judge said (at 360): "Making all reasonable allowance for the time necessary for appeal and considera tion of reprieve, we think that delay exceed ing two years in the execution of a sentence of death should be considered sufficient to entitle the person 535 under sentence of death to invoke Article 21 and demand the quashing of the sentence of death." Sher Singh case was decided by a three Judge Bench.
Chandrachud, CJ., who spoke for the Bench while disagreeing with above view in Vaitheeswaran, said (at 595): "The substitution of the death sentence by a sentence of life imprisonment cannot follow by the application of the two years ' formula, as a matter of "quod erat demonstrandum." Then followed the decision in Javed Ahmad case.
There Chinnappa Reddy, J. raised a question whether a three Judge Bench would overrule the decision of a two Judge Bench merely because three is larger than two? The learned Judge said: "The court sits in division of two and three Judges for the sake of convenience and it may be inappropriate for a Division Bench of three Judges to purport to over rule the decision of a Division Bench of two Judges.
Vide Young vs Bristol Aeroplane Co. Ltd. It may be otherwise where a full Bench does so.
We do not, however, desire to embark upon this question in this case.
In the present case.
we are satisfied that an overall view of all the circumstances appears to us to entitle the petitioner to invoke the protec tion of Article 21 of the Constitution.
We accordingly quash the sentence of death and substitute in its place the sentence of im prisonment for life.
" The question posed in Javed Ahmad case relates to the practice and procedure of this Court.
It presents little problem and could be conveniently disposed of without much controversy.
At the time of flaming the Constitution, Mr. B.N. Rau, after his return from United States reported to the President of the Constitution Assembly as follows: "Again Justice, Frankfurter was very emphatic that any jurisdiction, exercisable by the Supreme Court, should be exercised by the full Court.
His view is that the highest Court of appeal in the land should not sit in divi sions.
Every Judge, except of course such judges as may be disqualified by personal interest or otherwise from hearing 536 particular cases, should share the responsi bility for every decision of the Court." (The Framing of India 's Constitution Vol.
III by section Shiva Rao p. 219).
This was a very good suggestion.
But unfortunately that suggestion was not accepted and the principle which was dear to Justice Frankfurter was not incorporated in out Constitu tion.
The result iS that each Judge does not share the responsibility for every decision of this Court.
For a proper working arrangement in the Court, we have framed Rules under Article 145 of the Constitution confer ring power on the Chief Justice to constitute benches for disposal of cases.
Order VII Rule (1) of the Supreme Court Rules 1966 provides that every cause, appeal or matter shall be heard by a Bench consisting of not less than two judges nominated by the Chief Justice.
But this rule is subject to the requirement under Article 145(3) of the Constitution.
Article 145(3) requires a minimum number of five judges for deciding any case involving substantial question of law as to interpretation of the Constitution.
In any event, the Supreme Court has to sit in benches with judges distributed as the Chief Justice desires: In this context, Order VII Rule 2 of the Supreme Court Rules also needs to be noted.
It provides: "Where in the course of the hearing of any cause, appeal or other proceeding, the bench considers that the matter should be dealt with by a larger bench, it shall refer the matter to the Chief Justice, who shall thereupon constitute such a bench for the hearing of it.
" This is undoubtedly a salutory Rule, but it appears to have only a limited operation.
It apparently governs the procedure of a smaller bench when it disagrees with the decision of a larger bench.
The bench in the course of hearing of any matter considers that the matter should be dealt with by a larger bench, it shall refer the matter to the Chief Justice.
The Chief Justice shall then consitute a larger bench for disposal of the matter.
This exercise seems to be unnecessary when a larger bench considers that a decision of a smaller bench is incorrect unless a constitu tional question arises.
The practice over the years has been that a larger bench straightaway considers the correctness of and if necessary overrules the view of a smaller bench.
This practice has been held to be a crystallised rule of law in a recent decision by a 537 special bench of seven learned judges.
In A.R. Antulay vs
R.S. Nayak; , , Sabyasachi Mukharji, J., speaking for the majority said: "The principle that the size of the bench whether it is comprised of two or three or more judges does not matter, was enunciat ed in Young vs Bristol Aeroplace Ltd. (supra) and followed by Justice Chinnappa Reddy in Javed Ahmad A bdul Hamid Pawla vs State of Maharashtra, ; where it has been held that a Division Bench of two judges, has not been followed by our courts.
XXXX XXXX XXXX XXXX XXXX "The law laid down by this Court is some what different.
There is a hierarchy within the court itself here where larger benches over rule smaller benches.
See Mattulal vs Radhey Lal, [1975] 1 SCR 127: ; ; Union of India vs K.S. Subramanian ; at 92: ; at 2437 and State of U.P.v.
Ram Chandra Trivedi; , at 473: ; at 2555.
This is the practice followed by this Court and now in is a crystallised rule of law.
" The answer to the question posed in Javed Ahmad case thus stands concluded and it is now not open to any one to contend that a bench of two judges cannot be overruled by a bench of three judges.
We must regard this as a final seal to the controversy.
Before grappling with the crucial issue that has been raised in these petitions, it would be convenient to dispose of what may be regarded as peripheral submissions.
Mr. R.K. Jain, learned counsel who led the arguments on behalf of the petitioners referred to us in detail the consideration of justice, morality and usefulness of capital punishment.
The counsel also referred to us the opinion expressed by eminent persons like Shri Arvindo (Tales of Prison Life) with regard to torment in the prison life.
He also invited our attention to the dissenting opinion of Bhagwati, J., in Bachan Singh where learned Judge observed that the execution "serves no social purpose." The learned counsel made an impassioned appeal to save the life of these condemned persons by sub stituting life imprisonment on the ground of inordinate delay in execution.
I can really appreciate the compassion ate feeling with which the counsel made his submission.
The "self" in 538 him came out with every word he uttered.
He seems to belong to a faith where 'non violence ' to every life is a must.
Not that we are different underneath the rotes.
As said by Justice Brennan, white dealing with his opinion in Furman vs Georgia. ; "I am not, that we are each not, a human being with personal views and moral sensioilties and religious scruples.
But it is to say that above all, 1 am a Judge".
(The Oliver wendell Homes Lecture, delivered in September 5, 1986).
We are flesh and blood mortals with normal human traits.
Indeed, like all others, we too have some inborn aversions and acquired attractions.
But it is not for us while presiding over courts to decide what pun ishment or philosophy is good for our people.
While examin ing constitutional questions, we must never forget Mar shall 's mighty phrase "that it is a constitution that we are expounding".
We are oath bound to protect the Constitution.
We are duty bound to safeguard the life and liberties of persons.
We must enforce the constitutional commands, no matter what the problem.
In other issues of constitutional considerations, we must understand the aspirations and convictions of men and women of our time.
And we should not be swayed by our own convictions.
We must never allow our individuality t0 overshadow or supersede the philosophy of the Constitution.
These are various philosophical ideologies and underpin nings about the purposes of punishment.
It includes among others deterfence, retribution, protecting persons, punish ing guilty and acquitting the innocent.
Among these objec tives deterfence and retribution are prominent.
Retribution is often confused with revenge, but there are distinct differences.
Retribution embodies the concept that an of fender should receive what he rightfully deserves.
Deter fence has a two fold object.
The first object relates to specific deterrence.
It will deter the individual from committing the same or other offences in the future.
The second object is as to general deterrence.
It will convince or deter others that "crime does not pay") (See Crime and Punishment ' by Harry E. Allen & Ors.
at 735).
The Law Commission of India summarised these aspects as to the capital sentence (35th report para 265( 18)): "The fact remains however, that whenever there is a serious crime.
the society feels a sense of disapprobation.
If there is any element of retribution in the law, as administered now, it is not the instinct of the man of jungle but rather a refined evolu tion of that instinct the feeling prevails in the public is a fact of which notice is to be taken.
The law 539 does not encourage it, or exploit it for any undesirable ends.
Rather, by reserving the death penalty for murder, and thus visiting this gravest crime with the gravest punishment the law helps the element of retribution merge into the element of deterrence.
" Sarkaria, J., after referring to this report speaking for the majority in Bachan Singh, [19801 2 SCC 684 at 721 recognises: "Retribution and deterrence are not two divergent ends of capital punishment.
They are convergent goals which ultimately merge into one.
" The punishments are provided in order to deter crimes.
The punishments are imposed to make the threat credible.
Threats and imposition of punishments are obviously necessary to deter crimes.
As a venerated British Historian, Arthur Bryant writes "The sole justification for the death penalty is not to punish murderers but to prevent murder." Professor Earnest Van Den Haag states: "The murderer learns through his punishment that his fellow men have found him unworthy of living, that because he has mur dered, he is being expelled from the community of the living.
This degradation is self in flicted.
By murdering, the murderer has so dehumanised himself that he cannot remain among the living.
The social recognition of his self degradation is the punitive essence of execution.
" (See Harward Law Review: 1986 Vol.
99 p. 1699).
Of course, one cannot have any empirical data to prove that capital punishment can be deterrent greater than life imprisonment.
It may be that most killers as the Professor Jack Greenberg states "do not engage in anything like a cost benefit analysis.
They are impulsive and they kill impulsively.
" The paradigm of this kind of murderers cannot be properly accounted for.
However, many classic experiments on the effects of corporal punishments on dogs, monkeys, pigeons and other animals have been conducted in psychology laboratories.
Graeme Newman in his book "Just and Painful" (at 127) refers to such experiments.
The learned author states that corporal punishment works and it has been so successful that some animals have starved themselves to death rather than eat the forbidden food.
This position with the human beings is said to be not different.
Indeed, it cannot be different as we could see from day to day life.
As between life and 540 death one lives life.
It is the love of life with sensuous joy of companionship that moves the race and not so much the ideals.
One views the death with trepidation.
In fact, every living being dreads death and it cannot be an exception with those on death row.
They like all others want to live and live as long as they can.
Because, the life has its own attraction, no matter in what form and condition.
The death has no such attraction and cannot have any, since it is the most mysterious of all in this world.
The criminal law always keeps pace with the development of society.
It reflects as Chief Justice Warren said: "the evolving standards of decency that mark the progress of a maturing society".
(Trop. vs Dulles; , , 101 (1958).
We have much to learn from history of every country.
The punishment which meets the unanimous approval in one generation, may rank as the most reprehensible form of cruelty in the next.
Take for instance, the punishment of whipping.
A search of historical records of 16th century England shows that men and women were whipped unmercifully for trivial offences as peddling, being drunk on a Sunday, and participating in a riot.
Many other instances of ferocious whippings of men and women, both for political and other offences, besprinkle and blacken English historical records.
Rarely did any shred of excuse for human frailty seem to enter into the souls of those sitting in judgment.
In the days of Charles the Sec ond, however, the Duke of York did interpose in one such case he saved Lady Sophia Lindsay from being publicly whipped through the streets of Edinburgh for the crime of assisting at the escape of the Earl of Argyle, her own father in law.
In the early eighteen hundreds the Australian penal settlements were the scene of floggings of so severe a nature as to rival, for sheer savagery, the worst that were inflicted in England during the sixteenth century, or in the southern State of America during the days of slavery.
In the United States of America whipping was a favorite seven teenth century punishment for various offences, and both male and female culprits came under the lash.
Of all the civilized, nations, Russia may be considered to be the one which not only used the whip unmercifully, but also as the nation which continued to use it longer by far and for a greater variety of crimes than did any other.
Next to Rus sia, for sheer love of whipping, comes China, and little less formidable than the Russian known is the Chinese rod of split bamboo.
The sharp edges of the bamboo cut into the flesh, inflicting terrible lacera 541 tions.
Little wonder that deaths, as a result of these floggings, have been frequent, and that those who escape this fate are often so terribly mutilated that they remain crippled for the rest of their lives (The History of corpo ral Punishment by G.R. Scott (1948) pages 39 to 56).
Take the history of punishment of death in England.
In 1810 Sir Samuel Romilly who asked the Parliament to abolish the death penalty for some of crimes said "there is probably no other country in the world in which so many and so great a variety of human actions are punishable with loss of life as in England".
(A History of English Criminal Law By L. Radzinowicz V(1) p(1).
The beginning of the nineteenth century was a period of indiscriminate imposition of capital punishment in England for numerous widely differing offences.
There were two hundred or more such offences.
There were several legisla tions providing punishment of death in the reign of George IV.
All felonies except petty larceny and mayhem were theo retically punishable with death.
From 1827 to 1841 several legislations were passed abolishing the punishment of death in a variety of cases.
Burning continued till 1790 to be the punishment inflicted on women for treason, high or petty.
(Which latter included not only the murder by a wife of her husband, and the murder of a master or mistress by a servant but also several offences against the coin).
Burning in such cases was abolished by 30 Geo, 3, c. 48.
In practice, women were strangled before they were burnt; this, however, de pended on the executioner.
In one notorious case a woman was actually burnt alive for murdering her husband, the execu tioner being afraid to strangle her because he was caught by the fire.
In the reign of George II, an act was passed which was intended to make the punishment for murder more severe than the punishment for other capital crimes.
This was 25 Geo. 2, c. 37, which provided that a person convicted of murder should be executed on the next day but one after his sentence (unless he was tried on a Friday, in which case he was to be hanged on the Monday).
He was to be fed on bread and water in the interval and his body, after death, was either to be dissected or to be hung in chains.
The judge, however, had power to respite or to remit these special severities.
Under this act murderers were usually anato mized, but sometimes gibbeted.
By the 2 & 3 Will 4, c. 7 section 16 (for the regulation of schools of anatomy), it was enact ed that the bodies of murderers should no longer be anato mized, but that the sentence should direct that they should either be hung in chains or a buried in the prison.
Several persons were gibbeted under this act.
542 These provisions distinguish English law in a marked manner from the continental laws down to the end of the last cen tury.
In most parts of the continent breaking on the wheel, burning in some cases quartering alive and tearing with red hot pincers, were in use, as well as simpler forms of death.
(History of the Criminal Law of England by Stephen Ch.
XIII p. 477 478).
Through out the reign of Henry the Eighth, there were no fewer than two thousand executions a year.
As the stress on the value of property increased, the net was widened.
Not alone murderers and traitors; but robbers, coiners, heretics and witches were sent to their death.
The shooting of a rabbit; the forgery of a birth certificate; the theft of a pocket handkerchief; the adoption of a disguise; the damag ing of a public property were also included in the list of death sentence.
In 1814 a man was hanged at Chelmsford for cutting down a cherry tree.
The public hangings in England continued until well into the nineteenth century.
There were public executions with a large number of people watching.
On January 22, 1829, Willi an Burke was hanged at Edinburgh, and the crowd was great beyond all former precedent.
The last person to be hanged publicly in England was Michael Marett, who was executed at Newgate on May 26, 1868.
As time went past, the list of death sentence crimes was rapidly reduced and in 1950, it was confined for four crimes only, to wit; (1) murder, (2) treason, (3) piracy with violence, and (4) setting fire to arsenals and dockyards.
Later this was also abolished.
G.R. Scott, The History of Capital Punishment, 38 66 (1950).
What happened in the United States? It will be noticed that in the United States, the accused has a constitutional right to be tried by a Jury, as provided under 6th Amend ment.
The accused has a right not to be subjected to "cruel and unusual punishment" as mandated under 8th Amendment.
In Furman, some Judges took the view that death sentence was unacceptable to the evolving standards of decency of the American people.
But the American people rejected that view.
Since then 35 States have re enacted laws providing for the death sentence for murder of suitably altering the provi sions to comply with Furman.
What do we have here? The representatives of our people are cognizant of the contemporary social needs.
The legisla tive amendments brought about from time to time are indica tive of their awareness.
Sub sec.
(5) of sec.
367 of the Code of the Criminal Procedure, 543 1898 as it stood prior to its amendment by Act 25 of 1955 provided: "If the accused is convicted of an offence punishable with death, and the court sentences to any punishment other than death, the court shall in its judgment state the reasons why sentence of death was not passed.
" This provision laid down that if an accused was convict ed of an offence punishable with death, the imposition of death sentence was the rule and the awarding of a lesser sentence was an exception.
The court had to state the rea sons for not passing the sentence of death.
There was a change by the amending Act 26 of 1955 which came into force with effect from January 1, 1956.
The above sub section was deleted and it was left to the discretion of the court in each case to pass a sentence of death or life imprisonment.
In 1973 there was again a reshaping of the provision regard ing the death penalty.
In the Code of Criminal Procedure, 1973, sec.
354(3) was inserted in these terms: "When the conviction is for an offence punishable with death, or in the alternative with the imprisonment for life or imprisonment for a term of years, the judgment shall state the reasons for the sentence awarded, and in the case of sentence of death, the special reasons for such sentence.
" It is now obligatory for the court to state reasons for the sentence awarded for the offence of murder.
The court cannot award death sentence without giving special reasons.
As earlier noticed that death sentence Could be awarded only in exceptional cases and not in the usual run of murders.
We have got just six offences carrying death penalty and that too as an alternate sentence (Sections 120B, 121, 132, 302,307 and 396 IPC).
This is the need and notion of the present day society.
Tomorrow 's society and the atmosphere in which they live may be quite different.
They may not have rapist murderers like Ranga and Billa.
They may not have any merciless killing and bride burning They may have more respect for each other life.
They may be free from criminalisation of politics and elimination of political leaders by muscle power.
There then the penal law cannot remain isolated and untouched.
It will be profoundly influenced by philosophy prevailing.
Time may reach for the representatives of people to consider that death penalty even as an alternate sentence for murder is uncalled for and unnecessary.
There is 544 nothing in our Constitution to preclude them from deleting that alternate sentence.
The crusade against capital punish ment may,, therefore, go on elsewhere and not in this Court.
Let me now turn to the pivotal question which I have referred at the beginning of the judgment.
The question is whether the sentence of life imprisonment should be substi tuted on account of time factor alone, however, right and valid and death sentence was at the time when it was award ed.
The arguments for the petitioners primarily rested on the common area of agreement in Vaitheeswaran and Sher Singh cases on the implication of Article 21.
The accepted princi ple according to counsel, is that prolonged delay in execu tion would be "unjust, unfair and unreasonable".
It would be inhuman and dehumanising to keep the condemned person for a long period.
It offends the constitutional safeguards under Article 21.
Article 21 of the Constitution mandates the state that no person shah be deprived of his life or personal liberty except according to the procedure established by law.
The scope and content of this Article has been the subject matter of intensive examination in the recent decisions of this Court.
I do not want to add to the length of this judg ment by recapitulating all those decisions in detail.
I may only highlight some of the observations which are relevant to the present case.
In Maneka Gandhi vs Union of India, [1978] 1 SCC 248 this Court gave a new dimension to Article 21.
The seven Judge bench held that a statute which merely prescribes some kind of procedure for depriving a person of his life or personal liberty cannot meet the requirements of Article 21.
Bhagwati, J., as he then was, while explaining the nature and requirement of procedure under Article 21 observed (at 283): "We must reiterate here what was pointed out by the majority in E.P. Rayappa vs State of Tamil Nadu, [1974] 3.
SCR 348: , namely, that from a posi tivistic point of view, equally is antithetic to arbitrariness.
In fact equality and arbi trariness are sworn enemies; one belongs to the rule of law in a republic, while the other, to the whim and caprice of an absolute monarch.
Where an act is arbitrary, it is implicit in it that it is unequal both accord ing to political logic and constitutional law and is, therefore, violative of Article 14".
Article 14 strikes at arbitrariness in State action and ensures fairness and equality of treatment.
The principle of reasonableness, which 545 legally as well as philosophically, is an essential element of equality or non arbi trariness pervades Article 14 like a brooding omni presence and the procedure contemplated by Article 21 must answer the test of reasona bleness in order to be in conformity .with
Article 14.
It must be "right and just and fair" and not "arbitrary, fanciful or oppres sive", otherwise, it would be no procedure at all and the requirement of Article 21 would not be satisfied.
" If one prefers to go yet further back, the procedural fairness in the defence of liberties was insisted upon even in 1952.
The State of West Bengal vs Anwar Ali, ; Bose, J., remarked (at 367): "The question with which I charge myself, is, can fair minded, reasonable, unbiased and resolute men, who are not swayed by emotion or prejudice, regard this with equa nimity and call it reasonable, just and fair, regard it as that ' equal treatment and protection in the defence of liberties which is expected of a sovereign democratic repub lic in the conditions which obtain in India today? I have but one answer to that.
On that short and simple ground I would decide this case and hold the Act bad.
" In Bachan Singh case, Sarkaria, J., affirming this view said (at 730): "No person shall be deprived of his life br personal liberty except according to fair, just and reasonable procedure estab lished by valid law." In Mithu vs State of Punjab, ; Chandra chud.
C.J., said (at 284): " . that the last word on the question of justice and fairness does not rest with the legislature.
Just as reasonableness of restrictions under clauses (2) to (6) of Article 19 is the for the courts to determine, so is it for the courts to decide whether the procedure prescribed by a law for depriving a person of his life or liberty is fair, just and reasonable." In Sher Singh vs State of Punjab, [1983] 2 SCC 582 Chandrachud, C.J. again explained (at 593): 546 "The horizons of Article 21 are ever widening and the final word on its conspectus shall never have been said.
So long as life lasts, so long shall it be the duty and endea vour of this Court to give to the provisions of our Constitution a meaning which will prevent human suffering and degradation.
Therefore, Article 21 is as much relevant at the stage of execution of the death sentence as it is in the interregnum between the impo sition of that sentence and its execution.
The essence of the matter is that all procedure no matter the stage, must be fair, just and reasonable." Article 21 thus received a creative connotation.
It demands that any procedure which takes away the life and liberty of persons must be reasonable, just and fair.
The procedural fairness is required to be observed at every stage and till the last breath of the life.
In Vaitheeswaran the court thought that the delay of two years would make it unreasonable under Article 21 to execute death sentence.
The court did not attach importance to the cause of delay.
The Cause of delay was immaterial.
The accused himself may be responsible for the delay.
The court said that the appropriate relief would be to vacate the death sentence and substitute life imprisonment instead.
The learned counsel for the petitioners argued that if two years period of delay set out in Vaitheeswaran does not present favourably, we may fix any other period but we should not disturb the basis of the decision.
He invited our attention to a number of authorities where courts have awarded life imprisonment on the ground of delay in disposal of cases.
In Vivian Rodrick vs The State of West Bengal, ; six years delay was considered sufficient for impos ing a lesser sentence of imprisonment for life.
In State of U.P. vs Paras Nath Singh & Ors., , the Court, while reversing the order of acquittal awarded life imprisonment on the ground that the accused was under sen tence of death till he was acquitted by the High Court.
Similar was the view taken in State of Bihar vs Pashupati Singh, ; ; State of U.P. vs Suresh, at 643 and State of U.P. vs Sahai, In State of U.P.v. Suresh, the accused was given life imprisonment in view of the fact that seven years had elapsed after the date of murder.
In Ram Adhar vs State of U.P., at 777, the 547 delay of six years from the date of occurrence was held sufficient to commute the sentence of death to life impris onment.
The court also observed that the accused was not responsible in any manner for the lapse of time that has occurred.
In Nethi Sreeramulu vs State of A. P., 14 the Court while disposing of the appeal in 1973 commuted the sentence of death given in 1971 to life imprisonment.
In State of U.P.v. Lalla Singh & Ors., six years delay from the date of judgment of the trial court was a consideration for not giving the death sentence.
In Sadhu Singh vs State of U.P., about three years and seven months during which the accused was under spectre of death sentence, was one of the relevant factors to reduce the sentence to life imprisonment.
There are equally other decisions where in spite of the delay in disposal of the case, the Court has awarded the death sentence.
In Nachhittar Singh vs State of Punjab, , the court refused to consider the question of delay as a mitigating circumstances.
In Maghar Sing vs State of Punjab, [19751 4 SCC 234, the court said that delay does not appear to be good ground to commute to life impris onment in view of the pre planned, cold blooded and dastard ly murder committed by the accused.
In Lajar Mashi vs State of U.P., , the court while confirming the death sentence observed (at 809): "The value of such delay as a miti gating factor depends upon the features of a particular case.
It cannot be divorced from the diabolical circumstances of the crime itself, which, in the instant case fully justify the award of capital sentence for the murder of the deceased.
We, therefore, uphold the award of the capital sentence to the appellant and dismiss his appeal.
" All these decisions are of little use to determine the constitutionality of execution of the death sentence on the relevance of delay.
These decisions relate to the sentencing discretion of courts with which we are not concerned.
We are concerned with the right of the accused to demand life imprisonment after the final verdict of death sentence with every justification to impose it.
The demand for life imprisonment herein as solely based on the ground of prolonged delay in the execution.
The delay which is sought 548 tO be relied upon by the accused consists of two parts.
The first part covers the time taken in the judicial proceed ings.
It is the time that the parties have spent for trial, appeal, further appeal and review.
The second part takes into fold the time utilized by the executive in the exercise of its prerogative clemency.
I start with the first part of the delay.
In Vaitheeswa ran this part of the delay was expressly taken into consid eration.
It was observed that the period of two years as prolonged detention would include the time necessary for appeal from the sentence of death and consideration of reprieve.
In Sher Singh, this period has not been accepted as good measure.
The court said that the fixation of time limit of two years did not accord with the common experience of time normally consumed by the litigative process and the proceedings before the Government.
Mr. Parasaran, learned Attorney General has altogether a different approach and in my opinion very rightly.
He argued that the time spent by the courts in judicial proceedings was intended to ensure a fair trial to the accused and cannot be relied upon by the same accused to impeach the execution of the death sentence.
The relevant provisions in the Indian Penal Code, the Criminal Procedure Code, the Evidence Act and the Rules made by the High Courts and the Supreme Court governing the trial, appeal, execution of sentence, etc., were all highlighted.
According to learned Attorney, these provisions are meant to examine the guilt or innocence of the accused and to have an appropriate sentence commensurate with the gravity of the crime.
They constitute reasonable procedure, established by law.
I entirely agree.
The time taken in the judicial pro ceedings by way of trial and appeal was for the benefit of the accused.
It was intended to ensure a fair trial to the accused and to avoid hurry up justice.
The time is spent in the public interest for proper administration of justice.
If there is inordinate delay in disposal of the case, the trial court while sentencing or the appellate court while dispos ing of the appeal may consider the delay and the cause thereof along with other circumstances.
The court before sentencing is bound to hear the parties and take into ac count every circumstance for and against the accused.
If the court awards death sentence, notwithstanding the delay in disposal of the case, there cannot be a second look at the sentence save by way of review.
There cannot be a second trial on the validity of sentence based on Article 21.
The execution which is impugned is execution of a judgment and not apart from judgment.
If the judgment 549 with the sentence awarded is valid and binding, it falls to be executed in accordance with law since it is a part of the procedure established by law.
Therefore, if the delay in disposal of the case is not a mitigating circumstance for lesser sentence, it would be, in my opinion, wholly inappro priate to fall back upon the same delay to impeach the execution.
If the delay in passing the sentence render the execu tion unconstitutional, the delay subsequent thereof cannot also render it unconstitutional.
Much less any fixed period of delay could be held to make the sentence inexecutable.
It would be arbitrary to fix any period of limitation for execution on the ground that it would be a denial of fair ness in procedure under Article 21.
With respect, I, am unable to agree with the view taken in Vatheeswaram case on this aspect.
Under Article 72 of the Constitution, the President shall have the power to "grant pardons, deprives, respites or remissions of punishment or to suspend, remit or commute the sentence of any person convicted in an offence".
Under Article 161 of the Constitution, similar is the power of the Governor to give relief to any person convicted of any offence against any law relating to a matter to which the executive power of the State extends.
The time taken by the executive for disposal of mercy petitions may depend upon the nature of the case and the scope of enquiry to be made.
It may also depend upon the number of mercy petitions sub mitted by or on behalf of the accused.
The Court, therefore, cannot prescribe a time limit for .disposal
Of even for mercy petitions.
It is, however, necessary to point out that Article 21 is relevant at all stages.
This Court has emphasized that "the speedy trial in criminal cases though not a specific fundamental right, is implicit in the broad sweep and con tent of Article 21".
(See: Hussainara Khatoon vs The State of Bihar, [1979] 3 SCR 169 and ; Speedy trial is a part of one 's fundamental right to life and liberty.
(See Kadra Pahadiya vs State of Bihar, and This principle, in my opinion, is no less important for disposal of mercy petition.
It has been uni versally recognised that a condemned person has to suffer a degree of mental torture even though there is no physical mistreatment and no primitive torture.
He may be provided with amenities of ordinary inmates in the prison as stated in Sunil Batra vs Delhi Administration, , but nobody could succeed in giving him peace of mind.
550 Chita Chinta Dwayoormadhya, Chinta tatra gariyasi, Chita Dahati Nirjivam, Chinta dahati Sajeevakam.
As between funeral fire and mental worry, it is the latter which is more devastating, for, funeral fire bums only the dead body while the mental worry burns the living One.
This mental torment may become acute when the judicial verdict is finally set against the accused.
Earlier to it, there was every reason for him to hope for acquittal.
That hope is extinguished after the final verdict.
If, therefore, there is inordinate delay in execution, the condemned pris oner is entitled to come to the court requesting to examine whether, it is just and fair to allow the sentence of death to be executed.
What should be done by the Court is the next point for consideration.
It is necessary to emphasise that the juris diction of the Court at this stage is extremely limited.
If the Court wants to have a look at the grievance as to delay, it is needless to state, that there should not be any delay either in listing or in disposal of the matter.
The person who complains about the delay in the execution should not be put to further delay.
The matter, therefore, must be expedi tiously and on top priority basis, disposed of.
The Court while examining the matter, for the reasons already stated, cannot take into account the time utilised in the judicial proceedings up to the final verdict.
The Court also cannot take into consideration the time taken for disposal of any petition filed by or on behalf of the accused either under Article 226 or under Article 32 of the Constitution after the final judgment affirming the conviction and sentence.
The Court may only consider whether there was undue long delay in disposing of mercy petition; whether the State was guilty of dilatory conduct and whether the delay was for no reason at all.
The inordinate delay, may be a significant factor, but that by itself cannot render the execution unconstitutional.
Nor it can be divorced from the dastardly and diabolical circumstances of the crime itself.
The Court has still to consider as observed in Sher Singh case (at 596): "The nature of the offence, the diverse circum stances attendant upon it, its impact upon the contemporary society and the question whether the motivation and pattern of 551 the crime are such as are likely to lead to its repetition, if the death sentence is vacated, are matters which must enter into the verdict as to whether the sentence should be vacated for the reason that its execution is delayed.
" The last contention urged for the petitioners that the accused should not be executed if he was since improved is unavailable since it seeks to substitute a new procedure which the Code does not provide for.
We have already considered all these cases in the light of these principles and disposed them of by our earlier unanimous order.
| IN-Abs | The accused were convicted under section 302 I.P.C. and sentenced to death by the trial court.
The High Court con firmed their conviction and 510 sentence.
This Court dismissed their special leave peti tions/appeals and subsequent review petitions.
Their mercy petitions to the President and/ or Governor were also re jected.
Therefore, they approached this Court by way of Writ Petitions for setting aside the death sentence and substi tuting it by a sentence of life imprisonment on the ground of prolonged delay in the execution.
They contended that the dehumanising factor of prolonged delay with the mental torture in confinement in jail had rendered the execution unconstitutional.
In view of the conflicting decisions of this Court in T.V. Vaitheeswaran vs State of Tamil Nadu, and Sher Singh & Ors.
vs The State of Punjab, ; and observations in Javed Ahmed Abdul Hamid Pawala vs State of Maharashtra; , on the question of delay, the writ petitions were referred to a five judges Bench.
While a Bench of two Judges held in Vaitheeswaran 's case that two years delay in execution of the sentence after the judgment of the trial court would entitle the condemned prisoner to ask for commutation of his sentence of death to imprisonment for life, a three Judges ' Bench held, in Sher Singh 's case, that delay alone is not good enough for commu tation and two year 's rule could not be laid down in the cases of delay and that the Court in the context of the nature of the offence and delay, could consider the question of commutation of death sentence.
In Javed 's case this Court observed that where the condemned man had suffered more than two years and nine months and was repenting and there was nothing adverse against him in the jail records, this period of two years and nine months with the sentence of death heavily weighing on his mind, would entitle him for commuta tion of sentence of death into imprisonment for life.
The questions for consideration in these cases were: (a) whether prolonged delay in execution of the sentence of death rendered it inexecutable and entitled the accused to demand the alternate sentence of imprisonment for life, (b) what should be the starting point for computing this delay, (c) what were the rights of a condemned prisoner who had been sentenced to death but not executed, and (d) what could be the circumstances which should be considered along with the time that had been taken before the sentence is execut ed.
On October 11, 1988 this Court dismissed all the writ petitions, except Writ Petition No. 1566 of 1985, which was partly allowed and the sentence of death awarded to the accused was substituted by the sen 511 tence of imprisonment.
Over ruling the decision in Vaithees warans case that two years ' delay would make the sentence of death inexecutable, this Court held that undue long delay in execution of the sentence of death would entitle the condem ned person to approach this Court under Article 32 but this Court would only examine the nature of delay caused and circumstances ensued after sentence was finally confirmed by the judicial process and would have no jurisdiction to reopen the conclusions reached by the Court while finally maintaining the sentence of death, that this Court, might consider the question of inordinate delay in the light of all circumstances of the case to decide whether the execu tion of the sentence should be carried out or should be altered into imprisonment for life and that no fixed period of delay would be held to make the sentence of death inexe cutable.
Reasons for the judgment were to follow.
Giving the reasons for the Judgment, HELD: Majority: Oza, Murari Mohon Dutt, Singh and Sharma JJ.
Per Oza, J: 1.1 The delay which could be considered while consider ing the question of commutation of sentence of death into one of life imprisonment could only be from .the date the judgment by the apex Court is pronounced i.e when the judi cial process has come to an end.
[528E F] 1.2 The condemned prisoner knows that the judgment pronounced by the Sessions Court in the case of capital punishment is not final unless confirmed by the High Court.
All the delay upto the final judicial process is taken care of while the judgment is finally pronounced, and in a number of cases the time that has elapsed from the date of offence till the final decision, has weighed with the courts and lesser sentence awarded only on this account.
[526E, H; 527A] State of Uttar Pradesh vs Lalla Singh and others, ; Sadhu Singh vs State of U.P., AIR 1978 SC 1506; State of U.P.v.
Sahai, AIR 1981 SC 1442 and Joseph Peter vs State of Goa, Daman & Diu, ; , referred to.
Piare Dusadh and others vs The King Emperor, [1944] Federal Court Reports 61, referred to.
1.3 Practically, in all the High Courts a confirmation case i.e. a 512 case where the sentence of death is awarded by the Sessions Court and is pending in the High Court for confirmation in the High Court a time bound programme is provided in the rules and, except on some rare occasions, the High Court has disposed of a confirmation case between six months to one year.
At the Sessions level also, the normal procedure of the sessions trial is that it is taken up day today and it is expected that such a sessions case should be given top priority and it is expected that such trials must continue day to day till it is concluded.
Even in this Court, al though there is no specific rule, normally these matters are given top priority, and ordinarily, it is expected that these matters will be given top priority and shall be heard and disposed of as expeditiously as possible.
Therefore, as long as the matter is pending in any Court before any final adjudication, even the person who has been condemned or sentenced to death has a ray of hope.
Therefore, it could not be contended that he suffers that mental torture which a person suffers when he knows that he is to be hanged but waits for the Dooms day.
[527G H; 528C E] 1.4 After the matter is finally decided judicially, it is open to the person to approach the President or the Governor as the case may be with a mercy petition.
It is no doubt true that sometimes such mercy petition and review petitions are filed repeatedly causing delay, but a legiti mate remedy if available in law, a person is entitled to seek it and it would, therefore, be proper that if there has been undue and prolonged delay, that alone will be a matter attracting the jurisdiction of this Court, to consider the question of execution of the sentence.
However, while con sidering the question of delay after the final verdict is pronounced, the time spent on petitions for review and repeated mercy petitions at the instance of convicted person himself shall not be considered.
[528F, G; 529A] 1.5 The only delay which would be material for consider ation will be the delay in disposal of the mercy petitions or delays occurring at the instance of the Executive.
[529B] 1.6 When petitions under article 72 or 161 are received by the authorities concerned, it is expected that these peti tions shall be disposed of expeditiously.
[529C] T.V. Vaitheeswaran vs State of Tamil Nadu, , over ruled.
Sher Singh & Others vs The State of Punjab, ; , affirmed.
513 Javed Ahmed Abdul Hamid Pawala vs State of Maharashtra, ; , referred to.
2.1 A judgment of the Court can never be challenged under article 14 or 21 and, therefore, the judgment of the court awarding the sentence of death is not open to chal lenge as violating article 14 or 21.
[531G H] Naresh Shridhar Mirajkar and Ors.
vs State of Maharash tra and Anr.
; , and A.R. Antulay vs R.S. Nayak and another; , , relied on.
2.2 The only jurisdiction which could be sought to be exercised by a prisoner for infringement of his rights can be to challenge the subsequent events after the final judi cial verdict is pronounced and it is because of this that on the ground of long or inordinate delay a condemned prisoner could approach this Court.
[532A B] 2.3 It will not be open to this Court in exercise of jurisdiction under article 32 to go behind or to examine the final verdict reached by a competent court convicting and sentencing the condemned prisoner and even while considering the circumstances in order to reach a conclusion as to whether the inordinate delay coupled with subsequent circum stances could be held to be sufficient for coming to a conclusion that execution of the sentence of death will not be just and proper.
The nature of the offence, circumstances in which the offence was committed will have to be taken as found by the competent court while finally passing the verdict.
It may also be open to the court to examine or consider any circumstances after the final verdict was pronounced if it is considered relevant.
[532B D] 2.4 The question of improvement in the conduct of the prisoner after the final verdict also cannot be considered for coming to the conclusion whether the sentence could be altered on that ground also.
[532D] 3.1 Before 1955, sentence of death was the rule, the alternative sentence had to be explained by reasons.
There after, it was left to the discretion of the court to inflict either of the sentences and ultimately in the 1973 Code normal sentence is imprisonment for life except that for the special reasons to be recorded sentence of death could be passed.
This indicates a trend against sentence of death but this coupled with the decisions wherein sentence of death has been accepted as constitu 514 tional, show that although there is a shift from sentence of death to lesser sentence, there is a clear intention of maintaining this sentence to meet the ends of justice in appropriate cases.
Therefore, in spite of the divergent trends in the various parts of the world there is a consist ent thought of maintaining the sentence of death on the statute book for some offences and in certain circumstances where it may be thought necessary to award this extreme penalty.
It is awarded in the rarest of rare cases and this is the accepted position of law.
[524B D] Bachan Singh etc.
vs State of Punjab etc.
; , and Machhi Singh and others vs State of Punjab, referred to. 3.2 The circumstances in which the extreme penalty should be inflicted cannot be enumerated in view of complex situation in society and the possibilities in which the offence could be committed and the Legislature was, there fore, right in leaving it to the discretion of the judicial decision as to what should be the sentence in particular circumstances of the case.
But the Legislature has put a further rider that when the extreme penalty is inflicted it is necessary for the court to give special reasons thereof.
[525H; 526A B] 4.
The prisoner, who is sentenced and kept in jail custody under a warrant under section 366(2) of the Criminal Procedure Code is neither suffering rigorous imprisonment nor simple imprisonment.
In substance, he is in jail so that he is kept safe and protected with the purpose that he may be available for execution of the sentence which has been awarded.
Hence this will not amount to double jeopardy.
[53 1E] The life of the condemned prisoner in jail awaiting execution of sentence must be such which is not like a prisoner suffering the sentence, and it is essential that he must be kept safe.
[531F] Sunil Batra vs Delhi Administration, ; re ferred to.
Per Jagannatha Shetty, J (Concurring): 5.
Article 21 demands that any procedure which takes away the life and liberty of persons must be reasonable, just and fair.
This procedural fairness is required to be observed at every stage and till the last breath of the life.
[546C] 515 Maneka Gandhi vs Union of India, [1978] 1 SCC 248; The State of West Bengal vs Anwar Ali, ; ; Bachan Singh vs State of Punjab ; Mithu vs State of Punjab, ; and Sher Singh vs State of Punjab, [1983] 2 SCC 582, relied on.
6.1 The delay which is sought to be relied upon by the accused consists of two parts.
The first part covers the time taken in the judicial proceedings.
It is the time that the parties have spent for trial, appeal, further appeal and review.
The second part takes into fold the time utilized by the executive in the exercise of its prerogative clemency.
[547H; 548A B] 6.2 The time taken in the judicial proceedings by way of trial and appeal was for the benefit of the accused.
It was intended to ensure a fair trial to the accused and to avoid hurry up justice.
The time is spent in the public interest for proper administration of justice.
If there is inordinate delay in disposal of the case, the trial court while sen tencing or the appellate court while disposing of the appeal may consider the delay and the cause thereof along with other circumstances.
The court before sentencing is bound to hear the parties and take into account every circumstance for and against the accused.
If the court awards death sentence, notwithstanding the delay in disposal of the case, there cannot be a second look at the sentence, save by way of review.
[548F H] 6.3 There cannot be a second trial on the validity of sentence based on article 21.
The execution which is impugned is execution of a judgment and not apart from judgment.
If the judgment with the sentence awarded is valid and binding, it fails to be executed in accordance with law.
Therefore, if the delay in disposal of the case is not a mitigating circumstance for lesser sentence, it would be wholly inap propriate to fail back upon the same delay to impeach the execution.
[548H; 549A B] 6.4 If the delay in passing the sentence cannot render the execution unconstitutional, the delay subsequent thereof cannot also render it unconstitutional Much less any fixed period of delay could be held to make the sentence inexe cutable.
It would be arbitrary to fix any period of limita tion for execution on the ground that it would be a denial of fairness in procedure under Article 21.
[549B C] T.V. Vaitheeswaran vs State of Tamil Nadu, , over ruled.
516 6.5 The time taken by the executive for disposal of mercy petitions may depend upon the nature of the case and the scope of enquiry to be made.
It may also depend upon the number of mercy petitions submitted by or on behalf of the accused.
The Court, therefore, cannot prescribe a time limit for disposal of even mercy petitions.
However, Article 21 is relevant at all stages, and the principle that speedy trial is a part of one 's fundamental right to life and liberty is no less important for disposal of mercy petition.
[549E F] Hussainara Khatoon vs The State of Bihar, [1979] 3 SCR 169 and ; and Kadra Pahadiya vs State of Bihar, and relied on.
6.6 It has been universally recognised that a condemned person has to suffer a degree of mental torture even though there is no physical mistreatment and no primitive torture.
He may be provided with amenities of ordinary inmates in the prison.
But nobody could succeed in giving him peace of mind.
[549G H] Sunil Batra vs Delhi Administration, ; re ferred to.
As between funeral fire and mental worry, it is the latter which is more devastating, for, funeral fire burns only the dead body while the mental worry burns the living one.
This mental torment may become acute when the judicial verdict is finally set against the accused.
Earlier to it, there was every reason for him to hope for acquittal.
That hope is extinguished after the final verdict.
If, therefore, there is inordinate delay in execution, the condemned pris oner is entitled to come to the court requesting to examine whether, it is just and fair to allow the sentence of death to be executed.
[550C] 6.7 The jurisdiction of the Court at this stage, is extremely limited.
The Court, while examining the matter, cannot take into account the time utilised in the judicial proceedings up to the final verdict.
The Court also cannot take into consideration the time taken for disposal of any petition filed by or on behalf of the accused either under article 226 or under article 32 of the Constitution after the final judgment affirming the conviction and sentence.
The Court may only consider whether there was undue long delay in disposing of mercy petition; whether the State was guilty of dilatory conduct and whether the delay was for no reason at all.
Though the inordinate delay may be a significant factor, but that by itself cannot render the execution uncon 517 stitutional.
Nor it can be divorced from the dastardly and diabolical circumstances of the crime itself.
[550D G] T.V. Vaitheeswaran vs State of Tamil Nadu, over ruled.
Sher Singh vs State of Punjab, ; affirmed.
Javed Ahmed Abdul Hamid Pawala vs State of Maharashtra, ; ; Vivian Rodrick vs The State of West Bengal, ; ; State of U.P. vs Paras Nath Singh & Ors., ; Bihar vs Pashupati Singh, ; ; State of U.P. vs Suresh, at 643; State ofU. P. vs Sahai, ; Ram Adhar vs State of U.P., at 777; State of U.P. vs Lalla Singh ; Nachhittar Singh vs State of Punjab, ; Maghar Singh vs State of Punjab, ; Lajar Mashi vs State of U.P., ; Hussainara Khatoon vs The State of Bihar, [1979] 3 SCR 169 and ; and Kadra Pahadiya vs State of Bihar, and referred to.
6.8 If the Court wants to have a look at the grievance as to delay then there should not be any delay either in listing or in disposal of the matter.
The person who com plaints about the delay in the execution should not be put to further delay.
The matter, therefore, must be expedi tiously and on top priority basis, disposed of.
[550D E] 6.9 The contention that the accused should not be exe cuted if he has since improved is unavailable, since it seeks to substitute a new procedure which the Code does not provide for.
[551B] 7.
The judicial verdict pronounced by court in relation to a matter cannot be challenged on the ground that it violates one 's fundamental right.
The judgment of a court cannot be said to affect the fundamental rights of citizens.
[534A B] Naresh Sridhar Mirajkar, relied on.
It is now obligatory for the court to state reasons for the sentence awarded for the offence of murder.
The court cannot award death sentence without giving special reasons and only in exceptional cases and not in the usual run of murders.
There are just six offences carrying death penalty and that too as an alternate sentence.
[543E F] 518 9.
The criminal law always keeps pace with the develop ment of society.
The punishment which meets the unanimous approval in one generation, may rank as the most reprehensi ble form of cruelty in the next.
The representatives of the people are cognizant of the contemporary social needs.
The legislative amendments brought about from time to time are indicative of their awareness.
The penal law cannot remain isolated and untouched.
It will be profoundly influenced by philosophy prevailing.
Time may reach for the representa tives of people to consider that death penalty even as an alternate sentence for murder is uncalled for and unneces sary.
There is nothing in our Constitution to preclude them from deleting that alternate sentence.
[540C; 542H; 543H; 544A] Bachan Singh vs State of Punjab, and Mithu vs State of Punjab, ; , referred to.
The practice prevailing over the years had been that a larger bench straightaway considers the correctness of and, if necessary, overrules the view of a smaller bench.
This practice has been held to be the crystallised rule of law in a recent decision by a special bench of seven judges of this Court.
This must be regarded as a final seal to the controversy, and it is now not open to any one to contend that a bench of two judges cannot be overruled by a bench of three judges.
[536H; 537E] A.R. Antulay vs
R.S. Nayak, AIR 2988 SC 1532, followed.
|
vil Appeal No. 528 (NT) of 1989.
From the Judgment and Order dated 7.8.1987 of the Set tlement Commission (IT & WT), New Delhi in Settlement Appln.
No. 22/1/3/ 77 IT.
Harish N. Salve and Miss Bina Gupta for the Appellant.
Dr. V. Gauri Shankar and Miss A. Subhashini for the Respond ents.
The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J.
Special leave granted.
This is an appeal against the judgment and order of the Settle 338 ment Commission dated 7th August, 1987.
The fact that an appeal under Article 136 of the Constitution lies against the Order of the Settlement Commission is now beyond pale of any controversy in view of the decision of this Court in Commissioner of Income Tax (Central), Calcutta vs B.N. Bhattachargee and another, [1979] Vol.
118 Income Tax Re ports 461.
The appellant had applied to the Settlement Commission for settlement of his assessment for the assess ment years 1948 49 to 1975 76 under the Income tax Act, 196 1 (hereinafter referred to as 'the Act ').
That application had to be proceeded in accordance with section 245C of the Act which is as follows: "245C. (1) An assessee may, at any stage of a case relating to him, make an application in such form and in such manner and containing such particulars as may be prescribed to the Settlement Commission to have the case settled and any such application shall be disposed of in the manner hereinafter provided.
" Sub sections (2) and (3) of section 245C of the Act are not relevant for our present purpose.
The application made by the appellant was a composite one for settlement of his assessments for the assessment years 1948 49 to 197576.
The purpose for the introduction of the Settlement Commission has been explained by this Court in the aforesaid decision.
This Court observed that these are contained in Chapter XIX A of the Income tax Act, 1961.
The said Chapter was enacted by the Taxation Laws (Amend ment) Act, 1975 whose beneficiaries were ordinarily those whose tax liability was astronomical and criminal culpabili ty perilous.
As has been observed that this Chapter was introduced with the debatable policy, fraught with dubious potentialities in the context of Third World conditions of political peculium and bureaucratic abetment, that composi tion and collection of public revenue from tycoons is better than prosecution of their tax related crime and litigation for total revenue recovery.
The Wanchoo Committee appointed by the Government of India had recommended this step.
It appears that on 12th August, 1977 the Commissioner of Income tax objected to the proposal of the appellant under section 245D(1) of the Act.
The Commissioner objected to the settlement for the years 1948 49 to 1959 60, but agreed to the settlement for later years.
The Commissioner, it ap pears, accordingly made an order on 24th August, 1977 re jecting the application for settlement for the years 339 1948 49 to 1959 60.
The appellant on 20th September, 1977 applied to the Commission to recall its earlier order dated 24th August, 1977 since the same had been made without furnishing any opportunity of hearing to the appellant.
Section 245D(1) provides as follows: "245D. PROCEDURE ON RECEIPT OF AN APPLI CATION UNDER SECTION 245C (1) On receipt of an application under Section 245C, the Settlement Commission shall call for a report from the Commissioner and on the basis of the materials contained in such report and having regard to the nature and circumstances of the case or the complexity of the investigation involved therein, the Set tlement Commission may, by order, allow the application to be proceeded with or reject the application: Provided that an application shall not be rejected under this sub section unless an opportunity has been given to the applicant of being heard.
Provided further that an application shall not be proceeded under this sub section if the Commissioner objects to the application on being proceeded with on the ground that concealment of particulars of income on the part of the applicant or perpetration of fraud by him for evading any tax or other sum chargeable or impassable under the Indian Income tax Act, 1922 (XI of 1922), or under this Act, has been established or is likely to be established by any Income tax authority, in relation to the case.
" About hearing the applicant prior to the rejection of the application this Court in the aforesaid decision at page 472 of the report held that an applicant before the Settle ment Commission was entitled to a hearing before his appli cation for composition was rejected.
This Court observed that section 245D(1) does not negate natural justice and in the absence of an express exclusion of the rule of audi alteram partem, it is fair, and indeed fundamental, that no man be prejudiced by action without opportunity to show to the contrary.
Natural justice must be followed.
This also is the natural corollary of the decisions of this Court in M.S. Gill vs Chief Election Commissioner, 405 and Maneka Gandhi vs Union of India, [1978] 1 SCC 248.
The Finance Act, 1979, however, was amended with effect from ist April, 1979 and sub section (1A) was inserted to section 245D which empowered the Settlement Commission to overrule the objection of the Commissioner.
Sub section (1A) of section 245D reads as follows: "Notwithstanding anything contained in sub section (1), an application shall not be proceeded with under that subsection if the Commissioner objects to the application being proceeded with on the ground that concealment of particulars of income on the part of the applicant or perpetration of fraud by him for evading any tax or other sum chargeable or impassable under this Act, has been estab lished or is likely to be established by any Income tax Authority in relation to the case: Provided that where the Settlement Commission is not satisfied with the correct ness of the objection raised by the Commis sioner the Settlement Commission may, after giving the Commissioner an opportunity of being heard, by order, allow the application to be proceeded with under sub section (1) and send a copy of its order to the Commissioner." Though the Commission is empowered not to accept the objec tion of the Commissioner yet the Commissioner 's objection is of "lethal potency" as described by Krishna Iyer, J. in the aforesaid decision.
From the facts of this case, however, it has to be noted that the appellant applied to the Settlement Commission to permit him to contest the objections of the Commissioner on the proviso now inserted as mentioned above.
It has to be borne in mind that this was done after the proceedings had proceeded to a certain extent.
As mentioned hereinbefore, the appellant had applied to the Settlement Commission as aforesaid on 22nd January, 1977.
On 12th August, 1977 the Commissioner had tendered the objections as mentioned hereinbefore.
On 24th August, 1977, the Settlement Commissioner made an order rejecting the application for settlement for the assessment years 194849 to 1959 60.
This had been done without hearing the appellant.
On , 20th September, 1977 the appellant applied to the Commission to recall its order dated 24th August, 1977 since it had been passed without giving an opportunity of hearing to the appellant.
That application 341 was pending.
In the meantime, as mentioned hereinbefore, on Ist April, 1979, the Finance Act, 1979 inserted sub section (1A) to section 245(D) which empowered the Settlement Com mission to overrule the objections of the Commissioner.
On 29th May, 1979 the appellant applied to the settlement Commission to permit him to contest the objections of the Commissioner under the said proviso now inserted.
The matter was taken up after a long gap in June 1987 and it was heard on 18th June, 1987 and Ist July, 1987.
The appellant con tended that the order of 24th August, 1977 should be re called and the objections of the Commissioner be dealt with in accordance with the amended provisions of section 245D(1A) and it also contended that if the Commissioner 's objections were not to be interfered with then the entire application should be dismissed.
On 7th August, 1987, which is the date of impugned order in this appeal, the Settlement Commission accepted the first part of the contentions and held that the applicant was entitled to a reheating since its order of 24th August, 1977 had been made in violation of the principles of natural justice and also express provision of section 245D(1) proviso, but rejected the second part of the submission that the application for settlement made by the petitioner would have to be disposed of in accordance with law which prevailed on 24th August, 1977.
The Commis sion, however, held that since the Commissioner had objected only to some of the years under settlement, the entire application would have to be rejected.
It is this order which is under challenge before us.
We are definitely of the opinion that on the relevant date when the order was passed, that is to say, 24th August, 1977 the order was a nullity because it was in violation of principles of natural justice.
See in this connection, the principles enunciated by this Court in State of Orissa vs Dr. (Miss) Binapani Dei and Ors., ; as also the observations in Administrative Law by H.W.R. Wade, 5th Edition, pages 3 10 311 that the act in violation of the principles of natural justice or a quasi judicial act in violation of the principles of natural justice is void or of no value.
In Ridge vs Baldwin, ; and Anisminic Ltd. vs Foreign Compensation Commission, ; the House of Lords in English has made it clear that breach of natural justice nullifies the order made in breach.
If that is so then the order made in violation of the princi ples of natural justice was of no value.
If that is so then the application made for the settlement under section 245C was still pending before the Commission when the amendment made by Finance Act of 1979 came into effect and the said amendment being procedural, it would govern the pending proceedings and the Commission would have the power to overrule the objec 342 tions of the Commissioner.
Dr. V. Gauri Shanker, appearing for the Revenue, did not seriously contest that position.
He accepted the position that the law as it is, after the amendment authorises the Commission to consider and overrule the Commissioner 's objection.
He also very fairly, in our opinion, and rightly accepted the position that the appel lant was entitled to be heard on the Commissioner 's objec tions.
It appears to us, therefore, if that is the position then, in our opinion, the appellant was entitled to be heard on the objections of the Commissioner.
As mentioned herein before, the only short ground which was sought to be con vassed before us was whether after the amended Act the order had been rightly set aside and whether the appellant had a fight to be heard on the objections of the Commissioner.
Mr. Harish Salve, counsel for the appellant contends that it had a right to be heard.
On the other hand, Dr. V. Gauri Shan kar, learned counsel for the respondents submitted that the order proceeded on the assumption that the objections had been heard.
He did not, in fairness to him it must be con ceded, contest that in a matter of this nature the appellant had a fight to be heard.
Reading the order, it appears to us, that though the appellant had made submissions on the Commissioner 's objections.
but there was no clear opportuni ty given to the appellant to make submissions on the Commis sioner 's objections in the sense to demonstrate that the Commissioner was not justified in making the objections and secondly, the Commission should not accept or accede to the objections in the facts and circumstances of he present case.
We are of the opinion that in view of the facts and circumstances of the case and in the context in which these objections had been made, it is necessary as a concomitant of the fulfilment of natural justice that the appellant should be heard on the objections made by the Commissioner.
It is true that for the relevant orders for the years for which the Commissioner had objected the concealment had been upheld in the appeal before the appropriate authorities.
But it may be that in spite of this concealment it may be possi ble for the appellant to demonstrate or to submit that in disclosure of concealed income for a spread over period settlement of the entire period should be allowed and not bifurcated in the manner sought to be suggested for the Commissioner 's objections.
This objection the appellant should have opportunity to make.
In exercise of our power of judicial review of the decision of the Settlement Commission we are concerned with the legality of procedure followed and not with validity of the order.
See the observations of Lord Hailsham in Chief Constable of the North Wales Police vs Evans; , Judicial Review is concerned not with the decision but with the decision making process.
343 We therefore allow the appeal.
We set aside the order of 7th August, 1987 and remand the matter back to the Settle ment Commission to hear and dispose of the settlement peti tion made by the appellant dated 22nd January, 1977 taking into consideration objections made by the Commissioner and the objections made by the appellant to the Commissioner 's objections and after giving the appellant an opportunity of showing reasons and causes why the Commissioner 's objections should not be accepted by the Commission.
After considering the said objections of the Commissioner as well as the objections to the Commissioner 's objections made by the appellant, the Settlement Commission would be free to pass such orders as it considers fit and proper in accordance with the law.
Since the matter is pending for a long time, we do hope that the Settlement Commission will dispose of the matter as expeditiously as possible.
It is not necessary for us in this appeal to express any opinion on the correct ness or otherwise of the Commissioner 's objections or on the validity of the appellant 's objections to the Commissioner 's objections.
The appeal is disposed of accordingly.
There will be no order as to costs.
P.S.S. Appeal disposed of.
| IN-Abs | Sub section (1) of section 245C of the Income Tax Act, 1961 entitles an assessee, at any stage of the case, to make an application to the Settlement Commission to have his case settled.
Sub section (1) of section 245D requires the Set tlement Commission, as and when such an application is made to call for a report from the Commissioner of Income Tax.
The first proviso thereto interdicts rejection of the appli cation under that sub section unless an opportunity has been given to the applicant of being heard.
The second proviso thereto provides that no application shall be proceeded with under that sub section if the Commissioner objects to the same on the ground that concealment of particulars of income on the part of the applicant or perpetration of fraud by him for evading any tax has been established or is likely to be established.
Sub section (IA) inserted in section 245D by the Finance Act, 1979 empowered the Settlement Commission to overrule the objections of the Commissioner.
The appellant made a composite application under section 245C of the Act for settlement of his assessments for the assessment years 1948 49 to 1975 76.
The Commissioner ob jected to the proposals under sec 336 tion 245D(1) for settlement for the years 1948 49 to 1959 60, but agreed to the settlement for the later years.
The Commission accordingly made an order an 24th August, 1977 rejecting the application for settlement for the years 1948 49 to 1959 60.
The appellant thereupon applied to the Commission to recall its order since the same had been made without furnishing him any opportunity of hearing.
That application was pending.
When sub section (IA) was inserted to section 245D, the appellant applied to the Commission to permit him to contest the objections of the Commissioner contending that these should be dealt with in accordance with the amended provisions of section 245D(IA).
On 7th August, 1987 the Settlement Commission accepted the first part of the contentions holding that the applicant was entitled to a re hearing since its order of 24th August, 1977 had been made in violation of the principles of natural justice and also express provision of section 245D(1) provi so, but rejected the second part of the submission on the view that the application for settlement would have to be disposed of in accordance with law which prevailed on 24th August, 1977.
It further held that since the Commissioner had objected only to some of the years under settlement the entire application would have to be rejected.
Allowing the appeal by Special Leave, HELD: 1.
It is necessary as a concomitant of the fulfil ment of natural justice that an applicant before the Settle ment Commission should be heard before his application under Section 245C of the Act is rejected.
The order made by the Commission on 24th August, 1977 in the instant case in violation of the principles of natural justice was, there fore, of no value.
If that is so, then the application made for settlement was still pending before the Commission when the amendment made by the Finance Act of 1979 came into effect and the said amendment being procedural, it would govern the pending proceedings and the Commission would have the power to overrule the objections of the Commissioner.
[342E; 341E, G H] Income Tax (Central), Calcutta vs B.N. Bhattachargee & Anr., [1979] Vol. ; M.S. Gill.
vs Chief Election Commissioner, ; ; Maneka Gandhi vs Union of India, [1978] 1 SCC 248; State of Orissa vs Dr. (Miss) Binapani Dei & Ors., ; ; Ridge vs Baldwin, ; ; Anisminic Ltd. vs Foreign Compensation Commission, ; and Administrative Law, by H.W.R. Wade,5th Edn.
310 311 referred to.
2.1 The appellant had a right to be heard on the objections of the 337 Commissioner.
But no clear opportunity was given to him to make submissions in the sense to demonstrate that the Com missioner was not justified in making the objections and that the Commission should not accept or accede to the objections.
He should, therefore, be heard on the said objections.
[342D E].
2.2 Though for the relevant orders for the years for which the Commissioner had objected the concealment had been upheld in the appeal before the appropriate authorities, but in spite of this it may be possible for the appellant to demonstrate or to submit that in disclosure of concealed income for a spread over period settlement of the entire period should be allowed and not bifurcated in the manner sought to be suggested for the Commissioner 's objections.
This objection the appellant should have opportunity to make.
[342F G] 3.
In exercise of its power of judicial review of the decision of the Settlement Commission under Article 136 of the Constitution the Court is concerned with the legality of procedure followed and not with the validity of the order.
[342G] Chief Constable of the North Wales Police vs Evans, ; referred to.
The order dated 7th August, 1987 is set aside and the matter is remanded hack to the Settlement Commission to hear and dispose of the settlement petition in accordance with law.
[343A]
|
ivil Appeal No. 3 18788 of 1988.
From the Judgment and Order dated 4.4.1983 of the Madhya Pradesh High Court in C.R. No. 26 of 1988.
AND VICE VERSA (WITH S.L.P. (CIVIL) No. 13080 of 1988).
K. Parasaran, Attorney General, F.S. Nariman, Anil B. Divan, B.R. Zaiwala, Gopal Subramaniam, V.P. Sarthi, J.B. Dadachanji, Vijay Gupta, Ms. Anjali K. Verma, Sumeet Kachwa ha, Ashok Sagar, D.N. Misra, S.C. Sharma, O.C. Mathur, A. Subhashini, S.K. Gambhir, D .S. Shastri and Arun Madan for the appearing parties.
Vibhuri Jha, Anil K. Nauriya, Ms. Aruna Mathur, A. Mariarputham and C.L. Sahu for the Interveners.
732 The following Order of the Court was delivered: ORDER Having given our careful consideration for these several days to the facts and circumstances of the case placed before us by the parties in these proceedings, including the pleadings of the parties, the mass of data placed before us, the material relating to the proceedings in the Courts in the United States of America, the offers and counter offers made between the parties at different stages during the various proceedings, as well as the complex issues of law and fact raised before us and the submissions made thereon, and in particular the enormity of human suffering occasioned by the Bhopal Gas disaster and the pressing urgency to provide immediate and substantial relief to victims of the disaster, we are of opinion that the case is pre eminently fit for an overall settlement between the parties covering all litigations, claims, rights and liabilities related to and arising out of the disaster and we hold it just, equita ble and reasonable to pass the following order: We order: (1) The Union Carbide Corporation shall pay a sum of U.S. Dollars 470 millions (Four hundred and seventy Millions) to the Union of India in full settlement of all claims, rights and liabilities related to and arising out of the Bhopal Gas disaster.
(2) The aforesaid sum shall be paid by the Union Carbide Corporation to the Union of India on or before 31 March, 1989.
(3) To enable the effectuation of the settlement, all civil proceedings related to and arising out of the Bhopal Gas disaster shall hereby stand transferred to this Court and shall stand concluded in terms of the settlement, and all criminal proceedings related to and arising out of the disaster shall stand quashed wherever these may be pending.
A memorandum of settlement shall be filed before us tomorrow setting forth all the details of the settlement to enable consequential directions, if any, to issue.
We may record that we are deeply indebted to learned counsel for the parties for the dedicated assistance and the sincere cooperation 733 they have offered the Court during the hearing of the case and for the manifest reasonableness they have shown in accepting the terms of settlement suggested by this Court.
Having heard learned counsel for the parties, and having taken into account the written memorandum filed by them, we make the following order further to our order dated 14 February, 1989 which shall be read with and subject to this order: 1.
Union Carbide India Ltd., which is already a party in numerous suits filed in the District Court at Bhopal, and which have been stayed by an order dated 31 December, 1985 of the District Court, Bhopal, is joined as a necessary party in order to effectuate the terms and conditions of our order dated 14 February, 1989 as supplemented by this order.
Pursuant to the order passed on 14 Febru ary 1989 the payment of the sum of U.S. $ 470 Millions (four Hundred and Seventy millions) directed by the Court to be paid on or before 31 March, 1989 will be made in the manner following: (a) A sum of U.S. $ 425 Millions (four Hundred and Twenty five Millions) shall be paid on or before 23 March, 1989 by Union Carbide Corporation to the Union of India, less U.S. $ 5 Millions already paid by the Union Carbide Corporation pursuant to the order dated 7 June, 1985 of Judge Keenan in the court proceedings taken in the United States of America.
(b) Union Carbide India Ltd. will pay on or before 23 March, 1989 to the Union of India the rupee equivalent of U.S. $ 45 Millions (forty five Millions) at the exchange rate prevailing at the date of payment.
(c) The aforesaid payments shall be made to the Union of India as claimant and for the benefit of all victims of the Bhopal Gas Disaster under the Bhopal Gas Leak Disaster (Registration and Processing of Claims), Scheme, 1985, and not as fines, penalties, or punitive damages.
Upon full payment of the sum referred to in paragraph 2 above: 734 (a) The Union of India and the State of Madhya Pradesh shall take all steps which may in future become necessary in order to imple ment and give effect to this order including but not limited to ensuring that any suits, claims or civil or criminal complaints which may be filed in future against any Corpora tion, Company or person referred to in this settlement are defended by them and disposal of in terms of this order.
(b) Any such suits, claims or civil or criminal proceedings filed or to be filed before any court or authority are hereby enjoined and shall not be proceeded with before such court or authority except for dismissal or quashing in terms of this order.
Upon full payment in accordance with the Court 's direc tions: (a) The undertaking given by Union Carbide Corporation pursuant to the order dated 30 November, 1986 in the District Court, Bhopal shall stand discharged, and all order passed in Suit No. 1113 of 1986 and/or in revision therefrom shall also stand discharged.
(b) Any action for contempt initiated against counsel or parties relating to this case and arising out of proceedings in the courts below shall be treated as dropped.
The amounts payable to the Union of India under these orders of the Court shall be deposited to the credit of the Registrar of this Court in a Bank under directions to be taken from this Court.
This order will be sufficient authority for the Registrar of the Supreme Court to have the amount transferred to his credit which is lying unutilized with the Indian Red Cross Society pursuant to the direction from the International Red Cross Society.
The terms of settlement filed by learned counsel for the parties today are taken on record and shall form part of our order and the record.
The case will be posted for reporting compliance on the first Tuesday of April, 1989.
735 TERMS OF SETTLEMENT CONSEQUENTIAL TO THE DIRECTIONS AND ORDERS PASSED BY THIS HON 'BLE COURT 1.
The parties acknowledge that the order dated February 14, 1989 as supplemented by the order dated February 15, 1989 disposes of in its entirety all proceedings in Suit No. 1113 of 1986.
This settlement shall finally dispose.
of all past, present and future claims, causes of action and civil and criminal proceedings (of any nature whatsoever wherever pending) by all Indian citizens and all public and private entities with respect to all past, present and future deaths, personal injuries, health effects, compensation, losses, damages and civil and criminal complaints of any nature whatsoever against UCC, Union Carbide India Limited, Union Carbide Eastern, and all of their subsidiaries and affiliates as well as each of their present and former directors, officers, employees, agents representatives, attorneys advocates and solicitors arising out of, relating to or connected with the Bhopal gas leak disaster, including past, present and future claims, causes of action and pro ceedings against each other.
All such claims and causes of action whether within or outside India of Indian citizens, public or private entities are hereby extinguished, includ ing without limitation each of the claims filed or to be filed under the Bhopal Gas Leak Disaster (Registration and Processing of Claims) Scheme 1985, and all such civil pro ceedings in India are hereby transferred to this court and are dismissed with prejudice, and all such criminal proceed ings including contempt proceedings stand quashed and ac cused deemed to be acquitted.
Upon full payment in accordance with the Court 's directions the undertaking given by UCC pursuant to the order dated November 30, 1986 in the District Court, Bhopal stands discharged, and all orders passed in Suit No. 1113 of 1986 and or in any Revision therefrom, also stand dis charged.
Sd/ J.B. Dadachanji Sd/ A. Subhashini 15.2.1989 for UCC and UCIL Ltd. Advocate on Record for 15.2.
1989 Union of India.
| IN-Abs | Having carefully considered the facts and circumstances of the case, the mass of data placed before it, the material relating to the proceedings in the Courts in the U.S.A., the offers and counter offers made between the parties at dif ferent stages during the various proceedings, the complex issues of law and fact raised before it and the submissions made thereon, and in particular, the enormity of human suffering occasioned by the Bhopal Gas Leak Disaster and the pressing urgency to provide immediate and substantial relief to victims of the disaster, the Court was of opinion that the case was fit for an overall settlement between the parties covering all litigations, claims, rights and liabil ities related to and arising out of the Disaster and HELD that it was just, equitable and reasonable to order as follows: (1) That the Union Carbide Corporation shall, on or before 23.3.1989, pay a sum of U.S. Dollars 470 millions to the Union of India as claimant and for the benefit of all victims of the Bhopal Gas Leak Disaster under the Bhopal Gas Leak Disaster (Registration and processing of claims) Scheme 1985 and not as fines, penalties or punitive damages, in full settle ment of all claims, rights and liabilities related to and arising out of the Bhopal Gas Leak Disaster; [733F G] (2) That all civil proceedings related to and arising out of the Disaster shall stand trans ferred to this Court and shall stand concluded in terms of the settlement, and all criminal proceedings related to and arising out of the disaster shall stand quashed wherever pending; [732F G] (3) That upon full payment of the sum referred to above: (a) The Union of India and the State of Madhya Pradesh shall take all steps which may in future become necessary in order to implement and give effect to this order, including but not 731 limited to ensuring, that any suits, claims or civil or criminal complaints which may be filed in future against any Corporation, Company or person referred to in the Settle ment are defended by them and disposed of in terms of this order; [734 A B] (b) Any such suits, claims or civil or crimi nal proceedings filed or to be filed before any court or authority are hereby enjoined and shall not be proceeded with before such court or authority except for dismissal or quashing in terms of this order; and [734C] (4) That upon full payment in accordance with the directions issued by the Court, (a) The undertaking given by Union Carbide Corporation pursuant to the order dated 30.11.1986 in the District Court, Bhopal shall stand discharged, and all orders passed in Suit No. 1113 of 1986 and/or in revision therefrom shall also stand discharged; [734D] (b) Any action for contempt initiated against counsel or parties relating to this case and arising out of proceedings in the courts below shall be treated as dropped.
[734E]
|
vil Appeal No. 41819 of 1989.
From the Judgment and Order dated 29.4.1988 of the Gujarat High Court in F.A. Nos.
848 849 of 1986.
V.B. Patel, D. Patel, T.H Pandey and R.P. Kapur for the Appellant.
Soli J. Sorabjee, Atul Setalwad, N.J. Mehta, P. Shah, S.K. Sharma, section Sharma and P.H. Parekh for the Respondents.
The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J.
This is an application for leave to appeal under Article 136 of the Constitution from the judgment and order of the High Court of Gujarat dated 29th April, 1988.
To appreciate the questions involved herein, few facts have to be emphasized.
In 1978, the State Government of Gujarat undertook a scheme known as 'Bhavnagar City Water Supply Scheme '.
The 322 Scheme was divided into two parts: (i) Raising Main; and (ii) Gravity Main.
Raising Main was divided into two sec tions, namely, 10.1 k.ms.
and 7.4 k.ms.
steel welded pipe line.
On or about 15/16th December, 1978, the State Govern ment issued letter of approval to the bargain between the parties on certain terms.
On 12th January, 1979, two contracts were awarded to the respondent No. 1 for Rs. 1,29,39,691 and Rs.94,30,435 which provided the dates of completion as February 1979 and the 3rd week of September, 1980 respectively.
On 29th March, 1981 the respondent No. 1 filed the Civil Suit No. 588 of 1981 in the City Civil Court with regard to measurements recorded by the Deputy Engineer and alleged underpayments.
On 4th June, 1981, the respondent No. 1 gave notice to the State Government and the petitioner Board requesting for reference of the alleged disputes to the arbitrator under clause 30 of the agreement.
On or about 8th July, 198 1 the respondent No. 1 gave notice under Section 8 of the Arbitra tion Act, 1940 (hereinafter called 'the Act ') calling upon the petitioner to concur in the appointment of one Shri G.G. Vaidhya.
On 21st July, 1981, he withdrew the Civil Suit No. 588 of 1981.
On 6th August, 1981, the respondent No. 1 filed Civil Miscellaneous Application No. 231 of 1981 in the Court of Civil Judge, (SD), Ahmedabad for appointment of the said Shri G.G. Vaidhya as the sole arbitrator.
On 7th November 1981, the petitioner filed reply contesting the arbitrabili ty of the various claims made in the application and inter alia contending that the application was not maintainable.
On or about 15th December, 1981 the learned Civil Judge appointed Shri G.G. Vaidhya as the sole arbitrator with a direction that he should first decide as to which disputes fell within the purview of clause 30 of the agreement.
On 5th May, 1982, Shri Vaidhya gave an interim award holding that the claims at section Nos.
10(g) and 10(1) only were not arbitrable and further that the other claims were arbitra ble.
A petition was filed in High Court which was dismissed and then there was an application to this Court under Arti cle 136 of the Constitution which was disposed of by consent on 30th November, 1983.
The said order inter alia provided that the parties had agreed to settle the matter amicably and one Shri Mohanbhai D. Patel, Retired Secretary, Public Works Department, Gujarat and at that time Sitting Member of the petitioner Board was appointed as the sole arbitrator in place of Shri Vaidhya to decide all disputes between the parties relating to the following works: "i) providing, fabricating, laying and joint ing 1000 mm dia.
10,000 M long steel welded pipe line under Bhavnagar 323 Emergency Water Supply Scheme based on She trunji Dam Agreement No. 5/2 1 of 1978 79.
ii) providing, fabricating laying and jointing 1000 mm dia 7,400 M long steel welded pipe line under Bhavnagar Emergency Water Supply Scheme based on Shetrunji Dam Agreement No. B 2/2 of 1978 79.
" It was further provided that all disputes concerning the said two works in question should be referred to the sole arbitrator and the Board could also be entitled to put counter claims before him.
The consent terms also provided the following terms: "That the arbitration proceedings shall be started de novo meaning thereby that the earlier appointment and proceedings before the Sole Arbitrator Shit G.G. Vaidhya shall be inoperative and void.
That the Board shall have a right to agitate all points both in fact and in law before the Sole Arbitrator as per the terms and condi tions of the contract including the question of arbitrability within the meaning of clause 30 of the contract.
Both parties shall have a right to be repre sented by an Advocate and/or their representa tives.
The expenses of arbitration shall be borne by .both the parties as per rules of Govern ment in this behalf.
That both parties shall agree to extend time as and when necessary for competition of arbitration proceedings.
That a formal agreement for arbitration shall be executed between the parties defining the scope of Arbitration.
_ That the provisions of the Indian shall apply to the proceedings before this Sole Arbitrator." On 31st March, 1984, Shri M.D. Patel was appointed as the sole arbitrator jointly by the parties, and on 2nd April, 1984 he accepted his appointment and directed the parties to file their claim statements within 15 days.
Thereafter, the respondent No. 1 filed claim to the tune of Rs.4,92,20,683 and a counter claim to the extent of 324 Rs.26,87,217.40.
On 22nd August, 1984 the parties appeared before the arbitrator after filing of claims and counter claims.
On 1st October, 1984 the petitioner filed an application before the arbitrator praying that preliminary issues be raised and decided first as to which of the disputes were arbitrable under clause 30 Of the agreement.
On 8th July, 1985, a lumpsum award was made by the arbitrator, and on 19th July, 1985 the parties were informed about the signing of the award.
On the same day the award filed by the re spondent No.1 's Advocate which was dated 8.7.1985 was regis tered as Civil Miscellaneous Application No. 144/85.
There after, notice was issued on the same day and served on the petitioner also on the same day.
The petitioner filed objec tions to the award and the Objection Petition was registered as Civil Miscellaneous Application No. 158/85.
Reply to the objections was filed by the respondent No. 1.
On 17th June, 1986, however, the learned Civil Judge directed that decree be passed in terms of the award.
Two appeals were filed by the petitioner.
On the 29th April, 1988 the High Court by a judgment dismissed the petition challenging the award and upheld the award.
Aggrieved thereby, the petitioner has moved this Court as mentioned hereinbefore.
Various grounds were urged in support of this applica tion.
It was contended, firstly, that there was an error apparent on the face of the award and that the award was bad.
It was submitted that the arbitrator had committed an error of law in not deciding or disclosing his mind about the arbitrability of claims or counter claims, more so when the Board 's application for deciding the same, was pending before the arbitrator.
Before the learned Trial Judge the Board had submitted an application to the arbitrator seeking to raise a preliminary issue regarding arbitrability of the claims.
As noted by the learned Trial Judge, it appears that the third meeting specifically mentioned that the claims were placed before the arbitrator and their contentions about the arbitrability were considered.
So, these issues were gone into and it appears that the parties had agreed and proceeded on the basis that the claims may be examined and it was not necessary to decide preissue of arbitrability and it was agreed that aH the claims be decided claimwise.
So, it cannot be said that the arbitrator had acted arbi trarily in discussing all the questions raised before him without first deciding the question of arbitrability or non arbitrability of an issue as such.
The Court in its judgment has discussed the conduct of the parties.
It appears that the Court found that the par ties themselves had 325 agreed that the arbitrator should decide claimwise and on merit.
The Court so found, and in or opinion, rightly.
The arbitrator so proceeded.
There was no error committed by the arbitrator in so conducting himself.
It was, secondly, contended that out of the numerous claims before the arbi trator, some of which, according to the petitioner, were ex facie not arbitrable and some were withdrawn including the claims for interest of Rs.54,61,073 and compound interest of Rs.82,26,039.
and in the award no basis or indication was given as to which claim was rejected and further of the amount which was awarded as claim and what amount towards element of interest.
It was, thirdly, contended that there was an error apparent on the face of the award inasmuch as the basis on which interest has been awarded has not been disclosed and whether the interest has been awarded from the date of the institution of the proceedings.
It was, fourth ly, contended that granting of interest pendente lite was contrary to the decision of this Court.
It was, lastly, contended that non speaking award had resulted in great prejudice inasmuch as against the claim of Rs. 1 lakh, Rs.57 lakhs have been awarded.
The scope and extent of examination by the Court of the award made by an arbitrator has been laid down in various decisions.
It has to be noted that there is a trend in modern times that reasons should be stated in the award though the question whether the reasons are necessary in ordinary arbitration awards between the parties is pending adjudication by the Constitution bench of this Court.
Even, however, if it be held that it is obligatory for the arbi trator to state reasons, it is not obligatory to give any detailed judgment.
An award of an arbitrator should be read reasonably as a whole to find out the implication and the meaning thereof.
Short intelligible indications of the grounds should be discernible to find out the mind of the arbitrator for his action even if it be enjoined that in all cases of award by any arbitrator reasons have to be stated.
The reasons should not only be intelligible but should also deal either expressly or impliedly with the substantial points that have been raised.
Even in a case where the arbitrator has to state reasons, the sufficiency of the reasons depends upon the facts and the circumstances of the case.
The Court, however, does not sit in appeal over the award and review the reasons.
The Court can set aside the award only if it is apparent from the award that there is no evidence to support the conclusion or if the award is based upon any legal proposition which is erroneous.
See the observations of this Court in Indian Oil Corporation Ltd. vs Indian Carbon Ltd.; , 326 In the instant case, the arbitrator by virtue of the terms mentioned in the order of this Court had to decide which of the disputes were arbitrable and which were not.
It is true that the arbitrator has not specifically stated in the award that he had to decide the question of arbitrabili ty.
The arbitrator has rested by stating that he had heard the parties on the point of arbitrability of the claim and the ,counter claim.
He has further stated that after 'con sidering all the above aspects ' and 'the question of arbi trability or non arbitrability ' he had made the award on certain aspects.
Reading the award along with the preamble, it appears clear that the arbitrator had decided the arbi trability and the amount he has awarded was on the points which were arbitrable.
The contention that the arbitrator had not decided the question of arbitrability as a prelimi nary issue cannot also be sustained.
A reference to the arbitrator 's proceedings which were discussed in detail by the High Court in the judgment under appeal reveal that the procedure adopted by the arbitrator, i.e., that he will finally decide the matters, indicated that the parties had agreed to and the arbitrator had proceeded with the consent of the parties in deciding the issues before him and in not deciding the question of arbitrability as a separate, dis tinct and preliminary issue.
The arbitrator has made his award beating all the aspects including the question of arbitrability in mind.
It was contended before us that the arbitrator has made a non speaking award.
It was obliged to make a speaking award, it was submitted by terms of the order of this Court.
We cannot sustain this submission because it is not obligatory as yet for the arbitrator to give reasons in his decision.
The arbitrator, however, has in this case indicated his mind.
It appears to us that the point that the non speaking award is per se bad was not agitated before the High Court.
We come to that conclusion from the perusal of the judgment under appeal though, howev er, this point has not been taken in the appellant 's appeal.
It is one thing to say that an award is unintelligible and is another to say that the award was bad because it was a non speaking award.
The point taken was that the award was unintelligible and not that it was non speaking.
But there was nothing unintelligible about the award.
We were invited to refer the matter to the Constitution Bench and await the disposal of this point by the Constitu tion Bench.
The contract in this case was entered into in 1978.
The proceedings for initiation of arbitration started in 1981.
The matter had come up to this Court before which resulted in the order dated 30th November, 1983.
Pursuant thereto, the award has been made and no grounds specifically were urged though they were taken in the appeal in the High 327 Court in the arguments before the High Court about the award being bad because it is non speaking.
In those circum stances, it will not be in consonance with justice for us to refer the matter to the Constitution Bench or to await the disposal of the point by the Constitution Bench.
It was further submitted before us that the award was unreasonable and that the arbitrator had awarded a large amount to money but the original claim was not so large and as such the award was disproportionate.
This contention, as it is, it appears from the judgment of the High Court, was not urged and canvassed before the High Court.
The claim and the counter claim together in its totality, in our opinion, does not make the award amount disproportionate.
Reasonableness as such of an award unless the award is per se preposterous or absurd is not a matter for the court to consider.
Ap praisement of evidence by the arbitrator is ordinarily not a matter for the court.
It is difficult to give an exact definition of the word 'reasonable '.
Reason varies in its conclusions according to the idiosyncrasy of the individual and the times and the circumstances in which he thinks.
The word 'reasonable ' has in law prima facie meaning of reasona ble in regard to those circumstances of which the actor, called upon to act reasonably, knows or ought to know.
See the observations on this point in Municipal Corporation of Delhi vs M/s. Jagan Nath Ashok Kumar & Anr., ; Judged by the aforesaid yardstick the award cannot be condemned as unreasonable.
There is, however, one infirmity in the award which is apparent on the face of the award which in the interest of justice as the law now stands declared by this Court, we should correct, viz., the question of interest pendente lite.
The right to get interest without the intervention of the Court and the powers of the court to grant interest on judgment have been examined by this Court in Executive Engineer (Irrigation) Balimela and Ors.
vs Abhaduta Jena & Ors., [1988] 1 SCC 418 which observations were also followed by this Court in State of Orissa & Ors.
vs Construction India, [1987] Supp.
SCC 709.
In accordance with the princi ples stated therein and the facts in this case, it appears that the principal amount awarded is Rs.57,65,273.
This is confirmed.
In this case, 2nd April, 1984 is the date of the reference to arbitration, on 22nd August, 1984 the arbitra tor entered upon the reference.
8th July, 1985 is the date of the award and 19th July, 1985, is the date of the publi cation of the award.
The interest awarded, in the instant case, covers three periods: (i) 6th August, 1981 to 21st August, 1984 prior to the commencement of the arbitration proceedings; (ii) 22nd August, 1984 to 19th July, 328 1985 pendente lite; and (iii) 19th July, 1985 to 17th June, 1986 (date of award to date of decree).
Having regard to the position in law emerging from the decision of this Court in Executive Engineer (Irrigation) Balimela & Ors.
(supra) and section 29 of the and section 34 of the Code of Civil Procedure, we would modify the grant of interest in this case.
The arbi trator has directed interest to be paid at 17% per annum from 6.8.1981 upto the date of decree viz., 17.6.1986.
Since in this case the reference to arbitration was made after the commencement of the , the arbitrator under section 3(1)(a) of the said Act was entitled to award inter est from 6.8.1981 till 21.8.1984 in view of this Court 's decision in Abhaduta Jena 's case (supra).
In the light of the same decision, he could not have awarded interest for the period from 22.8.1984 till the date of the publication of the award viz. 19.7.
So far as interest for the period from the date of the award (19.7.1985) till the date of the decree is concerned, the question was not specifical ly considered in Abhaduta Jena 's case (supra) but special leave had been refused against the order in so far as it allowed interest for this period.
We think interest should be allowed for this period, on the principle that this Court can, once proceedings under sections 15 to 17 are initiated, grant interest pending the litigation before it, i.e., from the date of the award to the date of the decree.
It may be doubtful whether this can be done in cases arising before the in view of the restricted scope of section 29 of the .
But there can be no doubt about the court 's power to grant this interest in cases governed by the as section 3(1)(a) which was applied by Abhaduta Jena to arbitrators will equally apply to enable this Court to do this in these proceedings.
In this connection, it is necessary to consider whether the date of commencement of the arbitration proceedings should be taken as the date of the reference or the date on which the arbitrator entered upon the reference as the date of the calculation of interest.
In this case, the proceed ings commenced on 2nd April, 1984 and the arbitrator entered upon the reference on 22nd August, 1984.
Having regard to the facts and the circumstances of the case, it is neces sary, in our opinion, to take 22nd August, 1984 as the date.
It is also necessary to consider whether the date of award should be taken as the date of its making or its publica tion.
The award was made on 8th July, 1985 and it was pub lished on 19th July, 1985, and, therefore, the latter date would be taken as the date of the award.
329 We would, however, delete the interest awarded by the arbitrator for the period from 22.8.1984 till the date of the award and confine the interest on the principal sum of Rs.57,65,273 to interest at 9 per cent from 6.8.1981 till 21.8.1984 (which has been worked out at Rs.29,82,443).
However, in exercise of our powers under section 3 of the and section 29 of the , we direct that the above principal sum or the unpaid part thereof should carry interest at the same rate from the date of the award (19.7.1985) till the date of actual pay ment.
The appeals are disposed of in the above terms.
N.V.K. Appeals disposed of.
| IN-Abs | In 1978 the State Government undertook the construction of the 'Bhavnagar City Water Supply Scheme ', and on 12th January, 1979, two contracts in respect thereof were awarded to respondent No. 1.
On 29th March, 1981, respondent No. 1 filed a civil suit with regard to measurements recorded by the Deputy Engineer and alleged underpayments.
On 14th June, 1981, he gave notice to the State Government and the peti tioner Board requesting for reference of the disputes to an arbitrator as provided for under clause 30 of the Agreement, and gave notice under section 8 of the calling upon the petitioner to concur in the appointment of one Shri G.G. Vaidhya.
On 6th August, 1981 respondent No. 1 filed a civil miscellaneous application for appointment of the said Shri G.G. Vaidhya as the sole arbitrator after withdrawing the civil suit.
The petitioner contended that the application was not maintainable.
The Civil Judge howev er appointed the said Shri G.G. Vaidhya as sole arbitrator.
The arbitrator gave an interim award holding that only two claims were not arbitrable and that the other claims were arbitrable.
The High Court having dismissed the appeal, a further appeal was filed in this Court.
This appeal was, however, disposed of by con 319 sent on 30th November, 1983 to the effect that a retired Secretary, Public Department who was at that time sitting member of the petitioner Board be appointed as the sole arbitrator to decide all the disputes between the parties.
On 8th July, 1985, this sole arbitrator made a lump sum award.
The Civil Judge directed that the decree be passed in terms of the award, rejecting the objections of the peti tioner.
The High Court by a common judgment dismissed the two appeals of the petitioner challenging the award.
In the appeals to this Court by special leave, it was contended: (1) that the arbitrator had committed an error of law in not deciding or disclosing his mind about the arbi trability of the claim or counterclaims, (2) in the award no basis or indication was given as to which claim was reject ed, and further what amount was awarded as claim and what amount towards element of interest, (3) there was an error apparent on the face of the award inasmuch as the basis on which interest had been awarded had not been disclosed and whether the interest has been awarded from the date of the institution of the proceedings, (4) that the granting of interest pendente lite was contrary to the decision of this Court and (5) that the non speaking award had resulted in great prejudice to the petitioner inasmuch as against the claim of Rs.1 lakh, Rs.57 lakhs had been awarded.
Disposing of the appeals, the Court, HELD: 1(a) There is a trend in modern times that reasons should be stated in the award though the question whether the reasons are necessary in ordinary arbitration awards is pending adjudication by the Constitution Bench of this Court.
Even if it be held that it is obligatory for the arbitrator to state reasons, it is not obligatory to give any detailed judgment.
[325E] 1(b) An award Of an arbitrator should be read reasonably as a whole to find out the implication and the meaning thereof.
Short intelligible indications of the grounds shall be discernible to find out the mind of the arbitrator for his action.
[325F] l(c) The Court does not sit in appeal over the award and review the reasons.
The Court can set aside the award only if it is apparent from the award that there is no evidence to support the conclusion or if the award is based upon any legal proposition which is erroneous.
[325G H] 320 Indian Oil Corporation Ltd. vs Indian Corbon Ltd., ; , referred to.
l(d) It is one thing to say that an award is unintelli gible and it is another thing to say that the award was bad because it was a nonspeaking award.
[326F] In the instant case, the arbitrator, in pursuance to the order of this Court had to decide which of the disputes were arbitrable and which were not.
Reading the award along with the preamble, it appears clear that the arbitrator had decided the arbitrability and the amount which he has award ed was on the points which were arbitrable.
In such circum stances it will not be in consonance with justice to refer the matter to the Constitution Bench or to await the dispos al of the point by the Constitution Bench.
[326B, G] 2.
Reasonableness as such of an award unless per se preposterous or absurd is not a matter for the Court to consider.
Appraisement of evidence by the arbitrator is ordinarily not a matter for the Court.
It is difficult to give an exact definition of the word 'reasonable '.
The word 'reasonable ' has in law, prima facie meaning of reasonable in regard to those circumstances of which the actor, called upon to act reasonably, knows or ought to know.
The award in the instant case cannot be condemned as unreasonable.
[327C D] Municipal Corporation of Delhi vs M/s. Jagan Nath Ashok Kumar & Anr., ; referred to.
The grant of interest pendente lite is however one infirmity in.
the award which is apparent on the face of the award which in the interest of justice should be corrected.
[327E] Executive Engineer (Irrigation) Balimela and Ors.
vs Abhaduta Jena & Ors., [1988] 1 SCC 418 and State of Orissa & Ors.
vs Construction India, [1987] Supp.
SCC 709 referred to.
In the instant case, April 2, 1984 is the date of the reference to arbitration, on August 22, 1984 the arbitrator entered upon the reference.
July 8, 1985 is the date of the award and July 19, 1985 the date of publication of the award.
The latter date should be taken as the date of the award.
Since the reference to arbitration was made after the commencement of the the arbitrator under section 3(1)(a) of the said Act was entitled to award inter est from August 6, 321 1981 till August 21, 1984.
He could not have awarded inter est for the period from August 22, 1984 till the date of publication of the award viz. July 19, 1985.
[327G H; 328A] 4.
So far as interest for the period from the date of the award (July 19, 1985) till the date of the decree is concerned, interest should be allowed for this period, on the principle that this Court can, once proceeding under sections 15 to 17 are initiated, grant interest pending the litigation before it, i.e. from the date of the award to the date of the decree.
It may be doubtful whether this can be done ln cases arising before the in view of the restricted scope of section 29 of the .
[328D E] 5.
The interest awarded by the arbitrator for the period from August 22, 1984 till the date of award is deleted; and the interest on the principal sum is confined to 9% from August 6, 1981 till August 21, 1984.
However, exercising powers under section 3 of the and section 29 of the , the Court directed that the principal sum or unpaid part thereof should carry interest at the same rate from the date of the award (July 19, 1985) till the date of actual payment.
[329A B]
|
: Civil Appeal No. 1228(NT) of 1975.
From the Judgment and Order dated 29.11.1973 of the Allahabad High Court in I.T. Reference No. 842 of 1971.
V. Gauri Shankar, Ms. A. Subhashini, C.V.S. Rao, Mrs. Sushma Suri, P. Parmeshwaran and M.K. Sashidharan for the Appellant.
Harish N. Salve and Parveen Kumar for the Respondent.
The Judgment of the Court was delivered by RANGANATH MISRA, J.
This appeal at the instance of the Revenue is by special leave.
Two questions out of six re ferred by the Income Tax Appellate Tribunal, Allahabad, survive for consideration in this appeal and these are: (1) Whether on the facts and in the circumstances of the case, and on a true interpretation of the agreement, the Tribunal erred in holding that the sum of Rs.9,000 received as interest from Bazpur Cooperative Sugar Factory Ltd. is not covered under Section 14(3) of the Income Tax Act? (2) Whether on the facts and in the circumstances of the case, and on a true and correct interpretation of the various clauses of the agreement, the sum of Rs.51,295 and Rs.58,937 received as interest on advances would not be assessee 's income from coal and sugar business and would thus be exempt under Section 14(3) of the Income Tax Act, 1922? At the hearing it has been clarified by counsel for both parties that in the second question referred to above, the dispute is confined to the sum of Rs.51,295 only.
The relevant assessment year is 1961 62 corresponding to the accounting year ending with 30th June, 1960.
The asses see is a cooperative society registered under the Coopera tive Societies Act, 1912.
This being an apex body, its members are various District Cooperative Societies, District Cooperative Banks and some Govern 589 ment and other cooperative societies within the State of Uttar Pradesh.
The principal object of the Society is to regulate the distribution and supply of items like coal, sugar, cloth etc.
through the member cooperative societies.
In the year in question, the assessee inter alia main tained that the income earned on the various advances made by it to the member societies was entitled to exemption under Section 14(3) of the Income Tax Act, 1922.
The Income Tax Officer while rejecting the claim of deduction on the ground of exemption on several heads included interest of Rs.9,000 received from Bazpur Cooperative Sugar Factory Ltd. and a sum of Rs.51,295 received by way of interest from various cooperative societies on temporary loans for financ ing sugar business at the rate of 6 per cent on the amount given as loan as taxable items.
The two questions which have survived for decision in this appeal relate to refusal of these two deductions on the ground of statutory exemption.
The stand of the assessee had not been accepted by the Appellate Assistant Commissioner and the Income Tax Appel late Tribunal but the High Court has accepted the claim in regard to both the amounts.
The High Court dealing with the amount of Rs.9,000 held: "The Tribunal considered the claim for exemp tion in respect of amount of Rs.9,000 received by the assessee from the Bazpur Cooperative Sugar Factory and held that this represented the interest received on the cash security of Rs.2,00,000 which was furnished by the asses see for carrying on the sugar agency business, and as such it could not be said that it was interest from securities or interest from investments and as such rejected the claim made in respect of this amount under Section 14(3)(iii) of the Act." The High Court considered the exigibility of the sum of Rs.9,000 to tax analogously with the taxability of the other sum and did not pointedly take note of the fact that the sum of Rs.2,00,000 had been given as security and the arrange ment entered into between the assessee and the Bazpur Coop erative Sugar Factory stipulated payment of interest of 4 1/2 per cent per annum.
We may refer here to clauses (1) and (20) of the agency agreement: 590 "1.
That the manufacturer hereby appoints the Agent as one of their two agents for the whole of the Indian Union for the sale of sugar produced by the manufacturer during the crusing seasons 1958 59 and 1959 60 and the Agent hereby agrees to act as such agent in the said area on the terms mentioned here in.
The manufacturer hereby undertakes not to appoint more than two agents as aforesaid.
" "20.
The Agent shall simultaneously with the execution of this agreement furnish a cash security of Rs. Two lakhs to the manufac turer for a period of two years (irrespective of previous determination of the agreement for any cause whatsoever) to ensure against due compliance by the agent of the terms hereof; such security shall carry interest at the rate of 4 1/2 per annum.
Such security shall be repayable with interest to the agent within one month of the expiry of the period fixed in the agreement after adjustment of accounts between the parties.
The manufacturer shall have the option to realise from the said security money all losses suffered and/or expenses incurred and not paid by the Agent in pursuance of the provisions of this agreement.
If the said security shall fall short of Rs. Two lakhs at any time, the deficiency therein shall be made good by the Agent within 15 days of the notice in writing from the manufactur er.
" The amount of Rs.9,000 thus represented only interest on the security deposit and could not be mixed up with the other sums received by the assessee in course of carrying on its business.
We do not think the High Court was fight in concluding that this amount of Rs.9,000 was available to be exempted under any of the clauses of Section 14(3) of the Act.
Admittedly, the assessee 's claim does not come under clause (i) of Section 14(3).
Unless this sum is covered by Section 14(3)(iii), there would be no exemption.
The sum of Rs. Two lakhs given as security in terms of the agreement was not an investment and, therefore, the amount of Rs.9,000 received by way of interest does not come within the purview of clause (iii).
Mr. Salve for the assessee respondent has fairly conceded that it would be difficult on his part to press the claim of the assessee for exemption in respect of this sum.
The conclusion of the High Court in regard to this amount has, therefore, 591 tO be reversed and the stand of the Revenue to the effect that this amount represents taxable income has to be accept ed.
Our answer to the first question, therefore, is that on the facts and in the circumstances of the case and on a true interpretation of the agreement, the Tribunal did not err in holding that the sum of Rs.9,000 received as interest from Bazpur Cooperative Sugar Factory Ltd. was not covered under Section 14(3) of the Income Tax Act.
We shall now deal with the other question.
Dealing with it the High Court stated: "The facts relating to the case for exemption in respect of the two amounts of Rs.51,295 and Rs .58,937 (the second amount is no more in dispute) covered by question No. 3 may be stated.
We shall begin by referring to facts relating to advances made in relation to the sugar business.
The assessee was appointed as one of the wholesale dealers for distribu tion of sugar in this State.
It had, in pursu ance of an agreement entered into between it and the State Government.
to arrange for lifting, handling,.
storing and distributing to the retailers the stocks of sugar released by the Government of India.
The District Cooperative Development Federations of Deoria, Garhwal, Tehri Garhwal, Pilibhit, Etawah and Allahabad, entered into agreements with the assessee to work as agents for the whole sale distribution of sugar in their Districts.
A sample of the agreement entered into between the assessee and these various District Coop erative Development Federations .
The assessee was to make necessary investments by way of payment of price of sugar to be pro cured from the factories and also to pay the administrative charges incurred for the dis tribution of sugar.
This administrative charge was, however, recouped by the agents and paid over to the assessee.
The delivery of the sugar from the various factories was to be taken by the various District Cooperative Development Federations which had entered into agreements with the assessee on behalf of the assessee as soon as the release orders were issued by the Government of India.
The sugar so received was to be stored in godowns and was to remain under the custody of Godownkeep ers of the assessee or the bankers of the assessee.
The salaries of the Godown keepers and the Chowkidars 592 appointed for safe custody of the stocks of sugar were to be paid by the agents . . " "The sugar so stored was to be re leased to the agents as and when required by them on full payment of its price at the rate fixed by the State Government or the District Magistrate concerned.
The stocks of sugar taken over by the agents was to be sold by them to retailers, and permitholders who were to be nominated by the District Magistrate or the officer authorised by him.
The whole salers '.
margin on the sugar sold for the period beginning September 1959 onwards with which we are concerned was Rs.2.06 Naya Paisa per bag.
The share of the assessee and the District Cooperative Development Federations in this amount is set out in clause 18 of the agreement . . " The High Court extracted the terms and came to hold: "It appear from a letter dated 30th September, 1959, that the various District Cooperative Development Federations were not in a position to arrange the entire finances for the busi ness and accordingly the assessee agreed to arrange for finances of the business on cer tain terms and conditions.
The terms and conditions on which the finances were to be arranged may be extracted: (5) The money invested in the business will earn interest at 6 per cent per annum.
"It will be seen that money which the assessee made available to the District Cooperative Development Federations was to be utilised for the purchase of the stocks of sugar which the District Cooperative sold as agents of the asses 593 see.
In the accounting, year in question, the assessee realised the following amounts of interest from the District Cooperative Devel opment Federations mentioned below: Name Amount i) District Cooperative Development Federation Ltd., Deoria.
4,694.16 ii) District Cooperative Development Federation Ltd., Garhwal.
15,797.60 iii) District Cooperative Development Federation Ltd., Tehri Garhwal 5,557.50 iv) District Cooperative Development Federation Ltd., Etawah.
2,984.24 v) District Cooperative Development Federation Ltd., Pilibhit.
2,616.21 vi) District Cooperative Development Federation Ltd., Allahabad.
19,645.53 Total : 51,295.24 Dispute covered by the second question to be answered is over this amount.
The Income Tax Officer as also the two appellate authorities relying upon the decisions of the Bombay High Court in Sir Chinu Bhai Madav Lal vs Commission er of income Tax, and Commissioner of Income Tax, Bombay City vs Bombay State Cooperative Bank Ltd., held that the amount on which interest had been earned under the agreement did not constitute investment and, therefore, was not covered by Section 14(3)(iii) of the Act.
Section 14(3) provides that tax shall not be payable by a cooperative society in certain situations.
Clause (i) under its six sub clauses refers to specific classes of cooperative societies in whose case there is total exemp tion.
Clause (ii) exempts income in respect of profits and gains of business of cooperative societies not covered by clause (i) upto Rs. 15,000.
Clause (iii) exempts interest.
and dividends and income derived from investments with any other cooperative society.
Clause 594 (iv) exempts income derived from letting of godowns or warehouses for storage, processing or facilitating the marketing of commodities while Clause (v) exempts interest on securities chargeable under Section 8 or any income from property chargeable under Section 9, where the total income of the cooperative society of specific type mentioned there in does not exceed Rs.20,000.
There can be no dispute on the conclusion reached by the High Court that the money provided by the assessee was by way of investment.
In fact, if this money had not been made available the business as stipulated under the scheme could not have been carried out and perhaps there would have been no business.
"Investment" has not been defined in the Act.
P. Ramanatha Aiyar 's The Law Lexicon, (Reprint Edition 1987) states: "The term invest is used in a sense broad enough to cover the loaning of the money but is not restricted to that mode of invest ment or loans made on commercial paper.
The word invest has been judicially defined as follows: 'To place property in business; to place so that it will be safe and yield a profit.
It is also commonly understood as giving money for some other property (as) investing funds on lands and houses.
Invest ment means in common parlance, putting out money on interest, either by the way of loan, or by the purchase of income producing proper ty . ' In the facts of the present case the money provided by the assessee was necessary to run the business and generate profits; under the agreement interest has been earned.
In the peculiar situation appearing in the case as found by the High Court the provision of money by the assessee, the purpose for which the money was provided, the stipulation for earning of interest, were relevant considerations to be taken into account and it becomes difficult to take a view different from that of the High Court that the funding was investment and under the agreement interest has been earned.
Admittedly the finding was the cooperative societies.
In our opinion, therefore, the amount of Rs.51,295 squarely came within Section 14(3)(iii) of the Act.
The High Court, there fore, was right in its conclusion that no tax was payable on the said amount.
We would like to point out that under Section 14(3) provision has been made to extend certain advantages to the cooperative societies in order that the legislative purpose of providing incentive to the coopera tive movement may be fulfilled.
The High Court 595 was right in holding that the provisions contained in Sec tion 14(3) should be liberally construed.
Our answer to the second question, therefore, is on the facts and in the circumstances .of the case and on a true and correct interpretation of the various clauses of the agreement, the sum of Rs.51,295 received as interest on advances in the assessee 's income from sugar business was exempt under Section 14(3)of the Income Tax Act, 1922.
There shall be no order for costs in this appeal as success is divided.
P.S.S. Appeal disposed of.
| IN-Abs | Clause (iii) of Section 14(3) of the Income Tax Act, 1922 exempts interest and dividends derived by a cooperative society from its investments with any other cooperative society, from payment of tax.
The respondent assessee, an apex body having as its members various District Co operative Societies, District, Co operative Banks and some Government and other co opera tive Societies within the State of U.P., was appointed as one of the wholesale dealers under clause (1) of the agency agreement entered into with a co operative sugar factory for distribution of sugar produced by the latter during the crushing seasons 1958 59 and 1959 60.
Simultaneously with the execution of the agreement it furnished a cash security of Rs. Two lakhs to the manufacturer under clause (20) of the said agreement for the period of two years, which was to carry interest at the rate of 4 1/2 per cent per annum.
In pursuance of a separate agreement entered into be tween it and the State Government the assessee undertook to arrange for lifting, handling, storing and distributing to the retailers the stock of sugar released by the Government of India.
In an yet another agreement entered into between the assessee and member societies the latter undertook to work as agents for the wholesale distribution of sugar in their districts.
Since they were not in a position to ar range the entire finance for the business the assessee agreed to arrange for the same.
The money thus invested in the business was to earn interest at the rate of 6 per cent per annum.
587 In the accounting year in question the Income Tax Offi cer rejected the claim of the assessee for deduction, on ground of statutory exemption under section 14(3) of the Act, of the amounts of interest received respectively from the cooperative Sugar factory on the cash security deposit and from member societies on temporary loans advanced for fi nancing business.
The Assistant Appellate Commissioner rejected assessee 's contention.
The Appellate Tribunal rejecting the former claim took the view that the amount of interest received on cash security furnished by the assessee for carrying on the sugar agency business could not be said to be interest from securities or investments as understood under section 14(3)(iii) of the Act.
Rejecting the latter claim it held that the amount on which interest had been earned did not constitute investment and, therefore, was not cov ered by section 14(3)(iii) of the Act.
But the High Court accept ed the claim in regard to both the amounts.
Disposing of the appeal by the Revenue, the Court, HELD: 1.1 The Tribunal did not err in holding that the amount received as interest on the cash security from the cooperative sugar factory was not covered under section 14(3)(iii) of the Income Tax Act, 1922.
[591B] 1.2 The High Court failed to take note of the fact that the sum of Rs. Two lakhs had been given a security and the arrangement entered into between the assessee and the coop erative sugar factory stipulated payment of interest of 4 1/2 per cent per annum.
This sum was repayable to him on the expiry of the period fixed in the agreement after adjustment of accounts.
It could not, therefore, be said to be an investment.
The amount of interest earned thereon thus represented only interest on the security deposit and could not be mixed up with the other sums received by the assessee in course of carrying on its business.
It was not available to be exempted.
[589G; 590F] 2.1 The amount of interest received by the assessee on advances to its members was income from sugar business and was, therefore, exempt under section 14(3)(iii) of the Act.
[595B] 2.2 The money provided by the assessee was by way of investment with other cooperative societies.
If this money had not been made available the business as stipulated under the scheme could not have been carried out and perhaps there would have been no business.
This funding to other coopera tive societies was necessary to generate profits, and under the agreement interest has been earned.
The High Court was, 588 therefore, right in its conclusion that no tax was payable on this income from sugar business.
[594F G]
|
ivil Appeal No. 1632 of 1988.
From the Order dated 8.1.1988 of the Customs Excise and Gold (Control) Appellate Tribunal, New Delhi in Appeal No. SD SB/T 716/81 C (Order No. 17/88 C.) A.K. Ganguli, A. Subba Rao and Mrs. Sushma Suri for the Appellant.
A.N. Haksar, R. Karanjawala, Ms. M. Arora and Mrs. M. Karanjawala for the Respondent.
The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J.
This appeal is under section 35(L)(b) of the (herein after called 'the Act ') against the order dated 8th January, 1988 passed by the Customs, Excise & Gold (Control) Appel late Tribunal.
The issue involved in this appeal was whether in the facts and the circumstances of the case, the Tribunal was legally justified in restricting the demand of duty to six months prior to the date of issue of show cause notice, particularly in a case where longer period was invoked on the ground of suppression of information in the declaration furnished by the respondent.
The respondent manufactured patent and proprietary (P & P) medicines falling under T.I. 14E and also pharmacopoeial preparations falling under T.I. 68 of the Central Excise Tariff of an aggregate 714 value of Rs.20,59,338.60 and cleared during the period of 1.4.1979 to 31.3.1980, the same without payment of duty, availing the benefit of exemption notification No. 80/80.
Under the provisions of sub clause (ii) of clause 2 of notification No. 80/80 dated 19th June, 1980 and sub clause (iii) of clause (a) of notification No. 71/78 dated 1.3.1978 the manufacturer would not be eligible for exemption under the two notifications in respect of clearance of patent or proprietary medicines from 1st April, 1980 since the notifi cation would not apply to a manufacturer who manufactures excisable goods falling under more than one item of the 1st Schedule of the Act, and the aggregate value of the clear ness of all such excisable goods by the manufacturer or on his behalf are cleared for home consumption from one or more factories during the preceding financial year had exceeded Rs.20 lakhs.
The factory had cleared during the period from 1st April, 1980 to 29th October, 1980 (P & P) medicines falling under T.I. 14E valued at Rs.4,32,050.09.
The central excise duty payable on the goods removed was Rs.55,302.01.
The respondent filed a declaration for exemption under notifica tion No. 71/78 dated 1.3.1978, and furnished particulars of only the value of P & P medicines manufactured and cleared by it during the preceding financial year i.e. 1979 80, and the respondent did not furnish the particulars of the value of the goods cleared under Tariff item 68 during the finan cial year 1979 80.
It was noticed that the manufacturer did not file any declaration under Notification No. 111/ 78 dated 9.5.
1978 claiming exemption from the licensing con trol.
However, on 30th July, 1980 the firm filed a classifica tion list in respect of P & P medicines claiming exemption under notification No. 80/80.
A show cause notice was issued to the respondent who was asked to explain as to why excise duty in respect of Patent & Proprietary medicines manufactured and cleared by it should not be demanded under proviso (a) to Rule 10(1) of the Central Excise Rules and why penalty should not be imposed on it under rule 173Q of the Central Excise Rules, 1944 for having cleared the goods without payment of duty in contravention of Rule 173Q (a) and (d) of the Central Excise Rules.
After submission of the reply by the respondents, the Collector of Central Excise held the respondents to be ineligible for the benefit of the two notifications and therefore duty was demanded from them in respect of the goods cleared by them for the period 1.4.1980 to 715 29.10.
The Collector Was of the view that in view of the respondents ' failure to reveal the correct position, they were liable.
The Collector was of the view that the time limit under rule 10 (section 11A) would run for 5 years.
The relevant portion of section 11A of the Act is as follows: "(11 A).
Recovery of duties not levied or not paid or short levied or short paid or errone ously refunded. (1) when any duty of excise has not been levied or paid or has been short levied or short paid or erroneously refunded, a Central Excise Officer may, within six months from the relevant date, serve notice on the person chargeable with the duty which has not been levied or paid or which has been short levied or short paid or to whom the refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice: Provided that where any duty of excise has not been levied or paid or has been short levied or short paid or erroneously refunded by reason of fraud, collusion or any wilful misstatement or suppression of facts, or contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty, by such person or his agent, the provisions of this sub section shall have effect, (as if for the words "Central Excise Officer", the words "Collector of Central Excise", and) for the words "six months", the words "five years" were substituted.
" The respondent filed an appeal before the Tribunal.
The Tribunal considered the matter and noted that the appel lant 's case was that the demand for duty for the period beyond six months was time barred; and the respondent 's case was that the demand for the period beyond 6 months from the receipt of show cause notice, was time barred inasmuch as there was no suppression or misstatement of facts by the appellant with a view to evade payment of duty.
In support of its claim the respondent produced classification list approved by the authorities during the period 1978 1979, and also produced extracts from the survey register showing that the officers had been visiting its factory from time to time and also taking note of the previous goods manufactured by the respondent.
The plea of the revenue was that there was suppression and/or mis declaration and/or wrong information furnished in the declaration itself.
The Tribunal noted the facts as follows: 716 "We observe it is not denied by the Revenue that the appellants had been submitting their classification lists from time to time showing the various products manufactured by them including those failing under 14E and 68 also these containing alcohol.
The officer who visited the factory as seen from the survey register at the factory also took note of the various products being manufactured by the appellants.
It cannot be said that the appel lants had held back any information in regard to the range and the nature of the goods manufactured by them.
The appellants have maintained that the value of the exempted goods under T.I. 68 and also value of medi cines containing alcohol, according to their interpretation, were not required to be in cluded for the purpose of reckoning of the total excisable goods cleared by them.
There is nothing on record to show that the appel lants non bonafidely held back information about the total value of the goods cleared by them with a view to evade payment of duty.
Their explanation that it was only on the basis of their interpretation that the value of the exempted goods were not required to be included that they did not include the value of the exempted goods which they manufactured at the relevant time and failing under T.I. 68 is acceptable in the facts of that case.
The Departmental authorities were in full knowl edge of the facts about manufacture of all the goods manufactured by them when the declara tion was filed by the appellants.
That they did not include the value of the product other than these falling under T.I. 14E manufactured by the appellants has to be taken to be within the knowledge of the authorities.
They could have taken corrective action in time.
We therefore find there was no warrant in invok ing longer time limit beyond six months avail able for raising the demand.
So far as the demand for the period within six months reck oned from the date of receipt of the show cause notice is concerned, we observe that the appellant 's case is that value of the goods under 68 was not required to be included but the Revenue 's plea is that only value of the specified goods under notification No. 71/78 and 80/80 was not required to be excluded.
" On the aforesaid view the Tribunal came to the conclu sion that the demand raised on this for a period beyond 6 months was not maintainable.
717 Aggrieved thereby, the revenue has come up in appeal to this Court.
In our opinion, the order of the Tribunal must be sustained.
In order to make the demand for duty sustain able beyond a period of six months and up to a period of 5 years in view of the proviso to subsection 11A of the Act, it has to be established that the duty of excise has not been levied or paid or short levied or short paid, or erro neously refunded by reasons of either fraud or collusion or wilful misstatement or suppression of facts or contravention of any provision of the Act or Rules made thereunder, with intent to evade payment of duty.
Something positive other than mere inaction or failure on the part of the manufactur er or producer or conscious or deliberate withholding of information when the manufacturer knew otherwise, is re quired before it is saddled with any liability, beyond the period of six months.
Whether in a particular set of facts and circumstances there was any fraud or collusion or wilful misstatement or suppression or contravention of any provi sion of any Act, is a question of fact depending upon the facts and circumstances of a particular case.
The Tribunal came to the conclusion that the facts referred to hereinbe fore do not warrant any inference of fraud.
The assessee declared the goods on the basis of their belief of the interpretation of the provisions of the law that the exempt ed goods were not required to be included and these did not include the value of the exempted goods which they manufac tured at the relevant time.
The Tribunal found that the explanation was plausible, and also noted that the Depart ment had full knowledge of the facts about manufacture of all the goods manufactured by the respondent when the decla ration was filed by the respondent.
The respondent did not include the value of the product other than those falling under Tariff Item 14E manufactured by the respondent and this was in the knowledge, according to the Tribunal, of the authorities.
These findings of the Tribunal have not been challenged before us or before the Tribunal itself as being based on no evidence.
In that view of the matter and in view of the require ments of section 11A of the Act, the claim had to be limited to a period of six months as the Tribunal did.
We are, therefore, of the opinion that the Tribunal was fight in its conclusion.
The appeal therefore fails and is accordingly dismissed.
In the facts and the circumstances of the case, the parties will pay and bear their own costs.
N.P.V. Appeal dis missed.
| IN-Abs | The respondent firm manufactured patent and proprietary (P & P) medicines failing under T.I. 14E and also pharmaco poeial preparations falling under T.I. 68 of the Central Excise Tariff of an aggregate value of Rs.20,59,338.60 and cleared the same during the period 1.4.79 to 31.3.80 without payment of duty, availing the benefit of exemption of excise duty under Notification No. 80 of 1980.
The respondent also cleared, during the period from 1st April, 1980 to 29th October, 1980 (P & P) medicines failing under T.I.14E valued at Rs.4,32,050.09.
The respondent filed a declaration for exemption, under Notification No. 71 of 1978 dated 1.3.1978, and furnished particulars of only the value of P & P medicines manufac tured and cleared during the preceding financial year 1979 80 and did not furnish the particulars of the value of the goods under Tariff Item 68 during that financial year.
The manufacturer also did not file any declaration under Notifi cation No. 111 of 1978 dated 9.5.1978, claiming exemption from the licensing control.
However, on July 30, 1980 the firm filed a classification list in respect of P & P medi cines claiming exemption under Notification No. 80/80.
The appellant issued a show cause notice to the respond ent to explain as to why excise duty in respect of patent and proprietary medicines manufactured and cleared by it should not be demanded under proviso (a) to Rule 10(1) of the Central Excise Rules and why penalty should not be imposed under Rule 173Q of the Central Excise Rule, 1944 for having cleared the goods without payment of duty in contra vention of Rule 173Q(a) and (d) of the Rules.
On receipt of reply, the appellant held the respondent to be ineligible for the benefit of the 712 two notifications and demanded duty in respect of the goods cleared by them for the period 1.4.1980 to 29.10.80.
He also held that in view of the respondent 's failure to reveal correct position, the firm was liable to pay the duty, and that the time limit for the recovery of the duty under Rule 10 (Section 11A) of the Central Excise Rules would run for five years.
The respondent filed an appeal before the Tribunal contending that the demand for the period beyond six months from the receipt of the show cause notice was time barred inasmuch as there was no suppression or mis statement of facts by the appellant with a view to evade payment of duty.
The Revenue 's plea was that there was suppression and/or misdeclaration and/or wrong information furnished in the declaration itself.
Hence the appeal by the Revenue.
Dismissing the appeal, HELD: 1.1 In order to make the demand for duty sustain able beyond a period of six months and up to a period of 5 years, in view of the proviso to sub section
11A of the Act, it has to be established that the duty of excise had not been levied or paid or short levied or short paid, or erroneously refunded by reasons of either fraud or collusion or wilful mis statement or suppression of facts or contravention of any provision of the Act or Rules made thereunder, with intent to evade payment of duty.
Something positive other than mere inaction or failure on the part of the manufactur er or producer or conscious or deliberate withholding of information when the manufacturer knew otherwise, is re quired before it is saddled with any liability, beyond the period of six months.
[717A C] 1.2 Whether in a particular set of facts and circum stances there was any fraud or collusion or wilful mis statement or suppression or contravention of any provision of any Act, is a question of fact depending upon the facts and circumstances of a particular case.
[717C D] In the instant case the assessee declared the goods on the basis of their belief of the interpretation of the provisions of the law that the exempted goods were not required to be included and these did not include the value of the exempted goods which the assessee manufactured at the relevant time.
The Tribunal found that that the explanation was plausible, and also noted that the Department had full knowledge of the facts, about manufacture of all the goods manufactured by the respondent when the declaration was filed by the respondent.
The 713 respondent did not include the value of the product other than those falling under Tariff Item 14E manufactured by the respondent and this was in the knowledge, according to the Tribunal, of the authorities.
The findings of the Tribunal have not been challenged before this Court.
[717D F] The Tribunal also found that the facts of case did not warrant any inference of fraud.
[717D] Having regard to these, and in view of the requirements of section 11A of the Act, the claim had to he limited to a period of six months, prior to the date of issue of show cause notice.
The Tribunal was right in its conclusion.
[717G]
|
:Civil Appeal No. 1970(NT) of 1975 & 855(NT)/1975.
From the Judgment and Order dated 22.4.1974 of the Allahabad High Court in Civil Miscellaneous Writ No. 152 of 1974 Dr. V. Gauri Shankar, Miss A. Subhashini and K.C. Dua for the Appellants.
S.C. Manchanda, Ms. section Janani, Mrs. Urmila Kapoor and Ms. Meenakshi for the Respondent.
The Judgment of the Court was delivered by MISRA, J.
Civil Appeal No. 1970 of 1975 is by the Reve nue by certificate of the High Court while the other is an appeal by the assessee by special leave.
Both arise out of the same judgment of the Allahabad High Court dated 22.4.1974 in an application under article 226 of the Constitu tion by the assessee challenging the notices issued under section 148 read with sections 142(1) and 143(2) of the Income Tax Act of 1981, all dated 7th of March, 1973 relating to the assess ment year 1965 66.
The notice under section 148 was on the basis of three cash credit entries dated 22nd of August, 1964 from Messrs Meghraj Dulichand, Messrs Associated Commercial Organisation Private Limited and Messrs Laxminarain Atmaram, the first two being for a sum of Rs. 30,000 each and the last one for a sum of Rs.40,000.
The High Court ultimately found: "The result is that the notice dated 7th March 1973, was within jurisdiction only in regard to the cash credit entry from the firm Meghraj Dulichand of Calcutta.
In regard to the other two transactions, the case did not fall within the purview of clause (a) of section 147.
607 As seen above, the Income Tax Offi cer had no material in his possession on the basis of which he could have reason to believe (mere suspicion apart) that income had escaped assessment.
For this reason the case was not covered by clause (b) of section 147 either.
In regard to those two items the notice was totally without jurisdiction.
The Income Tax Officer had no jurisdiction to re open the assessment in respect of these two cash credit entries.
In this view it is unnecessary to decide whether the notice was barred by time on the footing that it was covered by clause (b) to section 147.
In the result, the petition succeeds and is allowed in part.
The respondent Income Tax Officer is directed not to re open the assessment of the petitioner firm for the assessment year 1965 66 in relation to the cash credit entries of Rs.30,000 from M/s. Associated Commercial Organisation Private Ltd. and of Rs.40,000 in respect of M/s. Laxminarain Atmaram.
" The appeal by the Revenue is in relation to the two transactions totaling Rs.70,000 and the appeal by the asses see is in regard to the remaining one in respect of a sum of Rs.30,000.
Dr. Gouri Shankar appearing for the Revenue has contended that it was not for the High Court to go into the question as to whether the notice under section 148 of the Act was partly valid and partly not because if the Income Tax Officer proceeded to issue notice under section 148 of the Act for reopening the assessment, he would require the assessee to furnish a fresh return and the entire assessment proceed ing has to be re done after the assessee furnishes the return.
In the present case, along with the notice under section 148 of the Act the Income Tax Officer did call upon the assessee to furnish a return as required under section 142 of the Act.
That notice casts an obligation on the assessee to make a fresh return and therein it was obliged to make a complete disclosure of its income in accordance with law and it was open to the Income Tax Officer to examine not only the three items referred to in the notice but also whatever came within the legitimate ambit of an assessment proceeding.
This being the legal position, Dr. Gouri Shankar for the Revenue contends, once the High Court sustained the notice in respect of a sum of Rs.30,000 that gave full jurisdiction to the Income Tax Officer to reopen the assessment and take to a fresh assessment proceeding.
The High Court should not have examined the tenability of the assessee 's 608 contenton in regard to the two transactions of Rs.30,000 and Rs.40,000 and that aspect should have been left to be con sidered by the Income Tax Officer while making the reassess ment.
A Division Bench of the Punjab High Court in Commission er of Income Tax, Punjab, Himachal Pradesh & Bilaspur, Simla vs Jagan Nath Maheshwary, examined this aspect of the matter with reference to a proceeding for reassessment under section 34 of the earlier Act of 1922 and came to hold: "When a notice is issued under section 34 based on a certain item of income that had escaped assessment, it is permissible for the Income tax authorities to include other items in the assessment, in addition to the item which had initiated and resulted in the notice under section 34." A Division Bench of the Andhra Pradesh High Court in Pulavarthi Viswanadham vs Commissioner of Income Tax, Andhra Pradesh, considered the same position with refer ence to section 34 of the earlier Act.
After extracting the two clauses in sub section
(1) of section 34, the Court held: "It is immediately plain that when once the Income tax Officer reaches the conclusion on the material that is before him that there has been a non disclosure as regards part of the income, profits or gains chargeable to income tax by the assessee, he is entitled to issue a notice either under clause (a) or (b), as the case may be, under section 22(2) of the In come tax Act." After extracting section 22(2) the High Court proceeded to say: "What emerges from sub section (2) of section 22 is that when once an assessee is required to submit a return of his income, he is obliged to disclose the totality of his in come.
The question that falls to be decided on the language of these two sections is whether after notice is issued under section 34(1)(a) the assessment should be limited to items which escaped assessment by reason of the failure on the part of the assessee to dis close all his income, profits or gains which are subject to tax.
The contention of learned counsel for the assessee is that having regard to the terms of clause (b) it was not within the powers of the Income tax 609 Officer to bring to charge such of the items as have escaped from being taxed without any remissness on his part.
It is only items that escaped assessment due to omission or failure of the assessee that come within the range and sweep of section 34, continues learned counsel for the assessee.
We do not think that we can accede to this proposition.
When once the assessment is reopened, no distinction could be made between items falling under clause (a) and those coming within the pale of clause (b).
As pointed out by a Division Bench of this Court in R.C. No. 12 of 1960 (Parimisetti Seetharamamma vs Commissioner of Incometax, , to which one of us was a party: " . . when once an assessment is reopened under section 34, the Income tax Officer proceeds de novo under the relevant sections of the Income tax Act, i.e., he issues notice under section 22(2) and proceeds to assess the assessee.
He has to follow the same procedure as in the case of the first assessment as is clear from the clause in section 34 and the provisions of this Act shall, so far as may be, apply accordingly as if the notice were a notice issued under that subsection.
The proceedings under section 34 must be deemed to relate to proceedings which commence with publication of notice under section 22(1).
" The view taken by the two High Courts has been supported by this Court in V. Jaganmohan Rao & Ors.
vs Commissioner of Incometax & Excess Profits Tax, Andhra Pradesh, There, repelling the same argument on behalf of the assessee this Court said: "This argument is not of much avail to the appellant because once proceedings under section 34 are taken to be validly initiated with regard to two thirds share of the income, the jurisdiction of the Income tax Officer cannot be confined only to that portion of the income.
Section 34 in terms states that once the Income tax Officer decides to reopen the assessment he could do so within the period prescribed by serving on the person liable to pay tax a notice containing all or any of the requirements which may be included in a notice under section 22(2) and may proceed to assess or reassess such income, profits or gains.
It is, therefore, manifest that once assessment is reopened 610 by issuing a notice under sub section (2) of section 22 the previous under assessment is set aside and the whole assessment proceedings start afresh.
When once valid proceedings are started under section 34(1)(b) the Income tax Officer had not only the jurisdiction but it was his duty to levy tax on the entire income that had escaped assessment during that year.
" No serious effort, however, was made by Mr. Manchanda appearing for the assessee respondent to counter this sub mission advanced on behalf of the Revenue.
Accepting the legal position indicated in these cases we come to the conclusion that it was not for the High Court to examine the validity of the notice under section 148 in regard to the two items if the High Court came to the conclusion that the notice was valid at least in respect of the remaining item.
Whether the Income Tax Officer while making his reassessment would take into account the other two items should have been left to be considered by the Income Tax Officer in the fresh assessment proceeding.
With this conclusion the decision of the High Court would ordinarily have been reversed.
As we have already stated, the assessee has also appealed against that part of the judgment of the High Court which was adverse to it.
Mr. Manchanda contended that in this case the regular assessment had been made for the assessment year 1965 66 on 22.1.1966.
Notice under section 147 of the Act was issued on 7th of March, 1973, i.e., more than seven years after the assessment had been completed.
The three amounts mentioned in the notice under section 148 of the Act were found in the assessee 's accounts by the Income Tax Officer when he exam ined the same in course of the assessment proceedings.
We had called upon the assessee to substantiate the genuineness of the transactions and the assessee had produced material to support the same.
The Income Tax Officer accepted the documents produced and treated all the three transactions to be genuine and on that footing completed the assessment.
The primary facts were before the Income Tax Officer at the time of the regular assessment and he called upon the assessee to explain to his satisfaction that the entries were genuine and on the basis of materials provided by the assessee satisfaction was reached.
It was then open to the Income Tax Officer to make further probe before completing the assess ment if he was of the view that the material provided by the assessee was not sufficient for him to be satisfied that the assessee 's contention was correct.
This Court in Calcutta Discount Company Limited vs I. T. 0., held that the expression 'Material facts ' used in el.
(a) 611 referred only to primary facts and the duty of the assessee was confined to disclosure of primary facts and he had not to indicate what factual or legal inferences should properly be drawn from the primary facts.
In the facts appearing on the record we are in agreement with Mr. Manchanda that cl.
(a) of section 147 did not apply to the facts of the case as the alleged escapement of income for assessment had not resulted from failure on the part of the assessee to disclose fully and truly all material facts necessary for its assessment for that year.
The notice in the instant case did not indi cate whether it was a case covered by cl.
(a) or cl.(b).
On our finding that cl.
(a) was not invokable, the power under cl.
(b) could be called in aid under section 149(1)(b) of the Act within four years from the end of the relevant assessment year.
Admittedly, the notice has been issued beyond a period of four years and, therefore, the notice itself was beyond the time provided under the law.
On the facts appearing in the case the High Court overlooked to consider this aspect of the matter.
Since the proceedings before the High Court were under article 226 of the Constitution and not by way of reference under the Act, the jurisdiction of this Court is not advisory and confined to the questions referred for opinion.
On the facts we are satisfied that ends of justice require our intervention and we would accordingly allow the appeal of the assessee by holding that the notice under section 148 of the Act cannot be sustained in law for the reasons indicated above.
The appeal by the assessee is allowed and the appeal by the Revenue is dismissed.
The notice under section 148 of the Act is quashed.
Both parties are directed to bear their respec tive costs throughout.
G.N. Appeal by the assessee is allowed and Appeal by the revenue is dismissed.
| IN-Abs | In respect of assessment year 1965 66, the Income tax Officer issued notices to the assessee under section 148 read with sections 142(1) and 143(2) of the Act on the ground that income has escaped assessment in respect of three cash credit entries totaling Rs. 1 lakh.
The assessee challenged the notices by way of writ petitions before the High Court.
The High Court gave a finding that the notice was within jurisdiction only in respect of an entry of Rs.30,000 and in respect of the other two entries viz. Rs.40,000 and Rs.30,000 it directed the Income tax Officer not to reopen the assessment.
These two appeals are against the High Court 's judgment.
The appeal by ReVenue, by certificate, is in respect of the two entries of Rs.40,000 and Rs.30,000 and the other appeal of the assessee, by special leave, is in respect of the entry of Rs.30,000.
On behalf of the Revenue, it was contended that once the High Court sustained the notice in respect of a sum of Rs.30,000, that gave full jurisdiction to the Income tax Officer to reopen the assessment and that the High Court should not have examined time tenability of the assessee 's contention in regard to the two transactions of Rs.30,000 and Rs.40,000 and that aspect should have been left to be considered by the Income tax Officer while making the reas sessment.
The contention of the assessee was that the notice was issued more than 7 years after the assessment was completed and was also beyond the period of limitation, viz., four years, that the escapement of the income from assessment had not resulted from failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment.
605 Allowing the appeal of the assessee, and dismissing the appeal by the Revenue.
HELD: 1.
The notice issued under section 148 of the Act is quashed.
It was not for the High Court to examine the valid ity of the notice under section 148 in regard to the two items if the High Court came to the conclusion that the notice was valid at least in respect of the remaining item.
Whether the Income tax Officer while making the reassessment would take into account the other two items, should have been left to be considered by the Income tax Officer in the fresh assess ment proceeding.
[610C D] CIT.
Punjab, H.P. & Bilaspur, Simla vs Jagan Nath Ma heshwary, 32 AIR 418 and Pulavarthi Viswanadham vs CIT.
A.P., approved.
V. Jagan Mohan Rao & Ors.
vs CIT & Excess Profits Tax, A.P., and Parimisetti Seetharamamma vs CIT, referred to.
2.1 The three amounts mentioned in the notice under section 148 of the Act were found in the assessee 's account by the Income tax Officer when he examined the same in course of the assessment proceedings.
He had called upon the assessee to substantiate the genuineness of the transactions and the assessee had produced material to support the same.
The Income tax Officer accepted the documents produced and treated all the three transactions to be genuine and on that footing completed the assessment.
The primary facts were before the Incometax Officer at the time of the regular assessment and he called upon the assessee to explain to his satisfaction that the entries were genuine and on the basis of materials provided by the assessee, satisfaction was reached.
It was then open to the Income Tax Officer to make further probe before completing the assessment if he was of the view that the material provided by the assessee was not sufficient for him to be satisfied that the assessee 's contention was correct.
[610E H] 2.2 The expression 'material facts ' used in section 147(a) referred only to primary facts and the duty of the assessee was confined to disclosure of primary facts and he had not to indicate what factual or legal inferences should properly be drawn from primary facts and this clause did apply to the facts of the present case as the alleged escapement of income for assessment had not resulted from failure on the part of the assessee to disclose fully and truly all materi al facts necessary for its assessment for that year.
The notice in the instant case, did not indicate 606 Whether it was a case covered by cl.
(a) or cl.
On the finding of this Court that cl.
(a) was not invokable, the power under cl.
(b) could be called in aid under section 149(1)(b) of the Act within four years from the end of the relevant assessment year.
Admittedly, the notice has been issued beyond a period of four years and, therefore, the notice itself was beyond the time provided under the law.
The High Court overlooked to consider this aspect of the matter.
[610H; 611A C] Calcutta Discount Company Ltd. vs ITO, , followed.
|
Appeal No. 149 of 1956.
Appeal by special leave from the judgment and order dated December 22, 1954, of the former Nagpur High Court in Misc.
Civil Case No. 36 of 1954.
R. J. Kolah, J. M. Thakar, Ramesh A. Shroff, J. B. Dadachanji, section N. Andley and Rameshwar Nath, for the appellant.
H. N. Sanyal, Additional Solicitor General of India, K.N. Rajagopala Sastri and R. H. Dhebar, for the respondent.
April 25.
The Judgment of the Court was delivered by VENKATARAMA AIYAR J.
This is an appeal against the judgment of the High Court of Nagpur in a reference under section 66(1) of the Indian Income tax Act, 1922, hereinafter referred to as the Act.
The appellant is the sole proprietor of a firm called Bansilal Abirchand Kasturchand, which carries on business as money lenders, dealers in shares and bullion and commission agents in Bombay, Calcutta and other places.
He is a resident of Bikaner, and manages the 692 business at the several places through agents.
During the relevant period, the agent of the firm at Bombay was one Chandratan, who held a power of attorney dated May 13, 1944, conferring on him large powers of management including authority to operate on bank accounts.
During the period, November 15, 1944, to November 23,1944, the agent withdrew from the firm 's bank account sums aggregating to Rs. 2,30,636 4 0, and applied them in satisfaction of his personal debts incurred in speculative transactions.
On November 25, 1944, the cashier of the firm sent a telegram to the appellant informing him of the true state of affairs.
Thereupon, the appellant went to Bombay on December 3, 1944, and on the 4th, cancelled the power of attorney given to the agent, and by notice dated December 6, 1944, called upon him to pay the amounts withdrawn by him.
The agent replied on December 8, 1944, admitting the misappropriation of the amounts and pleading for mercy.
On January 16,1945, the appellant filed a suit against him in the High Court of Bombay for recovery of Rs. 2,30,636 4 0 and that was decreed on February 20, 1945.
A sum of Rs. 28,000 was recovered from Chandratan and adjusted towards the decree and the balance of Rs. 2,02,442 13 9 was written off at the end of the accounting year as irrecoverable.
Before the Income tax authorities, the dispute related to the question whether this amount of Rs. 2,02,442 13 9 was an admissible deduction.
The Tribunal found that the amount in question represented the loss sustained by the appellant owing to misappropriation by his agent, Chandratan, but held on the authority of the decision in Curtis vs J. & G. Oldfield, Limited (1) that it was not a trading loss and therefore could not be allowed.
On the application of the appellant, the Tribunal referred the following question of law for the decision of the High Court, Nagpur: Whether the said sum of Rs. 2,02,442 13 9 being part of the amount embezzled by the assessee 's Munim is allowable as a deduction under the Indian Income (1) 693 tax Act either under Section 10(1) or under the general principles of determining the profit and loss of the assessee or Section 10(2)(xv) ? " The learned Judges held that the case was governed by the decision in Curtis vs J. & G. Oldfield, Limited (1), and answered the question against the appellant.
An application under section 66(A)(2) for a certificate was also dismissed and thereafter, the appellant applied for and obtained leave to appeal to this Court under article 136, and that is how the appeal comes before us.
The question whether moneys embezzled by an agent or employee are allowable as deduction in computing the profits of a business under section 10 of the Act has come up for consideration frequently before the Indian courts, and the decisions have not been quite uniform.
Before discussing them, it is necessary that we should examine the principles that are in law applicable to the determination of the question.
Three grounds have been put forward in support of the claim for deduction: (1) that the los 3 sustained by reason of embezzlement is a bad debt allowable under section 10(2)(xi) of the Act; (2) that it is a business expense falling within section 10(2)(xv) of the Act; and (3) that it is a trading loss, which must be taken into account in computing the profits under section 10(1) of the Act.
As regards the first ground, the authorities have consistently held that the deduction is not admissible under section 10(2)(xi) of the Act, and that, in our view, is correct.
A debt arises out of a contract between the parties, express or implied, and when an agent misappropriates monies belonging to his employer in fraud of him and in breach of his obligations to him, it cannot be said that he owes those monies under any agreement.
He is no doubt liable in law to make good that amount, but that is not an obligation arising out of a contract, express or implied.
Nor does it make a difference that in the accounts of the business the amounts embezzled are shown as debits, the amounts realised towards them, if any, as credits, and the balance is finally written off.
They are merely journal entries adjusting the accounts and do not import a contractual liability.
(1)(1925) 694 Nor can a claim for deduction be admitted under section 10(2)(xv), because moneys which are withdrawn by the employee out of the business till without authority and in fraud of the proprietor can in no sense be said to be " an expenditure laid out or expended wholly and exclusively " for the purpose of the business.
The controversy therefore narrows itself to the question whether amounts lost through embezzlement by an employee are a trading loss which could be deducted in computing the profits of a business under section 10(1).
It is to be noted that while section 10(1) imposes a charge on the profits or gains of a trade, it does not provide how those profits are to be computed.
Section 10(2) enumerates various items which are admissible as deductions, but it is well settled that they are not exhaustive of all allowances which could be made in ascertaining profits taxable under section 10(1).
In Incometax commissioner vs chitnavis (1), the point for decision was whether a bad debt could be deducted under section 10(1) of the Act, there having been in the Act, as it then stood, no provision corresponding to section 10(2)(xi) for deduction of such a debt.
In answering the question in the affirmative, Lord Russel observed: " Although the Act nowhere in terms authorizes the deduction of bad debts of business, such a deduction is necessarily allowable.
What are chargeable in income tax in respect of a business are the profits and gains of a year; and in assessing the amount of the profits and gains of a year account must necessarily be taken of all losses incurred, otherwise you would not arrive at the true profits and gains.
" It is likewise well settled that profits and gains which are liable to be taxed under section 10(1) are what are understood to be such according to ordinary commercial principles.
,The word " profits. . is to be understood ", observed Lord Halsbury in Gresham Life Assurance Society vs Styles (2), " in its natural and proper sense in a sense which no commercial man would misunderstand ".
Referring to these observa (1) (1932) L. R. 59 I.A. 290, 296, 297.
(2)(1892) A.C. 309, 315 ; , 188.
695 tions, Lord Macmillan said in Pondicherry Railway Co.v.
Income tax Commissioner (1):" English authorities can only be utilized with caution in the consideration of Indian income tax cases owing to the differences in the relevant legislation, but the principle laid down by Lord Chancellor Halsbury in Gresham Life Assurance Society V. Styles (2), is of general application unaffected by the specialities of the English tax system.
" The result is that when a claim is made for a deduction for which there is no specific provision in section 10(2), whether it is admissible or not will depend on whether, having regard to accepted commercial practice and trading principles, it can be said to arise out of the carrying on of the business and to be incidental to it.
If that is established, then the deduction must be allowed, provided of course there is no prohibition against it, express or implied, in the Act.
These being the governing principles, in deciding whether loss resulting from embezzlement by an employee in a business is admissible as a deduction under section 10(1) what has to be considered is whether it arises out of the carrying on of the business and is incidental to it.
Viewing the question as a businessman would, it seems difficult to maintain that it does not.
A business especially such as is calculated to yield taxable profits has to be carried on through agents, cashiers, clerks and peons.
Salary and remuneration paid to them are admissible under section 10(2)(xv) as expenses incurred for the purpose of the business.
If employment of agents is incidental to the carrying on of business, it must logically follow that losses which are incidental to such employment are also incidental to the carrying on of the business.
Human nature being what it is, it is impossible to rule out the possibility of an employee taking advantage of his position as such employee and misappropriating the funds of his employer, and the loss arising from such misappropriation must be held to arise out of the carrying on of business and to be incidental to it.
(1) (1931) L.R. 58 I.A. 239, 252.
(2) , 315; , 188 696 And that is how it would be dealt with according to ordinary commercial principles of trading.
At the same time, it should be emphasised that the loss for which a deduction could be made under section 10(1) must be one that springs directly from the carrying on of the business and is incidental to it and not any loss sustained by the assessee, even if it has some connection with his business.
If, for example, a thief were to break overnight into ,he premises of a moneylender and run away with funds secured therein, that must result in the depletion of the resources available to him for lending and the loss must, in that sense, be a business loss, but it is not one incurred in the running of the business, but is one to which all owners of properties are exposed whether they do business or not.
The loss in such a case may be said to fall on the assessee not as a person carrying on business but as owner of funds.
This distinction, though fine, is very material as on it will depend whether deduction could be made under section 10(1) or not.
We may now examine the authorities in the light of the principles stated above.
In Jagarnath Therani vs Commissioner of Income tax (1), the facts were that the assessee who was carrying on business entrusted a sum of Rs. 25,000 to his gumastha for payment to a creditor, but he embezzled it.
The question referred for the opinion of the High Court was whether that sum could be allowed as deduction in the computation of profits.
In answering it in the affirmative, the learned Judges observed that according to the practice obtaining in England, sums embezzled by employees were allowed as deductions and referred to statements of the law to that effect from Sanders ' Income tax and Super tax, Murray and Carters ' Guide to Income tax Practice and to the following passage in Snellings ' Dictionary of Income tax and Super Tax Practice: ,,If a loss by embezzlement can be said to be necessarily incurred in carrying on the trade it is allowable as.
deduction from profits.
In an ordinary case it springs directly from the necessity of deputing (1)(1925) I.L.R. 4 Pat.
697 certain duties to an employee, and should therefore be allowed.
" They accordingly allowed the deduction as "a loss incidental to the conduct of the business".
In Ramaswami Chettiar vs Commissioner of Income Tax, Madras (1), the assessee was carrying on banking business in several places in India and in Burma.
On October 21, 1926 thieves broke into the strong room in the business premises at Moulmiengyum and stole cash and currency notes of the value of Rs. 9,335.
The question was whether this amount could be allowed as a deduction.
It was held by the majority of the Jndges that it could not be.
In the judgment of the learned Chief Justice, the law was thus stated: " If any one is paid a sum due to him as profits and he puts that in his pocket and on his way home is robbed of it, it would be, I think, difficult to contend that such a loss was incidental to his business.
Still more so when he has reached his home and put those profits in a strong room or some other place regarded by him to be a place of safety.
1 can well understand that, in cases where the collection of profits or payment of debts due is entrusted to a gumastha or servant for collection and that person runs away with the money or otherwise improperly deals with it, the assessee should be allowed a deduction because such a loss as that would be incidental to his business.
He has to employ servants for the purpose of collecting sums of money due to him and there is the risk that such servant may prove to be dishonest and instead of paying the profits over to him, convert them to his own use.
But I cannot distinguish the present case from the case of any professional man or trader who, having collected his profits, is subsequently robbed of them by a stranger to his business.
In this case, none of the thieves were the then servants of the assessee, although one of them had formerly been his cook. " These observations, while they support the right of the asssee to deduction of loss resulting from (1)(1930) I.L. R. , 906, 907.
698 embezzlement by an employee, also show the extent and limits of that right.
In Bansidhar Onkarmal V. Commissioner of Incometax (1), there was a theft of money by an accountant, but it took place after the office hours, and it was held, following the decision in Ramaswami Chettiar vs Commissioner of Income tax (2) that it could not be allowed as a deduction under section 10(1) of the Act, as it was not incidental to the carrying on of the trade.
But it was observed by Narasimham J. who delivered the leading judgment that it might have made a difference if the theft had been by the accountant during the office hours.
In Venkatachalapathy Iyer vs Commissioner of Income tax (3), the assessees were a firm of merchants engaged in the business of selling yarn.
Its accountant was one Rajarathnam lyengar, whose duty it was to receive cash on sales, make disbursements and maintain accounts.
He duly entered all the transactions in the cash book but when striking the balance at the end of each day he short totalled the receipts and overtotalled the disbursements and misappropriated the difference.
The question was whether the amounts thus embezzled could be deducted.
On a review of the authorities, Satyanarayana Rao and Raghava Rao JJ. held that the loss was incidental to the carrying on of the business and should be allowed.
The appellant contends that this decision is decisive in his favour ; but the learned Judges of the Court below were of the opinion that on the facts it was distinguishable and that the present case fell within the decision in Curtis vs J. & G. Oldfield, Limited (4).
It is necessary to examine the decision in Curtis vs
J. & G. oldfield (4) somewhat closely, as the main controversy in the Indian courts has been as to what was precisely determined therein.
There, the facts were that the managing director of a company who was in exclusive control of its business, had, availing himself of his position as such managing director, withdrawn large amounts from time to time and applied them to his own personal affairs.
This went on for (1) (3) (2) Mad. 904, 906, 907.
(4) 699 several years prior to his death, and thereafter, the fraud was discovered, and the amounts overdrawn by him were written off as irrecoverable.
The question was whether these amounts could be allowed as a deduction, and it was answered in the negative by Rowlatt J.
Now, it should be observed that the learned Judge did not say that amounts embezzled by an employee in the course of business would not be admissible deductions.
On the other hand, he observed: " I quite think, with Mr. Latter, that if you have a business. in the course of which you have to employ subordinates, and owing to the negligence or the dishonesty of the subordinates some of the receipts of the business do not find their way into the till, or some of the bills are not collected at all, or something of that sort, that may be an expense connected with and arising out of the trade in the most complete sense of the word." He went on to observe: " I do not see that there is any evidence at all that there was a loss in the trade in that respect.
It simply means that the assets of the Company moneys which the Company had got and which had got home to the Company, got into the control of the Managing Director of the Company, and he took them out.
It seems to me that what has happened is that he has made away with, receipts of the Company de hors the trade altogether in virtue of his position as Managing Director in the office and being in a position to do exactly what he likes." Thus, what the learned Judge really finds is that the embezzlement was not connected with the carrying on of the trade but was outside it, and on that finding, the decision can only be that the deduction should be disallowed.
But the learned Judges in the Court below would appear to have read the above observations as meaning that, as a rule of law, embezzlements made prior to the receipts of the amounts by the assessees would be incidental to the carrying on of the trade and therefore admissible, but that embezzlements 89 700 made after receipt are not connected with the carrying on of the trade and are therefore inadmissible.
We do not so read those observations.
It is a question turning on the facts of each case whether the embezzlement in respect of which deduction is claimed took place in the carrying on of the business, and the observations of the learned Judge that it did not so take place have reference to the facts of that case, and can afford no assistance in deciding whether in a given case the embezzlement was incidental to the conduct of the business or not.
Now, in Curtis vs J. & G. Oldfield Limited(1), the company was doing business in wine and spirit, and in such a business it is possible to hold that when once the price is realised and put into the bank, the trading has ceased and that the subsequent operations on the bank account are not incidental to the carrying on of the trade.
But here, we are dealing with a banking business, which consists in making advances, realising them and making fresh advances, and for that purpose, it is necessary not merely to deposit amounts in banks but also to withdraw them.
That is to say, a continuous operation on the bank account is incidental to the conduct of the business.
The theory that when once moneys are put into the bank they have " got home " and that their subsequent withdrawal from the bank would be de hors the business, will be altogether out of place in a business such as banking.
It will be a wholly unrealistic view to take of the matter, to hold that the realisations have reached the till when they are deposited in the bank, and that that marks the terminus of the business activities in money lending.
It should also be mentioned that in Curtis vs J. & 'G. oldfield (1) though the assessee was a company, it was found that the shares were all held by the members of the Oldfield family, that the company had no auditor and no minutes book, that there was Cc an almost entire absence of balance sheets ", and that one of the members, Mr. J. E. Oldfield, was in management with wide powers.
In view of the fact that he (1) 701 had a large number of shares in the company and that it was in substance a private company, his withdrawals would be more like a partner overdrawing his account with the firm than an agent embezzling the funds of his employer, and it could properly be held that such overdrawing has nothing to do with the trading activities of the firm, whose profits are to be taxed.
It would, therefore, be an error to suppose that the observations made by Rowlatt J. in the above context could be regarded as an authority for the broad proposition that as a matter of law, and irrespective of the nature of business, there could be no business activities with reference to moneys after they have been collected, and that, in consequence, embezzlement thereof could not be incidental to the carrying on of business.
And we should further add that it would make no difference in the admissibility of the deduction whether the employee occupies a subordinate position in the establishment or is an agent with large powers of management.
Subsequent to the decision now under appeal, the Bombay High Court had occasion to consider this question in Lord 's Dairy Farm Ltd. vs Commissioner of Income tax (1).
On a review of the authorities including the decision in Curtis vs J. & G. Oldfield, Limited (2), Chagla C. J. and Tendolkar J. held that loss caused to a business by defalcation of an employee was a trading loss, and that it could be deducted under section 10(1).
In Motipur Sugar Factory Ltd. vs Commissioner of Income tax (3), an employee who had been entrusted with the funds of a company for purposes of distribution among sugarcane growers in accordance with statutory rules, was robbed of them on the way.
It was held by Ramaswami and Sahai JJ.
that the loss was incidental to the conduct of the trade, and must be allowed.
We agree with the decisions in Venkatachalapathy Iyer vs Commissioner of Incometax (4), Lord 's Dairy Farm Ltd. vs Commissioner of Income tax (1) and Motipur Sugar Factory Ltd. vs Commissioner of Income tax(3).
(1) (1925) 9 Tax Cas. 319.
(3) 702 It was argued for the respondent that there was no evidence, much less proof, that when Chandratan withdrew funds from the bank, he did so for the purpose of making any advance, and that, therefore, the withdrawal could not be held to have been for the conduct of the trade.
That, in our opinion, is not necessary.
When once it is established that Chandratan was in charge of the business, that he had authority to operate on the bank accounts, and that he with drew the moneys in the purported exercise of that authority, his action is referable to his character as agent, and any loss resulting from misappropriation of funds by him would be a loss incidental to the carrying on of the business.
It was also contended that the power of attorney dated May 13, 1944, under which Chandratan was constituted agent related not only to the business of the appellant but also to his private affairs, and that there was no proof that the embezzlement was in respect of the business assets of the appellant and not of his private funds.
No such question was raised before the Income tax authorities, and their finding assumes that the moneys which were misappropriated were business funds.
We are also not satisfied that, on its true construction,, the authority conferred on the agent by the power of.attorney extended to the personal affairs of the appellant.
In the result, we are of opinion that the loss sustained by the appellant as a result of misappropiriation by Chandratan is one which is incidental to the carrying, on of his business, and that it should therefore deducted in computing the profits under section 10(1) of the, Act.
In this view, the order of the lower court must be set aside and the reference answered in the, affirmative.
The appellant will get his costs of this appeal and of the reference in the Court below.
appeal allowed.
| IN-Abs | The appellant engaged an agent for the purposes of carrying on his business and conferred on him large powers of manage ment including authority to operate on bank accounts.
While acting under such authority the agent withdrew moneys from the bank and used them for the discharge of his personal debts.
The appellant was able to recover from the agent only a part of the amount misappropriated by him, and the balance had to be written off at the end of the accounting year as irrecoverable.
The question was whether the amount which was misappropriated and found irrecoverable was allowable as a deduction under the Indian Income tax Act in determining the profits of the appellant.
Held, that the amount in question is not allowable either as a bad debt under section 10(2)(Xi) or as a business expenditure under section 10(2)(XV) Of the Indian Income tax Act, 1922.
It can, however, be deducted in computing the profits of the appellant under 691 section 10(1) of the Act as a loss incidental to the carrying on of his business.
Where an agent or an employee of a businessman in charge of the business is given authority to operate on the bank accounts and withdraws moneys in the purported exercise of that authority, his action is referable to his character as such authorised agent or employee and any loss resulting from misappropriation of the money by him would be one incidental to the carrying on of the business, and it is not necessary to show that the money was withdrawn for the conduct of the business.
Curtis vs J. & G. Oldfield, and Rama swami Chettiar vs Commissioner of Income tax, Madras, Mad. 904, explained and distinguished.
Venkatachalapathy Iyer vs Commissioner of Income tax, , Lord 's Dairy Farm Ltd. vs Commissioner of Incometax, and Motipur Sugar Factory Ltd. vs Commissioner of Income tax, , approved.
|
ivil Appeal No. 2717 of 1985.
From the Judgment and Order dated 2.12.
1980 of the Madras High Court in T.C. No. 573 of 1976.
Harish N. Salve, A.S. Chandrashekaran, K.J. John and Sanjay Grover for the Appellants.
Dr. V. Gauri Shankar, Ms. A. Subhashini and M.K. Sha shidharan for the Respondent.
The Judgment of the Court was delivered by KULDIP SINGH, J.
The question in this appeal is whether the grant of a mining lease for a period of ten years by the assessee can give rise to a capital gain taxable under section 45 of Income tax Act, 1961.
599 The assessee, a body of individuals, purchased two pieces of land in the year 1966 measuring 14.55 acres at a price of Rs.27,260.
By an instrument of lease cum licence dated 10th September, 1970 they granted a mining lease in favour of M/s. Sri Krishna Tiles and Potteries (Madras) Private Limited (hereinafter called the 'Company '), an allied concern of the assessee.
The lease was for a period of 10 years and the lessee had to pay a premium or salami of Rs.5 lakhs in addition to the payment of royalty of Rs. 12 per hundred cubic ft. of clay extracted subject to a minimum of Rs.60,000 per year.
The Income tax Officer construed the lease deed as transferring a lease hold interest in the land in favour of the company and came to the conclusion that the transfer was assessable to capital gains tax.
For the purpose of comput ing the extent of tax the Income tax Officer assessed the market value of the entire land at Rs.8 lakhs.
Since the lease hold interest was transferred for a sum of Rs.5 lakhs, he valued the lease hold interest at 5/8th of the sale price of the entire land.
On that basis the Income tax Officer computed the cost of acquisition of the lease hold interest at Rs. 17,040, being 5/8th of Rs.271,260.
Thereafter deduct ing Rs. 17,040 from the sale consideration of Rs.5 lakhs, he treated the sum of Rs.4,82,960 as long term capital gains.
The assessee preferred an appeal to the Appellate As sistant Commissioner.
The Appellate Commissioner held that the value of the right to excavate the land in terms of money is included in the purchase price paid by the assessee for the land.
He rejected the argument of the assessee that the cost of acquisition of the said assets could not be determined.
He then proceeded to consider the cost of acqui sition of such right and differing with the Income Tax Officer held that on the facts of the case the cost for the purpose of ascertaining the capital gains would be the total price of the land paid by the assessee, that is, Rs.27,260.
On all other points he upheld the order of the Income tax Officer.
The assessee preferred an appeal to the Tribunal.
The Tribunal observed that the entire ownership of the property means the ownership of a bundle of rights and a limited interest which can be severed and disposed off for a speci fied period in the form of lease or mortgage or the like is part of that bundle.
According to the Tribunal the purchase price paid by the assessee for the land includes therein a component of purchase price attributable to various kinds of interests embedded in the said land.
The Tribunal confirmed the order of the Appellate Commissioner and dismissed the appeal.
600 Arising from the said decision of the Tribunal.
the following two.
questions were referred to the High Court for determination: (i) Whether, on the facts and in the cir cumstances of this case, the instrument of lease dated September 10, 1970 effected the transfer of a capital asset within the meaning of section 45 of the Income tax Act, 1961 and, accordingly, liable to capital gains tax? (ii) Whether, on the facts and in the circumstances of the case the Tribunal is right in law in holding that the cost of lease hold right is capable of valuation and, as such, capital gains can be computed? The High Court opined that the right conferred on the lessee under the lease deed was also a capital asset in the hands of the assessee lessor.
By giving a liberal meaning to the word "transfer" in section 2(47) of the Act the High Court held that there was a transfer of capital asset for a consideration of Rs. 5 lakhs under the instrument dated 10th September, 1970.
It was further held that the rights of owner of a land include a fight to grant the lease to ex ploit the land.
The High Court answered the two questions in the affirmative and against the assessee.
The High Court granted a certificate under section 261 of the Act to appeal to this Court.
The relevant provisions of sub section 14 of section 2 which defines "capital asset" and section 45(1) of the said Act which provides for the levy of tax on capital gains is as under: "2(14) "capital asset" means property of any kind held by an assessee, whether or not connected with his business or profession, but does not include .
45(1) Any profits or gains arising from the transfer of a capital asset effected in the previous year shall, save as otherwise provid ed in section be chargeable to income tax under the head "Capital gains", and shall be deemed to be the income of the previous year in which the transfer took place.
" Mr. Harish Salve, learned counsel appearing for the appellant, without disputing that the grant of a lease would constitute a transfer of an ,asset, has raised the following two contentions: 601 (i) That conceptually there is no "cost of acquisition" which is attributable to the right of limited enjoyment transferred by the grant of the lease.
There is no nexus between the "cost of acquisition" of the free hold land and the right granted under the lease.
For the same reason it is contended that there is no question of apportionment of such "cost of acquisition".
(ii) That since the cost of acquisition of the right granted under the lease cannot be determined the computation provisions under the Act cannot apply at all and as such sec tion 45 of the Act is not attracted.
Reliance for this contention is placed on the judgment of this Court in C.I.T.v.
B.C. Srinivas Shetty; , As regards the first contention, section 2(14) of the Act defines "capital asset" as "property of any kind held by an assessee".
What is parted with under the terms of the lease deed is the right to exploit the land by extracting clay which fight directly flows from the ownership of the land.
The said right evaluated in terms of money forms part of the cost of acquiring the land.
In Traders and Mining Ltd. vs C.I.T., , a Division Bench of the Patna High Court, interpreting the expression "transfer of a capital asset" held as under: "We think that the expression "transfer" in the section includes not only a permanent transfer but also a temporary transfer of title to the property in question and lease of mines for any period would fall within the ambit of section 12B of the Act.
It was also contended by Mr. Dutt that a transaction of a lease was not tantamount to a transfer of a title but that a mere contractual right was created.
We do not think that this argument is correct.
A lease of land is transfer of inter est in the land and creates a right in rem: and there is a transfer of title in favour of the lessee though the lessor has right of reversion after the period of the lease termi nates.
" This decision has been referred to with approval by this Court in R.K. Palshikar (HUF) vs Commissioner of Income.
Tax, M.P. Nagpur, If transfer of capital asset in section 45 of the Act includes grant of Mining Lease for any period .then obviously the "cost of acquisi tion" of the land would include the "cost of acquisition" Of the Mining right under the lease.
Undisputedly the grant of alease being a transfer of an asset there is no escape from the conclusion that 602 there is a live nexus between the "cost of acquisition" of the land and the rights granted under the lease.
The amount of Rs.27,260 paid by the Assessee was not only the cost of acquiring the land but also of acquiring bundle of fights in the said land including the right to grant lease.
There is, thus no force in the contention of the learned counsel that conceptually there is no "cost of acquisition" which is attributable to the fight of limited enjoyment transferred by the grant of the lease.
So far as the apportionment of the cost of acquisition is concerned it is a question of fact to be determined by the Income Tax Officer in each case on the basis of evidence.
The determination of the cost of the right to excavate clay in the land in terms of money may be difficult but is none the less of a money value and the best valuation possible must be made.
Viscount Simon in Gold Coast Selection Trust Ltd. vs Inspector of Taxes, (supp) observed "valuation is not an exact science.
Mathe matical certainty is not demanded, nor indeed is it possi ble.
" The Income tax Officer in this case worked out the cost of lease hold interest by adopting the 5/8th ratio, though the Appellate Commissioner gave the benefit to the Assessee of the Full Price of the land paid by him.
In Traders and Mines Ltd. vs Commissioner of Income tax, (supra) the Income tax Officer had also determined the cost of the lease hold fights on proportionate basis.
Once the cost of the lease hold fights is determined then there is no difficulty in making apportionment.
We, therefore, do not find any force in the first contention of Mr. Salve and reject the same.
In view of our finding on the first contention the second contention does not survive.
The value of lease hold fights in the cost of acquisition of land being determinable the computation provisions under the Act are applicable and section 45 would be attracted.
In Shetty 's case the question was whether the transfer of the goodwill of a newly com menced business can give rise to a capital gain taxable under section 45 of the Act.
This Court answered the ques tion in the negative.
Referring to the charging section and the computation provisions under the Act this Court held that none of those provisions suggest the inclusion of an asset under the Head "Capital Gain," in the acquisition of which no cost at all can be conceived.
Good will generated in an individual 's business was held to be an asset in which no cost element can be identified or envisaged.
It was also held that the date of acquisition of the asset is a material factor in applying the computation provisions pertaining to capital gains and in the case of self generated good will it is not possible to determine the same.
The third reason for holding that the good will generated in a newly commenced business cannot be described as an 'asset ' within the terms of section 45 of the 603 Act was that it is impossible to determine its cost of acquisition.
None of the three reasons given by this Court in Shetty 's case are applicable in the present case.
We have held that the cost of acquisition of lease hold rights can be determined.
The date of acquisition of the right to grant lease has to be the same as the date of acquiring the free hold rights.
The ratio of Shetty 's case is thus not attract ed to the question involved in the present case.
We, there fore, do not find any force in the second contention also.
Accordingly the appeal is dismissed with costs.
N.V.K. Appeal dis missed.
| IN-Abs | The appellant assessee, a body of individuals, purchased two pieces of land in the year 1966.
In 1970 it granted a mining lease to a private company (an allied concern) to extract clay for a period of ten years at a premium of Rs. 5 lakhs in addition to payment of royalty.
The Income tax Officer construed the lease deed as transferring a lease hold interest in the land in favour of the company and came to the conclusion that the transfer was assessable to capital gains tax.
For the purpose of comput ing the extent of tax, the Income tax Officer valued the lease hold interest at 5/8th of the sale price of the entire land, computed the cost at acquisition of the lease hold interest say Rs. 17,040, and after deducting this sum from the sale consideration of Rs.5 lakhs, determined a sum of Rs.4,82,960 as long term capital gains.
Being aggrieved by the aforesaid order of the Income tax Officer the assessee preferred an appeal to the Appellate Assistant Commissioner.
The Appellate Assistant Commissioner confirmed the assessment but allowed deduction on the entire price of the land on the ground that the cost for the pur pose of ascertaining the capital gains would be the total price of the land paid by assessee.
Not being satisfied, the assessee preferred an appeal to the Income tax Appellate Tribunal which confirmed the order of the Appellate Commissioner and dismissed the appeal.
The High Court on a reference held that the right conferred on 597 the lessee under the lease deed was also a capital asset in the hands of the assessee lessor, and that there was a transfer of capital asset for a consideration of Rs.5 lakhs.
The High Court accordingly answered the reference against the assessee, .but granted a certificate under section 261 of the Act to appeal to this Court.
On behalf of the assessee appellant it was contended: (1) that conceptually there is no 'cost of acquisition ' which is attributable to the right of limited enjoyment transferred by the grant of the lease, and (2) relying on the decision of this Court in C.I. T. vs B.C. Srinivas Sherry, ; SC it was submitted that since the cost of acquisition of the right granted under the lease cannot be determined the computation provisions under the Act cannot apply at all, and as such section 45 of the Act is not attracted.
On the question: whether the grant of a mining lease for a period of ten years by the assessee can give rise to a capital gain taxable under section 45 of the Income tax Act, 1961.
Dismissing the appeal, the Court, HELD: 1(a) Section 2(14) of the Income Tax Act defines "capital asset" as "property of any kind held by an asses see.
" What is parted with in the instant case, under the terms of the deed is the right to exploit the land by ex tracting clay which right directly flows from the ownership of the land.
The said right evaluated in terms of money forms part of the cost of acquiring the land.
[601C D] 1(b).
If a transfer of a capital asset in section 45 of the Act includes grant of a mining lease for any period, then obviously, the "cost of acquisition" of the land would include the "cost of acquisition" of the mining right under the lease.
The grant of a lease being a transfer of an asset, there is no escape from the conclusion that there is a live nexus between the "cost of acquisition" of the land and the right granted under the lease.
[601G H; 602A] In the instant case, the amount of Rs.27,260 paid by the assessee was not only the cost of acquiring the land but also acquiring a bundle of rights in the said land including the right to grant lease.
[602A] 1(c) The apportionment of the cost of acquisition is a question of fact to be determined by the Income tax Officer in each case on the basis of evidence.
The determination of the cost of the right to excavate 598 clay in the land in terms of money may be difficult but is nonetheless of a money value and the best valuation possible must be made.
In the instant came, the Income tax Officer worked out the cost of the lease held interest by adopting the 5/8th ratio, though the Appellate Assistant Commissioner gave the benefit to the assessee of the full price of the land paid by him.
[602B D] 1(d) Once the cost of lease hold right is determined than there is no difficulty in making apportionment.
[602E] Gold Coast Selection Trust.
Ltd. vs Inspector of Taxes, (supp); Traders and Mining Ltd. vs
C.I.T., ; R.K. Palshikar (HUF) vs Commissioner of Income Tax, M.P. Nagpur, ; , referred to.
2(a) The value of lease hold rights in the cost of acquisition of land being determinable the computation provision under the Act are applicable, and section 45 would he attracted.
[602E F] 2(b) The date of acquisition of the right to grant lease has to be the same as the date of acquiring the free hold rights.
[603B] C.I.T. vs B.C. Srinivas Shetty, ; distinguished.
|
ivil Appeal No. 2014 of 1986.
From the Judgment and Order dated 24.4.
1986 of the Delhi High Court in C.W. No. 477 of 1986.
Dr. Anand Prakash, D. Mehta, Atul Nanda and S.K. Mehta for the Appellant.
S.K. Bisaria for the Respondent.
The Judgment of the Court was delivered by RANGANATHAN, J.
A very short question as to the inter pretation of the service regulations of the appellant bank comes up for consideration in this appeal.
The relevant service regulation is Regulation No. 20 which reads as under: "20(1) Subject to sub regulation (3) of regu lation 16, the bank may terminate the services of any officer by giving him three months ' notice in writing or by paying him three months ' emoluments in lieu thereof.
615 (2) No officer shall resign from the service of the bank otherwise than on the expiry of three months from the service on the bank of a notice in writing of such resignation.
Provid ed further that the competent authority may reduce the period of three months, or remit the requirement of notice.
" The respondent, a permanent officer in the bank, sent a communication to the bank on 21st January, 1986.
By this letter he purported to resign from the service of the bank due to personal reasons.
He added that the date of receipt of the letter should be treated as the date of the commence ment of the notice period so that, inclusive of the same, his resignation would become effective on 30th June, 1986.
According to the respondent, the Deputy General Manager, who was the competent authority under the Service Regulations, had agreed that the resignation may be accepted with effect from 30th June, 1986.
However, what actually transpired was that the respondent received a letter from the bank on 7th February, 1986 informing him that his resignation letter dated 21st January, 1986 had been accepted by the competent authority with immediate effect by waiving the condition of notice and that, consequently, he was being relieved from the service of the bank with effect from the afternoon of the same date, namely, 7th February, 1986.
The respondent thereupon filed a writ petition in the High Court challeng ing the validity of the purported acceptance of his resigna tion with effect from 7th February, 1986 and for a direction to the bank to treat him as in service of the bank up to 30th June, 1986 and as entitled to all benefits while being in such service.
A further development took place after the filing of the writ petition and before it came up for hearing.
On 15th April, 1986, the respondent wrote a letter to the bank by which he purported to withdraw the resignation letter dated 21st January, 1986.
The High Court, therefore, dealt with the situation resulting from this subsequent development.
The High Court held that the petitioner 's resignation letter would have become effective only on the 30th June, 1986.
Under the regulations there was no jurisdiction whatever in the competent authority to determine his services earlier.
Until the resignation became effective on 30th June, 1986, the petitioner had a right to withdraw the same and in fact had also exercised that right.
The High Court concluded: "We may notice that this writ petition was filed at a stage 616 when the petitioner had not sent his letter dated 15th April, 1986 whereby he withdrew his resignation letter dated 2 Ist January, 1986.
This is a subsequent development during the pendency of the writ petition.
Therefore, we are not called upon to decide the earlier grievance that the resignation could not have been accepted at an earlier date.
Even to that submission we would have said that there is no provision of acceptance but that question does not arise so we will not deal with it further.
Result is that the impugned order dated 7th of February, 1986 is hereby quashed and it is declared that the petitioner continues to be in service with the respondent bank.
However, in view of the facts of the present case, parties are directed to bear their own costs of the present proceedings.
" The bank has preferred this appeal.
Dr. Anand prakash, learned counsel for the appellant bank, submitted that regulation 20(2) provided for a notice to the employer only in order to protect the employer 's interests and to enable the employer, in case it decided to accept the resignation, to make other arrangements in place of the resigning employ ee.
He submitted that, this being a provision for the bene fit of the employer, its requirements could be waived by the employer, if it so desired, unilaterally The proviso to clause (2) of the regulation indeed makes it clear that it is open to the bank to waive the requirement of notice or to reduce the period of the notice to less than three months.
He, therefore, submitted that, when the respondent sent in his resignation on 21st January, 1986, it was not incumbent on the bank to wait till 30th June, 1986 when the notice period would expire.
It was competent for the bank to waive any notice at all and to accept the resignation with immedi ate effect or with effect from such other date as the bank may consider appropriate.
It was further contended by learned counsel that, once the resignation letter of the respondent had been accepted by the bank and given effect to, to there was no further possibility of the respondent seeking to withdraw the resignation letter as he has pur ported to do in this case.
Learned counsel, therefore, submitted that the bank 's letter dated 7th February, 1986 was quite valid and effective and that the respondent 's writ petition ought to have been dismissed.
We have given careful thought to this contention of the learned counsel and we are of the opinion that the High Court was right in the conclusion it reached.
Clause (2) of regulation 20 makes it incumbent on an officer of the bank, before resigning, to serve a notice in writing 617 of such proposed resignation and the clause also makes it clear that the resignation will not be effective otherwise than on the expiry of three months from the service of such notice.
There are two ways of interpreting this clause.
One is that the resignation of an employee from service being a voluntary act on the part of an employee, he is entitled to choose the date with effect from which his resignation would be effective and give a notice to the employer accordingly.
The only restriction is that the proposed date should not be less than three months from the date on which the notice is given of the proposed resignation.
On this interpretation, the letter dated 21st January, 1986 sent by the employee fully complied with the terms of this clause.
Though the letter was written in January, 1986 the employee gave more than three clear months ' notice and stated that he wished to resign with effect from 30th of June, 1986 and so the resig nation would have become effective only on that date.
The other interpretation is that, when an employee gives a notice of resignation, it becomes effective on the expiry of three months from the date thereof.
On this interpretation, the respondent 's resignation would have taken effect on or about 21.4.1986 even though he had mentioned a later date.
In either view of the matter, the respondent 's resignation did not become effective till 21.4.1986 or 30.6.1986.
It would have normally automatically taken effect on either of those dates as there is no provision for any acceptance or rejection of the resignation by the employer, as is to be found in other rules, such as the Government.
Services Con duct Rules.
Much reliance was placed on the terms of the proviso to clause (2) of regulation 20 to justify the action of the bank in terminating the respondent 's services earlier but we do not think that the proviso can be interpreted in the manner suggested by learned counsel for the bank.
The resig nation letter of the officer has to give at least three months ' advance notice under the main part of the clause.
What the proviso contemplates is that in a case where the employee desires that his resignation should be effective even before the expiry, of the period of three months or without notice being given by him, the bank may consider such a request and waive the period or requirement of notice if it considers it fit to do so.
That question does not arise in the present case because the employee had not requested the bank to reduce the period of notice or to waive the requirement of notice.
Dr. Anand Prakash seeks to interpret the proviso as empowering the bank, even without any request= on the part of the employee, to reduce the period or waive the requirement of notice.
In other words, he says the bank has power to accept the resignation with immediate effect even though 618 the notice is only of a proposed future resignation.
We do not think this contention can be accepted.
As we have al ready mentioned, resignation is a voluntary act of an em ployee.
He may choose to resign with immediate effect or with a notice of less than three months if the bank agrees to the same.
He may also resign at a future date on the expiry, or beyond the period, of three months but for this no further consent of the bank is necessary.
The acceptance of the argument of Dr. Ananad Prakash would mean that, even though an employee might express a desire to resign from a future date, the resignation can be accepted, even without his wishes, from an earlier date.
This would not be the acceptance of a resignation in the terms in which it is offered.
It amounts really to forcing a date of termination on the employee other than the one he is entitled to choose under the. regulations.
As rightly pointed out by the High Court, the termination of service under clause (2) becomes effective at the instance of the employee and the services of the employee cannot be terminated by the employer under this clause.
Dr. Anand Prakash emphasises that as clause (2) and its proviso are intended only to safeguard the bank 's interests they should be interpreted on the lines suggested by him.
We are of the opinion that clause (2) of the regulation and its proviso are intended not only for the protection of the bank but also for the benefit of the employee.
It is common knowledge that a person proposing to resign often wavers in his decision and even in a case where he has taken a firm decision tO resign, he may not be ready to go out immediate ly.
In most cases he would need a period of adjustment and hence like to defer the actual date of relief from duties for a few months for various personal reasons.
Equally an employer may like to have time to make some alternative arrangement before relieving the resigning employee.
Clause (2) is carefully worded keeping both these requirements in mind.
It gives the employee a period of adjustment and rethinking.
It also enables the bank to have some time to arrange its affairs, with the liberty, in an appropriate case, to accept the resignation of an employee even without the requisite notice if he so desires it.
The proviso in our opinion should not be interpreted as enabling a bank to thrust a resignation on an employee with effect from a date different from the one on which he can make his resignation effective under the terms of the regulation.
We, therefore, agree with the High Court that in the present case the resignation of the employee could have become effective only on or about 21st April, 1986 or on 30th June, 1986 and that the bank could not have "accepted" that resignation on any earlier date.
The letter dated 7th February, 1986 was, therefore, without jurisdiction 619 The result of the above interpretation is that the employee continued to be in service till the 21st April, 1986 or 30th June, 1986, on which date his services would have come normally to an end in terms of his letter dated 21st January, 1986.
But, by that time, he had exercised his right to withdraw the resignation.
Since the withdrawal letter was written before the resignation became effective, the resignation stands withdrawn, with the result that the respondent continues to be in the service of the bank.
It is true that there is no specific provision in the regulations permitting the employee to withdraw the resignation.
It is, however, not necessary that there should be any such specif ic rule.
Until the resignation become effective on the terms of the letter read with regulation 20.
it is open to the employee, on general principles, to withdraw his letter of resignation.
That is why, in some cases of public services, this right of withdrawal is also made subject to the permis sion of the employer.
There is no such clause here.
It is not necessary to labour this point further as it is well settled by the earlier decisions of this Court in Raj Kumar vs Union of India, [1963] 3 SCR 857; Union of India vs Gopal Chandra Misra, ; and Balram Gupta vs Union of India, ; Learned counsel for the appellant relied on certain observations in Delhi Electric Supply Undertaking vs Tara Chand, Certain other decisions were also cited by Dr. Anand Prakash but we do not think that they have any bearing on the issue before us.
Tara Chand was a case under regulation 8 of the regulations made by the Delhi Electric Supply Undertaking under the .
The regulation permitted the termination of the services of a servant of the undertaking "on notice of three months from either side without any cause to be assigned in case of permanent servants".
The employee in that case sent a letter to the employer stating that "he was compelled to resign for various reasons" and this resignation was accept ed by the undertaking.
The Delhi High Court in its judgment (to which one of us was a party) observed that notice under the regulation was intended for the benefit of the employer which could, if it considered necessary or proper, waive the period of notice and accept the resignation with immediate effect.
But that was a case where the employee, though bound to give three months ' notice, expressed his desire to resign with immediate effect and it was also accepted by the em ployer.
It was not the case that he had given notice indi cating a desire to be relieved at a future date.
The analogy of that case would have applied to the present case as well if the respondent here had expressed his desire to be re lieved immediately even before the expiry of the three months ' notice period and the bank had accepted it.
The 620 employer would then certainly have been entitled to accept the resignation, as requested by the employee, waiving the notice period.
The distinction between that case and the present one is that, here, the employee has chosen a future date on which his resignation would be effective but he is being forced to "resign" before such date.
For the reasons discussed above, we affirm the decision of the High Court and dismiss this appeal.
As the employee has got a relief much larger than the one for which he initially came to Court and which has been made possible by his subsequent conduct, we make no order as to costs.
P .S.S.
Appeal dis missed.
| IN-Abs | Clause (2) of Regulation 20 of the Service Regulations of the Punjab National Bank lays down that no officer shall resign from the service of the bank otherwise than on the expiry of three months from the service on the bank of a notice in writing of such resignation.
The proviso thereto empowers the competent authority to reduce the period of three months or remit the requirement of notice.
The respondent, a permanent officer of the bank, made an application on 21st January 1986, purporting to resign from the service with effect from 30th June, 1986.
He, however, received a letter from the bank on 7th February, 1986 in forming him that his resignation letter had been accepted by the competent authority with immediate effect by waiving the condition of notice.
He thereupon filed a writ petition in the High Court challenging the validity of the purported acceptance of his resignation with effect from 7th February, 1986 and for a direction to consider him as in service up to 30th June, 1986.
Thereafter, on 15th April, 1986 he wrote another letter to the Bank purporting to withdraw the resignation letter dated 21st January, 1986.
The High Court held that the petitioner 's resignation letter would have become effective only on the 30th June, 1986, that under the Regulations there was no jurisdiction whatever in the competent authority to determine his service earlier than that and that until the resignation became effective on 30th June, 1986 he had a right to withdraw the same.
Consequently, it quashed the order dated 7th February, 1986 and declared that the petitioner continued to be in service with the bank.
613 In this appeal by special leave it was contended for the appellant that Regulation 20(2) provided for a notice to the employer only in order to protect the employer 's interests, that its requirements could, therefore, be waived by the employer if it so desired unilaterally, that under the proviso to clause (2) it was competent for the bank to waive any notice at all and to accept the resignation with immedi ate effect or with effect from such other date as the bank may consider appropriate.
Dismissing the appeal, HELD: 1.
Until the resignation becomes effective on the terms of the letter read with Service Regulation 20 of the Punjab National Bank, it is open to the employee, on general principles, to withdraw his letter of resignation.
[619C] Raj Kumar vs Union of India, ; Union of India vs Gopal Chandra Misra, ; and Balram Gupta vs Union of India, ; 2.
Clause (2) of Regulation 20 makes it incumbent on an officer of the bank, before resigning, to serve a notice in writing of such proposed resignation.
The clause also makes it clear that the resignation will not be effective other wise than on the expiry of three months from the service of such notice.
[616H; 617A] 3.
What the proviso to clause (2) contemplates is that in a case where the employee desires that his resignation should be effective even before the expiry of the period of three months or without notice being given by him, the bank may consider such a request and waive the period or require ment of notice if it considers it fit to do so.
It does not empower the bank to thrust a resignation on an employee with effect from a date different from the one on which he can make his resignation effective under the terms of the resig nation.
In the instant case, the employee had not requested the bank to reduce the period of notice or to waive the requirement of notice.
[617F; 618G] 4.
There are two ways of interpreting clause (2).
One is that the resignation of an employee from service being a voluntary act on his part he is entitled to choose the date with effect from which his resignation would be effective and give a notice to the bank accordingly.
The only restric tion is that the proposed date should not be less than three months from the date on which the notice is given.
In the instant case, the letter dated 21st January 1986, sent by the employee purporting to 614 resign with effect from 30th June, 1986 fully complied with the terms of this clause and so the resignation would have become effective only on that date.
The other interpretation is that when an employee gives a notice or resignation, it becomes effective on the expiry of three months from the date thereof.
On this interpretation the respondent 's resig nation would have taken effect on or about 21st April, 1986 even though he had mentioned a later date.
In either view of the matter, the respondent 's resignation did not become effective till 21st April, 1986 or 30th June, 1986.
The bank could not have accepted that resignation on any earlier date.
The letter dated 7th February, 1986 was, therefore, without jurisdiction.
[617A B; 618A B, G H] The respondent had thus continued to be in service till the 21st April, 1986 or 30th June, 1986.
But, by that time, he had exercised his right to withdraw the resignation.
Since the withdrawal letter was written before the resigna tion became effective, the resignation stood withdrawn with the result that the respondent continued to be in the serv ice of the bank.
[619A B] Delhi Electric Supply Undertaking vs Tara Chand, , distinguished.
|
vil Appeal Nos. 837 and 838 of 1989.
From the Judgment and Order dated 12.9.1988 of the High Court of Punjab and Haryana in C.W.P. Nos. 6871 and 6485 of 1988 respectively.
Kapil Sibal, Rajiv Dhawan and Ms. Kamini Jaiswal for the Appellants.
P.P. Rao, R.K. Gupta, Janendra Lal, Ms. Purnima Bhat and E.C. Agarwala for the Respondents.
The Judgment of the Court was delivered by DUTT, J.
Special leave is granted in both these mat ters.
Heard learned Counsel for the parties.
These two appeals preferred by the appellants, Deepak Sibal and Miss Ritu Khanna, are directed against the common judgment of the Punjab & Haryana High Court whereby the High Court dismissed the two writ petitions filed by the appel lants and also some other writ 696 petitions challenging the constitutional validity of the rule for admission in the evening classes of the Three Years LL.B. Degree Course conducted by the Department of Laws of the Punjab University.
The impugned rule that was published in the prospectus for the year 1988 89 relating to admission to 150 seats in the evening classes in the Three Year LL.B. Degree Course is extracted as follows: "Admission to evening classes is open only to regular employees of Government/Semi Govern ment institutions/ affiliated colleges/Statu tory Corporations and Government Companies.
A candidate applying for admission to the evening classes should attach No Objection/Permission letter from his present employer with his application for admission.
" It is not disputed that there are 150 seats in the morning classes and another 150 seats in the evening class es.
In both the morning and evening classes reservation has been made for scheduled castes, scheduled tribes, backward classes, physically handicapped persons, outstanding and defence personnel.
In the morning classes out of 150 seats, 64 seats are reserved for scheduled castes, scheduled tribes, backward classes etc.
and the remaining 86 seats are allotted to general students selected on merit basis.
Simi larly in the evening classes, the remaining 86 seats are also reserved for regular employees of Government/Semi Government institutions etc.
, as mentioned in the impugned rule for admission.
The appellant, Deepak Sibal, passed the Bachelor of Commerce Examination from the University of Punjab in June, 1981 securing 61.5 per cent marks in the aggregate.
On June 1, 1988, he was appointed to the post of Accountant in Agro Chem Punjab Ltd. with effect from June 2, 1988 on probation for a period of six months.
Agro Chem Punjab Ltd. is stated to be a joint venture with Punjab Agro Corporation Ltd., Chandigarh, an Undertaking of the Punjab Government.
On July, 18, 1988, the appellant, Deepak Sibal, applied for admission in the evening classes of the Punjab Universi ty for the Three Year LL.B. Degree Course with a 'No Objec tion Certificate ' from his employer dated July 18, 1988.
He was granted an interview sometime in the first week of August, 1988, but he was not selected.
On enquiry, he came to know that although his position was 29 in the merit list, he was declared ineligible because he was an employee of a 697 Public Limited Company and did not fall within the exclusive categories, as mentioned in the impugned rule, to which admission in the evening classes was restricted.
The other appellant, namely Miss Ritu Khanna, passed the Bachelor of Arts Examination from the Punjab University securing 4 18 marks out of 650 marks.
She was temporarily appointed to the post of Helper in the office of the Direc tor, Water Resources, Punjab.
She also applied for admission in the evening classes of the Three Year LL.B. Degree Course of the University with all requisite certificates on July 18, 1988.
She was granted an interview on July 30, 1988 and although her position in the merit list was 19, she was not selected for admission on the ground that she was only a temporary employee.
Both the appellants, being aggrieved by the refusal of the University to admit them in the evening classes of the Three Year LL.B. Degree Course, filed two separate writ petitions in the Punjab & Haryana High Court challenging, inter alia, the constitutional validity of the impugned rule.
Five other writ petitions were also filed by the candidates who were refused admission in the evening classes in view of the impugned rule.
At the hearing of the writ petitions before the High Court, it was contended on behalf of the petitioners including the appellants, that the im pugned rule was violative of Article 14 of the Constitution.
The High Court overruled the contention and, as stated already, dismissed the writ petitions.
Hence these two appeals by the two appellants.
It is now well settled that Article 14 forbids class legislation, but does not forbid reasonable classification.
Whether a classification is a permissible classification under Article 14 or not, two conditions must be satisfied, namely, (1) that the classification must be rounded on an intelligible differentia which distinguishes persons or things that are grouped together from others left out of the group, and (2) that the differentia must have a rational nexus to the object sought to be achieved by the statute in question.
By the impugned rule, a classification has been made for the purpose of admission to the evening classes.
The ques tion is whether the classification is a reasonable classifi cation within the meaning of Article 14 of the Constitution.
In order to consider the question as to the reasonableness of the classification, it is necessary to take into account the objective for such classification.
It has been averred in the written statement of Dr. Balram Kumar Gupta, Chair man, Depart 698 ment of Laws, Punjab University, the respondent No. 2, filed in the High Court, that the object of starting evening classes was to provide education to bona fide employees who could not attend the morning classes on account of their employment.
The object, therefore, was to accommodate bona fide employees in the evening classes, as they were unable to attend the morning classes on account of their employ ment.
Admission to evening classes is not open to the em ployees in general including private sector employees, but it is restricted to regular employees of Government/Semi Government institutions etc.
, as mentioned in the impugned rule.
In other words, the employees of Government/Semi Government institutions etc. have been grouped together as a class to the exclusion of employees of private establish ments.
It appears that in or about the year 1986, admission to evening classes was open to those who were in bona fide employment including self employed persons.
In supersession of that rule, the impugned rule was flamed excluding private sector employees and self employed persons.
In the counter affidavit filed in this Court on behalf of the respondents by the Registrar of the Punjab University, an explanation has been given why the University flamed the impugned rule restricting the admission in the evening classes open to Government/SemiGovernment institutions etc.
The explanation, as given in the counteraffidavit, is extracted below: "It is submitted that since the morning class es are open to all, the merit is much higher, whereas since the admission to the evening classes is only for regular employees of Government/Semi Government etc.
the merit goes lower.
It is in this view of the matter that in the past also, the Department of Law found that various certificates by employees were found to be incorrect and obtained by appli cants only with a view to get admission to the evening classes and, thereafter, applied for transfer to the morning classes.
On account of the past experience it was felt that the admission to the Law Courses in the morning be kept open to all persons whether employed or unemployed but the admission to the evening classes be restricted to only those who will be genuine and regular employee.
Since the Government/Semi Government and similar other institutions as mentioned in the prospectus are actually involved in lot of litigation, it was felt that imparting legal education to the employees of such institutions would be in public 699 interest.
It is submitted that it is in view of this practice of issuing of certificates by private employers in the past that the Depart ment of Law was compelled to restrict the admission of students of evening classes as has been done.
Thus, the respondents have sought to justify the exclu sion of private employees restricting admission to evening classes only to the Government/Semi Government and similar other institutions principally on two grounds, namely, (1) production of bogus certificates of employment from private employers, and (2) imparting of legal education to the employees of the Government/Semi Government and other insti tutions, as mentioned in the impugned rule, in public inter est.
Besides the above two grounds, Mr. P.P. Rao, learned Counsel appearing on behalf of the respondent, has added two more grounds, namely, (1) a candidate should have an assured tenure of employment likely to continue for three years, and (2) as far as possible, there should be no possibility of wastage of a seat.
It is submitted that employees of only Government/Semi Government institutions etc.
have an assured tenure of employment and if the admission in the evening classes is restricted to such employees, there would be no possibility of any wastage of a seat and the University will not have to engage itself in finding out whether or not a certificate produced by an employee of a private establish ment is a bogus certificate and whether such employee has an assured tenure of employment likely to continue for three years.
In upholding the validity of the impugned rule, it has been observed by the High Court that the Government employees have protection of Article 311 of the Constitu tion, which non Government employees do not have and that employees of SemiGovernment institutions are also on the same footing.
It is apparent that in framing the impugned rule, the respondents have deviated from its objective for the start ing of evening classes.
The objective was to accommodate in the evening classes employees in general including private employees who were unable to attend morning classes because of their employment.
In this backdrop of facts, we are to consider the reasonableness of the classification as contem plated by the provision of Article 14 of the Constitution.
It is difficult to accept the contention that the Gov ernment employees or the employees of Semi Government and other institutions, as mentioned in the impugned rule, stand on a different footing from the employees of private con cerns, in so far as the question of admission to evening classes is concerned.
It is true that the service condi 700 tions of employees of Government/Semi Government institu tions etc, are different, and they may have greater security of service, but that hardly matters for the purpose of admission in the evening classes.
The test is whether the employees of private establishments are equally in a disad vantageous position like the employees of Government/Semi Government institutions etc.
in attending morning classes.
There can be no doubt and it is not disputed that both of them stand on an equal footing and there is no difference between these two classes of employees in that regard.
To exclude the employees of private establishments will not, therefore, satisfy the test of intelligible differentia that distinguishes the employees of Government/Semi Government institutions etc.
grouped together from the employees of private establishments.
It is true that a classification need not be made with mathematical precision but, if there be little or no difference between the persons or things which have been grouped together and those left out of the group, in that case, the classification cannot be said to be a reasonable one.
It is, however, submitted on behalf of the respondents that the employees of private establishments have been left out as it is difficult for the University to verify whether or not a particular candidate is really a regular employee and whether he will have a tenure for at least three years during which he will be prosecuting his studies in the Three Year LL.B. Degree Course.
It is submitted that in making the classification, the surrounding circumstances may be taken into account.
In support ' of that contention, much reliance has been placed on the decision of this Court in Ram Krishna Dalmia vs Shri Justice S.R. Tendolkar, ; In that case, it has been observed by Das, C.J. that while good faith and knowledge of the existing condi tions on the part of a legislature are to be presumed, if there is nothing on the face of the law or the surrounding circumstances brought to the notice of the court on which the classification may reasonably be regarded as based, the presumption of constitutionality cannot be carried to the extent of always holding that there must be some undisclosed and unknown reasons for subjecting certain individuals or corporations to hostile or discriminating legislation.
It follows from the observation that surrounding circumstances may be taken into consideration in support of the constitu tionality of a law which is otherwise hostile or discrimina tory in nature.
But the circumstances must be such as to justify the discriminatory treatment or the classification subserving the object sought to be achieved.
In the instant case, the circumstances which have been relied on by the respondents, namely, the possibility of production by them of bogus 701 certificates and insecurity of their services are not, in our opinion, such circumstances as will justify the exclu sion of the employees of private establishments from the evening classes.
We are also unable to accept the contention of the respondents that such exclusion of the employees of private establishments is justified on the ground of administrative convenience.
The decision in Pannalal Binjraj vs Union of India, ; relied on by the respondents does not, in our opinion, lay down any such proposition of law.
In that case, the provision of section 5(7)A of the Income Tax Act 1982 was, inter alia, challenged as ultra vires Article 14 of the Constitution inasmuch as it was discriminatory.
Section 5(7A) confers power on the Commissioner of Income Tax and the Central Board of Revenue, inter alia, to trans fer any case from one Income Tax Officer to another.
It has been observed by this Court that in order to minimise the inconvenience of the assessee, the authority concerned may transfer the case of such assessee to the Income Tax Officer who is nearest to the area where it would be convenient for the assessee to attend and if, on account of administrative exigencies, this is not possible and the assessee requests that the examination of accounts or evidence to be taken should be in a place convenient to him, the Income Tax Officer comply with the request of the assessee by holding the hearing at the place requested.
It is manifestly clear from the observation that the power of transfer is not exercised for administrative convenience, but for the con venience of the assessee.
In the instant case, there is no question of any administrative inconvenience.
The respond ents have not placed any material before the High Court or in this Court as to in how many cases they had come across such bogus certificates produced by private employees during the time the admission to evening classes was open also to private employees.
It may be that there were one or two cases of production of bogus certificates, but that cannot be a ground for the exclusion of all private employees from the benefit of getting legal education in the evening class es.
In the circumstances, we are not at all impressed with the contention that in order to avoid production of bogus certificates of employment from the private employers and having regard to the fact that employees of Government/Semi Government institutions etc. have an assured tenure of employment likely to continue for three years, the private employees were excluded for the purpose of admission to the evening classes.
By the impugned rule, admission to evening classes is restricted to regular employees of Gov ernment/Semi Government 702 institutions etc.
There is no material to indicate that by the expression "regular employees" it is intended to include only those employees who will have an assured tenure of service for three years, that is to say, co extensive with the period of the Three Year LL.B. Degree Course.
The ex pression "regular employees", in our opinion, normally means bona fide employees.
Such bona fide employees may be perma nent or temporary.
All that the University can insist is that one should be a bona fide employee and if there be materials for show that a candidate for admission in the evening classes is a bona fide employee the University, in our opinion, cannot further insist on an assured tenure of service of such an employee for a period of three years.
Be that as it may, the reason for exclusion of private employ ees on the ground that there may not be an assured tenure of employment likely to continue for three years, not only does not stand scrutiny but also is unfair and unjust and cannot form the basis of such an exclusion.
In this connection, we may also examine another ground restricting the admission in the evening classes to the employees of Government/Semi Government and other institu tions, as mentioned in the impugned rule, namely, imparting of legal education to such employees.
According to the respondents, imparting of legal education to the employees of Government/Semi Government and other institutions, as mentioned in the impugned rule, would be in public interest.
Indeed, in the counter affidavit filed in this Court on behalf of the respondents by the Registrar of the Universi ty, that is also the objective for framing the impugned rule.
The counter affidavit is, however, silent as to why imparting of legal education to the employees of Government/Semi Government institutions etc.
would be in public interest.
It is not understandable why Government/SemiGovernment employees in general should be imparted legal education and what sort of public interest would be served by such legal education.
It may be that certain sections of Government employees require legal education but, surely, Government employees in general do not require legal education.
A similar rule, which was framed by the Government of Kerala reserving 100 per cent seats to Government and quasi Government employees irrespective of their category, came to be considered by the Kerala High Court in Jolly vs State of Kerala, AIR 1974 Kerala 178.
In that case, it has been observed by the Kerala 'High Court that there may be some posts in Government service, some even in public corpo rations which may require incumbents who may be able to perform their functions very efficiently with a legal back ground provided to 703 them, but this cannot be said of all employees whether of the State Government or Central Government or of the public corporations or Government owned companies.
In our opinion, there is much force in the observation of the Kerala High Court.
It cannot be laid down that only Government employees require legal education and not private employees.
Certain private sector employees may require legal education in the interest of the establishments of which they are employees.
It is difficult to understand the logic of the rule re stricting admission in the evening classes to employees of Government/Semi Government institutions etc.
on the plea that such employees require legal education in public inter est.
In considering the reasonableness of classification from the point of view of Article 14 of the Constitution, the Court has also to consider the objective for such classifi cation.
If the objective be illogical, unfair and unjust, necessarily the classification will have to be held as unreasonable.
In the instant case, the foregoing discussion reveals that the classification of the employees of Govern ment/Semi Government institutions etc.
by the impugned rule for the purpose of admission in the evening classes or Three Year LL.B. Degree Course to the exclusion of all other employees, is unreasonable and unjust, as it does not sub serve any fair and logical objective.
it is, however, sub mitted that classification in favour of Government and public sector is a reasonable and valid classification.
In support of that contention, the decision in Hindustan Paper Corpn.
Ltd. vs Government of Kerala, ; has been relied on by the learned Counsel for the respondents.
In that case, it has been observed that as far as Government undertakings and companies are concerned, it has to be held that they form a class by themselves, since any project that they may make would in the end result in the benefit to the members of the general public.
The Government and public sector employees cannot be equated with Government undertak ings and companies.
The classification of Government under takings and companies may, in certain circumstances, be a reasonably classification satisfying the two tests mentioned above, but it is difficult to hold that the employees of Government/Semi Government institutions etc., as mentioned in the impugned rule, would also constitute a valid classi fication for the purpose of admission to evening classes of Three Year LL.B. Degree Course.
The contention in this regard, in our opinion, is without any substance.
The next contention of the respondents is that the University, being an educational institution, is entitled to identify the sources for 704 admission to the evening classes and that has been done by the University by the impugned rule and that cannot be challenged as violative of Article 14 of the Constitution.
In support of this contention, much reliance has been placed on behalf of the respondents on a decision of this Court in Chitra Ghosh vs Union of India, ; relating to reservation of seats in a medical college.
In upholding such reservation of seats it has been observed by this Court as follows: "It is the Central Government which bears the financial burden of running the medical col lege.
It is for it to lay down the criteria for eligibility.
From the very nature of things it is not possible to throw the admis sion open to students from all over the coun try.
The Government cannot be denied right to decide from what sources the admission will be made.
" This observation in Chitra Ghosh 's case has also been relied on by the High Court.
It has been contended by the learned Counsel for the respondents that the question of reasonable classification has nothing to do with the identi fication of sources for admission by an educational institu tion.
We are unable to accept the contention.
It is true that an educational institution is entitled to identify sources from which admission will be made to such institu tion, but we do not find any difference between identifica tion of a source and a classification.
If any source is specified, such source must also satisfy the test of reason able classification and also that it has a rational nexus to the object sought to be achieved.
Indeed in Chitra Ghosh 's case, it has also been observed that if the sources are properly classified whether on territorial, geographical or other reasonable basis, it is not for the courts to inter fere with the manner and method of making the classifica tion.
It is very clear from this observation that the sources must be classified on reasonable basis, that is to say, it cannot be classified arbitrarily and unreasonably.
The principle laid down in Chitra Ghosh 's case has been reiterated by this Court in a later decision in D.N. Chan chala vs State of Mysore, [1971] Supp.
SCR 608.
It has been very clearly laid down by this Court that Government col leges are entitled to lay down criteria for admission in its own colleges and to decide the sources from which admission would be made, provided of course, such classification is not arbitrary and has a rational basis and a reasonable connection with the object of the rules.
Thus, it is now well established that a classification by the identification of a source must not be arbitrary, but should 705 be on a reasonable basis having a nexus with the object sought to be achieved by the rules for such admission.
It follows from the above discussion that the impugned rule, with which we are concerned, having made a classifica tion which cannot be justified on any reasonable basis, must be held to be discriminatory and violative of Article 14 of the Constitution.
It is, however, submitted by Mr. P.P. Rao that in case the Court holds against the constitutional validity of the impugned rule, the entire rule may not be quashed, but only such portion of it which is found to be discriminatory in nature and, as such, invalid.
It is con tended that if the impugned rule had not restricted the admission to evening classes to the employees of Government/Semi Government institutions etc.
but had provid ed for admission to regular employees including employees of private sectors, the classification would have been a rea sonable one and having a rational nexus to the object sought to be achieved by the rule, namely, to accommodate the regular employees in the evening classes, as they would be unable to attend the morning classes.
Accordingly, it is submitted that instead of striking down the whole of the impugned rule, a full stop may be put after the words "regular employees" in the impugned rule and the remaining part of the rule after the said words can be struck down as discriminatory and violative of Article 14 of the Constitu tion.
If that be done, the rule will be read as "Admission to evening classes is open only to regular employees".
Prima facie it appears that this part, which is sought to be retained, is not severable from the remaining part of the rule.
In R.M.D. Chamarbaugwalla vs Union of India, ; it has been laid down by this Court that if the valid and invalid provisions are so inextricably mixed up that they cannot be separated from one another then the invalidity of the portion must result in the invalidity in its entirety.
In the instant case, the invalid portion is inextricably mixed up with the valid portion of the rule and, accordingly, the entire rule requires to be struck down.
Our attention has, however, been drawn to a later decision of this Court in B. Prabhakar Rao vs State of Andhra Pradesh, [1985] Supp.
SCC 432.
In this case, a Bench of Three Judges of this Court struck out the word 'not ' from the provisions of clause 3(1) of Ordinance 24 of 1984 and section 4(1) of the Act 3 of 1984 so as to bring those provisions to conform to the requirements of Article 14 of the Constitution.
We do not think we should try to bring the impugned rule in conformity with the provision of Article 14 of the constitution by putting a full stop after the words "regular employees" and striking down the remaining part of the impugned rule on the basis of the same principle as in Prabhakar Rao 's case (supra).
For, it has 706 been stated by Mr. P.P. Rao, learned Counsel for the re spondents; that the respondents will frame a fresh rule for admission in the evening classes in conformity with and in the light of the decision of this Court in the instant case.
But, the next important question is even if the restric tion from the impugned rule is removed and the admission to evening classes is made open to regular or bona fide employ ees including Government and non Government employees, whether reservation of cent percent seats in the evening classes for the employees will be justified and reasonable.
It has been urged by Mr. Kapil Sibal, learned Counsel ap pearing on behalf of the appellants, that reservation of 100 per cent seats in an educational institution for a specified class of persons is not at all permissible.
The University, being an autonomous body, must be accessible, and such access must be based on the principle that those who are the most meritorious must be preferred to those who are less meritorious.
This principle is, however, subject to the provision of Article 15 of the Constitution of India which allows positive discrimination, despite the merit principle, on the basis that the equality clause will not be meaningful unless equal opportunity is given to such classes enumerated by Article 15 by giving them preferential treatment.
Apart from the provision of Article 15, reservation may be made on the basis of doctrine of source only with a view to giving equal opportunity to some disadvantaged classes for their education but, learned Counsel submits, whether the reserva tion is made under Article 15(4) of the Constitution or otherwise on the theory of identification of source, in any event, such reservation cannot be 100 per cent at the cost of merit.
In our opinion, the above contention is not without force.
In this connection, we may refer to a decision of this Court in M.R. Balaji vs State of Mysore, [1963] Supp.
1 SCR 439.
In that case, the State of Mysore passed an order reserving 68 per cent of seats in the engineering and medi cal colleges and other technical institutions for the educa tionally and socially backward classes and Scheduled Castes and Scheduled Tribes, and left only 32 per cent of seats for the merit pool.
In striking down such reservation, it was observed by this Court that it would be extremely unreasona ble to assume that in enacting Article 15(4), Parliament intended to provide that where the advancement of the back ward classes or the Scheduled Castes and Scheduled Tribes was concerned, the fundamental rights of the citizens con stituting the rest of the society were to be completely and absolutely ignored.
Speaking generally and in a broad way, it was observed by this Court 707 that a special provision should be less than 50 per cent and the actual percentage must depend upon the relevant prevail ing circumstances in each case.
Thus, the provision of Article 15(4) does not contemplate to reserve all the seats or the majority of the seats in an educational institution at the cost of the rest of the society.
The same principle should also apply with equal force in the case of cent percent reservation of seats in educational institutions for a certain class of persons to the exclusion of meritorious candidates.
In Pradeep Jain vs Union of India, ; , the question of reservation of seats in medical colleges for MBBS and 'postgraduate medical courses on the basis of domicile or residential qualification and institutional preference, came to be considered by this Court.
Bhagwati, J. (as he then was) speaking for the Court observed that the effort must always be to select the best and most meritori ous students for admission to technical institutions and medical colleges by providing equal opportunity to all citizens in the country and expressed an opinion that such reservation should, in no event, exceed the outer limit of 70 per cent which again needs to be reduced.
In Pradeep Jain 's case (supra), no reason appears to have been given for the observation relating to the reserva tion of 70 per cent of seats.
In a later decision of this Court in Nidamarti Maheshkumar vs State of Maharashtra, ; a more or less similar question regarding regionwise reservation of seats in medical colleges for admission to MBBS Course also came to be considered, and this time Bhagwati, C.J., speaking for the Court, gave the reason for reservation of 70 per cent of seats.
It was observed by the learned Chief Justice as follows: "In the first place it would cause a consider able amount of hardship and inconvenience if students residing in the region of a particu lar university are compelled to move to the region of another university for medical education which they might have to do if selection for admission to the medical col leges in the entire State were to be based on merit without any reservation or preference regionwise.
It must be remembered that there would be a large number of students who, if they do not get admission in the medical college near their residence and are assigned admission in a college in another region on the basis of relative merit, may not be able to go to such other medical college on account of lack of resources and facilities and in the result, they 708 would be effectively deprived of a real oppor tunity for pursuing the medical course even though on paper they would have got admission in the medical college.
The opportunity for medical education provided to them would be illusory and not real because they would not be able to avail of it.
Moreover some diffi culty would also arise in case of girls be cause if they are not able to get admission in the medical college near the place where they reside they might find it difficult to pursue medical education in a medical college situat ed in another region where hostel facilities may not be available and even if hostel facil ities are available, the parents may hesitate to send them to the hostels.
We are therefore of the view that reservation or preference in respect of a certain percentage of seats may legitimately be made in favour of those who have studied in schools or colleges within the region of a particular university, in order to equalise opportunities for medical admission on a broader basis and to bring about real and not formal, actual and not merely legal, equality.
The only question is as to what should be the extent of such reservation or preference.
But on this question we derive considerable light from the decision in Pra deep Jain case [1984] 3 SCC 654 where we held that reservation based on residence require ment or institutional preference should not exceed the other limit of 70% of the total number of open seats after taking into account other kinds of reservations validly made and that the remaining 30% of the open seats at the least should be made available for admis sion to students on all India basis irrespec tive of the State or the university from which they come.
We would adopt the same principle in case of regionwise reservation or prefer ence and hold that not more than 70% of the total number of open seats in the medical college or colleges situate within the area of jurisdiction of a particular university, after taking into account other kinds of reserva tions validly made, shall be reserved for students who have studied in schools or col leges situate within the region and at least 30% of the open seats shall be available for admission to students who have studied in schools or colleges in other regions within the State.
" In Pradeep Jain 's case (supra), although it was stated that the outer limit of such reservation should not exceed 70 per cent of the 709 total number of open seats after taking into account other kinds of reservations validly made, yet the Court expressed the view that this outer limit 70 per cent needs to be reduced.
In the instant case, the respondents have reserved 64 seats out of 150 seats for Scheduled Castes, Scheduled Tribes, backward classes, etc.
In our opinion, out of the remaining 86 seats, reservation of seats for regular or bona fide employees for admission to evening classes shall, in no event, exceed the limit of 50 per cent.
The admission to the remaining 43 seats will be open to general candidates on merit basis.
Thus, while the respondents will be at liberty to reserve seats for regular or bona fide employees for admission to evening classes, such reservation shall not exceed 50 per cent after deducting the number of seats reserved for Scheduled Castes, Scheduled Tribes, backward classes, etc.
The only question which remains to be considered is whether the appellants are entitled to any relief.
It has been already noticed that the appellant, Deppak Sibal, was refused admission on the ground that he was an employee of a Public Limited Company which did not fall within the exclu sive categories, as mentioned in the impugned rule, to which admission to the evening classes was restricted.
The appel lant was appointed on probation for a period of six months in Agro Chem Punjab Ltd. with effect from June 2, 1988.
In proof of his appointment, the appellant produced before the respondents a certificate of employment dated June 1, 1988 issued by the Director of Agro Chem Punjab Ltd. According to the respondents, the certificate of employment produced by the appellant is not a genuine one inasmuch as the appellant was admitted to the first semester in the LL.B. Course of the Himachal Pradesh University at Simla on July 12, 1988.
We fail to understand how it can be said that the certifi cate of employment of the appellant in Agro Chem Punjab Ltd. was not a genuine certificate, simply because the appellant was admitted in the first semester of the LL.B. Course of the Himachal Pradesh University on July 12, 1983.
It is common knowledge that a candidate very often seeks admission in more than one college or university.
The appellant also made an application for admission to the LL.B. Course in Himachal Pradesh University and he was admitted.
It may be that after the respondents refused to admit the appellant in the evening classes, the appellant had to join LL.B. Course of the Himachal Pradesh University after giving up his service in Agro Chem Punjab Ltd. But, when the appellant made the application for admission in the evening classes of the Law Department of the Punjab University, he was in employment of Agro Chem Punjab Ltd. We do not find any reason to doubt the genuineness of the certificate of em ployment in Agro Chem Punjab Ltd. It is 710 the case of the appellant that to prosecute his studies in LL.B. Course in Himachal Pradesh University will put him to great hardship and inconvenience and it will be convenient for him to prosecute his studies in the University of Pun jab.
Similarly the other appellant, Miss Ritu Khanna, was refused admission by the respondents on the ground that her appointment was purely temporary, although her position was 19 in the merit list.
It has been already found that the impugned rule is discriminatory and is violative of Article 14 of the Consti tution and, as such, invalid.
The refusal by the respondents to admit the appellants in the evening classes of the Three Year LL.B. Degree Course was illegal.
The appellants are, therefore, entitled to be admitted in the evening classes.
It is, however, submitted on behalf of the respond ents that all the seats have been filled up and, according ly, the appellants cannot be admitted.
As injustice was done to the appellants, it will be no answer to say that all the seats are filled up.
For the reasons aforesaid, the judgment of the High Court is set aside and the impugned rule for admission in the evening classes is struck down as discriminatory and violative of Article 14 of the Constitution and accordingly, invalid.
We, however, make it clear that the striking down of the im pugned rule shall not, in any manner whatsoever, disturb the admissions already made for the session 1988 89.
The re spondents are directed to admit both the appellants in the second semester which has commenced from January, 1989 and shall allow them to complete the Three Year LL.B. Degree Course, if not otherwise ineligible on, the ground of unsat isfactory academic performance.
As was directed by this Court in Ajay Hasia vs Khalid Mujib Sehravardi, ; , the seats allocated to the appellants will be in addi tion to the normal intake of students in the college.
Both the appeals are allowed.
There will, however, be no order as to costs.
N.P.V Appeal allowed.
| IN-Abs | The prospectus for the year 1988/89, for admission in the evening classes of the Three Year LL.B. Degree Course conducted by the Department of Laws of the Punjab Universi ty, prescribed that admission to evening classes was open only to regular employees of Government/ Semi Government institutions/affiliated Colleges/Statutory Corporations and Government Companies and that a candidate should attach No Objection/Permission letter from his employer with his application for admission.
Out of the 150 seats available in the evening classes, 64 were reserved for scheduled castes, scheduled tribes, backward classes, physically handicapped persons, outstanding sportsmen and defence personnel and the remaining 86 were reserved for regular employees of Govern ment/Semi Government institutions etc.
, as mentioned in the aforesaid rule for admission.
690 The two appellants, one employed in a Limited Company, a joint venture with an Undertaking of the State Government and the other working as a temporary employee in a State Government office, applied for admission in the evening classes with 'No Objection Certificates ' from their employ ees.
Both were interviewed but were not.
selected, although their positions in the merit list were 29 and 19 respective ly, on the ground that wile one of the appellants was an employee of a Public Limited Company and did not fall within the exclusive categories as mentioned in the impugned rule, the other was only a temporary employee.
Both the appellants filed writ petitions in the High Court, challenging the validity of the impugned rule.
Peti tions were also filed by five other refused candidates.
It was contended that the impugned rule was violative of article 14 of the Constitution.
The High Court dismissed the writ petitions.
While upholding the validity of the impugned rule, the High Court held that Government employees had protection of article 311 of the Constitution which non Govern ment employees did not have and that the employees of the Semi Government institutions were also on the same footing.
Hence the two appellants filed appeals in this Court.
In the counter affidavit filed in this Court the re spondents sought to justify the exclusion of private employ ees, restricting admission to evening classes only to the Government employees and similar other institutions on the grounds of production of bogus certificates of employment from private employers and imparting of legal education to the employees of the Government/Semi Government and other institutions as in public interest.
It was also contended that a candidate should have an assured tenure of employment likely to continue for three years and that, as far as possible, there should be no possibility of wastage of a seat.
Allowing the appeals, HELD: 1.1 Article 14 forbids legislation, but does not forbid reasonable classification.
Whether a classification is a permissible classification under article 14 or not, two conditions must be satisfied, namely, (1) that the classifi cation must be rounded on an intelligible differentia which distinguishes persons or things that are grouped together from others left out of the group, and (2) that the differ entia must have a rational nexus to the object sought to be achieved by the statute in question.
[697F] 691 1.2 In considering the reasonableness of classification from the point of view of article 14 of the Constitution, the Court has to consider the objective for such classification.
If the objective be illogical, unfair and unjust, necessari ly the classification will have to be held as unreasonable.
[703C D] 1.3 No doubt, a classification need not be made with mathematical precision but, if there be little or no differ ence between the persons or things which have been grouped together and those left out of the group, then the classifi cation cannot be said to be a reasonable one.
[700C] 1.4 Surrounding circumstances may be taken into consid eration in support of the constitutionality of a law which is otherwise hostile or discriminatory in nature.
But the circumstances must be such as to justify the discriminatory treatment or the classification subserving the object sought to be achieved.
[700G H] Ram Krishna Dalmia vs Shri Justice S.R. Tendolkar, ; , relied on.
1.5 A classification by the identification of sources most not be arbitrary but should be on a reasonable basis having a nexus with the object sought to be achieved.
[704H;705A4] Chitra Ghosh vs Union of India, ; and D.N. Chanchala vs State of Mysore, [1971] Supp.
SCR 608 relied on.
1.6 In the instant case, the objective of starting the evening classes was to accommodate in the evening classes employees in general including private employees who were unable to attend morning classes because of their employ ment.
However, in framing the impugned rule, the respondents have deviated from its objective for starting the evening classes.
[699F G] The classification of the employees of Government/Semi Government institutions etc.
by the impugned rule for the purpose of admission in the evening classes of Three Year LL.B. Degree Course to the exclusion of all other employees, is unreasonable and unjust, as it does not subserve any fair and logical objective.
[703D] The Government and public sector employees cannot be equated with Government undertaking and companies.
The classification of 692 Government undertakings and companies may, in certain cir cumstances, be a reasonable classification satisfying the tests laid down but the employees of Government/Semi Govern ment institutions etc., as mentioned in the impugned rule, cannot be held to constitute a valid classification for the purpose of admission to evening classes of Three years LL.B. Degree Course.
[703F G] Hindustan Paper Corpn.
Ltd. vs Government of Kerala, ; , distinguished.
1.7 The Government employees or the employees of Semi Government and other institutions cannot stand on a differ ent footing from the employees of private concerns, insofar as the question of admission to evening classes is con cerned.
[699H] Though the service conditions of employees of Govern ment/SemiGovernment institutions etc.
are different, and they may have greater security of service, that hardly matters for the purpose of admission in the evening classes.
The test is whether both the employees of private establish ments and the employees of Government/Semi Government insti tutions etc.
are equally in a disadvantageous position in attending morning classes.
There can be no doubt that both of them stand on an equal footing and there is no difference between these two classes of employees in that regard.
To exclude the employees of private establishments will not, therefore, satisfy the test of intelligible differentia that distinguishes the employees of Government/Semi Government institutions etc., grouped together from the employees of private establishments.
[700A C] 1.8 Though an educational institution is entitled to identify sources from which admission will be made in such institution, there is no difference between identification of the sources and a classification.
If any source is speci fied, such source must also satisfy the test of reasonable classification and also that it has a rational nexus with the object sought to be achieved.
The sources must be clas sified on reasonable basis, that is to say, it cannot be classified arbitrarily and unreasonably.
The impugned rule does not satisfy the test laid down in this regard.
[704D, F] Chitra Ghosh vs Union of India, ; and D.N. Chanchala vs State of Mysore, [1971] Supp.
SCR 608, relied on.
1.9 The circumstances relied on by the respondents, namely, the 693 possibility of production by the candidates of bogus certif icates and insecurity of their services are not such circum stances as will justify the exclusion of the employees of private establishments from the evening classes.
[700H; 701A] Ram Krishna Dalmia vs Shri Justice section R. Tendolkar, ; , explained.
1.10 The exclusion of employees of private establish ments cannot also be justified on administrative grounds.
The respondents have not placed any material before the High Court or in this Court as to in how many cases they had come across bogus certificates produced by private employees during the time the admission to evening classes was open also to private employees.
It may be that there were one or two cases of production of bogus certificates, but that cannot be a ground for the exclusion of all private employ ees from the benefit of getting legal education in the evening classes.
[701E F] Pannalal Binjraj vs Union of India, ; distin guished 1.11 There is no material to indicate that by the ex pression "regular employees" it is intended to include only those employees who will have an assured tenure of service for three years, that is to say, co extensive with the period of the Three Year LL.B. Degree Course.
The expression "regular employees", normally means bona fide employees.
Such bona fide employees may be permanent or temporary.
All that the University can insist is that one should be a bona fide employee and if there be materials to show that a candidate for admission in the evening classes is a bona fide employee, the University cannot further insist on an assured tenure of service of such an employee for a period of three years.
The reason for exclusion of private employ ees on the ground that there may not be an assured tenure of employment likely to continue for three years, therefore, not only does not stand scrutiny but is also unfair and unjust and cannot form the basis of such an exclusion.
[702A C] 1.12 It is difficult to understand the logic of the rule restricting admission in the evening classes to employees of Government/SemiGovernment institutions etc.
on the plea that such employees require legal education in public interest.
It may be that certain sections of Government employees require legal education hut, surely Government employees in general do not require legal education.
Certain private sector employees may also require legal education in the interest of the 694 establishments of which they are employees.
It cannot, therefore, be laid down that only Government employees require legal education and not private employees.
[703B] Jolly vs State of Kerala, AIR 1974 Kerala 178, approved.
The impugned rule, having made a classification which cannot be justified on any reasonable basis, must be held to be discriminatory and violative of article 14 of the Constitu tion.
[705B] 2.
It is not possible to bring the impugned rule in conformity with the provision of article 14 by putting a full stop after the words "regular employees" and striking down remaining part of the impugned rule, so as to read "Admis sion to evening classes is open only to regular employees".
Prima facie, the part which is sought to be retained is not severable from the remaining part of the rule.
The invalid portion is inextricably mixed up with the valid portion of the rule and, accordingly, the entire rule requires to be struck down.
[705G H] R.M.D. Chamarbaugwalla vs Union of India, ; , relied on.
B. Prabhakar Rao vs State of Andhra Pradesh, [1985] Supp.
SCC 432, distinguished.
Article 15(4) does not contemplate to reserve all the seats or the majority of the seats in an educational insti tution at the cost of the rest of the society.
The same principle should also apply with equal force in the case of cent percent reservation of seats in educational institu tions for a certain class of persons to the exclusion of meritorious candidates.
[707A B] M.R. Balaji vs State of Mysore, [1963] Supp. 1 SCR 439; Pradeep Jain vs Union of India, ; and Nida marti Maheshkumar vs State of Maharashtra, ; , relied on.
In the instant case, the respondents have reserved 64 seats out of 150 seats for Scheduled Castes, Scheduled Tribes, backward classes etc.
Out of the remaining 86 seats, reservation of seats for regular or bona fide employees for admission to evening classes should, in no event, exceed the limit of 50 per cent.
The admission to the remaining 43 seats will be open to the general candidates on merit basis.
Thus, while the respondents will be at liberty to reserve seats for regular or bona fide 695 employees for admission to evening classes, such reservation should not exceed SO per cent after deducting the number of seats reserved for Scheduled Castes, Scheduled Tribes, backward classes etc.
[709B C] 4.
The impugned rule is discriminatory and violative of article 14 of the Constitution and is accordingly struck down as invalid.
The refusal by the respondents to admit the appellants in the evening classes of the Three Years LL.B. degree course was illegal.
The appellants are, therefore, entitled to he admitted in the evening classes.
However, the striking down of the impugned rule should not in any manner whatsoever disturb the admissions already made for the session 1988 89.
The respondents should admit the appellants in the second semester which has commenced from January, 1989 and allow them to complete the Three Year LL.B. degree course, if not otherwise ineligible an the ground of unsat isfactory academic performance.
The seats allocated to the appellants will be in addition to the normal intake of students in the college.
[710D F] Ajay Hasia vs Khalid Mujib Sehravardi, ; , relied on.
|
vil Appeal No. 840842 of 1989.
From the Judgment and Order dated 5.5.1988 of the Kerala High Court in M.F.A. Nos.
72/83,346/83 and 380 of 1983.
K.K. Venugopal, Shiv Pujan Singh and Miss Niranjana for the Appellant.
G. Vishwanath Iyer and K.R. Nambiar for the Respondents.
The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J.
Leave granted.
These appeals arise from the judgment and order of the High Court of Kerala, dated 5th May, 1988.
The High Court by the impugned judgment and order in M.F.A. Nos.
72,346 and 380 of 1983 allowed the appeals of the respondent the Govt.
of Kerala, against the judgment and decree dated 25th Sep tember, 1982 passed by the principal Sub Judge, Trivandrum in S.P. (Arbitration) Cases Nos. 184, 185 and 186 of 1982 by which the learned Sub Judge had upheld the awards by the arbitrator on the ground that it was not open to the court to sit in appeal over the decision of the arbitrator and the court could not adjudicate upon the justification for the conclusions arrived at by the arbitrator unless such awards were the result of corruption, fraud or when there were errors apparent on the face of the award.
The learned Sub Judge further held that there was no error apparent on the face of the record and there was no allegation of corruption or fraud.
The High Court reversed the said decision.
670 The questions involved in these appeals are: how should the court examine an award to find out whether it was a speaking award or not; and if it be a non speaking award, how and to what extent the court could go to determine whether there was any error apparent on the face of the award to be liable for interference by the court.
The other question that arises in this case is, to what extent can the court examine the contract in question though not incorpo rated or referred to in the award.
It may be noted that on 23rd December, 1976 the agree ment No. 25/SESPC/1976 77 was entered into between the appellant and the respondent herein for construction of masonary dam across Siruvani river.
Certain disputes arose between the appellant and the respondent.
These disputes were referred to the arbitrator named in the agreement.
The arbitrator passed the awards dated 12th, 16th and 23rd April, 1982, which were filed before the Sub Judge and the appellant prayed for passing of decree in terms of the awards.
The respondents filed petitions seeking to set aside the awards.
The learned Judge refused to set aside the awards and passed decrees in terms of the awards.
The Trial Court held that there was no merit in the contention regard ing limitation; and that the claims under the award were not barred by limitation.
It was further held by the learned Trial Judge that the arbitrator had not incorporated in the award any material for his conclusion nor had he incorporat ed the terms of contract between the parties.
Under such circumstances the award could not be set aside, especially when there was no error apparent on the face and that there was nothing to show that the arbitrator had mis conducted the proceedings or that the award had been improperly pro cured.
So the objection to the passing of the award was turned down.
Aggrieved thereby, the respondent filed appeals before the High Court.
The High Court by the impugned judgment dated 5.5.
1988 set aside the awards and the decree of the Trial Court on the ground that there were errors of law apparent on the face of the awards.
It is contended that the High Court in the circumstances of this case and in view of the settled principles of law, exceeded its jurisdiction by acting in the manner it purported to do.
It is, therefore, necessary to refer to the award to determine how has the arbitrator proceeded and what actually the arbitrator has decided.
The arbitrator has noted in the first award that the dispute related to the work of 'Siruvani drinking Water Supply project Construction of an Intak Tower and allied structures '; and observed that an estimate amounting to Rs. 17.45 lakhs was sanctioned for the work and it was entrusted on contract to the 671 claimant appellant herein, on tenders.
The value of the work arranged on contract was Rs. 14.45 lakhs as per the departmental estimate which the appellant undertook, as understood by the arbitrator, to carry out works at a total amount of Rs. 19.15 lakhs as per their tender.
The contract was embodied in agreement No. 18/SC/SPS/1977 78 dated 17.3.78 between the claimants on the one side and the re spondent No. 2 on behalf of the State of Kerala cited as respondent No. 1 on the other, in these proceedings.
The work had been taken up as part of the scheme for augmenting the drinking water supply to Coimbatore city from the yield of the Siruvani river and due to acute scarcity of water in the city, work was taken up on an urgent footing and it was understood by both the parties that time was of utmost importance in the execution of work.
The site for the work was handed over to the claimants on 17th December, 1977 and the work had to be completed by 15.6.1978.
Accordingly to the arbitrator, however, it was clear that the work could not be completed within the stipulated period due to various reasons for which each party blamed the other.
It was noted in the award that according to the respondents, after carry ing out the work to the tune of Rs.3.46 lakhs (approx.) against the accepted probably estimate of contract of Rs. 19.15 lakhs, the appellant refused to proceed with the.
balance work in spite of specific notices to them and so the respondents were constrained to terminate the contract at the risk and cost of the appellant.
Several efforts were made to re arrange the balance works and finally as per the situation obtaining then these works were to be expected to be completed at an excess cost of Rs.0.97 lakhs over the amount that would have been payable to the appellant as per the terms of the original contract.
The arbitrator, thereaf ter, noted that the appellant had raised in respect of the dispute which is the subject matter in the first award, specific claims for an amount of Rs. 5.97 lakhs in addition to release of their retention sum of Rs. 32,139 and the security deposit of Rs.38,400 payment of final bill for the work done including the above claims, interest on amounts awarded and cost of the arbitration proceedings.
It seems from the award of the arbitrator that the contention of the respondents had been that as per the terms of the contract, they were entitled to realise the excess cost on re arrangement of the balance works estimated at Rs.0.87 lakhs from the claimant and so they proposed to appropriate the retention sum of Rs.32,139 lying in their hands, the Security Deposit of Rs.38,400 and the sums due to the claimant by way of final bill on other works as well.
It was noted by the arbitrator that there was a prayer by the appellant for inspection of the site and the same was in spected on 9.12.80.
It was contended on behalf 672 of the claimant that the site of work was situated on the Western Ghats far away from human habitation in dense forest infected with wild animals at an elevation of about 600 M and subject to heavy precipitation of upto 400 cms.
annually and that access to the site was only from Coimbatore side in Tamil Nadu.
Several obstacles for access to the site were highlighted before the arbitrator.
Another important point on which considerable stress was laid was the compensation for losses occasioned to them on account of the unsatisfac tory law and order situation coupled with labour unrest, stoppages and threats and even physical violence on the agents of the appellant.
It was further highlighted that the termination of the contract at their risk despite the frus tration and impossibility of performance was clearly illegal and unjustified.
In the premises compensation was demanded for loss of equipments.
The arbitrator noted that the main point of defence of the respondent was that the time for the completion of the work forming part of the time bound pro gramme was six months from the date of handing over the site.
As the site was handed over on 16.12.77, the date of completion should have been 15.6.1978.
Of the difficulties arising out of the location of the site of the work, it was emphasised by the respondent that the conditions under which the contract had to be performed were within the knowledge of the parties, and there could not be any ground for claim ing any addition than those contemplated in the contract.
It was definitely further stated that the additional haulage was due to the alternate route via Thachampara which was opened on 15.2.1977 and that any claim on this account subsequent to the above date was unjustified.
Furthermore, that materials like sand, cement and steel were all issued in time and there could hardly be any justification regard ing delays on these account.
Regarding interruptions in power supply the respondents ' case was that such interrup tions were not unexpected at a site to which the power lines passed through virgin reserve area, and at any rate the claimants were not assured by the respondents of uninter rupted power and there was hardly any items of machinery belonging to the appellant which had remained idle for want of power.
It was further stated that the various extra items of works including the work on the quarries had been adequately paid for by them and no further payments were due to the appellant; that there was no serious deterioration of the law and order situation; and that the losses were due to the conduct of the claimant and the materials left over by the claimant at the end of the second working seasons that had been taken over by them, duly accounted for and the credit thereof given in the final bill.
It was further reiterated by the respondent that the work 673 was not completed within the period agreed and, therefore, the respondent issued notice to resume the work and on the failure of the claimant to re start the work, there was no other alternative except to terminate the contract as the work itself was part of a time bound programme; and they had to make alternate arrangements and that would have cost Rs.0.87 lakhs additionally which was sought to be recovered from the appellant appropriating the retention money and security deposit.
It was, therefore, claimed that the claims of the appellant should be rejected.
Considering all these contentions and noting the several respective claims, the arbitrator awarded as follows: "Claims Nos.
(1), (2) (a & b) and (3) These claims are declined.
Claim No. 4 The Respondents shall pay the Claimants a sum of Rupees Ninety Six Thousand only (Rs.96,000) in satisfaction of this claim including the various Sub Claims under the same.
Claims No. 5(a), (b) & (c) The Respondents shall pay an amount of Rs. five thousand only (Rs.5,000) to the Claimants in satisfaction of this claim.
Claims Nos.
(6), (7), (8) and (9) These four Claims are declined.
Claim No. (10) The retention moneys recovered from the Claimants in regard to this work shall be refunded to them by the Respondents.
Claim No. 11 The f.oo.
for the work shall be paid to Claimant for the sums awarded under Claims (4) and (5) Supra resulting in a net payment of Rupees one Lakh and One thousand only (Rs. 1,01,000).
Claim No. 12 The Respondents shall refund the security deposit held by the Claimants for this work subject to the rules regarding tax clearance.
Claim No. 13 The Claim for interest is de clined.
Claim No. 14 The parties shall suffer their respective costs in these proceedings.
" 674 Regarding the counter claims it was held that the order of the 2nd respondent terminating the contract in favour of the appellant was valid and as such, the respondents were free to arrange for the balance work in the manner they thought fit.
The counter claim for costs of the respondents was also held by the arbitrator to be covered by other claims.
The award was passed on 12th April, 1982.
There was another award dated 16th April, 1982 which was with regard to the dispute that arose for controlling the work of "Siruvani Drinking Water Supply Project Construct ing a Masonry dam across Siruvani River Block Nos.
I, II and III from Ch.
13 to 60 up to level + 883.00 metres and Block No. III from ch. 60 to 82 upto level + 870 metres".
In respect of the aforesaid, an estimate amounting to Rs.71.5 lakhs had been sanctioned for the work and it was entrusted on contract to the appellant.
It appears that the value of the work arranged on contract was Rs.67,72,760 as per de partmental estimate which the appellant undertook to carry out at a total amount of Rs.76,55,300 as per their tender.
The contract was embodied in the aforesaid agreement of 23rd December, 1976.
The arbitrator recited the original claim and noted that the work could not be completed during the scheduled time and the respective contentions of the parties were, more or less, identical with the one made in the previous case.
There was inspection of documents and the parties were heard in person, it was noted.
After noting the respective contentions the arbitrator awarded as follows: "Claim No. (1)(A) The Claim for additional payment on account of aslar work is declined.
Claim No. (1)(B) The Respondents shall pay the Claimants an additional amount of Rupees One Lakh only (Rs. 1,00,000) in satisfaction of this claim over and above the amounts al ready paid by them in the various part bills.
Claim No, (1)(c) This claim for compensation on account of loss in hire charges and short age of rubble is declined.
Claim No. 2 The Respondents shall pay the Claimants a sum of Rupees three lakhs and thirty six thousand only (Rs.3,36,000) in satisfaction of this claim.
Claim Nos. 3 & 4 These two claims are de clined.
675 Claim No. 5 The Respondents shall pay the Claimants an increase of forty (40) per cent in the agreed rates for agreed items and rates derived from the agreement for the extra items for all work paid for after CC2 and part, such increase being worked out on the cost of the work excluding the value of the materials supplied by the Respondents.
Claim No. 6 The Claimant shall be entitled to a payment of Rupees twenty five thousand only (Rs.25,000) in satisfaction of this claim and the Respondent shall pay it accordingly.
Claim No. 7(a)(b) & (c) The Claimants shall be entitled to a consolidated payment of Rupees fifty thousand only (Rs.50,000) from the Respondents in satisfaction of these claims and the same shall be paid accordingly in addition to the payments already made.
The Claimants on receipt of such payment shall have no lien whatsoever on the sheds, goods of whatever description and materials lying at the site of the work and said to belong to them.
Claims 8, 9, 10, 11 & 12 These five claims are declined.
Claim No. 13 The retention amounts from the bills of the Claimants lying in the hands of the Respondents shall be released to them.
Claim No. 14 An amount of Rupees two lakhs only (Rs.2,00,000 shall be paid to the claim ants in settlement of the final claims on the work in addition to the specific items re ferred to in the other claims as per this award.
Claim No. 15 The Security offered by the Claimants for this work shall be released to them subject to the rules regarding tax clear ance.
Claim No. 16 The claim for interest is de clined.
Claim No. 17 The parties shall suffer their respective costs in these proceedings.
" Regarding the counter claims, it was reiterated by the arbitrator that the respondents were entitled to arrange for the balance work in any manner they deemed fit on the termi nation of the contract by 676 them.
But the appellant should not be responsible for any loss that might be sustained for this re arrangement.
The counter claim for costs of the respondents was also dealt with.
There was a third award dated 23.4.1982 which was in respect of the sum due to Blocks Nos.7, 8 & 11.
In respect thereof an estimate of Rs.69.7 lakhs had been sanctioned for the work and it was entrusted to the appellant.
The value of the work arranged on that contract was Rs.63.68 lakhs as per the departmental estimate which the claimants undertook to carry but at a total amount of Rs.71.96 lakhs as per their tender.
After reiterating that time was of the essence of the contract, the difficulties that arose in carrying out the contract and the respective contentions, which were identical with those in respect of the first two contracts were discussed.
In respect of interruptions in power supply the case of the respondent was that such interruptions were not unexpected at a site through which the power lines passed through virgin reserve forest and that the claimants had not been assured by the respondents of uninterrupted power and in any case there was hardly any item of machinery belonging to the claimant which could have remained idle for want of power.
In respect of the medical facilities it was submitted by the respondents that according to the terms of the contract it was the primary, duty of the appellant to provide for medical assistance to their work force.
After setting out the rival contentions the arbitrator awarded as follows: "Claim No. (1)(A) The claim for additional payment on account of aslar work is declined.
Claim No. (1)(B): The respondents shall pay the claimants an additional amount of rupees seventy five thousand only (Rs.75,000) in satisfaction of this claim over and above the amounts already paid by them in the various part bills.
Claim No. (1)(C): The claim for compensation on account of loss of hire charges and short age of rubble is declined.
Claim No. 2: The respondents shall pay the claimants a sum of Rupees three lakhs and seventy five thousand only (Rs.3,75,000) in satisfaction of this claim.
Claim Nos. 3 & 4: These two claims are de clined.
Claim No. 5: The respondents shall pay the claimants an 677 increase of Forty (40) per cent in the agreed rates for agreed items and rate derived from the agreement for extra items for all work paid for after CC 2 and part, such increase being worked out on the cost of the work excluding the value of materials supplied by the respondents.
Claim No. 6: the claimants shall be entitled to a payment of rupees twenty five thousand only (Rs.25,000) in satisfaction of this claim and the respondents shall pay it accordingly.
Claim No. 7(a)(b) & (c): The claimants shall be entitled to a consolidated payment of rupees fifty thousand only (Rs.50,000) from the respondents in satisfaction of these claims and the same shall be paid accordingly in addition to the payments already made.
The claimants on receipt of such payment shall have no lien whatsoever on the sheds, goods of whatever description and materials lying at site of the work and said to belong to them.
Claims Nos. 8, 9, 10, 11 & 12: These five claims are declined.
Claim No. 13: The retention amounts from the bills of the claimant lying in the hands of the respondents shall be released to them.
Claim No. 14: An amount of rupees fifty thou sand only (Rs.50,000) shall be paid to the claimants in settlement of the final claims on the work in addition to the specified items as per this award.
Claim No. 15: The security offered by the claimants for the work shall be released to them subject to the rules regarding tax clear ance.
Claim No. 16: The claim for interest is de clined.
Claim No. 17: The parties shall suffer their respective costs in these proceedings.
" About the counter claims it was also stated that the claimants would not be responsible to carry out the balance work which the 678 respondents might arrange in any manner they thought fit on termination of the contract, but it should not be at the risk of the claimants.
Upon these awards, an application was made before the Court of the Principle Sub Judge, Trivandrum, for passing decrees ' in terms of the award.
Objections were also filed.
The learned Judge by his judgment and order dated 25th September, 1982 dealt with the objections.
He rejected the contention that the claims were barred.
He further held that it was not necessary for the arbitrator to give reasons for his award; and that there was no provision under the law which required that the arbitrator should furnish reasons for the award.
It was submitted before him that the arbitra tor ought to have given separate findings for the issues under claim No. 4 as the issues raised were entirely inde pendent of each other.
It was submitted that under sub claim (a) in claim No. 4 the appellant had claimed loss on account of the pressure tactics adopted by the labourers.
Under sub claim (b) the appellant had claimed compensation for the extra works done.
In the statement of defence filed by the respondents it was more or less conceded that the claim for extra works would lie, and stated that the actuals should be accounted and paid along with the final bill.
The learned judge noted that the arbitrator could only give a lump sum award with respect to various claims and that he need not quantify the sum awarded under each claim separately.
It was contended before the learned Sub Judge that in respect of claim No. 5, there was no evidence to support the claim.
Under that claim the appellant had detailed the value of tools, plants and materials etc.
that were left by him at the site.
In the defence statement itself the respondent admitted that some materials belonging to the appellant were taken possession of by them and the value thereof would be paid in the final bill.
Therefore, according to the learned judge, it was not correct to say that there was no evidence at all for allowing claim No. 5.
Further,it was held that there was no jurisdiction to investigate into the merits of the case and to examine the documentary and oral evidence for the purpose of finding out whether or not the arbitrator had committed an error of law or fact.
The learned judge reiterated that the arbitrator had not incorporated in the award any materials for his conclusion nor did he incorpo rate the terms of the contract between the parties.
Under such circumstances the award could not be set aside espe cially when there was no error apparent on the face of it; and there was nothing to show that the arbitrator had mis conducted the proceedings or that the award had been improp erly procured.
So the objection was repelled.
In the prem ises the judgment in terms of the award was passed.
In respect of the three awards, three different judgments were 679 delivered incorporating more or less the same reasons.
Being aggrieved thereby the respondent preferred appeals before the High Court.
The Division Bench of the High Court by the judgment under appeal in F.M.A. Nos. 72, 346 and 380 of 1983 disposed of the appeals.
Being aggrieved thereby, the appellant is before this Court.
In the judgment under appeal, the Division Bench of the High Court has set out the claims and noted the rival contentions and referred to the various clauses and the conditions of the contract, though the contract itself was made no part of the award.
The Division Bench referred to the decision of the learned Sub Judge.
Before the Division Bench, the main contention which succeeded was that there were errors apparent on the face of award, and further that the arbitrator had misconducted himself and travelled beyond the terms of the contract.
On behalf of the appellant, however, it was contended that the award was a nonspeaking award and, hence, it was not open for the court to go into the correctness of the reasons of the award.
The High Court referred to the several decisions of this Court and other relevant decisions of the Kerala High Court.
In order, however, to appreciate the contentions, it is necessary to refer in detail to the judgment under appeal.
The High Court referred to the various clauses of the contract which were produced before the High Court.
The submissions were made on behalf of the respondents .that the claims allowed were beyond and contrary to the agreement between the parties.
The High Court noted that the arbitrator had allowed claims Nos. 1(b), 2, 5, 7(a), 7(b), 7(c), 13, 14 2 15 and had passed an award for payment of an amount of Rs.31.15 lakhs to the claimant towards his claim under the several heads mentioned therein.
The High Court noted the judgment of the learned Sub Judge.
It was held by the learned Sub Judge that the court could set aside an award only when it was the result of corruption, fraud or there were errors apparent on the face of the award.
According to the learned Sub Judge there was no error apparent on the face ' of the award and there was no allegation of fraud.
Thereafter, the different points on which the learned Sub Judge rested his decision, were noted by the High Court.
It was contended before the High Court on behalf of the respondents that there were errors apparent on the face of the award, and that the arbitrator had misconducted himself and travelled beyond the terms of the contract.
The first contention urged on behalf of the respondents, however, was that the award was a non speaking award and, there 680 fore, it was not open to the court to go into the correct ness or reasonableness of the award.
The High Court held that when the arbitrator was constituted the sole and final judge of all questions both of law and of facts, normally his decision should stand final and it was only when there was any error apparent on the face of the award either because a question of law arose on the face of the award or upon some paper accompanying or forming part of the award, it could be interfered with.
Thereafter, the High Court in para 8 of its judgment observed that in the light of several decisions it could say that there were any errors apparent on the face of the award, and that the arbitrator had mis conducted himself and had travelled beyond his power.
The High Court referred to the decision of the Division Bench of the Kerala High Court in State of Kerala vs Poulose, The High Court, thereafter, observed that it was not open to the arbitrator or the umpire to arrogate tO himself jurisdiction and answer a question not referred to him.
In this connection, reference was made by the High Court to several decisions, namely, Attorney General for Manitoba vs Kelly and Ors., ; Upper Ganges Valley Electricity Supply Co. Ltd. vs U.P. Electricity Board, ; ; M/s Alopy Parshad & Sons, Ltd. vs The Union of India, and Jivarajbhai Ujamshi Sheth & Ors.
vs Chintamanrao Balaji & Ors., [1964] 5 SCR480.
Regarding claim No. 1(b) it was the contention of the respondent that the award was over and above the amounts already paid under various part bills.
It was argued before the High Court that the Department had measured and paid for all quantities of earth work and ruble work and the same had been entered in the measurement book and accepted by the contractor.
Hence, the award of additional amount was unwar ranted.
It was also argued that as per clause 10 of Form No. 83 (Notice inviting tender) which formed part of the agree ment, every tenderer was expected to inspect the site of the proposed work and quarries, and satisfy himself about the quality and availability of materials.
It was also notified in the same clause that the Govt.
would not, after accept ance of the contract rate, pay any extra charges for lead or any other reason in case the contractor was found later on to have mis judged the materials available.
It was also notified that the Department would not be liable for any claim raised later on the plea of non access to the site.
R2 was a copy of extract of Clause 10 of Form No. 83.
It was argued that the award of Rs.75,000 under claim 1(b) was beyond the powers of the arbitrator.
The High Court held that the award on this aspect was beyond the provisions of the agreement, and therefore there were errors apparent on the face of the award.
681 Similarly, in respect of the claim for Rs.3,75,000 under claim No. 2, it was contended on behalf of the respondents that this was beyond the powers of the arbitrator and, as such, there were errors apparent on the face of the award.
It was argued by him that clause No. 2 of the general speci fication and special conditions of the contract clearly notified to the tenderers the site of the dam.
It was also contended by the Govt.
Pleader that the period during which the contractor had conveyed sand through Madukkarai, the claimant had been actually paid additional conveyance charges.
Hence, after construing clause 10 of Form No. 83, namely, notice inviting tender, the High Court held that it was necessary for the contractor to have inspected the site before tender.
Therefore, in awarding, the amount as the arbitrator did on this head, there was error apparent on its face and such award was liable to be set aside.
The High Court did so accordingly.
With regard to claim No. 5, it was contended that the claim was beyond the powers of the arbitrator and reference was made to clause 6(6)111 of the General Specification and Special Conditions which stated that the Department was not responsible for supply of uninterrupted electric supply, so any damage on that basis was also unwarranted.
The finding on this issue found in the award was set aside.
Similarly, in connection with claim No. 6, there was a claim for Rs.24,000 towards expenses for providing a perma nent doctor.
It was held to be contrary to Clause 7 of (IV) of the contract dealing with camp facilities medical aid etc.
which, according to the high Court, indicated that the contractor himself was responsible for providing medical facilities to the contract labourers and that the respond ents were not bound to pay any additional medical expenses.
The claim on this construction and view of the contract, was held to be not sustainable.
The arbitrator had awarded Rs.50,000 by way of damages for sheds and other materials left by the contractor at the site under claim No. 7.
It was held by the High Court that it was the duty of the contractor to remove the sheds and materials brought by him and, therefore, the award allowing such claim was definitely against the provision of the contract.
On this head it was held that the award by the arbitrator was contrary to the provision of the agreement and as such bad.
Regarding claim No. 14 for an additional amount of Rs.50,000 it 682 was held that it was unsustainable and due to the misconduct of the arbitrator that it was awarded.
It was further ob served that it was beyond the power of the arbitrator as it was against the provisions of the contract.
While dealing with that part of the award which exoner ated the contractor from the risk after holding that the termination of the contract by the respondent was valid, it was held that the same was opposed to the provisions of the agreement.
The direction to release the amount and release of security deposit without taking into account the liabili ty to account for the loss on re arrangement of work amount ed to errors apparent on its face.
In the aforesaid light, the High Court held that the award under claims Nos. 1(b), 2, 5, 6 & 7 and also the award of an additional sum of Rs.50,000 under claim No. 14 over and above the claim al lowed was against the terms of the contract and, therefore, liable to be set aside.
Similarly, in M.F.A. No. 346/82, the High Court went into the details of the claims and on the construction of the contract, came to the conclusion that the termination of the contract was legal and that the exoneration of the contractor from the risk and losses was opposed to that finding.
In the aforesaid light, the High Court set aside several claims as mentioned in the judgment on the award.
On similar or, more or less, identical grounds several items of MFA No. 380/83, were set aside.
One of the claims under claim No. 4 was the award of Rs.96,000.
The High Court found that it was under clause 20(5) of the General Specification and Special Conditions of the contract, which stated that the Department would not be liable to pay any damages or compensation for hold up caused by intervention of the court, labour strike or any other extraneous forces and therefore and award under claim No. 4 on the ground of labour unrest and extra work, suffered from being erroneous and was liable to be set aside.
The clause of the contract covered only situations of labour strike and not labour unrest.
It was submitted before us that the High Court had exceeded its jurisdiction in acting in the manner it did on these aforesaid aspects.
The first question, therefore, that arises for consideration in this case is, whether the award in question was a speaking award or not.
In our opinion, the award was not a speaking award.
An award can also be set aside if the arbitrator had misconducted himself or the proceedings or had proceeded beyond his jurisdiction.
These are separate and district 683 grounds for challenging an award.
Where there are errors apparent on the face of the award it can only be set aside if in the award there is any proposition of law which is apparent on the face of the award, namely, in the award itself or any document incorporated in the award.
The Judi cial Committee in Champsey Bhara & Co. vs Jivraj Balloo Spinning & Weaving Co, Ltd., L 1922 IA 324 has discussed this problem.
It was held that an award of arbitration can be set aside on the ground of error of law apparent on the face of the award only when in the award or in a document incorporated with it, as for instance a note appended by the arbitrator stating the reasons for his decision, there is found some legal proposition which is the basis of the award and which is erroneous.
In that case the appellants had sold cotton to the respondents by a contract which contained a submission to arbitration of disputes as to quality, and a further clause submitting to arbitration all other disputes arising out of the contract.
Cotton was delivered, but the respondents objected to its quality, and upon arbitration an allowance was awarded; the respondents thereupon rejected the cotton.
The appellants claimed damages for the rejec tion, and upon that dispute being referred to arbitration under the further clause, were awarded damages.
The award recited that the contract, the date and subject of which were stated, was subject to the rules of the Bombay Cotton Trade Association, which were not further referred to; and that the respondents had rejected on the grounds contained in a letter of a certain date.
That letter stated merely that as the arbitrators had made an allowance of a certain amount the respondents rejected the cotton.
The High Court set aside the award, holding that it was bad on its face, in that under one of the rules of the Association the respond ents were entitled to reject without liability.
It was held by the Judicial Committee that the award could not be set aside; the terms of the contract were not so incorporated with the award as to entitle the Court to refer to them as showing, either that the award was wrong in law, or that under them the contract, and therefore the jurisdiction of the arbitrators, were terminated.
This decision and the ratio on this proposition of law has always been accepted by the courts of this country and is well settled.
The next question on this aspect which requires consid eration is that only in a speaking award the court can look into the reasoning of the award.
It is not open to the court to probe the mental process of the arbitrator and speculate, where no reasons are given by the arbitrator, as to what impelled the arbitrator to arrive at his conclusion.
See the observations of this Court in Hindustan Steel Works Con struction Ltd. vs C. Rajasekhar Rao, [1987] 4 SCC 93.
In the in 684 stant case the arbitrator has merely set out the claims and given the history of the claims and then awarded certain amount.
He has not spoken his mind indicating why he was done what he has done; he has narrated only now he came to make the award.
In absence of any reasons for making the award, it is not open to the court to interfere with the award.
Furthermore, in any event, reasonableness of the reasons given by the arbitrator, cannot be challenged.
Appraisement of evidence by the arbitrator is never a matter which the court questions and considers.
If the parties have selected their own forum, the deciding forum must be conced ed the power of appraisement of the evidence.
The arbitrator is the sole judge of the quality as well as the quantity of evidence and it will not be for the court to take upon itself the task of being a judge on the evidence before the arbitrator.
See the observations of this Court in Municipal Corpn.
of Delhi vs M/s Jagan Nath Ashok Kumar & Anr.
, ; The same principle has been stated in M/s. Alopi Parshad & Sons, Ltd. vs The Union of India, (supra).
There this Court held that the award was liable to be set aside because of an error apparent on the face of the award.
An arbitra tion award might be set aside on the ground of an error on the face of it when the reasons given for the decision, either in the award or in any document incorporated with it, are based upon a legal proposition which is erroneous.
But where a specific question is referred, the award is not liable to be set aside on the ground of an error on the face of the award even if the answer to the question involves an erroneous decision on a point of law.
But an award which ignores express terms of the contract, is bad.
Similarly, in Jivarajbhai Ujamshi Sheth & Ors.
vs Chintamanrao Balaji & Ors.
(supra), this Court reiterated that an award by an arbitrator is conclusive as a judgment between the parties and the court is entitled to set aside an award if the arbitrator has misconducted himself in the proceeding or when the award has been made after the issue of an order by the Court superseding the arbitration or after arbitration proceedings have become invalid under section 35 of the or where an award has been improperly pro cured or is otherwise invalid under section 30 of the Act.
An award may be set aside on the ground of error on the face of the award, but an award is not invalid merely because by a process of inference and argument it may be demonstrated that the arbitrator has committed some mistake in arriving at his conclusion.
The Court, however, went into the ques tion whether the arbitrator had included depreciation and appreciation of certain assets in the value of the goodwill which he was incompetent to include by virtue of the limits placed upon his authority by the deed of 685 reference.
The Court found that was not a case in which the arbitrator had committed an error of fact or law in reaching his conclusions on the disputed questions submitted for adjudication.
It was a case of assumption of jurisdiction not possessed by him and that rendered the award to the extent to which it was beyond the arbitrators ' jurisdiction, invalid.
This was reiterated by Justice Hidayatullah that if the parties set limits to action by the arbitrator, then the arbitrator had to follow the limits set for him and the court can find that he exceeded his jurisdiction on proof of such excess.
In that case the arbitrator in working out net profits for 4 years took into account depreciation of immov able property.
For this reason he must be held to have exceeded his jurisdiction and it is not a question of his having merely interpreted the partnership agreement for himself as to which the Civil Court could have had no say, unless there was an error of law on the face of the award.
Therefore, it appears to us that there are two different and distinct grounds involved in many of the cases.
One is the error apparent on the face of the award, and the other is that the arbitrator exceeded his jurisdiction.
In the latter case, the courts can look into the arbitration agreement but in the former, it can not, unless the agreement was incorpo rated or recited in the award.
In Upper Ganges Valley Elec tricity Supply Co. Ltd. vs U.P. Electricity Board (supra), the respondent had taken over the appellant 's undertakings, but as the parties were at variance on the true market value to be paid to the appellant, the matter was referred to arbitration.
As the arbitrators were unable to agree on the question whether the appellant was entitled to compensation for the 'service lines ' which were laid with the help of contributions made by consumers, they referred the question to the umpire.
The umpire framed an issue and gave a finding that the appellant was not entitled to claim from the re spondent the value of the position of the service lines which were laid at the cost of the consumers, for the sole reason that they were laid at the cost of the consumers.
The appellant filed an application under section 30 of the challenging the validity of the award on the question.
The lower court and the High Court held against the appellant.
Allowing the appeal, it was held by this Court that the appellant 's application for setting aside the award could succeed only if there was any error of law on the face of the award.
There, it was found, that the umpire had made a speaking award and there was no question of the construction of any document incorporated in or appended to the award.
If it was transparent from the award that a legal proposition which forms its basis is erroneous, the award is liable to be set aside.
An award may be remitted or set aside on the ground that the 686 arbitrator in making it, had exceeded his jurisdiction and evidence of matters not appearing on the face of it, will be admitted in order to establish whether the jurisdiction had been exceeded or not, because the nature of the dispute is something which has to be determined outside award whatever might be said about it in the award or by the arbitrator.
See in this connection, the observations of Russell on The Law of Arbitration, 20th Edn. 427.
Also see the observations of Christopher Brown Ltd. vs Genossenschaft Oesterreichisch er etc., at p. 10 and Dalmia Dairy Industries Ltd vs National Bank of Pakistan, It has to be reiterated that an arbitrator acting beyond his jurisdiction is a different ground from the error apparent on the face of the award.
In Halsbury 's Laws of England (4th Edn.
2 para 622) one of the misconducts enumerated, is the decision by the arbitrator on a matter which is not included in the agreement or reference.
But in such a case one has to determine the distinction between an error within the jurisdiction and an error in excess of the jurisdiction.
See the observations in Anisminic Ltd. vs Foreign Compensa tion Commission; , and Regina vs Noseda, Field, Knight & Fitzpatrick, But, in the instant case the court had examined the different claims not to find out whether these claims were within the disputes referable to the arbitrator, but to find out whether in arriving at the decision, the arbitrator had acted correctly or incorrectly.
This, in our opinion, the court had no jurisdiction to do, namely, substitution of its own evalua tion of the conclusion of law or fact to come to the conclu sion that the arbitrator had acted contrary to the bargain between the parties.
Whether a particular amount was liable to be paid or damages liable to be sustained, was a decision within the competency of the arbitrator in this case.
By purporting to construe the contract the court could not take upon itself the burden of saying that this was contrary to the contract and, as such, beyond jurisdiction.
It has to be determined that there is a distinction between disputes as to the jurisdiction of the arbitrator and the disputes as to in what way that jurisdiction should be exercised.
There may be a conflict as to the power of the arbitrator to grant a particular remedy.
See Commercial Arbitration by Sir N.J. Mustil and Stewart C. Boyd page 84.
The High Court in the judgment under appeal referred to the decision of the Division Bench of the Kerala High Court in State of Kerala vs Poulose, (supra).
Our attention was also drawn to the said decision by the counsel for the respondents that if an arbitrator or the umpire travels beyond his jurisdiction and arrogates jurisdiction that does not vest in him, that would be a ground to impeach the award.
If 687 an arbitrator, even in a non speaking award decides contrary to the basic features of the contract, that would vitiate the award, it was held.
It may be mentioned that in so far as the decision given that it was possible for the court to construe the terms of the contract to come to a conclusion whether an award made by the arbitrator was possible to be made or not, in our opinion, this is not a correct proposi tion in law and the several decisions relied by the learned Judge in support of that proposition do not support this proposition.
Once there is no dispute as to the contract, what is the interpretation of that contract, is a matter for the arbitrator and on which court cannot substitute its own decision.
Reference was also made to the decision in State of Kerala vs Raveendranathan, Insofar as the court held therein that an arbitrator deciding a dispute under the contract, is bound by the contract, the court is right.
The court cannot, however, substitute the decision of the arbitrator as to what was meant by the contract, once that dispute is conceded to the arbitrator.
In so far and to the extent the aforesaid decision of the Kerala High Court decided to the contrary, the same is not the correct law.
The Kerala High Court in certain decisions relied on certain authorities of England.
In a decision of the House of Lords in F.R. Absalom, Ltd. vs Great Western (London) Garden Village Society, Ltd., it was held that the arbitrator had erred in his construction of clause 30 of the contract.
But as the judgment of Lord Warrington at page 600 of the report, made it quite clear that the arbitrator had recited the terms of clause 32 of the contract in the award, and thereafter on the construction of that clause, the court decided that the arbitrator had misconstrued the effect thereof.
That was a case where dispute was not within the contract.
In Heyman & Anr.
vs Darwins, Ltd., the controversy was entirely different.
Similarly, in Attorney General for Manitoba vs Kelly & Ors., (supra), upon which the High Court in the judgment under appeal referred was again in a different context.
There, in an action in Manitoba against building contractors to recover sums im properly paid to them under a contract, and for damages, a judgment by consent was entered whereby it was provided, inter alia, that the plaintiff should recover, among other sums, "all loss to the plaintiff by reason of defective workmanship and materials", and that these should be set off against the sums recovered by the plaintiff the fair value of the work done and materials provided at fair contractor 's prices.
The judgment, however, provided further that the sums to be debited and 688 credited were to be determined by two appraisers, and that any matter upon which they differed was to be referred to a named umpire whose decision thereon was to be final; and that the Manitoba should not apply.
The defendants moved to set aside or vary an award.
It was held that under the words "all loss" there was jurisdiction to award to the plaintiff not only sums actually expended, but also a sum estimated as being necessary to make good the defects, and that extrinsic evidence was not admissible to show that the sum allowed to the defendants as set off had been reduced in respect of defective work for which they had also been debited.
Further, it was held that the award being within the jurisdiction conferred by the submission, and there being no error apparent on its face, it could not be questioned either on the facts or on the law.
In the instant case, the High Court seems to have fallen into an error of deciding the question on interpretation of the contract.
In the aforesaid view of the matter we are of the opinion that the High Court was in error.
It may be stated that if on a view taken of a contract, the decision of the arbitrator on certain amounts awarded, is a possible view though perhaps not the only correct view, the award cannot be examined by the court in the manner done by the High Court in the instant case.
In light of the above, the High Court, in our opinion, had no jurisdiction to examine the different items awarded clause by clause by the arbitrator and to hold that under the contract these were not sustainable in the facts found by the arbitrator.
These appeals are, therefore, allowed.
The judgment and order of the High Court are set aside and the orders of the learned Sub Judge are restored.
In the facts and the circum stances of the case, however, the parties will bear their own costs.
P.S.S. Appeals al lowed.
| IN-Abs | The appellant contractor undertook construction of certain timebound projects.
The work, however, could not be completed within the scheduled time due to various reasons.
The contract was consequently cancelled at appellant 's risk.
The disputes arising therefrom between the parties were referred to the arbitrator named in the agreement.
He made three awards allowing claim Nos. 1(e), 2, 5, 7(a), 7(b), 7(c), 13, 14, and 15 preferred by the appellant aggregating to Rs.31.15 lakhs under the several heads mentioned therein.
Upon these awards, an application was made before the court for passing decrees in terms thereof.
Objections were also filed.
The trial court took the view that it could not adjudi cate upon the justification for the conclusions arrived at by the arbitrator unless such awards were the result of corruption, fraud or there were errors apparent on the face of the award, that it was not necessary for the arbitrator to give reasons for his award, that there was no jurisdic tion to investigate into the merits of the case and to examine the documentary and oral evidence for the purpose of finding out whether or not the arbitrator had committed an error of law or fact, that the arbitrator had not incorpo rated in the award any materials for his conclusion nor did he incorporate the terms of the contract between the par ties.
Under such circumstances the award could not be set aside, especially when there was no error apparent on the face of it and there was nothing to show that the arbitrator had misconducted the proceedings or that the award had been improperly procured.
In appeal before the High Court it was contended for the respon 666 dents that there were errors apparent on the face of the award, that the arbitrator had misconducted himself and travelled beyond the terms of the contract, and that the claims allowed were beyond and contrary to the agreement between the parties, whereas for the appellants it was contended that the award was a non speaking award and, therefore, it was not open to the court to go into the correctness or reasonableness of the award.
The High Court set out the claims, noted the rival contentious and referred to the various clauses and the conditions of the contract, though the contract itself was made no part of the award, and concluded that there were errors apparent on the face of the award that the arbitrator had misconducted himself and travelled beyond his power.
In the appeals by special leave, it was contended that the High Court had exceeded its jurisdiction in acting in the manner it did on the aforesaid aspects.
Allowing the appeals by special leave, HELD: 1.1 The High Court fell into an error in deciding the question on interpretation of the contract.
It had no jurisdiction to examine the different items awarded clause by clause by the arbitrator and to hold that under the contract these were not sustainable in the facts found by the arbitrator.
[688D,E] 1.2 Once there is no dispute as to the contract, what is the interpretation of that contract, is a matter for the arbitrator and on which the court cannot substitute its own decision.
So also, the court cannot substitute the decision of the arbitrator, as to what was meant by the contract, once a dispute under the contract is conceded to the arbi trator.
[687B,D] 1.3 In the instant case the court had examined the different claims not to find out whether these claims were within the disputes referable to the arbitrator, but to find out whether in arriving at the decision, the arbitrator had acted correctly or incorrectly.
This the court had no juris diction to do, namely, substitution of its own evaluation of the conclusion of law or fact to come to the conclusion that the arbitrator had acted contrary to the bargain between the parties.
Whether a particular amount was liable to be paid or damages liable to be sustained, was a decision within the competency of the arbitrator.
By purporting to construe the contract the court could not take upon itself 667 the burden of saying that this was contrary to the contract and, as such, beyond jurisdiction.
[686D F] 1.4 Furthermore, if on a view taken of a contract, the decision of the arbitrator on certain amounts awarded, is a possible view though perhaps not the only correct view, the award cannot be examined by the court in the manner done by the High Court in the instant case.
[688D] F.R. Absalom, Ltd. vs Great Western (London) Garden Village Society, Ltd., ; Heyman & Anr.
vs Darwins, Ltd. and Attorney General for Manito ba vs Kelly & Ors., distinguished.
State of Kerala vs Poulose, and State of Kerala vs Raveendranathan, partly over ruled.
2.1 Where there are errors apparent on the face of the award it can only be set aside if in the award there is any proposition of law which is apparent on the face of the award, namely, in the award itself or any document incorpo rated in the award.
But where a specific question is re ferred, the award is not liable to be set aside on the ground of an error on the face of the award even if the answer to the question involves an erroneous decision on a point of law.
[684D E] Champsey Bhara & Co. vs Jivraj Balloo Spinning & Weaving Co. Ltd. (L 1922 1A 324; M/s Alopi Parshad & Sons, Ltd. vs The Union of India, ; Jivarajbhai Ujamshi Sheth & Ors.
vs Chintamanrao Balaji & Ors., ; and Upper Ganges Valley Electricity Supply Co. Ltd. vs U.P. Electricity Board.
; , referred to.
2.2 An award can also be set aside if the arbitrator had misconducted himself or the proceedings.
One of the miscon ducts could be the decision by the arbitrator on a matter which is not included in the agreement or reference.
But in such a case one has to determine the distinction between an error within the jurisdiction and an error in excess of the jurisdiction.
[686C] Anisminic Ltd. vs Foreign Compensation Commission, ; ; Regina vs Noseda, Field, Knight & Fitzpat rick, and Halsoury 's Laws of England, 4th Edn.
para 622 referred tO. 668 2.3 An award may be remitted or set aside on the ground that the arbitrator in making it had exceeded his jurisdic tion and evidence of matters not appearing on the face of it will be admitted in order to establish whether the jurisdic tion had been exceeded or not, be because the nature of the dispute is something which has to be determined outside the award whatever might be said about it in the award or by the arbitrator.
[685H; 686A B] Christopher Brown Ltd. vs Genossenschaft Oesterreigh ischer etc.
, ; Dalmia Dairy Industries Ltd. vs National Bank of Pakistan, and Russell on The Law of Arbitration, 20th Edn.
427 referred to.
2.4 An arbitrator acting beyond his jurisdiction, howev er, is a different ground from the error apparent of the face of the award.
In the former case the court can look into the arbitration agreement but in the latter it cannot unless the agreement was incorporated or recited in the award.
In the instant case the contract in question was not incorporated or referred to in the award.
[686B C] 2.5 However, there is a distinction between disputes as to the jurisdiction of the arbitrator and the disputes as to in what way that jurisdiction should be exercised There may be a conflict as to the power of the arbitrator to grant a particular remedy.
The nature of the dispute has to be determined.
[686F G] Commercial Arbitration by Sir M.J. Mustill & Steward G. Soyd page 84, referred to.
3.1 The court look into the reasoning only in a speak ing award.
It is not open to the court to probe the mental process of the arbitrator and speculate, where no reasons are given by the arbitrator, as to what impelled the arbi trator to arrive at his conclusion.
[683G H] 3.2 Furthermore, in any event, reasonableness of the reasons given by the arbitrator, cannot be challenged.
Appraisement of evidence by the arbitrator is never a matter which the court questions and considers.
If the parties have selected their own forum, the deciding forum must be conced ed the power of appraisement of the evidence.
The arbitrator is the sole judge of the quality as well as the quantity of evidence and it will not be for the court to take upon itself the task of being a judge on the evidence before the arbitrator.
[684B C] 669 3.3 In the instant case, the award was not a speaking award.
The arbitrator had merely set out the claims and given the history of the claims and then awarded certain amount.
He had not spoken his mind indicating why he had done what he had done; he had narrated only how he came to make the award.
In the absence of any reasons for making the award, it was not open to the court to interfere with the award.
[684A B] Hindustan Steel Works .Construction Ltd. vs C. Rajasek har Rao, [1987] 4 SCC 93 and Municipal Corporation of Delhi vs M/s Jagan Nath Ashok Kumar & Anr., ; referred to.
|
il Appeal No. 1520 (NT) of 1986.
From the Judgment and Order dated 10.8.1977 of the Bombay High Court in I.T.R. No. 34 of 1968.
V.S. Desai and Ms. A. Subhashini for the Appellant.
Harish Salve, Mrs. A.K. Verma and Joel Peres for the Respondents.
Three private limited companies, the Italindia Cotton Co. (P) Ltd., who is the assessee before us, the India Corporation (P) Ltd and the International Cotton (P) Ltd. were controlled by three groups of share holders, who may be described as the Chunilal Group, the Babubhai Group and the Purushottam Group.
There was a change in the share holding of the three companies during the accounting year ending 3 1 March, 1963.
The Chunilal Group acquired controlling interest in India Corporation (P) Ltd., the Babubhai group acquired controlling interest in the assessee company and the Purushottam Group acquired controlling interest in International Cotton (P) Ltd. The assessee suffered a loss in the accounting year ending 31 March 1960, relevant to the assessment year 1960 61, in the amount of Rs.12,172.
This was available for a set off in a subsequent year.
But having regard to the change in the share holding of the assessee during the accounting year ending 31 March, 1963 relevant to the assessment year 1964 64,the question arose whether the assessee was entitled to of carrying forward that loss for the purpose of computing PG NO 817 its assessable profits for that assessment year.
The Income tax Officer held that section 79 of the Income tax Act, 1961 disentitled the assessee from claiming such a set off.
He said that 51% of the voting power held by persons on the last day of the year in which the loss was suffered was no longer held by them on 31 March, 1963.
On appeal by the assessee, the Appellate Assistant Commissioner of Income tax took a different view.
He held that before the right to set off a loss could be denied to an assessee, not only should there be a change in the persons holding a voting power of not less than 51% but further the change should have been effected with a view to avoiding or reducing the liability to tax.
The Revenue appealed to the Income Tax Appellate Tribunal.
Upon an analysis of section 79 the Tribunal observed that the denial of the set off of a loss incurred in an earlier year was subject to two exceptions, the first being that the beneficial holding representing not less than 51% of the voting power should not change hands between the last day of the year in which the loss was incurred and the last day of the relevant previous year, and the second exception was that any change in the share holding contemplated by the parent provision should not have been effected with a view to avoiding or reducing any liability to tax.
According to the Tribunal the two exceptions applied independently, and if either came into play the prohibition contained in section 79 against the setting off of a loss could not be invoked by the Revenue.
It appears to have been admitted before the Tribunal that the assessee was not entitled to the benefit of the first exception, and in the view which it took it rendered no definite finding on whether the assessee fell within the terms of the second exception .
At the instance of the assessee the Tribunal referred the following question to the Bombay High Court for its opinion: "Whether both the conditions mentioned in clause (a) and clause (b) of section 79 must apply for disentitling the loss of a prior year being allowed as set off in accordance with the substantive provisions of section 79 of the Income tax Act, 1961?" The High Court answered the question in favour of the assessee.
holding that even if a change in the voting power of not less than 51% between the two relevant dates has taken place, for the Revenue to succeed such change should be effected with a view to avoiding or reducing any liability to tax.
It observed that as the Tribunal had not considered the question whether the change in the voting power had taken place with a view to avoiding or reducing any liability to tax that question should now be decided by PG NO 818 the Tribunal before the claim for a set off could be finally disposed of.
And now this appeal.
Chapter VI of the Income tax Act, 1961 contains a number of provisions entitling the assessee to the carry forward and set off of a loss suffered by him.
Section 70 provides for the set off of a loss from one source against income from another source under the same head of income.
Section 71 provides for the set off of a loss from one head against income from another head.
Section 72 entitles an assessee to carry forward and set off a business loss which could not be set off wholly during the year in which it arose.
Then follow provisions relating to the setting off of losses in certain particular cases.
Section 79, with which we are concerned, provides: "Notwithstanding anything contained in this Chapter, where a change in shareholding has taken place in a previous year in the case of a company, not being a company in which the public are substantially interested, no loss incurred in any year prior to the previous year shall be carried forward and set off against the income of the previous year unless (a) on the last day of the previous year the shares of the company carrying not less than fifty one per cent of the voting power were beneficially held by persons who beneficially held shares of the company carrying not less than fifty one per cent of the voting power on the last day of the year or years in which the loss was incurred; or (b) the Income tax Officer is satisfied that the change in the share holding was not effected with a view to avoiding or reducing any liability to tax." Section 79 is an exception to the scheme enacted in Chapter VI for the carry forward and setting off of a loss incurred in any earlier year against the income of the relevant previous year.
The provision was enacted in the Income tax Act 1961 for the first time in order to deny that benefit to companies not being companies in which the public are substantially interested.
On its plain terms section 79 provides that in the case of such companies, if a change in shareholding has taken place in a previous year, no loss incurred in any year prior to the previous year shall be carried forward or set off against the income of the previous year unless (a) both on the last day of the previous year and on the last day of the year or years in PG NO 819 which the loss was incurred the shares of the company carrying not loss than 51 per cent of the voting power were beneficially held by the same persons (b) the Income tax Officer is satisfied that the change in the share in holding was not affected with a view to avoiding or reducing any liability to tax.
The question before us is whether the two conditions operate cumulatively or in the alternative.
In other words, should both conditions exist together to nullify the prohibition against carry forward and set off of the loss? Upon careful consideration we are of opinion that the conditions are intended to operate as alternative to one another.
If the terms of either cl.(a) or cl.(b) are satisfied, the disqualification suffered by a company, by reason of a change in share holding in the previous year, is removed, and the company is entitled to the benefit of the provisions in Chapter VI relating to the carry forward and set off of losses.
The benefit is available notwithstanding the change in share holding in the previous year, if shares representing not less than 51% of the voting power remain beneficially held by the same persons on the relevant dates.
Similarly, the benefit is available notwithstanding the change in shareholding in the previous year if the change was not effected with a view to avoiding or reducing any liability to tax.
The object sought to be served by enacting section 79 appears to be to discourage persons claiming a reduction of their tax liability on the profits earned in companies which had sustained losses in earlier years.
It was not unusual for a group of persons to acquire a company, which had suffered losses in earlier years, in the expectation that the company would earn substantial profits after such acquisition, and they would benefit by a reduction of the tax liability on those profits on a set off of losses carried forward from earlier years before the acquisition.
The acquisition of a company in such a case would be effected by a change in its share holding and the control over the company could be ensured by securing the beneficial ownership of shares carrying 51 per cent or more of the voting power.
If the change in share holding did not result in holding voting power of 51 per cent or it was established that the shares of the company carrying not less than 51 percent of the voting power were beneficially held by the same persons, both on the last day of the previous year as well as the last day of the year or years in which the loss was incurred, it could be presumed that there was no change in the control over the company, and the disqualification imposed on the company because of the change in its share holding would stand removed.
But there may be a change in the share holding, and it may result in a change of control of the company.
Yet every PG NO 820 such change of shareholding need not fall within the prohibition.
There can be a case where persons already owing a shareholding carrying less than 51 percent of the voting power in the company may enlarge their share holding during the previous year in order that control over the company may pass to them.
Attempts to acquire control over a company by controlling a majority of the share holding are not unknown.
The acquisition of control over a company provides a source of both direct and indirect financial benefit as well as power over its policies and activities.
On the other side, there can be a case where the change is affected with a view to avoiding or reducing some liability to tax.
The change is effected not for business or commercial reasons but in order that tax liability may be avoided or reduced.
In that event, the change in the share holding will tend to bring about the result which section 79 was designed to prevent.
In our opinion, to avoid falling within the scope of section 79 it is sufficient for the assessee to show that the case attracts either cl.
(a) of cl.
If the assessee succeeds in doing so, he will be entitled to the benefit of the provisions of the Income Tax Act entitling him to claim a carry forward and set off losses suffered by the company in an earlier year or years against the income of the previous year.
We are fortified in our conclusion by the view expressed by the Gujarat High Court in Commissioner of Income tax, Gujarat III vs Shri Subhalaxmi Mills Ltd., and by the Madras High Court in Commissioner of Income tax vs Saravanabhava Mills Pvt Ltd.,[1983] I.T.R.856.
In our judgment, the High Court is right in the view taken by it and the appeal must be dismissed.
The appeal is dismissed with costs.
| IN-Abs | The respondent assessee which had suffered a loss during the assessment year 1960 61, and whose share holding had undergone a change subsequently, claimed a set off against the same in its assessment for the year 1963 64, but the Income tax Officer turned it down on the ground that section 79 of the Income tax Act, 1961 dis entitled the assessee from claiming such a set off since 51% of the voting power held by persons on the last day of the year in which the loss was suffered was no longer held by them on March 31, 1963.
On appeal, the Appellate Assistant Commissioner held that before the right to set off a loss could be denied to an assessee, not only should there be a change in the persons holding a voting power of not less than 51% but further the change should have been effected with a view to avoiding or reducing the liability to tax.
On appeal by the Revenue, the Appellate Tribunal observed that the denial of the set off of a loss incurred in an earlier year was subject to two exceptions: (i) that the beneficial holding representing not less than 51% of the voting power should not change hands between the last day of the year in which the loss was incurred and the last day of the relevant previous year, and (ii) that any change in the share holding should not have been effected with a view to avoiding or reducing any liability to tax; that these two exceptions applied independently, and if either came into play, the prohibition contained in section 79 against the setting off of a loss could not be invoked by the Revenue.
However, at the instance of the assessee, the Tribunal referred the following question to the High Court for its opinion: "Whether both the conditions mentioned in clause (a) and clause (b) of section 79 must apply for disentitling the loss of a prior year being allowed as set off in accordance with the substantive provisions of section 79 of the Income tax Act, 1961?" PG NO 814 PG NO 815 The If High Court answered the question in favour of the assessee, holding that even if a change in the voting power of not less than 51% between the two relevant dates has taken place, for the Revenue to succeed, such change should be effected with a view to avoiding or reducing any liability to tax.
Dismissing the appeal, HELD: In our opinion, to avoid falling within the scope of section 79 it is sufficient for the assessee to show that the case attracts either cl.(a) or cl.(b).
If the assessee succeeds in doing so, he will be entitled to the benefit of the provisions of the Income Tax Act entitling him to claim a carry forward and set off losses suffered by the company in an earlier year or years against the income of the previous year.
[820C D] Section 79 is an exception to the scheme enacted in Chapter VI for the carry forward and setting off of a loss incurred in any earlier year against the income of the relevant previous year.
The provision was enacted in the Income tax Act, 1961 for the first time in order to deny that benefit to companies not being companies in which the public are substantially interested.
On its plain terms section 79 provides that in the case of such companies, if a change in share holding has taken place in a previous year, no loss incurred in any year prior to the previous year.
shall be carried forward or set off against the income of the previous year unless (a) both on the last day of the previous year and on the last day of the year or years in which the loss was incurred the shares of the company carrying not less than 5l per cent of the voting power were beneficially held by the same persons (b) the Income tax Officer is satisfied that the change in the share holding was not effected with a view to avoiding or reducing any liability to tax.
The question before us is whether the two conditions operate cumulatively or in the alternative.
In other words, should both conditions exist together to nullify the prohibition against carry forward and set off of the loss? Upon careful consideration we are of opinion that the conditions are intended to operate as alternative to one another.
If the terms of either cl.
(a) or cl.
(b) are satisfied, the disqualification suffered by a company.
by reason of a change in share holding in the previous year, is removed, and the company is entitled to the benefit of the provisions in Chapter VI relating to the carry forward and set off of losses.
The benefit is available notwithstanding the change in share holding in the previous year, if shares representing not less than 51% of the voting power remain beneficially held by the same persons on the relevant dates.
Similarly, the benefit is available notwithstanding the PG NO 816 change in shareholding in the previous year if the change was not effected with a view to avoiding or reducing any liability to tax.
[818F H, 819A D] Commissoner of Income tax, Gujarat III vs Shri Subhalaxmi Mills Ltd., and Commissioner of Income tax vs Saravanabhava Mills Pvt. Ltd., [1983]143I.T.R.856, approved.
|
Appeal No. 1119(NT) of 1975.
From the Judgment and Order dated 16.12.1974 of the Calcutta High Court in I.T. Reference No. 256 of 1974.
S.C. Manchanda, Ms. A. Subhashini and K.C. Dua, for the Appellant.
Dr. D. Pal, Ms. M. Seal, Ms. Mridula Ray and H.K. Dutt, for the Respondents.
The Judgment of the Court was delivered by KANIA, J.
This is an appeal filed by the Commissioner of 641 Income tax, Calcutta, by Special Leave against an order of a Division Bench of the Calcutta High Court declining to direct the Income tax Appellate Tribunal (hereinafter re ferred to as "the Tribunal") to refer to the Court for determination of certain questions raised by the Commission er of Income tax.
It is necessary to set out a few facts for the apprecia tion of the controversy in this appeal.
In its agreement for the Assessment Year 1959 60 the respondent assessee claimed deductions inter alia in respect of the loss of the sale of certain shares of Bharat Starch & Chemicals Ltd. and Greaves Cotton & Co. Ltd. for the relevant previous year.
The re spondent assessee had sold in the relevant previous year 2500 shares of Bharat Starch & Chemicals Ltd. to M/s K.C. Thapar & Sons Ltd., a company belonging to the same group.
These shares were purchased on 22nd February, 1958 and were sold on 31st March, 1959.
The loss claimed was of Rs.26,465.
The Income tax Officer concerned disallowed this case on the ground that the sale price was shown at Rs.2.50 per share whereas the market quotation on 31st March, 1959 was Rs.8.06 per share.
The Income tax Officer also relied upon the circumstances that the shares had been sold to a company which was an allied concern of the assessee, that is, be longing to the Thapar group.
The Income tax Officer took the view that the sale had been affected only to enable the assessee to claim the loss and could not be allowed as genuine.
The respondent assessee had also sold 3000 shares of Greaves Cotton & Co. Ltd. on 4th February, 1959 to M/s K.C. Thapar & Sons Ltd., and claimed a loss of Rs.47,878.55p on this transaction.
The Income tax Officer held that these shares had also been sold to a company belonging to the Thapar group and under the control of that group.
The In come tax Officer took the view that the motive for selling the aforesaid shares and some other shares was to make losses and set them off against the profits and these .transactions could not be considered to be in the normal course of business.
He held that this type of trans action could not be regarded as genuine and disallowed the claim.
The assessee preferred an appeal to the Appellate As sistant Commissioner against the order of the Income tax Officer.
In respect of the sale of the shares of Bharat Starch & Chemicals Ltd. the Appellate Assistant Commissioner accepted that the market quotation of these shares at Rs.8.06 on 31st March, 1959, was a nominal quotation 642 and there was no transaction in these shares at that rate because there was no buyer at that price and that the In come tax Officer was wrong in relying upon this circumstance to come to the conclusion that the transaction of sale of these shares was not genuine.
He also took the view that the Income tax Officer was in error when he took the view be cause these shares had changed hands between companies controlled by the same group that fact vitiated the sale.
He, however, took the view that the disallowance was correct as the shares were, in fact, purchased at Rs.2.50 per share and sold at the same rate, that is, he disagreed with the average cost worked out by the assessee and pointed out that the basis on which such average cost was worked out had not been shown to him.
He further took the view that the 25,000 shares of this company sold by the assessee constituted a large block and was connected with the acquiring of control over the Bharat Starch & Chemicals Limited and hence the loss should be regarded as an investment loss and not a business loss.
As far as the loss on the sale of shares of Greaves Cotton & Co. Ltd. was concerned, after referring to the ground on which the Income tax Officer had disallowed this loss the Appellate Commissioner took the view that the holding of these shares could be reasonably attributed to the invest ment portfolio and hence, the said loss was a capital loss and not a business loss or a revenue loss.
He further re ferred to the fact that the shares of this company, namely, Greaves Cotton & Co. Ltd. were not quoted in the stock exchange market.
On the basis of these circumstances he disallowed the loss.
The assessee went in further appeal to the Tribunal.
The Tribunal relied upon the fact that in the earlier years, the profits made by the assessee on the sale of shares had been treated as business income and this would show that the assessee in the earlier years had been regarded as a dealer in shares.
The Tribunal rightly observed that under these circumstances, there was no reason why the assessee should not be treated as a dealer in shares in the relevant previ ous year either.
The Tribunal also pointed out that nothing was shown on the record which would suggest that the acqui sition and purchase of these shares was for anything other than normal commercial purposes or that the sales were not made in the ordinary course of business.
The Tribunal held that the mere fact that the shares have been sold to a company belonging to the same group and under the same control would not be conclusive to show that the transac tions were bogus or 643 not in the normal course of business or were for an extra commercial consideration.
It was pointed out to the Tribunal by the Departmental Representative concerned that these shares were shown by the assessee as investments in the balance sheet.
The Tribunal pointed out that this circum stance would not necessarily lead to a conclusion that the shares were held in the investment portfolio and not as stock in trade and in this connection, the Tribunal placed reliance on the decision of this Court in Karam Chand Thapar and Bros. P. Ltd. vs Commissioner of Income tax (Central), Calcutta, wherein it was held that the circumstances that the assessee had shown certain shares as investment shares in its books of account as well as its balance sheet was by itself not a conclusive circumstance indicating that the shares were held on investment account or capital account but it was a relevant circumstance on which the Tribunal could rely for drawing an inference that the loss on the sale of the said shares was a capital loss.
It may be noted that this decision shows that although the manner in which shares are shown in the balance sheet or books of account of the assessee is relevant, it is not a conclusive factor in determining whether the shares were held as an investment or as stock in trade.
However, the view taken by this Court in that case was that the loss was a capital loss as the sale of the shares was made after a long period of over ten years.
In the case before us, howev er, the shares have been sold within a much shorter period which would suggest, although by no means conclusively, that the sales were in the nature of a business transaction.
The Tribunal also pointed out that the circumstances that the transactions were between companies in which Thapar group had a controlling interest and also in respect of shares of companies belonging to the same group by themselves would not support the conclusion that the transactions were stage managed, although it might arouse suspicion and call for a closer scrutiny.
In respect of both the said lots of shares, the Tribunal pointed out that there was nothing to show that the purchase of these shares had anything to do with the control of the companies concerned.
The Tribunal relied upon the circumstances that the sales were at the market rates or going rates and hence, there was no question of making a bogus loss.
On the basis of these conclusions, the Tribunal held that the losses in respect of the sales of shares of Bharat Starch & Chemicals Ltd. as well as of Greaves Cotton & Co. Ltd. were liable to be allowed as business losses.
From this decision of the Tribunal, the Commissioner of Income 644 tax applied to the Tribunal for referring certain questions for the determination of the High Court.
The Tribunal passed an order referring one question to the Court for determina tion but declined to refer the other questions on the ground that the decision of the Tribunal was arrived at purely on the appreciation of the facts brought out in evidence and that these questions, in respect of which the Commissioner wanted a reference, were not questions of law which deserved to be referred to the court for determination.
From this decision of the Tribunal, the Commissioner applied to the High Court for directing the Tribunal to refer the said questions also to the Court for determination.
The High Court by its impugned judgment rejected the said applica tion.
The present appeal is directed against the said deci sion of the High Court.
When the appeal reached hearing before us, Mr. Manchan da, learned counsel for the Commissioner stated that he pressed the appeal only in respect of two questions which are as follows: 1.
Whether, on the facts and in the circumstances of the case, the Tribunal had any evidence and had not relied on irrelevant or partly irrelevant materials in holding that the transactions entered into by the assessee in.
the purchase and sale of shares of Bharat Starch & Chemicals Ltd. and Greaves Cotton & Co. Ltd. were genuine commercial transactions and whether such finding was not otherwise unreasonable or perverse? 2.
Without prejudice to Question No. (1), whether, on the facts and in the circum stances of the case, the Tribunal 's finding that the assessee entered into the transac tions of purchase and sale of 25000 shares of Bharat Starch & Chemicals Ltd. and 3000 shares of Greaves Cotton & Co. Ltd. in the course of its business as a dealer in shares was based on no evidence or was otherwise unreasonable or perverse? In deciding the question whether the Tribunal should have referred the aforesaid two questions to the court for determination, there are certain well settled principles which have to be borne in mind.
In Commissioner of Income tax, Bihar and Orissa vs Dalmia Jain & Co. 645 Ltd., this Court held that whether a particular loss is a trading loss or a capital loss is primarily a question of fact.
Where the Tribunal has come to the conclusion that the loss incurred by the assessee in the sale of the shares held by it was a trading loss and it is not the case of the Department that in arriving at its decision the Tribunal had taken into consideration any irrelevant material or failed to take into consideration any relevant material, there is no room for interference by the court.
It is well settled that the Tribunal is the final fact finding body.
The questions whether a particular loss is a trading loss or a capital loss and whether the loss is genuine or bogus are primarily questions which have to be determined on the appreciation of facts.
The findings of the Tribunal on these questions are not liable to be interfered with unless the Tribunal has taken into consideration any irrelevant material or has failed to take into consideration any relevant material or the conclusions arrived at by the Tribunal is perverse in the sense that no reasonable person on the basis of facts before the Tribunal could have come to the conclusion to which the Tribunal has come.
It is equally settled that the decision of the Tribunal has not to be scrutinised sentence by sentence merely to find out whether all facts have been set out in detail by the Tribunal or whether some incidental fact which appears on record has not been noticed by the Tribunal in its judgment.
If the court, on a fair reading of the judgment of the Tribunal, finds that it has taken into account all relevant material and has not taken into account any irrelevant material in basing its conclusions, the decision of the Tribunal is not liable to be interfered with, unless, of course, the conclusions arrived at by the Tribunal are perverse.
Keeping these principles in mind in the present case, we find that the Tribunal has taken note of all the relevant circumstances which appear on record and which were referred to by the Departmental Representatives before the Tribunal.
It has been taken into account any material which could be said to be irrelevant in arriving at its conclusions.
In considering whether the shares of Bharat Starch & Chemicals Ltd. and Greaves Cotton & Co. Ltd. were held by the assessee as stock in trade or as capital, the Tribunal has taken into account the fact that the assessee was earlier treated by the Department as a dealer in shares, as pointed out by Mr. Manchanda, but that circumstance cannot be regarded as irrelevant in view of the decision to which we have already referred.
It is also not possible to say that the decision of the Tribunal is perverse.
Mr. Manchanda strongly contend ed before us that the Tribunal has nowhere stated in terms that it 646 has taken into consideration the totality of circumstances or the cumulative effect of the circumstances pointed out to the Tribunal and hence the matter should be remanded to the Tribunal.
In our view, there is no substance in this submis sion.
It is true that the Tribunal has not stated in terms that it has considered the cumulative effect of the circum stances pointed out to the Tribunal, but, on the other hand, a plain reading of the judgment of the Tribunal makes it clear that the Tribunal has, in fact, taken into account the cumulative effect of the circumstances on record before the Tribunal.
It is not necessary for the Tribunal to state in its judgment specifically or in express words that it was taken into account the cumulative effect of the circum stances or has considered the totality of facts, as if that were a magic formula; if the judgment of the Tribunal shows that it has, in fact, done so, there is no reason to inter fere with the decision of the Tribunal.
In our opinion, there is no merit in this appeal and it must fail.
In the result, the appeal fails and is dismissed with costs.
G.N. Appeal dismissed.
| IN-Abs | For the assessment year 1959 60, the Income Tax Officer disallowed the loss claimed by the Respondent assessee, on the sale of certain shares, to its allied concern, on the grounds that the sale price was much below the market quota tion and that the motive behind the transactions was to set off the loss against the profits and hence the transactions were not genuine.
On appeal by the assessee the Appellate Assistant Com missioner held that the losses on both the transactions cannot be held to be business losses.
ion a further appeal by the assessee, the Tribunal observed that there was nothing to show that the transac tions in question had anything to do with the control of the companies concerned.
It also relied upon the circumstance that the sales were at the market rates or going rates and held that there was no question of making a bogus loss.
Based on these facts and circumstances, the Tribunal held that the losses in respect of the sales of the shares in question, were liable to be allowed as business losses.
639 The Commissioner of Income Tax made an application to the Tribunal for referring certain questions for the deter mination of the High Court.
The Tribunal declined to refer the questions on the ground that they were not questions of law, which deserved to be referred to the Court for determi nation.
This order of the Tribunal was confirmed by the High Court.
This appeal, by special leave, is against the said order of the High Court.
Dismissing the appeal, HELD: 1.
Where the Tribunal has come to the conclusion that the loss incurred by the assessee in the sale of shares held by it was a trading loss and it is not the case of the Department that in arriving at its decision the Tribunal had taken into consideration any irrelevant material or failed to take into consideration any relevant material, there is no room for interference by the court.
It is well settled that the Tribunal is the final fact finding body.
The ques tions whether a particular loss is a trading loss or a capital loss and whether the loss is genuine or bogus are primarily questions which have to be determined on the appreciation of facts.
The findings of the Tribunal on these questions are not liable to be interfered with unless the Tribunal has taken into consideration any irrelevant materi al or has failed to take into consideration any relevant material or the conclusion arrived at by the Tribunal is perverse in the sense that no reasonable person on the basis of the facts before the Tribunal could have come to the conclusion to which the Tribunal has come.
[645B D] C.I.T., Bihar & Orissa vs Dalmia Jain & Co. Ltd., , relied on.
It is equally well settled that the decision of the Tribunal has not to be scrutinised sentence by sentence merely to find out whether all facts have been set out in detail by the Tribunal or whether some incidental fact which appears on record has not been noticed by the Tribunal in its judgment.
If the court, on a fair reading of the judg ment of the Tribunal, finds that it has taken into account all relevant material and has not taken into account any irrelevant or impermissible material in basing its conclu sions, the decision of the Tribunal is not liable to be interfered with, unless, of 640 course, the conclusions arrived at by the Tribunal are perverse [645DF] 3.
In the instant case, the Tribunal has taken note of all the relevant circumstances which appear on record and which were referred to by the Departmental Representatives before the Tribunal.
It has not taken into account any material which could he said to be irrelevant in arriving at its conclusions.
In considering whether the shares of Bharat Starch & Chemicals Ltd. and Greaves Cotton & Co. Ltd. were held by the assessee as stock in trade or as capital, the Tribunal has taken into account the fact that the assessee was earlier treated by the Department as a dealer in shares, that circumstances cannot he regarded as irrelevant.
The decision arrived at by the Tribunal cannot be said to he perverse.
[645F H] Karam Chand Thapar & Bros. (P) Ltd. vs Commissioner of Income tax (Central), Calcutta, ; re ferred to. 4.
It is not necessary for the Tribunal to state in its judgment specifically or in express words that it has taken into account the cumulative effect of the circumstances or has considered the totality of facts, as if that were a magic formula; if the judgment of the Tribunal shows that it has, in fact, done so, there is no reason to interfere with the decision of the Tribunal.
[646B C]
|
ivil Appeal No. 1795 of 1982.
From the Judgment and Order dated 3.2.
1982 of the High Court of Calcutta in Appeal No. 75 of 1981.
Shanti Bhushan, Ms. Lira Goswami, section Ganesh, R. Narain and D.N. Mishra for the Appellant.
478 C.S. Vaidyanathan, S.R. Setia, K.V Mohan and K.V. Viswanathan for the Respondents.
The Judgment of the Court was delivered by K.N. SAIKIA, J.
This appeal by special leave is from the appellate judgment of the Calcutta High Court in Appeal No. 75 of 1981 dismissing the appeal and upholding the judgment of the learned Single Judge granting stay of the appellant 's suit on the respondent 's application under section 34 of the .
The appellant as plaintiff has instituted suit No. 736 of 1978 on 29.9.1978 in the original side of the Calcutta High Court against the respondent as first de fendant and Canara Bank as second defendant stating in the plaint, inter alia, that the first defendant, was the sole and absolute owner of two fishing trawlers, Ave Maria I and Ave maria II, registered under No. 1567 dated 30th January, 1974 and No. 1568 dated 30th January, 1974 with the Regis trar of Indian Ships, Cochin that the said trawlers were imported by the first defendant with financial assistance of the second defendant, Canara Bank, under Import Licence No. P/CC/2062299 dated 3rd March, 1971 issued by or on behalf of the Chief Controller of Imports & Exports, Ministry of Commerce, Government of India, New Delhi, that in or about March, 1977 the first defendant as owner agreed to charter and the plaintiff as charterer agreed to take on charter for the purpose of deep sea fishing, the said two trawlers on the terms and conditions contained in a "Bare Boat Charter Party" dated the 21st March, 1977, hereinafter called, the agreement, executed at Calcutta, subject to the owner first defendant obtaining the requisite permission in writing from the Chief Controller of Imports & Exports and the No Objec tion Certificate of the second defendant for chartering the said trawlers; that within seven days of receipt of the approval of the Chief Controller of Imports & Exports or no objection certificate from the Canara Bank the first defend ant owner will deliver the said trawlers to the plaintiff charterer at the Port of Vishakapatnam for carrying out the inspection of the said trawlers by its authorised agents to ascertain repairs to be carried out to the trawlers for making them fully operational without any defect whatsoever and also to ascertain the cost of such repairs and thereaf ter the Chatterer will undertake the repairs at the cost of the owner and bring them to fully operational condition without any defect including all aspects of refrigeration equipment; that the charterer will then conduct fishing trials to ascertain actual condition of the trawlers and in case the condition is fully satisfied according to the Charterer, and the 479 owner furnishes to the Charterer all documents certifying sea worthiness and also supplies proof of compliance of pre condtions, the Charter hiring shall commence on or from the date fishing trials are ended; that the charterer shall pay to the owner Rs.50,000 per trawler per month payable in advance every month and shall continue to pay up to and including the date of redelivery of each trawler to the owner at Vishakapatnam (unless lost sunk); that he shall keep a deposit of Rupees one lakh per trawler with the owner during the period of the agreement to be adjusted without interest towards the charter hire against the last two months of charter period; that by a Letter No. CG/N 2 143 70 71 dated 18th August, 1977 the Chief Control ler of Imports & Exports granted permission to the first defendant to charter the said trawlers to the plaintiff on a charter rental of Rs.50,000 per month per trawler for a period of three years; that the owner delivered the said two trawlers for repairs to the plaintiff at Vishakapatnam on or about 30th September, 1977 and thereafter on or about 2nd February, 1978 the parties agreed to modify the agreement in the manner stated in a subsequent written agreement dated 2nd February, 1978 executed at Calcutta; and that according to the agreement after modification, the charter hire com menced from 15.1.1978 and the charter hire revised to Rs.6,25,000 per trawler per year.
The plaintiff 's main averments in the plaint are that the permission dated 18th August, 1977 granted by the Chief Controller of Imports & Exports to the first defendant for chartering the said trawlers to the plaintiff was given under the said Import Licence to the first defendant and the permission was given subject to two conditions, namely, that the charter rental would be Rs.50,000 per month and that the charter would be for a period of three years but the agree ment dated 21st March, 1977 was, in fact, for a period of two years with an option to the plaintiff to continue the hire for a further period of three years and as such the agreement was in contravention of and contrary to the terms of the said permission and consequently to the said Import Licence, and hence, illegal, against public policy and void; that the plaintiff and the first defendant entered into the agreement and its modification dated 2nd February, 1978 on the basic, essential and fundamental assumption that the trawlers would be made fully operational and free from all defects by effecting repairs as contemplated thereby but the assumption was mistaken and not true and was subsequently discovered to be so mistaken that it rendered the agreement with its modifications void; that pursuant to the agreement the plaintiff paid to the first defendant through the second defendant the initial deposit of Rupees two lakhs in respect of the said two trawlers of the 480 charter rent as agreed up to and for the month of July 1978, but in or about early September 1978 the plaintiff having discovered the agreement to have been void and illegal called upon the first defendant to take back or obtain permission of the said trawlers lying at Vishakapatnam at the risk and cost of the first defendant but he failed and neglected to do so; and that the first defendant is bound to pay or make compensation for all the advantages which he had received under the agreement and its modifications and the costs, charges and expenses which the plaintiff has incurred on the said trawlers, being assessed at Rs. 39,64,34 1 as per Schedule 'D ' to the plaint.
In the alternative it has been averred that in supplying the said trawlers the first defendant committed a fundamental breach of the agreement and its modifications which went to the root and affected the very substance of the same and which made its perform ance impossible and such a breach on the part of the first defendant has produced a situation fundamentally different from anything which the parties could as reasonable persons have contemplated when the agreement was entered into, and as the plaintiff has not been able to use or obtain any benefit out of the said trawlers, the plaintiff never was nor is bound by the obligation under the agreement and the modification thereof and was entitled to and had duly re scinded the same and the plaintiff had in the premises suffered loss and damages which the first defendant is bound to compensate and such loss and damage is assessed reasona bly at Rs.39,64 341 particulars whereof have been given in Schedule 'D ' thereof; and that the plaintiff is entitled to recover the said sum of Rs.39,64,34 1 as money paid to and or on account of the first defendant and expenses so in curred without any consideration and or for consideration which has totally failed and/or to the use of the first defendant.
The plaintiff accordingly claimed, inter alia, a decla ration that the agreement dated 2 Ist March, 1977 and the modifications thereof dated 2nd February, 1978 were, and are illegal, against public policy and void; a decree for Rs.39,64,341 against the first defendant; alternatively an enquiry into the amount due to the plaintiff from the first defendant and decree for a sum found due on such enquiry; in the alternative decree for the same amount as compensation for loss and damage and or as money paid to or expenses incurred without any consideration or for consideration which has totally failed or to the use of the first defend ant; and further and other reliefs.
In the matter of the aforesaid Suit No. 736 of 1978, hereinafter referred to as 'the suit ', the first defendant after receiving summons 481 and entering appearance moved on 25th April, 1979 and appli cation under section 34 of the , here inafter referred to as 'the Act ', impleading the plaintiff (instant appellant) as first respondent and Canara Bank second defendant as second respondent stating, inter alia, that the agreement as modified on 2nd February, 1978 con tained an arbitration clause; that the agreement has been and is perfectly binding and not violative of the conditions of the permission granted by the Controller of Imports & Exports; that the defects in the refrigeration system as alleged are factually wrong; that the plaintiff, his serv ants and agents have themselves materially deteriorated the machines and hence no amount was payable to the plaintiff as claimed in the plaint; and that all the disputes, conten tions alleged to have arisen between the plaintiff and the defendant were wholly covered by the said arbitration clause contained in the agreement which was binding between the parties.
Accordingly, it was prayed that the suit and all proceedings therein be stayed and interim orders, costs and other reliefs be granted.
The plaintiffs filed affidavit in opposition to the application and the applicant first de fendant filed affidavit in reply.
The learned Single Judge in his judgment dated 11.2.
1981 held, inter alia, that there was no question of inva lidity for non compliance of the conditions of the licence granted to the first defendant applicant as necessary per mission was obtained in respect of the agreement from the Chief Controller of Imports and Exports vide his letter dated 18th August, 1977 and the modification of the agree ment on 2nd February, 1978 could not and did not materially alter its terms to impair its validity and there was sub stantial compliance with the obtained permission; that though in a particular case if there was any doubt about facts, the matter had to be decided by trial on evidence, in this case, having regard to the admitted facts and conduct of the parties, it was not necessary to set down the matter for trial on evidence to determine the facts as the same could not be disputed; that having regard to the conduct of the parties in admitted documents, being the licence of the petitioner granted by the Chief Controller of Import & Export in respect of the said two trawlers and the provi sions of the Import and Export Control Act, 1947, and Appen dix 31 of the Import & Export Trade Control Hand Book for Rules and Procedures, 1979, the correspondence between the parties before the alleged discovery of purported mistake and illegality by the respondent (plaintiff) and particular ly the letter dated 18th July, 1978 from the respondent No. 1 (plaintiff) to the applicant 1(first defendant) and the Balance Sheet of the plaintiff (Respondent No. 1) I.T.C. Ltd, for the year 1978, there is no question of any illegal ity or any mutual mistake; that the alleged 482 fundamental breach is wholly covered by the arbitration clause as it wide enough to include the same; that the arbitration clause is valid and binding between the parties; that the allega tion of breach of contract and the claims made are within the jurisdiction of the arbitrator; and that all the condi tions under section 34 of the Act have been satisfied in this case.
Accordingly the learned Judge granted stay of the suit and directed the parties to take immediate steps for initiation of reference under the arbitration agreement.
On appeal, the learned Division Bench by an elaborate and erudite judgment dismissed the appeal holding, inter alia, that in the facts and circumstances of the case it could not be held that the trial court erred in exercising its discretion to decide the controversy, namely, whether the contract being void the arbitration clause also was void, in the application without evidence and on the basis of pleadings only, nor was the discretion exercised improp erly; that the learned Judge was not wrong in coming to the conclusion that the mistake as pleaded as to quality of the goods was not a mistake of such nature as to make the thing contracted for something different, and in holding that there was no case of mutual mistake of such a type as to quality of the thing contracted for which could have avoided the parent contract which contained the arbitration clause; and that the learned Single Judge was right in so far as he held that the matters were arbitrable apart from the ques tion of illegality of the contract.
It was further held that there was no breach of conditions of the permission or the provisions of the Import & Export Control Act to render the contract illegal or void; and that the Court having held that all the contentions and allegations were arbitrable, the granting stay in the suit was reasonable and proper.
Mr. Shanti Bhushan, the learned counsel for the appel lant submits, inter alia, that the subject matter of the suit, namely, the question whether the agreement was void ab initio for mutual mistake was not arbitrable at all and the learned Courts below erred in holding so; that even assuming but not admitting that the subject matter was arbitrable, it having involved complicated questions of facts the court ought not to have exercised jurisdiction on the application under section 34 and in doing so it acted without jurisdiction and, assuming that the court had juris diction, it should have decided only after taking oral and documentary evidence and not merely on affidavits; that the agreement itself having been void ab initio due to mutual mistake the arbitration clause, namely, clause 18 of the charter party, also perished with it and there was no scope for arbitration at all and the learned 483 courts below erred in holding that all the contentions raised and allegations made in the suit were arbitrable under the arbitration clause; and that the agreement was void being violative of the conditions of the permission and for that matter the import licence and the provisions of the Import and Export Control Act.
Mr. C.S. Vaidyanathan, the learned counsel for the respondent refuting submits that there having been no mutual mistake so as to invalidate the agreement, the arbitration clause remains binding and the subject matter of the suit has rightly been held to be arbitrable; that the court rightly exercised jurisdiction on the application under section 34 of the on the basis of the affi davits and at no stage before argument the appellant as respondent No. 1 applied to the court for permission to adduce oral evidence, and stay of the suit was granted in accordance with law on the basis of the evidence on record; that the agreement as modified was not void on the ground of violation of the permission or of the import licence or of the provisions of the Import & Export Control Act; and that the direction to proceed to arbitration is just and proper and the respondent has no objection to a Retired Supreme Court Judge being appointed arbitrator.
The first question to be decided in this appeal, there fore, is whether in an application under section 34 of the Indian the court has jurisdiction to decide the validity of the Contract containing the arbitration clause, and if so, whether it has to be decided on affida vits or on evidence.
To decide the question we may conveniently refer to the provisions of section 34 of the ; Section 34: Power to stay legal proceedings where there is an arbitration agreement.
Where any party to an arbitration agreement or any person claiming under him commences any legal proceedings against any other party to the agreement or any person claiming under him in respect of any matter agreed to be referred, any party to such legal proceedings may, at any time before filing a written statement or taking any other steps in the proceedings, apply to the judicial authority before which the proceedings are pending to stay proceed ings; and if satisfied that there is no suffi cient reason why the matter should not be referred in accordance with the arbitration agreement and that the applicant was, at the time, when the proceedings were commenced, and 484 still remains, ready and willing to do all things necessary to the proper conduct of the arbitration, such authority may make an order staying the proceedings.
This section deals with the staying of a suit where there is an arbitration agreement concerning the subject matter of the suit and between the same parties, for the Court to have power to exercise the discretion conferred upon it by this section, there must have been a valid agree ment to submit to arbitration.
Where the objection is that the arbitration is a nullity, it amounts to an objection of want of jurisdiction.
The term "arbitration agreement" includes "agreement to refer", and "submission" to arbitra tor.
A submission forming part of a void contract is itself void and cannot be enforced.
Where a firm of bookmakers had engaged in betting transactions with the defendants on the terms that any dispute which might arise should be referred to arbitration, it was held that the whole contract was void and unenforceable and that the defendants could not be compelled to submit to arbitration: Joe Lee vs Lord Dalneny, Where there is no valid arbitration agree ment on the subject matter of the suit, there is no justifi cation for staying a suit for that will deprive the plain tiff of his fight to sue on that subject matter.
In Heyman vs Darwins, , Lord Macmillan pointed out at Pages 370 371: "If it appears that the dispute is whether there has ever been a binding contract between the parties, such a dispute cannot be covered by an arbitration clause in the challenged contract.
If there has never been a contract at all, there has never been as part of it an agreement to arbitrate.
The greater includes the less.
Further, a claim to set aside a contract on such grounds as fraud, duress or essential error cannot be the subject matter of a reference under an arbitration clause in the contract sought to be set aside.
Again, an admittedly binding contract containing a general arbitration clause may stipulate that in certain events the contract shall come to an end.
If a question arises where the con tract has for any such reason come to an end I can see no reason why the arbitrator should not decide that question.
It is clear, too, that the parties to a contract may agree to bring it to an end to all intents and purposes and to treat it as if it had never existed.
In such a case, if there be an arbitration clause in the contract, it perishes with the con 485 tract.
If the parties substitute a new con tract for the contract which they have abro gated the arbitration clause in the abrogated contract cannot be invoked for the determina tion of questions under the new agreement.
All this is more or less elementary.
" Earlier in Monro vs Bognor Urban District Council, ; where a building contract had been en tered into between the plaintiff and the defendants for a construction of sewerage works contained an arbitration clause which provided that if at any time any question, dispute or difference should arise between the parties upon or in relation to or in connection with the contract, the matter should be referred to arbitration and during the progress of the works disputes arose between the parties mainly as to the nature of the site upon which the works had to be carried out, which the plaintiff alleged was different from that which he had been led to believe by the specifica tions.
The plaintiff having brought an action against the defendants claiming, inter alia, damages for fraudulent misrepresentation whereby he was induced to enter into the contract, the defendants took out a summons asking that all proceedings in the action be stayed and the matter be re ferred to arbitration.
It was held that the action, being based on fraud, referred to matters wholly outside the powers of the arbitrator, with which he could not possibly deal, and so could not be said to be a question, dispute or difference upon or in relation to or in connection with the contract and as such referable to arbitration under the arbitration clause.
In Jawaharlal Burman vs Union of India, [1962] 3 S.C.R. 769 it was held that section 32 of the Act creates a bar against the institution of suits with regard to an arbitra tion agreement or award on any ground whatsoever.
Thus if a party affirms the existence of an arbitration agreement or its validity it is not open to the party to file a suit for the purpose of obtaining a declaration about the existence of the said agreement or its validity.
The bar to the suit thus created by section 32 of the Act inevitably raises the question as to what remedy is open to a party to adopt in order to obtain an appropriate declaration about the exist ence or validity of an arbitration agreement.
1t was held that having regard to the scheme of sections 31, 32 and 33 of the Act in matters which fail within the bar created by section 32, if a suit cannot be filed it is not necessarily intended that an application can be made under the Court 's powers provided for by section 31 and impliedly recognised by section 32 of the Act.
In the later part of section 33 an application can be made to have the effect or purport of the agreement 486 determined but not its existence.
That means that an appli cation to have the effect of the agreement can be made provided the existence of the agreement is not in dispute, and that a party affirming the existence of an arbitration agreement cannot apply under section 3 for obtaining a decision that the agreement in question exists.
In Waverly Jute Mills Co. Ltd. vs Raymon & Co. (India) Pvt. Ltd., ; ; the Constitution Bench reiterated the decision in Khardah Co. Ltd. vs Raymon & Co. India Ltd., ; where it was held that if a contract is illegal and void, the arbitration clause which is one of the terms of the contract thereof must also perish along with it and that a dispute relating to the validity of the contract is in such a case for the court and not for the arbitration to decide.
Where the arbitration clause is a term of the particular contract whose validity is in question it has no existence apart from the impugned contract and must perish with it.
In Renusagar Co. vs General Electric Co., ; at page 507 it has been reiterated that though section 34 of the confers a discretion upon the Court in the matter of granting stay of legal proceedings where there is an arbitration agreement, it cannot be disputed that before granting the stay the Court has to satisfy itself that arbitration agreement exists factually and legally and that the disputes between the parties are in regard to the matters agreed to be referred to arbitration and that decided cases have taken the view that the Court must satisfy itself about these matters before the stay order is issued.
In other words, Court under section 34 must finally decide those issues before granting stay.
Among High Court decisions reference may be made to Banwari Lal vs Hindu College, Delhi, A.I.R. 1949 East Punjab 165 wherein it has been held at paragraph 33 that the Arbi tration Act has been enacted merely with the object of consolidating the law relating to arbitrations, and the question of the existence or validity of the contract con taining an arbitration agreement being not a matter falling within the purview of the Act, it cannot be said, with any show of reason, that section 32 takes away the jurisdiction of the courts to give appropriate relief in suit brought either to contest or to establish, the existence or validity of the contract.
In Johurmull Parasram vs Louis Dreyfus Cx. Ltd., 52 C.W.N. (1947 48) 137; A.I.R. 1949 Cal. 179 it was held at para 14 that the court must consider a suit as it is pleaded and framed.
If it comes to a conclusion that a suit as pleaded in a suit on the contract or arising out of the contract containing the arbitration clause 487 then the suit should be stayed.
But on the other hand if the suit is pleaded as a suit independent of the contract then the Court has no power to stay the suit although it is satisfied that the frame of the suit is merely a means of avoiding the consequences of alleging the true nature of the claim.
In considering the question of stay of the suit the Court is not entitled to go into the question as to what is substantially the nature of the claim.
So also in Pramada Prasad vs Sagar Mal Aggarwal, A.I.R. 1952 Patna 352 it was observed that from the language of the Section 34 it is clear that party can apply to stay a legal proceeding only when the repudiation is of the right or obligation in re spect of any matter agreed to be referred, and not when the very existence of the agreement is repudiated.
The court relied on the decision in Monro vs Bognor Urban District Coun, In Narsingh Prasad vs Dhanraj Mills, I.L.R. 21 Patna 544; A.I.R. 1943 Pat 53 Harries, C.J. held that where an agreement is impeached on the ground of fraud and the dispute is as to the factum or validity of contract, such a dispute does not fail under the arbitration clause and should be decided by the Court.
Similarly in Birla Jute Manufacturing Co. Ltd. vs Dulichand, AIR 1953 Calcutta 450 it was held at paragraph 15 that a dispute as to the validity of the contract cannot be held to be within an arbitration agreement contained in the contract itself and such a dispute cannot be referred to arbitrators or dealt with by them under such an agreement, unless the parties agreed to include it in the arbitration clause.
Otherwise where the contract itself is repudiated in the sense that its original existence or its binding force is challenged, for example, where it is said that the parties were never 'ad idem ' or where it is said that the contract is voidable ad initio on the ground of fraud, misrepresenta tion or mistake and it has been avoided, the parties are not bound by any contract and escape the obligation to perform any of its terms, including the arbitration clause, unless the provisions of that clause are wide enough to include the question of jurisdiction as well.
In W.F. Ducat & Co. Pvt. Ltd. vs Hiralal Pannalal, A.I.R. 1976 Calcutta 126, Salil K. Roy Choudhary, J. held at paragraph 8 that where in a suit the plaintiff alleges that the contract containing the arbitration clause is void and illegal and prima facie it appears that there are sufficient grounds on which the legality of the said contract has been challenged for non compliance of the statutory requirement, the court should decline to exercise discretion in favour of the stay of the suit.
Similarly in General Enterprises vs Jardine Handerson Ltd., A.I.R. 1978 Calcutta 407, Sabyasachi Mukharji, J., as his Lordship then was, held that if the contract containing the arbitration clause was obtained by fraud the stay of the suit could not be granted under Section 34 of the Act.
Thus, while there is not doubt 488 about the law as enunciated in the above English and Indian decisions, namely, where the validity, existence or legality of the contract is challenged in the suit on grounds de hors, independent of, or external to the terms or stipula tions of the contract, the court in an application under Section 34 of the Act shall have no jurisdiction to go into the question, and that in large majority of cases it would be applicable, in appropriate cases, having regard to the nature of the dispute raised in the pleadings of the suit, the compass and scope of the arbitration clause in the contract, the surrounding facts and circumstances of the case having a bearing on the question of genuine grievance falling outside or inside the arbitration agreement and the objects and spirit of the , the court may be justified in deciding the validity, existence or legality of the challenged contract containing the arbitration agree ment.
In Heyman vs Darwins, (supra) Viscount Simon, L.C. stated thus: "if the dispute is whether the contract which contains the clause has ever been entered into at all that issue cannot go to arbitration under the clause, for the party who denies that he has ever entered into the contract is thereby denying that he had ever joined in the submission.
Similarly, if one party to the alleged contract is contending that it is void ab initio (Because for example, the making of such a contract is illegal), the arbitration clause cannot operate for on this view the clause itself also is void.
But, in a situa tion where the parties are at one in asserting that they entered into a binding contract, but a difference has arisen between them whether there has been a breach by one side or the other, or whether circumstances have arisen which have discharged one or both parties from further performance, such differences should be regarded as difference which have arisen 'in respect of ' or 'with regard to ' or 'under ' the contract, and an arbitration clause which uses these, or similar, expressions should be construed accordingly.
" Section 34 of the , deals with the staying of a suit where reference concerning the subject matter of the suit and between the same parties is pending.
This section corresponds to Section 4 of the English .
Whether a particular dispute arising out of a particular contract is referable to arbitration or not must necessarily depend on the intention of the parties as embodied in the arbitration clause.
If the dispute is squarely covered by the arbitration clause the 489 relevant provisions of the Act will be attracted.
Section 32 puts a bar to suits contesting arbitration agreement or award by providing that notwithstanding any law for the time being in force, no suit shall lie on any ground whatsoever for a decision upon the existence, effect or validity of an arbitration agreement or award, nor shall any arbitration agreement or award be enforced, set aside, amended modified or in any way affected or otherwise than as provided in the Act.
Section 33 of the Act provides that any party to an arbitration or any person claiming under him desiring to challenge the existence or validity of an arbitration agree ment or an award to have the effect of either determined shall apply to the Court and the Court shall decide the question on affidavits: Provided that where the Court deems it just and expedient it may set down the application for hearing on other evidence also, and it may pass such orders for discovery and particulars as it may do in a suit.
It may be noted that section 32, 33 and 34 speak of an arbitration agreement as defied in section 2(a) of the Act which means a written agreement to submit present or future differences to arbitration, whether an arbitrator is named therein or not.
In the instant case the arbitration clause forms a part of the agreement, namely, the charter party.
The question is whether the validity or otherwise of the charter party itself can be said to have been covered within the arbitration clause.
On scrutiny of clause 18 we find that any dispute or difference in respect of the construc tion, meaning or effect or as to the rights and liabilities of the parties thereunder or any other matter arising out of this agreement shall be referred to arbitration.
Can the validity of the contract itself as embodied in the charter party be said to have arisen out of the contract or can the validity or otherwise of the contract in the charter party itself be said to be construction, meaning or effect or rights and liabilities of the party thereunder? In our opinion, the answer is in the negative.
The arbitration agreement is not the same as the contract in the charter party.
It cannot, therefore, be said that the validity or otherwise of the chartery party was covered by clause 18.
In Khardah Company Ltd. vs Raymon & Co. (India) Pvt. Ltd., ; the appellant company entered into a contract on September 7, 1955 for the purchase of certain goods and clause 14 thereto provided that all disputes arising out of or concerning the contract should be referred to the arbitration of the Bengal Chamber of Commerce.
The respondents having failed to deliver the goods as agreed the appellants applied to the Bengal Chamber of Commerce for arbitration and an award made in favour of the appellant.
Thereupon the respondent filed an application in the High Court of Calcutta under 490 section 33 of the challenging the validity of the award on the ground that the contract dated September 7, 1955 itself was illegal as it was in contraven tion of the notification of the Central Government dated October 29, 1953.
It was held that the dispute as to the validity of the contract dated September 7, 1955, was not one which the arbitrators were competent to decide under clause 14 and that in consequences the respondents were entitled to maintain the application under section 33 of the Act and that where an agreement is invalid every part of it including clause as to arbitration contained therein must also be invalid.
In Anderson Wright Ltd. vs Moran and Compa ny, [1955] 1 S.C.R. 862 it has been laid down that in order that a stay may be granted under section 34 of the Act, it is necessary, among others, that the legal proceeding which is sought to be stayed must be in respect of a matter agreed to be referred and the Court must be satisfied that there is no sufficient reason why the matter should not be referred to an arbitrator in accordance with the arbitration agree ment.
The question whether the dispute in the suit falls within the arbitration clause really pre supposes that there is such agreement and involves consideration of two matters, i.e. (i) what is the dispute in the suit and (ii) what dispute the arbitration clause covers.
It is incumbent upon the Court to decide whether there is a binding contract for arbitration between the parties.
If it is found that the dispute in the suit is not covered by the arbitration clause the application for stay may be dismissed.
In Damodar Valley Corporation vs
K.K. Kar; , it has been held that as the contract is an outcome of the agreement between the parties it is equally open to the parties thereto and to Court to bring to an end or to treat it as if it never existed.
It may also be open to the parties to terminate previous contract and substitute in the place a new contract or alter the original contract in such a way that it cannot subsist.
In all these cases since the entire contract is put to an end to, the arbitration clause, which is a part of it, also perishes along with it.
Where, therefore, the dispute between the parties is that the contract itself does not subsist either as a result of its being substituted by a new contract or by rescission on alteration, that dispute cannot be referred to the arbitration as the arbitration clause itself would perish if the averment was found to be valid.
As the very jurisdiction of the arbitrator is dependent upon the existence of the arbitration clause under which he is appointed, the parties have no right to invoke a clause which perished with the contract.
In case of rescission it would put an end to the rights of the parties to the con tract in future but it may permit claiming of damages either for previous breaches or for the breach which constitute the termination.
The contract being consensual, the question whether the 491 arbitration clause survives or perishes would depend on the nature of the controversy and its effect upon the existence of survival of the contract itself.
A dispute as to the binding nature of the contract cannot be determined by resort to arbitration because the arbitration clause itself stands or falls according to the determination of the ques tion in dispute.
As was held in Hirji Mulji vs Cheong Yue Steamship Co., , "a contract that has deter mined is in the same position as one that has never been concluded at all".
In Heyman vs Darwins, (supra) Lord Porter pointed out "that it is not in every instance in which it is claimed that the arbitrator has no jurisdiction the Court, will refuse to stay an action.
If this were the case such a claim would always defeat an agreement to submit disputes to arbitration, at any rate, until the question of jurisdiction had been decided.
The Court to which an application for stay is made is put in possession of the facts and arguments and must in such a case make up its mind whether the arbitrator has jurisdiction or not as best it can on the evidence before it.
Indeed, the application for stay gives an oppor tunity for putting these and other considerations before the court that it may determine whether the action shall be stayed or not.
" These observations were accepted by S.R. Das, J in the case of Khusiram vs Hanutmal, [1948] 53 C.W.N. 505,518 wherein it was held that where on an application made under section 34 of the for stay of a suit, an issue is raised as to the formation, existence or validity of the contract containing the arbitration clause, the Court is not bound to refuse a stay but may in its discretion, on the application for stay, decide the issue as to the existence or validity of the arbitration agreement even though it may involve incidentally a decision as to the validity or existence of the present contract (Emphasis supplied).
Their Lordships in Anderson Wright Ltd. vs Moran and Company, (supra) reiterating the above passage observed: "We are in entire agreement with the view enunciated above." Thus, where in an application under section 34 of the Act an issue is raised as to the validity or existence of the contract containing the arbitration clause, the court has to decide first of all whether there is a binding arbitration agreement, even though it may involve incidentally a deci sion as to the validity or existence of the parent contract.
The court has to bear in mind that a contract is an agree ment enforcible at law and that it is for the parties to make their own contract and not for the court to make one for them.
Court is only to interpret the contract.
The stipulations in the contract have, therefore, to be examined in the light of the dispute raised in the pleadings of the suit.
If it is found that the dispute raised in the suit outside or independent of the contract it follows that the arbitration clause will not encompass that dispute.
However, as the parties were 492 free to make their own contract they were also free to have agreed as to what matters would be referred to arbitration.
If the arbitration clause is so wide as to have included the very validity or otherwise of the contract on the grounds of fraud, misrepresentations, mutual mistake or any valid reason the arbitrator will surely have jurisdiction to decide even that dispute.
Two extreme cases have to be avoided, namely, if simply because there is an arbitration clause all suits including one questioning the validity or existence or binding nature of the parent contract is to be referred to arbitrator irrespective of whether the arbitra tion clause covered it or not, then in all cases of con tracts containing arbitration clause the parties shall be deprived of the right of a civil suit.
On the other hand if despite the arbitration clause having included or covered ex facie even a dispute as to the existence, validity or bind ing nature of the parent contract, to allow the suit to proceed and to deprive the arbitrator of his jurisdiction to decide the question will go contrary to the policy and objects of the as embodied in Sections 32, 33 and 34 of the Act.
Both the extremes have, therefore, to be avoided.
The proper approach would be to examine the issues raised in the suit and to ascertain whether it squarely fails within the compass of the arbitration clause and take a decision before granting the stay of the suit.
If an issue is raised as to the formation existence or validity of the contract containing the arbitration clause, the court has to exercise discretion to decide or not to decide the issue of validity or otherwise of the arbitration agreement even though it may involve incidentally a decision as to validity or existence of the challenged contract.
Should the court find the present contract to be void ab initio or illegal or non existent, it will be without jurisdiction to grant stay.
If the challenged contract is found to be valid and binding and the dispute raised in the suit covered by the arbitration clause, stay of the suit may be justified.
In the instant case considering the issues raised, the arbitration clause and surrounding circumstances and the part played by the parties pursuant to the charter party since execution to the modification and thereafter till objection raised by the appellant plaintiff, we are of the view that the learned trial court did not err in proceeding to decide the issue of validity or legality of the parent contract.
The question whether the validity and legality of the parent contract could be decided without taking oral evi dence need not detain us long.
All the relevant documents and affidavits were before the court and were considered.
Mr. Shanti Bhushan submits that in deep sea fishing, use of trawlers, requirement and standard of refrigeration system in the trawlers so as to maintain 20F temperature in their fish 493 holds are highly technical matters and given the opportunity the appellant plaintiff could have produced expert evidence in the matter.
Counsel, however, states, that at no stage of the proceedings before argument any written or even oral application was made seeking permission to adduce oral evidence.
Admittedly, it was only during agreement that oral prayer was made.
We are, therefore, of the view that no illegality was committed by the trial court in this regard considering the facts and circumstances of the case.
The learned judge rightly observed that if there was any doubt about facts, the matter had to be decided by trial on evi dence, in this case the admitted facts could not be disput ed.
The learned courts have also exercised discretion to grant stay.
Even if it appears that the discretion could have also been exercised to decide the issue of invalidity in a trial on evidence adduced, this court would not substi tute its view for that of the trial court, unless the ends of justice required it to be done.
Since it was said by the Court of Appeal in Ormerod vs Todmordon, that while it had jurisdiction to review the descreation of the judge it would not do so except in a case in which it clearly though that the judge had wrongly exercised his discretion and that an injustice had thereby been done by his order.
This was approved in Charles Osenton & Co. vs Johnston, holding that a legitimate exercise of the jurisdiction would not be disturbed in appeal but a wrongful exercise of the discretion will be corrected by the House of Lords.
Referring to Gardner vs Jay, [1885] 29 Ch.
D. it was ruled in the Printers (Mysore) Pvt. Ltd. vs Pothan Joseph, ; that this court would not light ly interfere under Article 136 of the Constitution with the concurrent exercise of discretion of the Courts below under Section 34 of the Act.
Before it can justly do so, the appellant must satisfy the court, on the relevant facts referred by the courts below, that they exercised their discretion in a manifestly unreasonable or perverse way, which was likely to defeat the ends of justice.
The appel lant has failed to do so in this case.
The next question is whether the learned courts below were correct in holding that there was no mutual mistake so as to render the agreement void ab initio under section 20 of the Contract Act.
Section 20 of the provides that where both the parties to an agreement are under a mistake as to a matter of fact essential to the agreement, the agreement is void.
The explanation to the section says that an erroneous opinion as to the value of the thing which forms subject matter of the agreement is not to be deemed a mistake as to a matter of fact.
Where the parties make mutual mis 494 take misunderstanding each other and are at cross purposes, there is no real correspondence of offer and acceptance and the parties are not really consensus ad idem.
There is thus no agreement at all; and the contract is also void.
A common mistake is there where both parties are mistaken about the same vital fact although both parties are ad idem, e.g. the subject matter of the contract has already perished.
The contract in such a case is void as the illustrations to the section make clear.
In U.P. Government vs Nanhoo Mal, A.I.R. 1960 Allahabad 420 it has been observed that section 20 is concerned with common mistake of fact and not mutual mis take.
A common mistake is made or shared alike by both while mutual means made or entertained by each of the persons towards or with regard to each other.
In Cooper vs Phibbs, ; , A agreed to take a lease of a fish ery from B, though contrary to the belief of both parties at the time, A was tenant for life of the fishery and B had no title at all.
Lord Westbury applied the principle that if parties contract under a mutual mistake and misapprehension as to their relative and respective rights, the result is that the agreement is liable to be set aside as having proceeded upon a common mistake.
The transfer of ownership being impossible, the stipulation was naturali ratione inunitilis.
This principle of Cooper vs Phibbs has been followed in Earl Beauchamp vs Winn and Hudders field Banking Co. vs Henry Lister & Sons, [1895] 2 Ch. 273.
However, Lord Atkin in Bell vs Lever Bros Ltd., ; ; , 27 followed in Kennedy vs Panama Royal Mail Co., and Smith vs Hughes, described the state ment of Westbury too wide and said that the correct view was that there was a contract which the vender was either inca pable of performing or had committed breach of a stipulation as to title; the contract was unenforceable but not void.
In Bell vs Lever Bros Ltd., (supra) an agreement of service between the company and two of the directors of its subsidi ary company was terminated on payment of compensation.
The parties proceeded on the assumption that the service agree ment was not liable to immediate termination by reason of misconduct of the directors which assumption proved to be mistaken.
Fraud was however negatived.
In an action by the company for recession of contract and repayment of moneys paid the agreement was set aside on the ground of mutual mistake as to the quality of the service contract.
The accepted proposition was that whenever it is to be inferred from the terms of the contract or its surrounding circum stances that the consensus has been reached upon the basis of a particular contractual assumption, and that assumption is not true, the contract is avoided; i.e. it is void ab initio if the assumption is of present fact and it ceases to bind if the assumption is of future 495 fact.
The assumption must have been fundamental to the continued validity of the contract or a foundation essential to its existence.
Lord Atkin observed that the common stand ard for mutual mistake and implied conditions as to the existing or as to future fact is: Does the state of new facts destroy the identity of the subject matter as it was in the original state of facts? In the words of Lord Than kerton the error must be such that it either appeared on the face of the contract that the matter as to which the mistake existed was an essential and integral element of the sub ject matter of the contract or was an inevitable inference from the nature of the contract that all parties so regarded it.
Where each party is mistaken as to the other 's inten tion, though neither realises that the respective promises have been misunderstood, there is mutual mistake.
The illus tration in Cheshire and Fifoots Law of Contract is, if B were to offer to sell his Ford Comina Car to A and A were to accept in the belief that the offer related to a Ford Zeph yr.
In such a case, no doubt, if the minds of the parties could be probed, genuine consent would be found wanting.
But the question is not what the parties had in their minds, but what reasonable third parties would infer from their words or conduct.
The court has to ascertain "the sense of the promises".
In other words, it decides whether a sensible third party would take the agreement to mean what A under stood it to mean or what B understood it to mean, or whether indeed any meaning can be attributed to it at all.
Blackman J in Smith vs Hughes, ,607 said "if whatever a man 's real intention may be he so conducts him self what a reasonable man would believe that he was assent ing to the terms proposed by the other party, and that other party upon that belief enters into the contract with him, the man thus conducting himself would be equally bound as if he had intended to agree the other party 's terms".
This case establishes that a contract is void at law only if some term can be implied in both offer and accept ance which prevents the contract from coming into operation.
In Solle vs Butcher, (691) Lord Denning said that once a contract has been made, that is to say, once the parties, whatever their in most states of mind, have to all outward appearances agreed with sufficient certainty in the same terms on the subject matter, then the contract is good unless and until it is set aside for fail ure of some condition on which the existence of the contract depends, or for fraud, or on some equitable ground.
Neither party can rely upon his own mistake to say that it was a nullity from the beginning, no matter that it was a mistake which to his mind was fundamental, and no matter that the other party knew that he was under a mistake.
A fortiori, if the other party did not know of the 496 mistake but shared it.
There is no doubt that the applica tion of the doctrine of mutual mistake depends upon the true construction of the contract made between the parties.
A mutual misunderstanding will not nullify a contract but only if terms of the contract construed in the light of the nature of the contract and of the circumstances believed to exist at the time it was done show that it was never intend ed to apply to the situation which in reality existed at that time, will the contract be held void.
Mistake as to the quality of the article contracted for may not always avoid the contract.
As Lord Atkin said in Bell vs Lever Bros Ltd. (supra) mistake as to the quality of the thing contracted for raises more difficult questions.
In such a case a mis take will not affect assent unless it is the mistake of both parties, and is as to the existence of some quality which makes the thing without the quality essentially different from the thing as it was believed to be.
A distinction has, therefore, to be made between a mistake as to substance or essence on the one hand, and a mistake as to quality or attributes on the other.
A mistake of the former type, will avoid the contract whereas a mistake of the latter type will not.
Such a distinction was made in Kennedy vs Panama, Royal Mail Co. Ltd., (supra).
It may be said that if there be misapprehension as to the substance of the thing there is no contract; but if it be a difference in some quality or accident, even though the misapprehension may have been the actuating motive to the purchaser, yet the contract remains binding.
Thus a mistake as to an essential and integral element in the subject matter of the contract will avoid the contract.
A mistake will not affect assent unless it is the mistake of both parties, and is as to the existence of some quality which makes the thing without the quality essential ly different from the thing as it was believed to be.
A distinction, therefore, should be drawn between a mistake as to the substance of the thing contracted for, which will avoid the contract and mistake as to its quality which will be without effect.
According to circumstances even a mistake as to the substance of the thing contracted for may not necessarily render a contract void as was observed in Solle vs Butcher (supra).
Similarly in Frederick E. Rose (London) Ltd. vs William H. Pim Junior & Co. Ltd., where both parties entered into a contract for the sale of horse beans, which were quite different from the feveroles which they each believed them to be, yet the contract was held not to be void.
Thus there must be a difference so complete that, if the contract were enforced in the actual circumstances which have unexpectedly emerged, this would involve an obligation fundamentally different from that which the parties believed they were undertaking.
In Sheikh.
Brothers Ltd. vs Arnold, ; Belly.
Lever Bros (supra) was applied.
497 Applying the above principles of law to the facts of the instant case, we find that the two fishing trawlers Ave Maria I and Ave Mariall were imported by the respondent on 30.1.1974 and were operated by him based at Vishakapatnam.
At the time of negotiations survey report relating to the trawlers dated 20.2.
1977 of ABS Worldwide & Technical Services India Pvt. Ltd. was handed over by the respondent to the appellant and thereafter the agreement was executed on 21.3.1977.
Delivery of the trawlers was to be made seven days after receipt of the approval or no objection certifi cate for carrying out inspection to ascertain repairs to be carried out for making the trawlers fully operational and to ascertain the cost of such repairs.
On 10.7.
1977 trawlers were delivered to the charterer for inspection and repairs.
On 12.11.1977 the charterer wrote to the owner asking for payment of hire charges from 1.10.1977 and pointing out delays in repairs.
The owner also requested the charterer to pay port charges with effect from 1.10.1977.
On 2.2.1978 the charter party was modified to the extent that charter hire would commence from 15.1.1978 and that as the charterer had incurred substantial charges on repairs the owner shall bear only Rs. 1.5 lakhs per trawler for repairs carried out up to the commencement of the charter hire.
The charter hire was revised to Rs.6,25,000 per trawler per year and an amount of Rs.6,70,000 paid towards deposit and charter hire from 15.1.1978 to May 1978.
In the first week of March, 1978 the charterer paid Rs. 1,04,000 towards charter hire for June 1978.
On 18.7.1978 the charterer wrote to the owner setting out payments made and claiming adjustment of Rs.90,000 towards repair charges and transferring Rs.14,000 towards charter hire.
It was only on 14.9.1978 that the charterer for the first time raised some complaints and objections on the trawlers and questioned the very validity of the agree ment.
On 14.9.
1978 the trawlers were inspected by Kamath & D 'Abrie Marine Surveyors who submitted their report on 26.9.
1978 and the suit was filed on 29.9.
The appellant plaintiff 's averment, as we have already mentioned, is that the trawlers suffered from inherent and latent defects in the refrigeration system which was an essential part of such trawlers and which were not discover able by ordinary diligence at the time of entering into the agreement on 21st March 1977 and as such they were not fully operational.
It is not their grievance that there was no refrigeration system at all in the trawlers but that only it was not of a particular standard, namely that even after extensive repairs it could not be brought to the standard of minus 20 degree F but attained only minus 10 degree F. The learned counsel for the appellant submits that 498 for deep sea fishing the temperature in the trawler 's fish hold has to be minus 20 degree F and minus 10 degree F would not be adequate and as a result the trawlers cannot be used for deep sea fishing.
The grievance has been made that no opportunity to lead expert evidence on this question was available to the appellant.
The question, therefore, arises under the facts and circumstances of the case, namely, whether the deficiency in the refrigeration systems to the extent of minus 10 degree F made the trawlers essentially different from trawlers with a refrigeration system of minus 20 degree F. The other question is whether this standard of the refrigeration system was in the minds of the parties at the time of entering into the contract and there was a mutual mistake regarding this, and the contracting minds were, therefore, not ad idem.
From the series of steps taken for repairs and the stipulations in the charter party in cluding the modifications thereof we are unable to hold that it was a case of mutual mistake as to a quality which made the trawlers transferred essentially different from the trawlers that the parties in their minds agreed to transfer.
This being the position we have to agree with the learned courts below that there was no mutual mistake and the con tract would not be avoided on this ground.
The next question is that of illegality or otherwise of the agreement.
The learned trial court exercised its discre tion to go into the question and arrived at the finding that there was no illegality on the ground of violation of the permission or the condition of licence granted by the Chief Controller of Exports and Imports.
The learned lower appel late court upheld that finding.
It is settled law that where the subject matter of a reference is illegal no award can be of any binding effect.
In Taylor vs Barnett, [1953] W.L.R. 562; the plaintiff had agreed to purchase goods from the defendants.
The defendants had agreed to deliver.
The goods were subject to the price control, sales at price in excess of the control price being forbidden by regulations at the time of making the contract (though not at the time of the delivery).
The control price was less than the agreed price.
The umpire awarded the plaintiffs damages and the award was good on the face of it, but it was held that the award should be set aside for illegality.
If the contract itself was illegal, the controversy as to whether it was illegal or not would not be a dispute arising out of the contract as also would be the question whether the contract was void ab initio.
When, however, it is found that a binding contract was made which was not illegal what follows from such a contract would be covered by the expression "dispute arising out of the contract".
To stay a suit under section 34 of the Act the Court has to see, inter alia, whether there was a valid agreement to have the dispute concerned settled by arbitration and that the 499 proceedings are in respect of a dispute so agreed to be referred.
In Taylor vs Barnett, (supra) Singleton J; ex pressed the opinion that an arbitrator is guilty of miscon duct if he knows or recognises that a contract is illegal and thereafter proceeds to make award upon dispute arising under that contract.
The illegality of a contract can be an issue in deciding want of jurisdiction.
The first and essen tial pre requisite to making an order of stay under section 34 of the Act, as was ruled in Anderson Wright Ltd. (supra) is that there is a binding arbitration agreement between the parties to the suit which is sought to be stayed.
Public policy imposes certain limitations on the freedom of con tract by forbidding the making of certain contracts.
In such cases though all other requisites for formation of the contract are complied with, parties to such forbidden con tracts are not allowed to enforce any rights under them.
In clear cases the law strikes at the agreement itself by making the contract illegal.
However, the effect and nature of illegality will depend upon on the facts and circum stances of each case.
Thus, the effects of illegality are by no means uniform.
In other words, the effect of illegality is not the same in all cases.
Where a statute makes a con tract illegal or where a certain type of contract is ex pressly prohibited there can be no doubt that such a con tract will not be enforcible.
In Rearbitration between Mahmoud and Isphani, by a war time statu tory order it was forbidden to buy or sell linseed oil without a licence from the Food Controller.
The plaintiff had a licence to sell to other licenced dealers.
He agreed to sell and deliver to the defendant a quantity of linseed oil, and before the contract was made, asked the defendant whether he possessed a licence, the defendant falsely as sured him that he did.
Subsequently; however, the defendant refused to accept the oil on the ground that he had no licence.
The plaintiff having brought an action for damages for nonacceptance, the Court of Appeal refused to entertain the action even if the plaintiff was ignorant, at the time the contract was made, of the facts which brought it within the statutory prohibition observing that it was a clear and unequivocal declaration by the legislature in the public interest that this particular kind of contract shall not be entered into.
A contract which was not illegal from the beginning may be rendered illegal later by the method of performance which did not comply with the statutory require ments.
The appellant 's burden was to show that the charter party was illegal to take it out of the arbitration clause for if the contract is illegal and not binding on the par ties the arbitration clause would also be not binding.
Once it is shown to have been illegal it would be unenforcible as ex turpi causa non oritur actio.
Again it is a settled principle that one who knowingly enters into a contract with improper object cannot enforce his rights thereunder.
The learned 500 counsel for the appellant submitted that the import of trawlers was subject to the conditions of the import li cence, and one of the conditions was that the goods imported under it will be utilised in the licence holder 's factories and that no portion thereof will be sold or will be permit ted to be utilised by any other party or placed with any financier other than the banks authorised to deal in the foreign exchange and State Financial Corporation, provided that particulars of goods to be pledged are reported by the licence to the licencing authorities.
We are of the view that this was a proforma condition in the licence No. P/CC/206299 dated3.3.1971 and could not appropriately be applied to the two imported trawlers.
Needless to observe that the appellant plaintiff was also a party to the agree ment of charter party in respect of the two imported trawl ers.
We are also of the view that though it purported to be actual user 's licence there was no violation of this condi tion in view of the express permission granted by the Con troller vide his Memo No. GG.IV/28/143/70/71/374 dated 17.8.1977 with specific reference to the licence No.
P/CC/2062299 dated 3.3.1971 allowing the chartering of the two imported trawlers to be delivered to plaintiff M/s. I.T.C. India Ltd. We also agree with the learned courts below that the modifications dated 2.2.1978 did not make any alteration so as to make the agreement contrary to the terms and conditions of the permission inasmuch as the permission was for a period of three years.
The option to continue hire of the trawler for a further period of three years did not ipso facto violate the permission.
There was also no viola tion as to the duration of the charter party.
The next question is whether the dispute under the charter party raised in the suit are arbitrable.
The divi sion bench held that the learned Single Judge was right in so far as he held that the matters were arbitrable apart from the question of illegality, invalidity of the contract.
We agree with this view inasmuch as it is obvious that the question of invalidity of the contract due to the alleged mutual mistake would be de hors and independent of the contract and as such would not be referable under the arbi tration clause, In so far as the question of illegality of the charter party is concerned as the appellant plaintiff has not established that the charter party was illegal or void ab initio the question whether the modification as alleged had rendered the contract illegal would be covered by arbitration clause which reads: "Any dispute or difference at any time arising between the parties hereto in respect of the construction meaning or effect or as to the rights and liabilities of the parties afore said hereunder or any other matter arising out of this 501 agreement, shall be referred to arbitration in accordance with the subject to the provision of the Indian or any statutory modification or re enactment thereto or thereof for the time being in force and the venue of Arbitration shall be Madras or Cal cutta, and not elsewhere and the Award or Awards in such arbitration shall be made a rule of court of competent jurisdiction at the instance of either party".
We agree that under the above clause the reliefs claimed in the suit other than the question of ab initio invalidity or illegality of the contract would be referable.
However, it will be within the jurisdiction of the arbitrator to decide the scope of his jurisdiction as we have said earlier that the court cannot make a contract between the parties and its power ends with interpretation of the contract between them.
The same principle also applies to the arbi tration agreement unless of course, the parties to the arbitration agreement authorises the court to make and modify the agreement for themselves.
Mr. C.S. Vaidyanathan for the respondents states that the respondent shall have no objection to a retired Judge of the Supreme Court being appointed as Arbitrator and the respondents shall not raise the question of limitation as indicated by Mr. Shanti Bhushan learned counsel for the appellant.
We have no doubt that the Arbitrator so appointed shall proceed in accordance with law to decide the questions including that of the jurisdiction, if raised.
In the result, we find no merit in this appeal and hence it is dismissed leaving the parties to bear their own costs.
T.N.A. Appeal dis missed.
| IN-Abs | Under an import licence dated 3rd March, 1971 issued by the Chief Controller of Imports and Exports the respondent imported two fishing trawlers with the financial assistance of the second respondent Canara Bank.
The respondent con ducted negotiations with the appellant for a charter party agreement in respect of the said trawlers.
On 21st March, 1977, an agreement between the parties was executed 470 under which the appellant agreed to take on charter hire the said two trawlers for the purpose of deep sea fishing for a period of two years with an option to continue the hire for a further period of three years.
Under the terms of the agreement the respondent was to deliver the said trawlers to the appellant at Vishakhapatnam within seven days of the receipt of approval from the Chief Controller of Imports and Exports or no objection certificate from the Canara Bank, for making the said trawlers fully operational and to ascer tain the cost of such repairs.
The appellant charterer was then to conduct fishing trials to ascertain actual condi tions and thereafter the charter hiring was to commence from the date the fishing trials were ended.
On 18th August, 1977, the Chief Controller of Imports and Exports granted permission to the respondent to charter the said trawlers to the appellant on the conditions that the charter rent would be Rs.50,000 per month per trawler and that the charter would be for a period of three years.
On 30th September, 1977, the respondent delivered the said two trawlers for repairs to the appellant.
On 2nd February, 1978, the parties modified the agree ment revising the rate of charter hire and the date of commencement of hire, to the extent that the charter hire would commence from 15th January, 1978 and the revised rate of hire would be Rs.6,25,000 per trawler per year.
The appellant charterer raised objections alleging that the trawlers suffered from inherent and latent defects in the refrigeration system which was an essential part of such trawlers and as such the trawlers were not fully operational because even after carrying out extensive repairs the re frigeration system could not be brought to the required standard of minus 20 degree F but attained only minus 10 degree F.
On 29.9.1978, the appellant instituted a suit in the original side of the Calcutta High Court claiming (i) a decree for a sum of Rs.39,64,341 towards cost, charges, damages and compensation incurred on the said trawlers and, (ii) a declaration that the agreement was contrary to the terms of the permission granted by the Chief Controller of Imports and Exports and consequently illegal and against public policy and void; (iii) that the Parties had entered into the agreement on the basic fundamental assumption that by effecting necessary repairs the trawlers would be made fully operational but the assumption was subsequently dis covered to be mistaken because of the deficiency in the refrigeration system and it rendered the agreement void.
471 The respondent filed an application under Section 34 of the praying that the suit instituted by the appellant, and all proceedings therein be stayed because the disputes were wholly covered by the arbitration clause as contained in the modified agreement dated 2nd February, 1978 which was binding between the parties.
The Single Judge held that there was no invalidity for non compliance of the conditions of the licence granted because necessary permission was obtained in respect of the agreement from the Chief Controller of Imports and Exports and the modifications of the agreement did not impair its validity; though in a particular case if there was any doubt about facts, the matter had to be decided by trial on evi dence but in the instant case, having regard to the admitted facts and conduct of the parties it was not necessary to set down the matter for trial on evidence; there was no illegal ity or mutual mistake; that the alleged fundamental breach was wholly covered by the arbitration clause; that the arbitration clause was valid and binding between the par ties; and that all the conditions of Section 34 were satis fied.
Accordingly, the Single Judge granted stay of the suit and directed the parties to take immediate steps for initia tion of reference under the arbitration agreement.
The judgment and order of the Single Judge was confirmed by the Division Bench by dismissing the appeal.
In this appeal by special leave it was contended on behalf of the appellants that (i) the subject matter of the suit, namely, the question whether the agreement was void ab initio for mutual mistake was not arbitrable; and the courts below erred in holding so; (ii) assuming that the subject matter was arbitrable, the court should not have exercised its jurisdiction on the application under Section 34 because it involved complicated questions of fact and in exercising such jurisdiction the courts acted without jurisdiction; (iii) the court should have decided only after taking oral and documentary evidence and not merely on affidavits; (iv) the agreement was void being violative of the conditions of the permission granted by the Chief Controller of Imports and Exports; (v) the agreement itself having been void ab initio due to mutual mistake, the arbitration clause per ished with it and the courts below erred in holding that the disputes were arbitrable.
Dismissing the appeal, the Court, HELD: 1.
Section 34 deals with the staying of a suit where there 472 is an arbitration agreement concerning the subject matter of the suit and between the same parties.
For the Court to have power to exercise the discretion conferred upon it by this section, there must have been a valid agreement to submit to arbitration.
Where the objection is that the arbitration is a nullity, it amounts to an objection of want of jurisdic tion.
The term "arbitration agreement" includes "agreement to refer", and "submission" to Arbitrator.
A submission forming part of a void contract is itself void and cannot be enforced.
[484B C] 1.1 Whether a particular dispute arising out of a par ticular contract is referable to arbitration or not, must necessarily depend on the intention of the parties as em bodied in the arbitration clause.
If the dispute is squarely covered by the arbitration clause, the relevant provisions of the Act will be attracted.
The question whether the dispute in the suit fails within the arbitration clause really pre supposes that there is such agreement and in volves consideration of two matters, that is (i) what is the dispute in the suit, and (ii) what dispute the arbitration clause covers.
It is incumbent upon the court to decide whether there is a binding contract for arbitration between the parties.
If it is found that the dispute in the suit is not covered by the arbitration clause the application for stay may be dismissed.
[488H; 489A] 2.
Where in an application under Section 34 of the Act an issue is raised as to the validity or existence of the contract containing the arbitration clause, the court has to decide first of all whether there is a binding arbitration agreement, even though it may involve incidentally a deci sion as to the validity or existence of the parent contract.
If the arbitration clause is so wide as to have included the very validity or otherwise of the contract on the grounds of fraud, mis representations, mutual mistake or any valid reason the arbitrator will surely have jurisdiction to decide even that dispute.
The proper approach would be to examine the issue raised in the suit and to ascertain wheth er it squarely falls within the compass of the arbitration clause and take a decision before granting the stay of the suit.
If an issue is raised as to the formation, existence or validity of the contract containing the arbitration clause, the court has to exercise discretion to decide or not to decide the issue of validity or otherwise of the arbitration agreement even though it may involve incidental ly a decision as to validity or existence of the challenged contract.
Should the Court find the parent contract to be void ab initio or illegal or non existent, it will be with out jurisdiction to grant stay.
If the challenged contract is found to be valid and binding and the dispute raised in the suit covered by the arbitration clause, stay of the suit may be justified.
[491F G; 492A B, D F] 473 2.1 In the instant case, considering the issues raised, the arbitration clause and the surrounding circumstances and the part played by the parties pursuant to the charter party since execution to the modification and thereafter till objection raised by the appellant plaintiff.
it must be held that the trial court did not err in proceeding to decide the issue of validity or legality of the parent contract.
[492F G] 3.
Where the validity, existence or legality of the contract is challenged in suit on grounds de hors, independ ent of, or external to the terms or stipulations of the contract, the court in an application under Section 34 of the Act shall have no jurisdiction to go into the question, and that in a large majority of cases it would be applica ble, in appropriate cases, having regard to the nature of the dispute raised in the pleadings of the suit, the compass and scope of the arbitration clause in the contract, the surrounding facts and circumstances of the case having a bearing on the question of genuine grievance failing outside or inside the arbitration agreement and the objects and spirit of the , the Court may be justified in deciding the validity, existence or legality of the chal lenged contract containing the arbitration agreement.
[488A C] 3.1 In the instant case, the arbitration clause formed part of the agreement.
The arbitration agreement is not the same as the contract in the charter party.
It cannot, there fore, be said that the validity or otherwise of the charter party was covered by the arbitration clause.
[489D E] Jee Lae vs Lord Dalmeny, ; Heyman vs Darwins, ; Monro vs Bognor Urban District Council, ; Jawaharlal Burman vs Union of India, ; Waverly Jute Mills Co. Ltd. vs Raymon & Co. (India) Pvt. Ltd.; ,3 S.C.R. 209; ; Khardah Co. Ltd. vs Raymon & Co. India Ltd., ; ; Renusagar Co. vs General Electric Co., ; ; Anderson Wright Ltd. vs Moran and Company, [1955] 1 S.C.R. 862; Damodar Valley Corporation vs
K.K. Kar; , ; Hirji Mulji vs Cheong Yue Steamship Co., ; applied.
Banwari Lal vs Hindu College, A.I.R. 1949 East Punjab 165; Johurmull Parasram vs Louis Dreyfus Co. Ltd. 52 C.W.N. (1947 48) 137 A.I.R. 1949 Cal 179; Pramada Prasad vs Sagar Mal Aggarwal, A.I.R. 1952 Patna 352; Narsingh Prasad vs Dhanraj Mills.
I.L.R. 21 Patna 544; A.I.R. 1943 Patna 53; Birla Jute Manufacturing Co. Ltd. vs Dulichand.
A.I.R. 1953 Calcutta 450; W.F. Ducat & Co. Pvt. Ltd. vs 474 Hiralal Pannalal, A.I.R. 1976 Calcutta 126; General Enter prises vs Jardine Handerson Ltd., A.I.R. 1978 Calcutta 407; Khusiram vs Hanutmal, , approved.
In the instant case, facts were admitted.
[493B C] All the relevant documents and affidavits were before the Court and were considered by it.
Therefore no illegality was committed by the trial court in not setting down the matter for trial on evidence and deciding the validity and legality of the matter without taking oral evidence.
[49211; 493B] 4.1 Even if it appears that the discretion could have also been exercised to decide the issue of invalidity in a trial on evidence adduced, this court would not substitute its view for that of the trial court, unless the ends of justice required it to be done.
This Court would not lightly interfere under Article 136 of the Constitution with the concurrent exercise of discretion of the courts below under Section 34 of the .
Before it can justly do so, the appellant must satisfy the Court, on the relevant facts referred to by the Courts below, that they exercised their discretion in a manifestly unreasonable or perverse way which was likely to defeat the ends of justice.
The appellant has failed to do so in the instant case.
[493C, E F] Ormarod vs Todmordon, ; Charles Osenton and Co. vs Johnston, ; Gardner vs Jay, ; Printers (Mysore) Pvt. Ltd. vs Pothan Joseph; , , applied.
Where the parties make mutual mistake misunderstand ing each other and are at cross purposes, there is no real correspondence of offer and acceptance and the parties are not really consensus ad idem.
There is thus no agreement at all; and the contract is void.
Section 20 is concerned with common mistake of fact and not mutual mistake.
A common mistake is there where both parties are mistaken about the same vital fact although both parties are ad idem, e.g., the subject matter of the contract has already perished.
A con tract in such a case is void.
Where each party is mistaken as to the other 's intention, though neither realises that the respective promises have been misunderstood, there is mutual mistake.
1493H; 494A B] 6.
A mistake will not affect assent unless it is the mistake of both parties, and is as to the existence of some quality which makes the thing 475 without the quality essentially different from the thing as it was believed to be.
Neither party can rely upon his own mistake to say that it was a nullity from the beginning, no matter that it was a mistake which to his mind was fundamen tal, and no matter that the other party knew that he was under a mistake.
A fortiori, if the other party did not know of the mistake but shared it.
The question is not what the parties had in their minds, but what reasonable third par ties would infer from their words or conduct.
The court has to ascertain the "sense of the promises".
[496E; 495G H] 7.
The application of the doctrine of mutual mistake depends upon the true construction of the contract made between the parties.
A mutual misunderstanding will not nullify a contract but only if the terms of contract con strued in the light of the nature of the contract and of the circumstances believed to exist at the time it was done show that it was never intended to apply to the situation which in reality existed at that time, will the contract be held void.
Thus a mistake as to an essential and integral element in the subject matter of the contract will avoid the con tract.
A mistake as to the quality of the article contracted for may not always avoid the contract.
A distinction, there fore, should be drawn between a mistake as to the substance of the thing contracted for, which will avoid the contract and mistake as to its quality which will be without effect.
According to circumstances even a mistake as to the sub stance of the thing contracted for may not necessarily render a contract void.
Thus there must be a difference so complete that, if the contract were enforced in the actual circumstances which have unexpectedly emerged, this would involve an obligation fundamentally different from that which the parties believed they were undertaking.
[496A H] 8.
From the series of steps taken for repairs and the stipulations in the charter party including the modifica tions thereof, it is not possible to hold that it was a case of mutual mistake as to a quality which made the trawlers transferred essentially different from the trawlers that the parties in their minds agreed to transfer.
Therefore, there was no mutual mistake and the contract would not be avoided on this ground.
[498C D] Cooper vs Phibbs, ; ; Ear/Beauchamp vs Winn., ; Hudders field Banking Co. vs Henry Lister & Sons, [1895] 2 Ch. 273; Bell vs Laver Brs.
Ltd.; , ; Kannedy vs Panama Royal Mail Co., ; Smith vs Hughes, [1871] L.R. 6 Q.B. 597; Solle vs Butcher, 476 Fraderick E. Rose (London) Ltd. vs William H. Pim Junior & Co. Ltd. ; Sheikh Brothers LId.
vs Arnold, ; referred to.
U.P. Government vs Nanhoo Mal, A.I.R. 1960 All. 420, approved.
It is settled law that where the subject matter of a reference is illegal, no award can be of any binding effect.
If the contract itself was illegal, the controversy as to whether it was illegal or not would not be a dispute arising out of the contract as also would be the question whether the contract was void ab initio.
When, however, it is found that a binding contract was made which was not illegal what follows from such a contract would be covered by the expres sion "dispute arising out of contract".
To stay a suit under Section 34 the Court has to see whether there was a valid agreement to have the dispute settled by arbitration and that the proceedings are in respect of a dispute so agreed to be referred.
[498E, (; H; 499A] 10.
Public policy imposes certain limitations on the freedom of contract by forbidding the making of certain contracts.
In such cases though all other requisites for formation of the contract are complied with, parties to such forbidden contracts are not allowed to enforce any rights under them.
In clear cases the law strikes at the agreement itself by making the contract illegal.
However, the effect and nature of illegality are by no means uniform and will depend upon the facts and circumstances of each case.
Where a statute makes a contract illegal or where a certain type of contract is expressly prohibited there can be no doubt that such a contract will not be enforcible.
[499B D] 11.
A contract which was not illegal from the beginning may be rendered illegal later by the method of performance which did not comply with the statutory requirements.
The appellant 's burden was to show that the charter party was illegal to take it out of the arbitration clause for if the contract is illegal and not binding on the parties the arbitration clause would also be not binding.
Once it is shown to have been illegal it would be unenforcible as ex turpi causa non oritur actio.
[499G H] 12.
One who knowingly enters into a contract with im proper object cannot enforce his rights thereunder.
The appellant in the instant case was also a party to the agree ment of charter party in respect of the two imported trawl ers.
Though it purported to be actual user 's licence 477 there was no violation of this condition in view of the express permission granted by the Controller of Imports and Exports allowing the chartering of the two imported trawl ers.
The modifications to the contract did not make any alteration so as to make the agreement contrary to the terms and conditions of the permission inasmuch as the permission was for a period of three years.
The option to continue hire of the trawlers for a further period of three years did not ipso facto violate the permission.
There was also no viola tion as to the duration of the charter party.
[499H; 500C E] Taylor vs Barnett, ; Anderson Wright Ltd. vs Moran and Company, [1955] 1 S.C.R. 862; In Re arbi tration between Mahmoud and Isphani, ; applied. 13.
The Courts below were right in holding that the matters were arbitrable apart from the question of illegali ty, invalidity of the contract.
The question of invalidity of the contract due to the alleged mutual mistake would be de hors and independent of the contract and as such would not be referable under the arbitration clause.
In so far as the question of illegality of the charter party is concerned as the appellant has not established that the charter party was illegal or void as initio, the question whether the modification as alleged had rendered the contract illegal would be covered by the arbitration clause.
[500F G] 14.
In the instant case, the reliefs claimed in the suit other than the question of ab initio invalidity or illegali ty of the contract would be referable.
However, it will be within the jurisdiction of the arbitrator to decide the scope of his jurisdiction.
The Court cannot make a contract between the parties and its power ends with the interpreta tion of the contract between them.
The same principle also applies to the arbitration agreement unless the parties to the arbitration agreement authorises the court to make and modify the agreement.
The arbitrator shall proceed in ac cordance with law to decide the questions including that of jurisdiction, if raised.
[501C 1).
|
ivil Appeal No. 785 of 1988.
From the Judgment and Order dated 6.3. 1987 of the Bombay High Court in Writ Petition No. 1166 of 1981.
Appellant in person.
Dr. Y.S. Chitale and V.B. Joshi for the Respondents.
The Judgment of the Court was delivered by AHMADI, J.
This is an appeal by Special Leave under Article 136 of the Constitution of India from the Judgment of Bombay High Court dated 6th March, 1987 in Writ Petition No. 1166 of 1981.
The appellant, C.D. Tase, joined the college run by Vidhya Prasarak Mandal, Thane, on June 15, 1971 as a lectur er in the pay scale of Rs.300 25 600 prescribed by the Uni versity Grants Commission pursuant to the recommendations made by the Second Pay Commission.
By Government Resolution No. USG 1167 U dated November 6, 1967, the Government of Maharashtra had accepted in principle the Government of India scheme based on the recommendations of the University Grants Commission for improvement of salary scales of uni versity teachers and teachers in affiliated Arts, Science, Commerce and Secondary Training Colleges.
Accordingly, the Government of Maharashtra directed all the Universities in the State to implement the pay scales recommended by the Commission.
The scales recommended were to take effect from April 1, 1966.
Three scales were recommended for lecturers, namely, Rs.300 25 600 (Lecturers, Junior Scale), Rs.400 30 640 40 800 (Lecturers, Senior Scale) and Rs.700 40 1100 (Senior Lecturers).
The Universities in turn directed col leges affiliated to them to implement the recommendations accepted by the State of Maharashtra.
The appellant 's col lege was at the material time affiliated to the University of Pune.
The Additional Director of Education, Maharashtra State by his letter No. S 95/127 A 739 dated January 18, 1968 addressed to the Principals of non Government Arts, Science, Commerce and S.T. Colleges in the State directed the colleges to implement the recommendations made by the Second Pay Commission as approved by the State of Maharashtra.
The University in turn by its letter No. PU/Stat/F.3/A/67 68/236 dated February 7, 1968 directed the Principals of all colleges to implement the new pay scales with effect from April 1, 1966.
Thus, in the category of lecturers (excluding Principals) three scales as stated above were prescribed subject to the condition that the number of senior lecturers and lecturers, senior scale, was not to exceed 1/4th of the total strength of lecturers.
It was left to the Universities to formulate norms which the lecturers must satisfy for being considered for the posts of senior lecturers and/or lecturers, senior scale, as the case may be.
The High Court while disposing of the writ petition filed by the appellant and his two companions, Writ Petition No. 1166 of 1981, observed: "There does not appear to be much dispute that if the report of the Second Pay Commission of University Grants Commission was implemented in letter and spirit, the petitioners would have respectively qualified for the category of Senior Lecturers in the pay scale of Rs.700 40 1100 on 2nd March, 1974, 15th June, 1974 and 15th June, 1975 respectively.
" It is evident from the above observation of the High Court that the appellant was entitled to placement in the senior scale of Rs.700 401100 with effect from June 15, 1975.
In the meantime, sometime in 1978, a decision was taken to implement the Third Pay Commission Report prescribing a running scale of Rs.700 1600 for teachers with effect from January 1, 1973.
All the Universities in the State were directed to implement the new scale of Rs.700 1600 pre scribed for senior lecturers.
This raised the question whether placement of teachers already made after January 1, 1973 in the higher pre 1973 scales would be valid on the implementation of the revised scale w.e.f. January 1, 1973.
By Government Resolution No. USG 1178/24585/XXXII (Cell) dated June 27, 1978, it was clarified that placement of teachers made in one of the higher pre 1973 scales of 400 800 and Rs.700 1100 on or after January 1, 1973 would be considered valid and protected subject to the prescribed conditions.
The High Court points out that if the above clarification is accepted as correct the appellant would be entitled to placement in the high scale of Rs.700 1100.
However, relying on the University of Pune 's subse 740 quent letter of March 10, 1978 whereby the college manage ments were directed to ignore the pay scales prescribed pursuant to the recommendations of the Second Pay Commission in the case of teachers who became entitled to the higher scale after January 1, 1973, it was submitted before the High Court that since the new pay scale of Rs.7001600 was made operative from January 1, 1973, lecturers who were not given the benefit of the revised scale of Rs.700 40 1100 could be fixed in the new scale of Rs.700 1600 with effect from January 1, 1973 as per the Circular No. Aff/Recg/193 of 1977 dated May 19, 1977.
This submission made on behalf of the University authorities found favour with the learned Judges of the High Court as they thought that there was 'nothing very inequitable ' about the decision taken by the university authorities.
The appellant who argued the case in person submitted that the High Court failed to appreciate the fact that the decision of the university authorities was highly prejudi cial to the appellant and others similarly situated, as it resulted in substantial monetary loss.
It must be realised that the. decision to implement the recommendation of the Third Pay Commission w.e.f. January 1, 1973 was taken some time in 1978.
In the meantime, several lecturers of affili ated colleges were placed in the higher scale of Rs.700 1100.
That is why, it became necessary to seek a clarifica tion from the Government whether the placement allowed to such lecturers in the higher scale would be treated as valid having regard to the implementation of the new scale of Rs.700 1600 w.e.f.
January 1, 1973.
As pointed out earlier, the Government by their Resolution of June 27, 1978 clari fied that such placement in the higher scale of Rs.700 1100 was valid subject to the fulfilment of the prescribed condi tions.
The placement of such lecturers in the higher scale of Rs.700 1100 was therefore directed to be protected while bringing them on the revised scale of Rs.700 1600.
It fol lows that if the appellant had been placed in the higher scale of Rs.700 1100 when he became entitled to it on June 15, 1975 his pay would have been protected as per the clari fication while being placed in the revised scale of Rs.700 1600.
The appellant is, therefore, justified in making a grievance that merely because the college/ university au thorities did not place him in the higher scale of Rs.7001100 w.e.f. June 15, 1975 he cannot be made to suffer on the ground that he will get the benefit of two reports simultaneously if he is first placed on the scale of Rs.700 1100 and, thereafter brought on the scale of Rs.700 1600.
It is evident from the letter No. BY/Genl/1981 82 dated January 28, 1982 addressed to all the Principals of Arts, Science and Commerce Colleges by the Administrative Officer of Higher Edu 741 cation Grants, Bombay Region, Bombay that the college au thorities were directed to furnish information in the pre scribed form in respect of teachers who were entitled to the benefit of the pre revised scales of Rs.700 1100 and Rs.400 800.
The Principal of the college forwarded the information to the Administrative Officer under his letter ACC/ TNE/2080 dated March 13/15, 1982 in the prescribed proforma which includes the name of the appellant as one of the persons entitled to the same benefit.
We may incidental ly mention that his two companions in the High Court Dr. M.P. Kendurkar and Professor N. Krishnan were also included in the list of eligible lecturers entitled to the higher scale of Rs.700 1100.
The subsequent Resolution No. USG 1178/ 160692(19) UNI/4 dated April 7, 1983 issued by the State of Maharashtra also stipulates as under: "The question of placement of these teachers was, therefore, under consideration of Govern ment for sometime past.
Government is now pleased to direct that the placement of only those teachers whose names were recommended for placement in the senior lecturers scale of I.S.S. viz. Rs. 1100 and 400 800 to the universities by the respective colleges man agements prior to 4th October, 1975 i.e. the date of issue of Government Resolution assign ing revised University Grants Commission recommended scales but their placement was not effected due to some reason or the other, should be made with effect from the dates the placement is approved by the concerned Univer sities.
" It is evident from the above decision that lecturers whose name were recommended for placement in the higher scale before October 4, 1975 were entitled to such placement before being brought over to the revised scale of Rs. 700 1600.
The appellant was entitled to placement in the higher scale of Rs.700 1600 w.e.f.
June 15, 1975.
The college authorities failed, for no fault of the appellant and his companions, to forward their names to the University in the prescribed proforma for reasons best known to them.
To deny the benefit to which the appellant and his companions were entitled on account of the lapse on the part of the college authorities would be highly unfair and unjust.
The High Court, however took the view that there was 'nothing very inequitable ' about the decision of the University to deny such placement to the appellant and his companions, but it is obvious that if they had been granted placement on the due dates they would have been entitled to higher salary and allowances related to basic salary e.g. dearness allowance which is a certain percentage of basic 742 salary, would have gone up.
In addition they would have earned increments by the time they became entitled to the revised scale of Rs.7001600.
It is, therefore, obvious that the decision of the university not only appears to be 'ine quitable but also discriminatory inasmuch as it sought to treat equals as unequals by protecting those who had secured the placement and denying the same to others whose names the college managements had failed to forward in good time.
We are, therefore, of the opinion that the appellant was enti tled to placement in the higher scale of Rs.700 1100 before being brought over to the revised scale of Rs.700 1600.
For the above reasons, we allow the appeal and set aside the impugned order of the High Court dated March 6, 1987.
We direct the respondents to grant the benefit of placement in the higher scale of Rs.700 1100 to the appellant from the date he became entitled to the same i.e. June 15, 1975 and thereafter fix his pay in the revised scale of Rs.700 1600.
The appellant will be entitled to the monetary benefit accruing to him on the implementation of the above directive which should be worked out and paid to him within three months from today.
The appellant will also be entitled to cost from the University of Bombay which we quantify at Rs.2500.
Before we part, we may mention that the two companions of the appellant who were writ petitioners in the High Court have not approached this Court under Article 136 of the Constitution but we find that they were similarly situated and were entitled to placement in the higher scale of Rs.700 1600 w.e.
L March 2, 1974 and June 15, 1975.
We hope that the authorities will extend the same benefit to them also notwithstanding their failure to approach this Court, perhaps on account of cost constraint.
It would be highly unfair to deny to them the monetary benefits to which they are legally entitled.
We do hope that the concerned authori ties will not drive them to another round of litigation.
G.N. Appeal al lowed.
| IN-Abs | The appellant joined as a Lecturer in 1971, in a College affiliated to Pune University in the scale of Rs.300 600 prescribed by the University Grants Commission.
Earlier, in 1967 the State Government accepted in principle the Govern ment of India Scheme based on recommendations of the Univer sity Grants Commission for improvement of pay scales of all university and college teachers, and issued directions to all universities in the State.
The Universities in turn directed all the affiliated colleges accordingly.
The new scales were Rs.300 25 600 (Lecturers, Junior Scale), Rs.400 30 640 40 800 (Lecturers, Senior Scale) and Rs.700 40 1100 (Senior Lecturers) and were to take effect from 1.4.1966.
The number of Senior Lecturers and Lecturers (Sr. Scale) was not to exceed 1/4 of the total strength of Lecturers.
Again, in 1978, it was decided to implement the next report, viz, the Third Pay Commissioner 's report which prescribed a running scale of Rs.700 1600 with effect from 1.1.1973.
All the Universities in the State were directed to implement the same.
A question was raised as to whether placement of teachers already made after 1.1.1973 in the pre 1973 scales would be valid on the implementation of the revised scale with effect from 1.1.1973.
The Government clarified that such a placement would be valid and protect ed, subject to the prescribed conditions.
However, the Pune University directed the College Managements to ignore the pay scales prescribed by the earlier Pay Commission in case of teachers who became entitled to the higher scale after 1.1.73.
Against this, the appellant and two others ap proached the High Court by way of a Writ Petition.
However, the High Court felt that there was 737 nothing very inequitable about the decision taken by the University authorities and declined to interfere.
This appeal, by special leave, is against the said judgment of the High Court.
Before the Court, the appellant argued that the High Court failed to appreciate the fact that the decision of the University authorities was highly prejudicial to the appel lant and others who were similarly situated, as it resulted in substantial monetary loss.
Allowing the appeal, HELD: 1.
The decision of the university not only appears to be 'inequitable ' but also discriminatory inasmuch as it sought to treat equals as unequals by protecting those who had secured the placement and denying the same to others whose names the college managements had failed to forward in good time.
The appellant was entitled to placement in the higher scale of Rs.700 1100 before being brought over to the revised scale of Rs.700 1600.
[742B] 2.
The Lecturers whose names were recommended for place ment in the higher scale before October 4, 1975 were enti tled to such placement before being brought over to the revised scale of Rs.700 1600.
The appellant was entitled to placement in the higher scale of Rs.700 1600 w.e.f.
June 15, 1975.
The college authorities failed, for no fault of the appellant and his companions, to forward their names to the University in the prescribed proforma for reasons best known to them.
To deny the benefit to which the appellant and his companions were entitled on account of the lapse on the part of the college authorities would be highly unfair and un just.
The High Court, however took the view that there was 'nothing very inequitable ' about the decision of the Univer sity to deny such placement to the appellant and his compan ions, but it is obvious that if they had been granted place ment on the due dates they would have been entitled to higher salary and allowances related to basic salary e.g. dearness allowance which is a certain percentage of basic salary, would have gone up.
[741F H; 742A] 3.
The respondents are directed to grant the benefit of placement in the higher scale of Rs.700 1100 to the appel lant from the date he became entitled to the same i.e. June 15, 1975 and thereafter fix his pay revised scale of Rs.700 1600.
The appellant will be entitled to the monetary benefit accruing to him on the implementation of the above 738 directive which should be worked out and paid to him within three months.
[742C D] [The Court expressed the hope that the authorities will extend the same benefit also to the two companions of the appellant notwithstanding their failure to approach this Court, perhaps on account of cost constraint, and not drive them to another round of litigation.] [742F]
|
ivil Appeal No. 1504 of 1980.
From the Judgment and Order dated 20.5.
1980 of the Delhi High Court in Regular Second Appeal No. 18 1 of 1979.
S.K. Mehta, D. Mehta, A. Vachhar and Atul Nanda for the Appellant.
Dr. Shankar Ghosh and Ashok Grover for the Respondent.
The Judgment of the Court was delivered by RANGANATHAN, J.
The appellant, a cooperative society, (hereinafter referred to as 'the society '), resists a suit for possession 650 laid by the respondent, contending that the property in question is a 'building ' within the meaning of the Delhi Rent Control Act, 1958 ( 'the Act '), the eviction of a tenant from which can be sought by the landlord only from a rent controller on grounds specified in the Act and not by a suit in a civil court under the Transfer of Property Act read with the Code of Civil Procedure (C.P.C.).
This contention of the appellant has been rejected, concurrently, by the Assistant District Judge, the Additional District Judge and the High Court.
In this appeal, counsel for the appellant seeks to persuade us that all the three courts have decided erroneously a substantial question of law raised by it and that they ought to have dismissed the suit instead of de creeing it.
To get a cogent idea of the history of the litigation concerning this property and to properly appreci ate the contentions urged, it is necessary to set out the relevant facts at some length.
2(a) The property in question originally belonged to one Khan Din Hussain Din but it came to be vested in the Custo dian of Evacuee Property on the owner being declared an evacuee on the eve of the partition of the country.
The Custodian leased it out to one Pritam Chand who occupied it in September 1947.
There is on record an undated survey report in a "proforma for residential premises" which per tains to the period when Pritam Chand was in occupation.
It described the property covered by it thus: 1. Locality or street Hamilton Road, Delhi 2.
H.C. No. III/1403 1406 3.
No. & size of rooms 15 ' x 15 ' shed, 3 ' x 8 ' 10 'x 10 ', 10 'x 10 ' 10 ' x 10 ' Ver 40 ' x 8 ' shed 35 ' x 10 ' Open space 50 ' x 45 ' use as Motor Lorry Workshop.
(b) Subsequently, the allotment in favour of Pritam Chand appears to have got cancelled and the Society applied for the allotment of the property to it for starting a factory.
The application was granted and the property was allotted, by way of a lease, to the Society by an order dated 28.3.1949.
It is necessary to extract this order in full: ORDER "Subject: Allotment of industrial premises.
651 With reference to your application dated I have to inform you that Indus trial Establishment known as open compound at Hamilton Road (Portion of Jai Hind Motor Works) with 25 Front and 50 deep together with all the machinery and accessories kept there in has been allotted to you.
Possession of the factory/workshop/Industrial establishment will be delivered to you immediately after your fulfilling the following conditions namely: 1.
Delivering at this office a communication addressed to the Custodian undertaking to pay such deposit and rent as may be assessed and required to be paid and to execute the lease on the prescribed form.
Filling a duly attested affidavit as per form 'A ' attached herewith.
Possession of stocks of consuma ble goods and other stores and material, if any, will be given to you for safe custody as caretaker until the disposal thereof.
Assistant Custodian Industrial is hereby required to deliver the possession of factory/workshop/Industrial Establishment and other moveable property kept therein (to) the above named allottee after satisfying himself that he has fulfilled conditions laid down above.
If necessary, the enforcement section will help the Assistant Custodian and the allottee of the property in accordance with the procedure prescribed under law.
" (c) A report on the use of the allotted plot submitted on 9.1.51 is of some relevance.
It clarifies that no machin ery had been allotted to the Society and that power was being fitted.
It says then: "I have found nobody at the premises except a Gorkha Chowkidar.
I remember it very well that in the presence, I gave the possession of the above said plot to allottee who promised that they want to start a factory very soon, but it is regretted that no advantageous use of the premises is being made by the Co operative.
However, I have seen new power connection being fitted on the premises.
The work might have (then) set back due to non availability of power.
Any how we must consult the file and subsequently call the allottee.
" 652 (d) It appears that Pritam Chand was attempting to get the allotment to the Society cancelled on the allegation that it had unauthorisedly sublet the property.
A letter was written, in this context, by the Assistant Registrar of Cooperative Societies to the Custodian on 15.5.1954.
This letter, on the subject of"Allotment of Industrial Premises", reads as under: "Kindly refer to your order No. DC/IV/A/185 dated the 28th March, 1949 on the above sub ject under which the house No. 2939 III/1403 1406 on Industrial Establishment known as open compound at Hamilton Road (Portion of Jai Hind Motor Works with 25 ' front and 56 ' deep) together with all machinery and accessories kept therein, was allotted to the Prabhat Manufacturing Co operative Industrial Society Ltd.
Before allotment one Shri Pritam Chand was occupying the whole premises.
He is now again trying to take the premises allotted to the society.
He therefore filed an applica tion to the Assistant Custodian against the Society alleging that the premises had been sublet to Shri Ajit Singh Duni Chand and Banwari Lal.
The Assistant Custodian served the Society with a notice for cancellation of allotment of the said premise.
The fact is that Shri Ajit Singh, is the Secretary of the Society and Shri Duni Chand and Banwari Lal were its members.
The question of subletting does not arise.
A Government loan of Rs.4,000 was also advanced to the society under the Rehabilitation Scheme.
Under the above circum stances I would request you to allow the Society to function in the allotted premises, so that it may be able to repay the Government loan advanced to it." (e) The Society made an attempt to have the assessment of rent reduced.
The order of the Deputy Custodian dated 31.5.
1955, under which this relief was granted reads thus: "This is revision petition by M/s Prabhat Mfg. Cooperative Socio Industrial Society Ltd., against the assessment of rent.
The petitioner has got a plot.
There is a small shed on this plot also.
The petitioner was assessed on the rental of Rs.50 on the basis of the M.A.R. It is contended before me that there is no M.A.R. for property No. 2939 653 but there is joint M.A.R. for house No. 1403 6.
From the copy of the assessment sheet, (it) appears that 1403 1406 is equivalent to 2939 40.
It is not clear therefore whether new number has got an assessment of Rs.50 or there are several numbers included in this assess ment.
I find that I inspected this house on 20th March 1953 and asked the S.D.O. to let me know the value of the plot and probable rent.
At that time he had assessed the value of the plot at Rs. 10970.
The present value of course will be more than that.
However, on the basis of this valuation, the rent of the petition er 's plot if it were a vacant plot would work out to Rs.327 per month exclusive of house tax.
There is a small shed also which is alleged to be self constructed.
Considering therefore all the circumstances I fix the rent of the petitioners plot at Rs.35 per month.
As the petitioner is a cooperative society, I direct that rate should have retrospective ef fect.
The petitioner is, however, directed to clear the arrears within fortnight." (f) After this order was passed, a survey report was made on 15.7.1955 which describes the property in the occu pation of the Society thus: 1.
No. 2.
Road, Street, lane or Mohalla Hamilton Road 3.
Municipal House No. (old) III/l/4 (1403 6) old 2939 (new) 4. 5.
Accommodation available Plot with tin shed No. & Size of rooms store 27 ft.
North rooms, verandah, kitchen, 61 ft.
East bath, courtyard etc.
64.8 ft.
West 24 ft.
South 15.
Description of present Manufacturing concern occupation i.e. business Motor accessories and service (Govt.
or Pvt.) tools Regd.
No. 199 other occupation) dated 24.3.49.
Rent previously fixed Rs.50 reduced to for the accommodation Rs.35 3.(a) Having thus got the plot on lease, the Society tried to acquire the property for itself.
There is on record a letter of the Society dated 21.1.1957 requesting that the "industrial plot" may be perma 654 nently allotted to it.
However, the Custodian chose tO sell the property by auction on 15.7.60 in favour of one Dina Nath (the predecessor in interest of the present respondent Banwari Lal).
The upset price was Rs.21,000 and the sale was for Rs.23,000.
Unfortunately, however, except the informa tion that sale deed in favour of Dina Nath was executed on 13.7.61, there is no document on record about the exact nature and condition of the property thus sold.
(b) The Society moved to have the sale set aside on the ground that, as the value of the property was less than Rs. 10,000, it should have been sold to the Society itself as the allottee and not to an outsider.
In the course of these proceedings, it made an application on 15.10.60 to the concerned authority for a copy of the order declaring the property to be saleable, the first paragraph of which reads thus: "The above mentioned property an Industrial Plot on Hamilton Road No. 2939 (old No. 1403 1406) was sold by auction on 15.7.60." (c) The application of the Society was, eventually, rejected by the Chief Settlement Commissioner on 25.8.1961 and so the appellant filed a revision petition before the Government of India.
In this petition, it is seen, the Society tried to take advantage of a Press Note of the Government which enabled an allottee who had invested more than Rs.30,000 in a property to get a priority when the property came to be allotted but this attempt was also unsuccessful.
Certain reports submitted by the concerned authorities in the context of the Society 's application have been placed on record.
On 21.3.
1962, the Executive Engineer reported.
"The land under property in question has been assessed at Rs. 17,500 while the structure value of it has been assessed at Rs.3,883 giving a total value of Rs.21,383.
The reserve price of this property has been fixed at Rs.21,000" Reports submitted by one T.C. Dewan contain the following observations: "I have been to the premises and obtained a list of machinery now installed in the prem ises.
The copy of the letter dated 21.3.56 addressed to the C.S.C. is also attached.
M/s Prabhat Mfg.
Co op.
Industrial Society want to have the premises transferred to them as Industrial concern.
655 The property has already been auctioned on 15.7.1960.
The sale certificate has been issued in favour of Dina Nath s/o Charan Das on 13.6.61." "I have to submit further that a part of the superstructure was evacuee and was valued with the plot.
Some portion has been made as a temporary shed etc.
The position can be made clear by consulting the valuation schedule on the property.
The portion which was included in the valuation at that time means at the time of auction as noted it was definitely an evacuee structure.
The rest is non evacuee raised by the occupant.
" It also appears that, in the course of these proceedings, Ajit Singh, on behalf of the Society made a statement to the following effect in May, 1962: "The above Society is in occupation of the premises since the year 1949.
There was only a shed built in the premises but the other portion was open plot when it was allotted to us.
The entire machinery has been installed by the Co op.
Society.
I can supply inventory of the machinery which has been installed by the Society would be produced on 8.5.62." (d) The Society 's revision petition was rejected on 6.8.62.
The order of the Joint Secretary to the Government of India starts with a recital that the Custodian had allot ted "an open plot of land" to the society for industrial purposes, and that the Society had erected "a temporary structure on this plot and also installed some machinery".
In para 3, the contention of the Society is stated to be "that the plot was allotted to the Society for industrial purposes and they erected a building and installed machinery worth about Rs.30,000 in it.
" The order proceeds: ". the valuation officer was asked to assess the value of the land, building and machinery.
After a spot inspection he reported that the value of land and building was about Rs.21,000, whereas the value of the machinery installed in March, 1956, according to the vouchers produced before him by the Society came to only Rs.6,585.
Hence, the value 656 of the machinery did not exceed that of the land and building.
Further, the Press Note of the 22nd March, 1956 required such allottees to submit applications to the Regional Settle ment Commissioner concerned with a certificate from the Director of Industries of the State that they had established factories under the Commissioner, New Delhi.
It is, therefore, clear that this case is not covered by the Press Note of 22nd March, 1956.
The property in their occupation was rightly auctioned.
Now we come to the third chapter of the story.
Dina Nath, the purchaser of the property filed suit No. 155 1/62, in the court of Rent Controller, Delhi seeking eviction of the appellant society from the property in question on the ground of sub letting, misuser, default in payment of rent and requirement of the premises for the bona fide use of the owner.
The Rent Controller dismissed the petition.
It is seen from the order of the Rent Controller that the owner had alleged that a portion of the demised premises had been sublet, assigned or otherwise parted with to M/s. Malviya Industries after 9.6.1952 without obtaining the written consent of the landlord.
The respondent had shown that Malviya Industries was a proprietory concern of Ajit Singh, who was in possession of the whole premises as a Secretary of the appellant society and that, apart from the fact that the goods manufactured by the society were sold through Malviya Industries, there was nothing to show that any particular portion of the property in question was exclu sively used by Malviya Industries.
It also appears that the owner alleged that he required the premises in question for purposes of re building it.
The controller held that as the property had been given to the tenant for residential pur poses and the proposed reconstruction would change the character of the premises, this was not permissible under the Act, and therefore, the landlord could not be said to require the premises bona fide for re building.
On behalf of the appellant it is urged that the fact the landlord filed a rent control eviction petition as well as a finding in the order of the Rent Controller dated 16.1.1967 clearly show that the property in question was a 'building ' falling within the scope of the Delhi Rent Control Act.
It is also pointed out, from a copy of the application for eviction placed on record, that in para 5 of the application it was stated that a workshop was situated on the piece of land and about 20 people (approx.) were working therein and the details of the accommodation were shown as comprising of one tin shed as shown in the attached plan.
657 (b) In 1964 the society filed suit No. 294 of 64 against Dina Nath and others.
In this suit it prayed for an injunc tion restraining the defendants from interfering with its possession and lawful enjoyment of the property, inter alia, by preventing the plaintiff from carrying out the necessary repairs to the premises in question.
This suit was filed during the pendency of the earlier suit filed in the rent controller 's court.
It was alleged that the portion of the roof had started leaking and that, when the plaintiff began to make the necessary repairs to the premises, the defend ants began to interfere illegally with its possession with the ulterior motive of securing the possession of the prem ises otherwise than in due course of law.
The defendants resisted this suit.
It appears that this suit was eventually dismissed but further details are not available.
(c) It also appears that Banwari Lal had filed a suit for permanent injunction against the Society restraining it from erecting any new structure on, or making any additions or alterations to the property in question.
It is said that in one of the affidavits filed in the course of these pro ceedings Banwari Lal stated as follows: "3.
That the defendant is tenant of ground floor consisting of a tin shed in house No. 2939, Hamilton Road, Delhi at a monthly rent of Rs.35 which is a single storeyed property.
That the defendant has got no right title and interest to erect any new structure on the first floor or to make any additions and alterations in the aforesaid property without the consent of the plaintiff.
" There is no further information available regarding this suit.
(d) One more proceeding instituted by the appellant society has also to be referred to: On 15.2.1968, the appel lant filed an application under section 44 of the Delhi Rent Control Act, 1958 (Suit No. 169 M of 1968 69), seeking permission to make repairs to the premises in question.
This application was resisted by the owners on a preliminary objection that the petitioner were not tenants of any prem ises within the meaning of Delhi Rent Control Act.
This application was dismissed on 9.3.1972.
It is necessary to extract paragraph 5 of this order since it is relevant to the controversy presently in question: "5.
I also find it established on record that the petitioner society is a tenant only with respect to an open site and the 658 structure thereon namely, the shed itself constructed by the tenant.
It is admitted (that) by Ajit Singh, who states himself to be the Secretary of the Society by the custodian, as it was an evacuee property.
A reference to the allotment order exhibit RW 1/1 which was produced by the clerk of the office concerned, examined as R.W. 1 shows that the subject matter of the allotment of the petitioner society was an 'Open Compound '.
It is further clear from the copy of an order exhibit R.W. 1/1 that it was stated by the tenant, namely the petitioner society before the custodian ' that the shed was self constructed and the rent was got reduced from Rs.50 per month to Rs.35 per month.
This continues to be the rent upto date, according to be that the petitioner society continues to be in occupation of the same property, as it was, when it was allotted to them by the Custodian, and it is estab lished from the evidence of the clerk of the office of the Custodian.
R.W. 1 and the orders produced by him, namely R.W. 1/1 and R.W. 2/2, as well as the survey report exhibit R.W. 1/3 that what was allotted to the petitioner society, was only a plot and that the shed was self constructed.
The petitioner has failed to substantiate the contention that the respond ent himself has treated him/them/as a tenant because no certified copy of the previous pleadings has been placed on the file.
The petitioner, therefore, being a tenant only with respect to open site, which does not come within the definition of a 'premises ', as contemplated by the Delhi Rent Control Act the petition under sec.
44 of the act, is not entertainable.
The suit out of which the present appeal arises has to be understood in the context of the above previous histo ry.
In 1977 Banwari Lal instituted suit No. 318/77 against the Society seeking eviction of the Society from "the plot of land in question".
It was alleged that the plaintiff was the owner of the above said plot and that the defendant had put up a shed thereon.
It was alleged that the Society had been occupying the property much earlier and that the plain tiff who came to the scene much later had mistakenly thought that the defendant was the tenant of both the land and the shed put up thereon and accordingly filed the petition under the Rent Control Act for evicting the Society.
Subsequently it was said, after examining the records of the Custodian and allotment letter in favour of the defendant he had come to know that the shed had been constructed by the defendant and that, as such the property from which the eviction 659 was to be sought was only a plot of land and not 'premises ' within the meaning of the Delhi Rent Control Act.
In these circumstances, it was claimed that the plaintiff had termi nated the tenancy of the defendants and that the suit was being filed to recover possession of the property from the tenants.
As mentioned earlier, the plaintiff has succeeded in all the three courts and hence the present appeal.
Shri S.K. Mehta, learned counsel for the Society, contends that in this case both the parties had taken up inconsistent stands at different stages of the litigation and that, in that state of affairs, the courts below should have ignored the past conduct of both the parties and gone by the contents of the documents of title in order to decide the matter.
Instead, he complains, the courts have held the conduct of the Society in some of the prior litigation as negativing its claim but, when it came to a consideration of the like conduct on the part of the plaintiff, they have chosen to make light of it, accepting the lame excuses put forward on his behalf.
We shall, therefore, consider, at the outset, the impact, if any, of the earlier proceedings in this case on the question at issue.
The detailed narration of facts set out earlier will show that the parties have not been consistent in their stands and have tried to blow hot or cold as the occasion suited them.
Taking up the stand of the Society first, the Society, in its application to the custodian for reduction of rent claimed successfully that what was allotted to it was only a plot of land and that the small shed thereon had been put up by the Society itself.
So also, in its applica tion for allotment dated 21.1.
1957 and 15.10.1960, it referred to the property only as an industrial plot.
The letters addressed by the Society to the Custodian and Set tlement Commissioner as well as the application for reduc tion of rent and the order thereon are valuable pieces of evidence both because they are anterior to the litigation between these two parties and also because they reflect the representations of the Society to, and the findings of, the very authority that allotted the property to the Society.
The Society represented that it had been allotted only a plot of land and that the shed had been put up thereon by itself and this plea would not have been accepted by the Custodian had it not been correct.
Shri Mehta tried to argue that the Custodian has only reduced the rent on general grounds and has given no finding that only a plot had been allotted to the Society but we are unable to accept this contention as both in the opening sentences as well as in the body of order there is a clear finding to this effect.
This is a very strong circumstance to show that what was allotted to the Society was only a plot of land.
Secondly, 660 the findings of the Rent Controller in the application under section 44 filed by the Society, right or wrong, have at tained finality as between the parties and it is not open to the Society on principles analogous to res judicata to take a contrary stand in these proceedings.
It is true that in the suit for injunction filed in 1964 as well as in its application under section 44 of the Rent Control Act the Society took up a contrary position and claimed that the property was tenanted 'premises '.
It is not clear why the Society filed the suit if the property was subject to the Rent Control Act and, though it appears that the plaintiff pointed out that the property was the subject of proceedings under the Rent Control Act, the suit was eventually dismissed without any findings.
Again, the Socie ty 's claim in the second set of proceedings was rejected by the Rent Controller in a reasoned order on 9.3.1972.
The statement of Ajit Singh of May, 1962 is ambiguous, as it says on the one hand that there was a shed but also says on the other that what was allotted to the Society was only an open plot.
These are, therefore, not of much help to the Society.
Turning next to the stand of the plaintiff, in Decem ber 1962, soon after acquiring the property, he applied to the Rent Controller though unsuccessfully for the eviction of the Society on the allegation that the property comprised a shed, that it had been unauthorisedly sublet and that the plaintiff required it for reconstruction as residential premises.
His explanation that this was due to some mistaken notion has been accepted by the first appellate court.
Counsel for the appellant contends that this was a naive explanation which should not have been accepted as the material on record shows that Banwan Lal and Dina Nath were members of the Society and were fully aware of all the transactions and activities of the Society right from the inception and could not have been unaware of the nature of the property allotted to the Society as alleged.
There is some truth in this but at the same time, it should be appre ciated that, when filing this application, the plaintiff might not have been fully aware of all the legal implica tions of the situation.
At the time of the action, the property consisted of a land and shed.
If the land belonged to the Custodian and the shed had been put up by the Socie ty, what was sold to the plaintiff was really only the right, title and interest of the Custodian and the plaintiff could not have become the owner of the shed superstructure.
Strictly speaking, the Society was the tenant only in re spect of the land but it is possible that, without examining the niceties as to what was the original allotment and the effect of subsequent structure having been put up on it by the lessee, the plaintiff may just have tried 661 to evict the Society by resort to the Rent Control Act.
The question whether the property was 'premises ' within the Rent Control Act was not put in issue in that case and the deci sion of the Rent Controller also rested on a very narrow finding which has no relevance to the point at issue.
We, therefore, think, that these proceedings do not affect the present case of the plaintiff, particularly in view of the specific findings given by the Rent Controller in the Socie ty 's application.
Summing up the position, therefore, it seems to us that the history of the earlier litigation and findings given in the orders therein support the plaintiff 's case rather than that of the Society as held by the courts below.
That apart, we do not think the position is different even_if, as urged by Sri Mehta, we ignore all these proceed ings as unhelpful to either side and concentrate only on the documents on which Shri Mehta relies as supporting his plea that the Society had got an allotment of not a mere plot of land but of a building as well.
The first and most important document on which Shri Mehta places great reliance is the order of allotment dated 28.3.1949 by the Custodian in favour of the Society.
Counsel lays stress on the references in it to "industrial premises", to the "industrial establishment known as open compound . (portion of Jai Hind Motor Works)", to "the factory/workshop/industrial establishment", to "possession of stocks of consumable goods and other stores and material, if any", "and other movable property kept therein" and contends that the document clearly shows that what was allotted to the Society was not a mere plot of land but an industrial premises.
We are unable to accept the above contention for a number of reasons.
In the first place, the reference to 'industrial premises ' in this letter cannot be construed as a reference to 'premises ' within the meaning of the Rent Control Act.
The letter also refers to the allotted property as factory, workshop and industrial establishment though, admittedly, there was no such factory, workshop or estab lishment in existence on that date.
The letter also refers to stocks of consumable goods, stores and movable property on the property but it is common ground that there was none of these things on the site at the time.
It was obviously a cyclostyled proforma allotting an item of evacuee property and, except for the portion where it contains a description of the particular property in question viz. "open compound at Hamilton Road (portion of Jai Hind Motor Works) with 25 front and 50 deep", it only contains terms applicable to allotments generally.
In this case the 662 particular description is not of much help either.
That the property was "known as office compound" does not necessarily mean that there were premises inside the compound as was sought to be suggested.
It is equally consistent with the claim that it was only an open plot of land inside a com pound on which some motor works were located.
Secondly, in the absence of a clear indication of the nature of the property in the allotment letter, we may refer to the other documentary evidence on record.
The inspection report of the person who delivered the property to the Society dated 9.1.1951, the order dated 31.3.1955 of the Deputy Custodian, the letters of the Society dated 21.1.1957 and 12.10.1960, the revision petition filed by the Society as well as the order dated 6.8.1962 thereon clearly indicate that what was allotted to the Society was only a plot of land and that the Society had put up a temporary structure and installed some machinery on it.
The importance of these documents, as indicated earlier, lies in the fact that they arise out of proceedings between the allotting authority and the Society and relate to a point of time anterior to the commencement of the litigation between the Society and the plaintiff.
Shri Mehta invited our attention to the reports called for and submitted in connection with the application under section 33 of the Displaced Persons Act filed by the Society.
He pointed out that the report of the Executive Engineer shows that the reserve price for the auction sale of the property was fixed at Rs.21,000 by taking into account the value of the land at Rs. 17,500 and the value of the structure of Rs.3.883 (in all Rs.21,303) and that this had been further clarified by the report of T.C. Dewan.
But, as rightly pointed out by Dr. Ghosh for the plaintiff, these were only reports submitted in 1962 (much later than the allotment) in the context of justifying the action of the department in auctioning the property in 1960 instead of allotting it to the occupant Society.
As men tioned earlier, the Society itself had pleaded in its appli cation that it had been allotted the land and that it had put up structure and machinery thereon worth Rs.31,000.
It is clear that the machinery installed by the Society on the land was not considerable.
It is seen from the order on the revision petition that the Society could prove installation of machinery only to the extent of Rs.6,585.
The effort of the Society was, therefore, apparently to contend that it had been allotted only the land for which an upset price of Rs.21,000 had been fixed and that since it had also put up a structure and installed machinery worth Rs.31,000, the property should not have been sold in auction.
An inspection was ordered and report of the Executive Engineer indicates that the value of Rs.21,000 had been fixed taking into account both the land and the structure thereon and not merely for the 663 land.
The report of T.C. Dewan was also to the effect that the upset price of Rs.21,000 fixed in 1960 had taken into account a part of an evacuee structure that had already existed on the land.
These reports were thus drawn up in the context of a controversy between the parties as to the nature of the property allotted and the manner in which it had been valued at Rs.21,000.
These reports drawn up several years after.
the allotment, and intended to justify the department 's action, cannot be of much evidentiary value.
It is also significant that, although Dewan 's report states that "the position can be made clear by consulting the valuation schedule ' of the property" no attempt was made to bring on record the valuation schedule which must have been drawn up at the time of the sale, before fixing the upset price at Rs.21,000.
These documents cannot, therefore, be relied upon as to the state of the property when it was allotted to the Society.
Thirdly, the survey reports referred to by us earli er are helpful in indicating how the confusion in the case could have arisen.
The report made at the time of Pritam Chand 's occupancy obviously covers a much more extensive property which consisted of an open space of area 50 ' x 45 which was used as motor lorry workshop and a number of sheds and a verandah.
If we read the letter of allotment in the context of this report, it is clear that what was allotted to the Society was only a portion of the Jai Hind Motor Works measuring 50 ' x 25 '.
This makes it abundantly clear that only an open space was allotted to the Society.
Even the report of 1955 shows the property (though somewhat larger in size than 50 ' x 25 ' shown in the allotment letter) only as a plot with tin shed.
As, even on the Society 's own showing, it had put up a shed on the plot, we again reach the position that what was originally allotted was only a plot of land.
The allotment letter and the other documents re ferred to by counsel for the Society do not, therefore, further its case.
On the contrary, they only reinforce the conclusion of the courts below.
Actually, the findings on the point of all the three courts are concurrent findings on a question of fact.
The Additional District Judge has co gently collected together all the circumstances which mili tate against the Society in its judgment and the High Court has approved this summing up.
This Court does not normally reappraise the evidence or interfere with such concurrent findings of fact, even if it is possible on the facts to come to a contrary conclusion.
We have, however, discussed the material at great length and practically reviewed the entire evidence on record as Shri Mehta submitted that the property is at present occupied by a larger number of mem bers of the petitioner Society who are carrying on small business and that they will all be 664 thrown out on the road as a result of the decision of the courts below.
Even so, for reasons discussed above, we do not think we can come to a contrary conclusion on the mate rial on record.
The High Court has gone one step further.
It has indicated that, even if one accepted the best case of the appellant Society that there was a shed on the land even at the time of the original allotment such plot cum shed cannot convert the land into 'premises ' within the meaning of the Rent Control Act.
This was the prima facie view of the court as it did not hear arguments from the parties on this point.
Counsel canvassed this point before us also.
Shri Mehta, referring to Corporation of City of Victoria vs Bishop of Vancouver Island, AIR 1921 PC 240; Karnania Properties Ltd. vs Augustin, [1957] SCR 20; State of Bombay vs Sardar VenkatRao Krishna Rao Gujar, ; and Ghanshiam Das vs Devi Prasad & Another, contended that the definition of premises envisages a build ing and that, as per these decisions, anything that is built on land, even if it is only a kacha shed, would be a build ing and this brings the property in question within the purview of the Act.
On the other hand Dr. Ghosh sought, by analogy of the principle of the decisions in Uttam Chand vs S.M. Lalwani, AIR 1965 SC 716; S.M Gopalkrishna Chetty vs Ganeshan & Ors., and Morarji Goculdas Deoji Trust & Ors.
vs Mahadev Vithan Kutwa, , to contend that what the Rent Control Act contemplates is a building let out qua building, may be with appurtenant land, but not a land let out for use as land merely because there may be a small building on it.
The relevant question, he says, is what was the dominant subject matter of the allot ment the land or the building and this is a question which can only be decided in the respondent 's favour.
We do not consider it necessary to embark on a discussion of this aspect as we are satisfied, for the reasons already dis cussed, that the property allotted to the Society in respect of which it was a tenant, initially under the custodian and later under the plaintiffs, was only a plot of land and that the plaintiffs were justified in attempting to recover possession thereof by a suit for possession in the civil court.
It is further directed that the decree for eviction will not be executed till 28.2.1990 provided the persons who are in occupation of the premises in question file an undertak ing containing the usual terms within four weeks from today.
The appeal, therefore, fails and is dismissed but, in the circumstances, we make no order as to costs.
P.S.S. Appeal dismissed.
| IN-Abs | The appellant society was temporarily allotted the property in question by way of a lease by the Custodian of Evacuee Property in March, 1949.
In the allotment letter it was described as an 'industrial establishment ' known as open compound.
The inspection report dated January 9, 1951 of the person who had delivered the possession to the society described the property as a 'plot ' on which the allottee promised to start a factory.
Sometime thereafter the society sought reduction of the assessment rent.
The order of the Deputy Custodian thereon dated March 31, 1955 granting the relief, again described the property as a 'plot ' with a self constructed shed.
Subsequently, the society through its letter dated January 21, 1957 requested that the said 'indu strial plot ' may be permanently allotted to it.
However, the Custodian chose to sell the property by auction on July 15, 1960 in favour of the predecessor in interest of the re spondent.
The society moved to have the said sale set aside and in its application dated October 15, 1960 made to the concerned authority it mentioned the property as an 'indu strial plot '.
That application was eventually rejected by the Chief Settlement Commissioner on August :25, 1961.
In its revision petition before the Government of India the contention of the society was that the plot was allotted to the society for industrial purpose and they had erected a building and installed machinery thereon.
The Government order rejecting the revision petition too started with a recital that the Custodian had allotted 'an open plot of land ' to the society for industrial purposes and that the society had erected 'a temporary structure ' on the plot and also installed some machinery.
648 On February 15, 1968 the appellant society filed an application under section 44 of the Delhi Rent Control Act, 1958 seeking permission to make repairs to the premises in ques tion.
The owners resisted the said application on a prelimi nary objection that the petitioners were not tenants of any premises within meaning of the Delhi Rent Control Act.
The Controller found that what was allotted to the petitioner society was only a plot and that the shed was self con structed.
The petitioner, therefore, being a tenant only with respect to an open site, which did not come within the definition of a 'premises ' as contemplated by the Act, the petition under section 44 was not maintainable.
The respondent instituted a suit against the society in 1977 seeking its eviction and possession stating that the property was only a plot of land and not 'premises ' within the meaning of Delhi Rent Control Act, and that the plain tiffs had terminated the tenancy of the defendants.
All the three courts below held in his favour.
In this appeal it was contended for the appellant socie ty that the property in question was a 'building ' within the meaning of the Delhi Rent Control Act, 1958 the eviction from which could be sought by the landlord only from a Rent Controller on grounds specified in the Act and not by a suit in a civil court under the Transfer of Property Act read with the Code.of Civil Procedure; that the references in the allotment letter to 'industrial premises ', to the 'industri al establishment known as open compound ', and to the 'facto ry/workshop/industrial establishment ' clearly showed that what was allotted to the society was not a mere plot but an industrial premises.
Dismissing the appeal, HELD: 1.
The property allotted to the appellant society in respect of which it was a tenant initially under the Custodian and later under the plaintiff respondent was only a plot of land.
The plaintiff was, therefore, justified in attempting to recover possession thereof by a suit for possession in a civil court.
[664F G] 2.
The letters addressed by the society to the Custodian and the Settlement Commissioner as well as the application for reduction of rent and the order, thereon, are valuable pieces of evidence both because they are anterior to the litigation between the parties and also because they re flected the representations of the society to, and the findings of the very authority that allotted the said property.
The society represented that it had been ' allotted only a plot of land and that 649 the shed had been put up thereon by itself and this plea would not have been accepted by the Custodian had it not been correct.
Both in the opening sentence as well as in the body of the order there is a clear finding to this effect.
This is a very strong circumstance to show that what was allotted to the society was only a plot of land.
Further more, the findings of the Rent Controller in the application under section 44 of the Rent Control Act filed by the society, right or wrong, had attained finality as between the parties and it was not open to the society on principles analogous to res judicata to take a contrary stand in these proceed ings.
[659F H;660A] 3.
The reference to 'industrial premises ' in the allot ment letter cannot be construed as a reference to 'premises ' within the meaning of the Rent Control Act.
It was obviously a cyclostyled proforma allotting an item of evacuee property and except for the portion where it contained a description of the property in question viz., 'open compound ', it only contained terms applicable to allotment generally.
[661F H] 4.
The finding on the point of the courts below are concurrent findings on a question of fact.
This Court under Article 136 of the Constitution does not normally reappraise the evidence or interfere with such concurrent findings of fact, even if it is possible on the facts to come to a contrary conclusion.
[663G] The decree for eviction not to be executed till February 28, 1990 provided the persons in occupation of the premises file the usual undertaking.
[664G]
|
Criminal Appeal No. 105 of 1989.
From the Judgment and Order dated 31.10.1987 of the Karnataka High Court in Criminal Petition No. 400 of 1986.
M.V. Goswami and B.R.G.K. Achar for the Appellant.
B. Krishna Prasad and P.K. Rao for the Respondents.
The Judgment of the Court was delivered by NATARAJAN, J.
Special Leave granted.
This appeal by special leave is directed against an order of the High Court of Karnataka under Sec.
482 Criminal Procedure Code (For short the Code) setting aside the order or the Second Additional Chief Metropolitan Magistrate, Bangalore directing the registration of a calendar case against the second respondent under Sections 408 and 420 of the Indian Penal Code and the issue of summons to him under Section 204 of the Code.
So far as the facts are concerned, they are as follows.
The appellant gave a report to the Commissioner of Police, Bangalore on 20.2.1980 against the second respondent alleg ing that he had committed the offences of cheating and criminal breach of trust.
It was averred that the second respondent, was its Divisional Manager 722 (Export Import) and had negotiated on its behalf with an Italian firm in July 1979 for supply of quality granite stones and had obtained a letter credit.
Availing the credit facility, he had drawn a sum of Rs. 13,59,750 but failed to supply granite stones to the Italian firm and instead had misappropriated the amount.
On the foot of the report, a case was registered against the second respondent in Ulsoor Police Station as Crime No. 145/1980 under Sections 408 and 420 of the Indian Penal Code and the case was investigated by Shri Bayar, Inspector of Police.
When Shri Bayar went away on promotion, his succes sor took over the investigation but subsequently he sent a "B" Report to the Court stating that further investigation was not required as the case was of a civil nature.
Aggrieved by the report sent by the police, the appel lant approached the Second Additional Chief Metropolitan Magistrate, Bangalore for the report being quashed and permission granted to him to prove the commission of of fences by the second respondent.
The learned Magistrate, after perusing the investigation records came to the view that a prima facie case was made out against the second respondent and consequently he passed an order for a calen dar case being registered against him for offences punisha ble under Sections 408 and 420 of the Indian Penal Code and for summons being issued to him under Sec. 204 of the Code.
Thereupon, the second respondent filed a petition under Sec.
482 of the Code before the High Court and sought the quashing of the order of the Magistrate.
The High Court allowed the petition and set aside the order of the Magis trate on the ground the Magistrate had not followed the procedure laid down by the Code for taking cognisance of the case and issuing process to the accused after the police had sent a 'B ' report in the case.
The High Court has held that on receipt of the 'B ' report, the Magistrate should have issued notice to the appellant to find out whether he was disputing the correctness of the 'B ' report and, if so, to comply with the requirements of Sec. 200 of the Code.
The High Court has further stated that only after examining the appellant.
on oath and his witnesses, the Magistrate should have decided whether a case should be registered and process issued to the accused.
The High Court has referred to the ratio laid down in an earlier case K. Sham Rao vs A.R. Diwakar, and followed it.
Aggrieved by the order of the High Court, the appellant has come forward with this appeal.
723 Mr. B.R.G.K. Achar, learned counsel for the appellant contended that the second respondent had no locus to ques tion the order of the Second Additional Chief Metropolitan Magistrate and therefore, the High Court was in error in entertaining the petition filed by him under Section 482 of the Code and setting aside the order of the learned Magis trate.
In support of this contention he placed reliance on the decision in Nagawwa vs
section Konjalgi; , He further submitted that the Second Additional Chief Metropol itan Magistrate was entitled to take cognizance of the offences alleged to have been committed by the second re spondent and order the issue of process to him and that the Magistrate 's power under Sections 190 and 204 of the Code could well be exercised without advertance to any possible defence the second respondent may have.
The learned counsel also stated that since the police had made a perfunctory investigation and sent a 'B ' report stating that the case was of a civil nature, the Magistrate was perfectly justi fied, in the facts and circumstances of the case in taking cognizance of the offence and directing the issue of process to the second respondent.
Controverting these arguments, the learned counsel for the respondent submitted that since the police had sent a 'B ' report stating that the investigation disclosed that the dispute between the parties was only of a civil nature and that no offence has been made out against the second re spondent, the Second Additional Chief Metropolitan Magis trate, ought to have called upon the appellant to find out whether he was challenging the police report and if so, to make a sworn statement and also examine his witnesses and thereafter only the learned Magistrate should have decided whether cognizance should be taken of the offences and process issued to the second respondent.
The learned coun sel, therefore, argued that since the magistrate had not followed the procedure laid down in Section 200 or Section 202, the second respondent was entitled to seek quashing of the order of the Magistrate and as such the High Court ha:; acted correctly in allowing the second respondent 's petition and setting aside the order of the Magistrate.
Before we examine the contentions of the learned counsel for the appellant and the second respondent, we may briefly refer to some of the provisions in Chapter X11, XIV, XV and XVI of the Code.
Section 155 in Chapter XII pertains to information laid to the police regarding non cognizable cases and Sub Section (2) lays down that no police officer shall investigate a non cognizable case without the order of a Magistrate having power to try such case or commit the case for trial.
724 Section 156(1) confers power on an officer in charge of a police station to investigate any cognizable case without the order of a Magistrate.
Section 156(3) authorises a Magistrate, empowered under Section 190 to order the police to make an investigation as provided for in Section 156(1).
The other provisions in the Chapter from Section 157 onwards set out the powers of investigation of the police and the procedure to be followed.
Section 169 prescribes the proce dure to be followed by an officer in charge of a police station if it appears to him upon investigation of a case that there is no sufficient evidence or reasonable ground of suspicion to justify the forwarding of the accused to a Magistrate.
Section 170 prescribes the procedure to be followed by the officer in charge of a police station if it appears to him upon investigation that there is sufficient evidence or reasonable ground of suspicion to justify the forwarding of the accused to a Magistrate.
Section 173(1) enjoins a Police Officer to complete the investigation without unnecessary delay.
Section 173(2) lays down that as soon as the investigation is completed the officer in charge of a police station should forward to a Magistrate empowered to take cognizance of an offence on a police report, a report in the prescribed form stating the various particu lars mentioned in that Sub Section.
Chapter XIV deals with the conditions requisite for initiation of proceedings and as to the powers of cognizance of a Magistrate.
For our purpose it is enough if we extract Section 190(1) alone. "Section 190(1).
Cognizance of offences by Magistrates Subject to the provisions of this Chapter, any Magistrate of the first class, and any Magistrate of the second class spe cially empowered in this behalf under sub section (2), may take cognizance of any of fence (a) upon receiving a complaint of facts which constitute such offence; (b) upon a police report of such facts; (c) upon information received from any person other than a police officer, or upon his own knowledge, that such offence has been commit ted." Chapter XV which contains Section 200 to 203 deals with "Complaints to Magistrate".
A Magistrate taking cognizance of an offence on complaint is required by Section 200 to examine the complaint and 725 the witnesses present, if any.
Section 202 provides that a Magistrate taking cognizance of a case, upon complaint, may, if he thinks fit, postpone the issue of process against the accused, and either inquire into the case himself or direct investigation to be made by a police officer or by such other person as he thinks fit, for the purpose of deciding whether or not there is sufficient ground for proceeding.
Section 203 empowers the Magistrate to dismiss the com plaint, if after considering the statements on oath (if any) of the complainant and of the witnesses and the result of the inquiry or investigation (if any) under Section 202, the Magistrate is of opinion that there is no sufficient ground for proceeding.
Chapter XVI deals with "Commencement of Proceedings before Magistrates" and Section 204 empowers a Magistrate to issue summons or a warrant as the case may be, to secure the attendance of the accused if in the opinion of the Magis trate taking cognizance of the offence there is sufficient ground for proceeding.
From the provisions referred to above, it may be seen that on receipt of a complaint a Magistrate has several courses open to him.
The Magistrate may take cognizance of the offence at once and proceed to record statements of the complainant and the witnesses present under Section 200.
After recording those statements, if in the opinion of the Magistrate there is no sufficient ground for proceeding, he may dismiss the complaint under Section 203.
On the other hand if in his opinion there is sufficient ground for pro ceeding he may issue process under Section 204.
If, however, the Magistrate thinks fit, he may postpone the issue of process and either inquire into the case himself or direct an investigation to be made by the police officer or such other person as he thinks fit, for the purpose of deciding whether or not there is sufficient ground for proceeding.
He may then issue process if in his opinion there is sufficient ground for proceeding or dismiss the complaint if there is no sufficient ground for proceeding.
Yet another course open to the Magistrate is that instead of taking cognizance of the offence and following the procedure laid down under Section 200 or Section 202, he may order an investigation to be made by the police under Section 156(3).
When such an order is made, the police will have to investigate the matter and submit a report under Section 173(2).
On receiv ing the police report the Magistrate may take congnizance of the offence under Section 190(1)(c) and issue process straightaway to the accused.
The Magistrate may exercise his powers in this behalf irrespective of the view expressed by the police in their report whether an offence has been made out or not.
This is because the police report 726 under Section 173(2) will contain the facts discovered or un earthed by the police as well as the conclusion drawn by the police therefrom.
If the Magistrate is satisfied that upon the facts discovered or unearthed by the police there is sufficient material for him to take cognizance of the offence and issue process, the Magistrate may do so without reference to the conclusion drawn by the Investigating Officer because the Magistrate is not bound by the opinion of the police officer as to whether an offence has been made out or not.
Alternately the Magistrate, on receiving the police report, may without issuing process or dropping the proceeding proceed to act under Section 200 by taking cogni zance of the offence on the basis of the complaint original ly submitted to him and proceed to record the statement upon oath of the complaint and the witnesses present and thereaf ter decide whether the complaint should be dismissed or process should be issued.
Since in the present case the Second Additional Chief Metropolitan Magistrate has taken cognizance of offences alleged to have been committed by the second respondent and ordered issue of process without first examining the appel lant and his witnesses, the question for consideration would be whether the Magistrate is entitled under the Code to have acted in that manner.
The question need not detain us for long because the power of a Magistrate to take cognizance of an offence under Section 190(1)(b) of the Code even when the police report was to the effect that the investigation has not made out any offence against an accused has already been examined and set out by this Court in Abninandan Jha & Ors.
vs Dinesh Misra; , and H.S. Bains vs State, ; In Abhinandan Jha & Ors.
vs Dinesh Misra, (supra) the question arose whether a Magistrate to whom a report under Section 173(2) had been submitted to the effect that no case had been made out against the accused, could direct the police to file a charge sheet, on his disagreeing with the report submitted by the Police.
This Court held that the Magistrate had no jurisdiction to direct the police to submit a charge sheet but it was open to the Magistrate to agree or disagree with the police report.
If he agreed with the report that there was no case made out for issuing process to the accused, he might accept the report and close the proceedings.
If he came to the conclusion that further investigation was necessary he might make an order to that effect under Section 156(3) and if ultimately the Magistrate was of the opinion that the facts set out in the police report constituted an offence he could take cognizance of the offence, notwithstanding the contrary opinion of the police expressed in the report.
While expressing the opinion that the Magistrate could take cognizance of the offence, notwithstanding the 727 contrary opinion of the police, the Court observed that the Magistrate could take cognizance under Section 190(1)(c).
The reference to Section 190(1)(c) was a mistake for Section 190(1)(b) and this has been pointed out in H.S. Bains (supra).
In the case of H.S Bains (supra) one Gurnam Singh sub mitted a complaint to the Judicial Magistrate 1st Class, Chandigarh alleging that H.S. Bains trespassed into his house along with two others on 11 8 1979 at about 8 a.m. and threatened to kill him and his son.
The Magistrate directed the police under Section 156(3) of the Code to make an investigation.
After completing the investigation, the police submitted a report to the Magistrate under Section 173(2) of the Code stating that the case against the accused was not true and that the case may be dropped.
The learned Magistrate disagreed with the conclusion of the police and took cognizance of the case under Sections 448 and 506 of the Indian Penal Code and directed the issue of process to the accused.
Thereupon, the accused moved the High Court for quashing the proceedings before the Magistrate.
As the High Court declined to interfere, the accused approached this Court by way of appeal by special leave.
Various contentions were advanced on behalf of the accused and one of them was that the Magistrate was not competent to take cognizance of the case upon the police report since the report was to the effect that no offence had been committed by the accused.
It was further urged that if the Magistrate was not satisfied with the police report, there were only two courses open to him, viz. either to order a further investigation of the case by the police or to take cognizance of the case himself as if upon a complaint and record the statements of the complainant and his witnesses under Section 200 of the Code and then issue process if he was satisfied that the case should be proceeded with.
Repelling those contentions this Court held as follows: "The Magistrate is not bound by the conclu sions arrived at by the police even as he is not bound by the conclusions arrived at by the complainant in a complaint.
If a complainant states the relevant facts in his complaint and alleges that the accused is guilty of an offence under Section 307 Indian Penal Code the magistrate is not bound by the conclusion of the complainant.
He may think that the facts disclose an offence under Section 324 Indian Penal Code only and he may take congni zance of an offence under Section 324 instead of Section 307.
Similarly if a police report mentions that half a dozen persons examined by them claim to be eye witnesses to a murder but that for 728 various reasons the witnesses could not be believed, the Magistrate is not bound to accept the opinion of the police regarding the credibility of the witnesses.
He may prefer to ignore the conclusions of the police regarding the credibility of the witnesses and take cognizance of the offence.
If he does so, it would be on the basis of the statements of the witnesses as revealed by the police report.
He would be taking cognizance upon the facts disclosed by the police report though not on the conclusions arrived at by the police.
" The position is, therefore, now well settled that upon receipt of a police report under Section 173(2) a Magistrate is entitled to take cognizance of an offence under Section 190(1)(b) of the Code even if the police report is to the effect that no case is made out against the accused.
The Magistrate can take into account the statements of the witnesses examined by the police during the investigation and take cognizance of the offence complained of and order the issue of process to the accused.
Section 190(1)(b) does not lay down that a Magistrate can take cognizance of an offence only if the investigating officer gives an opinion that the investigation has made out a case against the accused.
The Magistrate can ignore the conclusion arrived at by the investigating officer ;and independently apply his mind to the facts emerging from the investigation and take cognizance of the case, if he thinks fit, in exercise of his powers under Section 190(1)(b) and direct the issue of process to the accused.
The Magistrate is not bound in such a situation to follow the procedure laid down in Section 200 and 202 of the Code for taking cognizance of a case under Section 190(1)(b) though it is open to him to act under Section 200 or Section 202 also.
The High Court was, there fore, wrong in taking the view that the Second Additional Chief Metropolitan Magistrate was not entitled to direct the registration of a case against the second respondent and order the issue of summons to him.
The fact that in this case the investigation had not originated from a complaint preferred to the Magistrate but had been made pursuant to a report given to the police would not alter the situation in any manner.
Even if the appellant had preferred a complaint before the learned Magistrate and the Magistrate had ordered investigation under Section 156(3), the police would have had to submit a report under Section 173(2).
It has been held in Tufa Ram & Ors.
vs Kishore Singh, ; that if the police, after making an investigation, send a report that no case was made out against the accused, the 729 Magistrate could ignore the conclusion drawn by the police and take cognizance of a case under Section 190(1)(b) and issue process or in the alternative he can take cognizance of the original complaint and examine the complainant and his witnesses and thereafter issue process to the accused, if he is of opinion that the case should be proceeded with.
In the light of our conclusion, the appeal succeeds and the order of the High Court is set aside.
The order of the Second Additional Chief Metropolitan Magistrate, Bangalore will stand restored and the case against the second respond ent will be proceeded further in accordance with law.
G.N. Appeal allowed.
| IN-Abs | The appellant gave a report to the Commissioner of Police against the second respondent, alleging that he had committed the offences of cheating and criminal breach of trust.
It was alleged that the second respondent, who was employed by the appellant as its Divisional Manager (Export Import) had negotiated on behalf of the appellant with an Italian firm for supply of quality granite stones and had obtained a letter of credit and availing the credit facility, had drawn a sum of Rs. 13,69,750 and misappropri ated the amount.
A case was registered and investigated, but subsequently the police sent a 'B ' Report to the Court, stating that further investigation was not required as the case was of a civil nature.
Aggrieved by the report, the appellant ap proached the Second Additional Chief Metropolitan Magistrate for quashing the report and for permission to prove the commission of offences by the second respondent.
The Magis trate passed an order for a calendar case being registered against the second respondent for offences punishable under Sections 408 and 420 I.P.C. and for issuing summons to him.
Thereupon the second respondent filed a petition under Section 482 of the Code before the High Court and sought the quashing of the order of the Magistrate.
The High Court allowed the petition and set aside the order of the Magis trate on the ground that the Magistrate had not followed the procedure for taking cognizance of the case and issuing process to the accused after the police had sent a 'B ' report in the case.
According to the High Court, the Magis trate should have issued notice to the appellant to find out whether he was disputing the correctness of the 'B ' report and if so, to comply with the requirements of Section 200 719 of the Code.
The High Court further stated that only after examining the appellant on oath and his witnesses, the Magistrate should have decided whether a case should be registered and process issued to the accused.
Aggrieved by the High Court 's order, the appellant has preferred this appeal by special leave.
On behalf of the appellant, it was contended that the second respondent had no locus to question the order of the Magistrate and that the Magistrate was justified in taking cognizance of the offence and directing the issue of process to the second respondent.
On behalf of the respondent, it was argued that since the Magistrate had not followed the procedure laid down in Section 200 or Section 202, the second respondent was enti tled to seek quashing the order of the Magistrate, and the High Court was right in setting aside the order of the Magistrate.
Allowing the appeal, HELD: 1.
On receipt of a complaint a Magistrate has several courses open to him.
The Magistrate may take cogni zance of the offence at once and proceed to record state ments of the complainant and the witnesses present under Section 200.
After recording those statements, if in the opinion of the Magistrate there is no sufficient ground for proceeding, he may dismiss the complaint under Section 203.
On the other hand if in his opinion there is sufficient ground for proceeding he may issue process under Section 264.
If, however, the Magistrate thinks fit, he may postpone the issue of process and either inquire into the case him self or direct an investigation to be made by the police officer or such other person as he thinks fit, for the purpose of deciding whether or not there is sufficient ground for proceeding.
He may then issue process if in his opinion there is sufficient ground for proceeding or dismiss the complaint if there is no sufficient ground for proceed ing.
Yet another course open to the Magistrate is that instead of taking cognizance of the offence and following the procedure laid down under Section 200 or Section 202, he may order an investigation to be made by the police under Section 156(3).
When such an order is made, the police will have to investigate the matter and submit a report under Section 173(2).
On receiving the police report the Magis trate may take cognizance of the offence under Section 190(1)(0) and issue process straightaway to the accused.
The Magistrate may exercise his powers in this 720 behalf irrespective of the view expressed by the police in their report whether an offence has been made out or not.
This is because the police report under Section 173(2) will contain the facts discovered or unearthed by the police as well as the conclusion drawn by the police therefrom.
If the Magistrate is satisfied that upon the facts discovered or unearthed by the police there is sufficient material for him to take cognizance of the offence and issue process, the Magistrate may do so without reference to the conclusion drawn by the Investigating Officer because the Magistrate is not bound by the opinion of the police officer as to whether an offence has been made out or not.
Alternately the Magis trate, on receiving the police report, may without issuing process or dropping the proceeding proceed to act under Section 200 by taking cognizance of the offence on the basis of the complaint originally submitted to him and proceed to record the statement upon oath of the complainant and the witnesses present and thereafter decide whether the com plaint should be dismissed or process should be issued.
[725D H;726A C] 2.1 The position is, therefore, now well settled that upon receipt of a police report under section 173(2) a Magistrate is entitled to take cognizance of an offence under Section 190(1)(b) of the Code even if the police report is to the effect that no case is made out against the accused.
The Magistrate can take into account the statements of the witnesses examined by the police during the investi gation and take cognizance of the offence complained of and order the issue of process to the accused.
Section 190(1)(b) does not lay down that a Magistrate can take cognizance of an offence only if the investigating officer gives an opin ion that the investigation has made out a case against the accused.
The Magistrate can ignore the conclusion arrived at by the investigating officer and independently apply his mind to the facts emerging from the investigation and take cognizance of the case, if he thinks fit, in exercise of his powers under Section 190(1)(b) and direct the issue of process to the accused.
The Magistrate is not bound in such a situation to follow the procedure laid down in Section 200 and 202 of the Code for taking cognizance of a case under Section 190(1)(b) though it is open to him to act under Section 200 or Section 202 also.
The High Court was, there fore, wrong in taking the view that the Second Additional Chief Metropolitan Magistrate was not entitled to direct the registration of a case against the second respondent and order the issue of summons to him.
[728C F] 2.2 The fact that in this case the investigation had not originated from a complaint preferred to the Magistrate but had been made 721 pursuant to a report given to the police would not alter the situation in any manner.
Even if the appellant had preferred a complaint before the Magistrate and the Magistrate had ordered investigation under Section 156(3), the police would have had to submit a report under Section 173(2).
[728G H] K. Sham Rao vs A.R. Diwakar, ; Nagawwa vs section Konjalgi, ; ; Abhinandan Jha and Ors.
vs Dinesh Mishra, ; ; H.S. Bains vs State, ; and Tufa Ram & Ors.
vs Kishore Singh, ; relied on.
Setting aside the order of the High Court and restoring the order of the Magistrate, this Court directed that the case against the Second Respondent shall proceed in accord ance with law.
[729B C]
|
l Appeal No.5 of 1958.
Appeal by special leave from the judgment and order dated September 26, 1956, of the former Nagpur High Court in Letters Patent Appeal No. 66 of 1956, arising out of the judgment and order dated April 14, 1956, of the said High Court in Misc.
Petition No. 6 of 1956.
M. C. Setalvad, Attorney General of India, B. Sen, D. B. Padhya and I. N. Shroff, for the appellants.
R. V. section Mani, for the respondent.
April II.
The Judgment of the Court was delivered by S.K. DAS J.
This is an appeal by special leave.
The appellants before us are the Nagpur Electric Light and Power Co. Ltd. (hereinafter referred to as the Company), a public limited company having its registered office at Nagpur in Madhya Pradesh, its Manager, and Assistant Manager.
The respondent, Shreepathi Rao, joined the service of the Company as a typist on a salary of Rs. 30 per month in July, 1936.
He rose in rank from time to time and was appointed Deputy Head Clerk in 1947 in the grade of Rs. 120 10 225.
Since 1952 he has been receiving a basic salary of Rs. 245 per month.
On November 28, 1955, an explanation was called for from him with regard to the issue of certain bills to consumers of electricity called ".high tension consumers ", without having certain " notes for the information of consumers " printed at the back of the bills.
The respondent submitted his explanation on the next day, marking a copy thereof to one of the directors of the Company.
On December 2,1955, he was again asked to explain why he marked a copy of his explanation to one of the directors.
The respondent submitted an explanation in respect of this matter also.
On the same date, he was again asked to explain as to how and why certain " double adjustments " had been made in the accounts of 1954 relating to the consumers ' department of the Company, the allegation being that a sum of Rs. 1,05,894 7 7 which represented the amount of bills of the Central Railway had been deducted twice in the accounts.
The respondent submitted an explanation on December 3, 1955, in which he said that the charge was vague and that, after 1949, he was not in any way concerned with the preparation of summaries and annual statements of accounts of the consumers department.
On December 5, 1955, an order of suspension was made against the respondent which stated that the order was to take immediate effect and to remain in force until further orders, pending some investigation against the respondent.
Two days later, on December 7, 1955, a memorandum was served on the respondent terminating his services with effect from January 31,1956.
The memorandum, so far as it is relevant for our purpose, read We hereby give you notice under Standing Order 16(1) that your services will stand terminated as from 31st January, 1956.
The Company 's Managing Director is satisfied that it is not in the interests of the business of the Company to disclose reasons ' for terminating your services.
" On December 19, 1955, a notice was served on the Company on behalf of the respondent wherein it was stated that the order of suspension dated December 5, 1955, and the order of termination dated December 7, 1955, were illegal and ultra vires and a request was made to withdraw the said orders and reinstate the respondent within 24 hours, failing which the respondent said that he would take legal action in the matter.
On December 26, 1955, the Company sent a reply to the notice denying the allegations, and the company further stated that it had no desire to enter into a discussion with the respondent as to the propriety of the orders passed.
On January 2, 1956, the respondent filed a petition under article 226 of the Constitution in the High Court 466 at Nagpur in which he prayed for the issue of appropriate writs or directions quashing the orders of suspension and termination dated December 5, 1955, and December 7, 1955, respectively and asking for certain other reliefs.
This petition was heard by a learned single Judge on certain preliminary objections raised by the present appellants, and, by an order dated April 14, 1956, he upheld the preliminary objections and dismissed the petition.
The preliminary objections taken were these: it was urged that the service of the respondent was terminated in accordance with the Standing Orders of the Company, approved by the relevant authorities under the provisions of the (XX of 1946), hereinafter referred to as the central Act, and also under the provisions of the Central Provinces and Berar Industrial Disputes Settlement Act, 1947 (C. P. and Berar Act XXlll of 1947), hereinafter called the local Act; and if the respondent had any grievance against the said Standing Orders, his only remedy was to get the Standing Orders amended as provided for in the relevant Act, but he had no right to move the High Court under article 226 of the Constitution for quashing the orders passed against him or for reinstatement, etc.
Alternatively, it was urged that if the Standing Orders did not apply in the case of the respondent as was the respondent 's case, then the Ordinary law of master and servant applied, and the only remedy of the respondent was to sue the Company in damages for wrongful dismissal.
On these preliminary objections the learned Judge held (1) that the respondent was not an employee within the meaning of the Standing Orders and therefore his case was not governed by the Standing Orders; (2) that the relationship between the appellants and the respondent was contractual and not statutory and the remedy of the respondent was to sue the Company in damages for wrongful dismissal; and (3) as for amendment of the Standing Orders so as to include the respondent and persons in his category, the only remedy open to the respondent was to take action under the relevant Act by approaching a recognised union to move in the matter.
467 On the dismissal of his petition, the respondent preferred an appeal under el.
10 of the Letters Patent.
This appeal was heard and allowed by a Division Bench on September 26, 1956, on the findings that (1) the Standing Orders did not apply to the respondent, though he was an employee within the meaning of that expression in section 2 (1) of the local Act ; (2) the conditions of the respondent 's service were governed by the provisions of the local Act and on a breach thereof, the respondent had a right to move the High Court for appropriate orders under article 226 of the Constitution; and (3) as the termination of the service of the respondent was without statutory authority, it must be vacated.
The Division Bench accordingly allowed the appeal, quashed the orders of suspension and termination of service and declared that the respondent continued to bean employee of the Company on terms which were applicable to him on the date of his suspension, namely, December 5, 1955.
There was also a direction to the Company to pay back wages to the respondent.
The appellants herein then moved this Court and obtained special leave to appeal from the order of the Division Bench, dated September 26, 1956.
The present appeal has been brought in pursuance of the order granting special leave to the appellants.
The first and foremost question which arises for decision in this appeal is whether the Standing Orders of the Company apply to the respondent.
We have already stated and it is not in dispute that the Standing Orders were approved by the certifying officer under the provisions of the central Act and by the Labour Commissioner under section 30 of the local Act.
It is necessary to explain here the general scheme of the provisions of the two Acts under which the Standing Orders were approved.
Under the central Act, the expression " Standing Orders " means rules relating to matters set out in the Schedule, and section 3 requires that within six months from the date on which the central Act becomes applicable to an industrial establishment the employer shall submit to the certifying officer five copies of the draft Standing Orders proposed by him 468 for adoption in his industrial establishment.
Sub section (2) of section 3 lays down that provision shall be made in such draft for every matter set out in the Schedule which may be applicable to the industrial establishment and where model Standing Orders have been prescribed, the draft shall so far as practicable, in conformity with such model.
The Schedule refers to the matters which are to he provided by Standing Orders, and item 8 of the Schedule relates to " termination of employment, and the notice thereof to be given by employer and workman We may state here that the central Act contains a definition of " workman " which, at the material time in this case, meant any person employed in any industrial establishment to do any skilled or unskilled, manual or clerical, labour for hire or reward, but did not include any member of the armed forces.
Sections 4 to 10 of the central Act deal with (a) conditions for certification of Standing Orders, (b) certification of Standing Orders, (e) appeals, (d) date of operation of Standing Orders, (e) register of Standing Orders, (f) posting of Standing Orders and (g) duration and modification of Standing Orders.
There are similar provisions in the local Act,Chapter IV of which deals with Standing Orders.
Sub section (1) of section 30 of the local Act lays down Every employer, in respect of any industry to which this Act has been made applicable under subsection (3) of section 1, shall, within two months of the (late of such notification, submit to the Labour Commissioner for approval, in such manner as may be prescribed, a copy of the Standing Orders concerning the relations between him and his employees with regard to all industrial matters mentioned in Schedule 1.
" Item 8 of Schedule I of the local Act is again " termination of employment, notice to be given by employer and employee ".
The other sub sections of section 30 lay down the procedure to be followed for the approval of Standing Orders by the Labour Commissioner, appeal by an aggrieved person, etc.
Sections 31 and 32 lay down the procedure for an amendment of the Standing Orders either at the instance of the employer or at the 469 instance of a representative of employees.
It is worthy of note that sub section
(1) of section 30 requires every employer to submit to the Labour Commissioner a copy of the Standing Orders concerning the relations between him and his employees with regard to all industrial matters mentioned in Schedule 1.
The local Act defines the expression " employee " and, at the relevant time, it meant any person employed by an employer to do any skilled or unskilled, manual or clerical work for contract or hire or reward in any industry.
It is worthy of note that the definition of " employee " in the local Act corresponds more or less to the definition of " workman " under the central Act.
There are some minor differences in the definition of the two expres sions in the two Acts, but with those differences we are not concerned in the present case.
The Standing Orders with which we are concerned in the present case came into force on November 14, 1951, and it is convenient at this stage to refer to the relevant Standing Orders.
Standing Order No. 2 defines certain expressions used in the Standing Orders.
It states In these Orders, unless there is anything repugnant in the subject or context (a) " employees " means all persons, male or female, employed in the Office or Mains Department or Stores or Power House or Receiving Station of the Company, either at Nagpur or at Wardha whose names and ticket numbers are included in the departmental musters.
(b) " The Manager " means the person appointed as such and includes the Assistant Manager and in relation to Wardha establishment " the Resident Engineer ".
(c) " Ticket " includes a Card, pass or token.
(d) " Workman " means such categories of employees as may from time to time be declared to be " Workman " by the Management ".
Standing Order No. 3 classifies employees into certain categories and Standing Order No. 4 deals with tickets.
In substance, it says that every workman, permanent 6 470 or temporary, shall have a ticket or card, and an apprentice shall have an apprentice card; the tickets or cards issued shall be surrendered when the workman is discharged or ceases to belong to the class of employment for which the card or ticket is issued.
It is to be noticed that under the definition clause " workman " means such categories of employees as may from time to time be declared, to be workmen by the management and Standing Order No. 4 makes it clear that every workman, permanent or temporary, will have a ticket.
Standing Order No. 16 deals with termination of employment, and cl.
(1) thereof, relevant for our purpose, must be quoted in full " For terminating the employment of a permanent employee, a notice in writing shall be given either by the employer or the employee, giving one calendar month 's notice.
The reasons for the termination of the services will be communicated to the employee in writing, if he so desires at the time of discharge, unless such a communication, in the opinion of the Management, may directly or indirectly lay the company and the Management or the person signing the communication open to criminal or civil proceedings at the instance of the employee, or the Company 's Managing Director is satisfied that it is not in the interests of the business of the Company to disclose the reasons and so orders in writing.
" Now, it is not in dispute that the respondent is a 'workman ' within the meaning of the Central Act and an 'employee ' as defined in the local Act.
controversy before us is as to whether he is an employee ' within the meaning of the Standing Orders.
Admittedly, no ticket has been issued to the respondent by the Company; his ticket number cannot, therefore, be included in the departmental muster.
The learned Judges of the High Court held that the inclusion of the name and ticket number in the departmental muster was an essential characteristic of an ' employee ' as defined for the purpose of the Standing Orders, and the mere fact of employment in the Office, Mains Department, Stores, Power House or Receiving Station of the Company was not enough to make a, 471 person so employed an 'employee ' within the meaning of the Standing Orders, and as the respondent did not fulfil the necessary condition of having his name and ticket number included in the departmental ' muster, he was not an 'employee ' as defined for the Standing Orders, which did not therefore apply to him.
On behalf of the appellants, it is contended that regard being had to the context and the entire body of the Standing Orders, the aforesaid view of the High Court is not correct, and on a proper construction, inclusion of the name and ticket number in the departmental muster is not an essential characteristic of an 'employee ' as defined for the Standing Orders.
It is rightly pointed out that if the possession of a ticket and a ticket number is taken as an essential characteristic of an ' employee ', then there is hardly any difference between an 'employee ' and a 'workman ' as defined in the Standing Orders; because a 'workmen ' means such categories of employees as may from time to time be declared to be workmen, and under Standing Order No. 4 all workmen must have tickets.
If a person em ployed by the company must have a ticket before he can be an employee, and if workmen are such categories of employees as have tickets, the distinction between the two disappears and.
it is difficult to understand why two definitions were necessary.
On a consideration, however, of ' the subject or context of the Standing Orders, read in their entirety and in harmony with one another, it becomes at once clear why two definitions are necessary and what is the distinction between the two classes , employees ' and ' workmen ' in the landing Orders.
The expression ' employee ' denotes a larger group namely, all persons, male or females who are employed in the Office, Mains Department, Stores, Power House, or Receiving Station of the Company, either at Nagpur or Wardha. 'Workmen ' denotes a smaller group, viz., such categories of employees as have been declared to be workmen, and who must have a ticket.
Such a distinction is clearly intelligible in an industrial establishment, where for security and other reasons a system of tickets or passes is necessary for those who 472 work in the Power House or Mains Department or other places where essential machinery is installed while others, such as the clerical staff, may work in an office building where security demands are either nonexistent or much less insistent.
This distinction means that all 'workmen ' are 'employees ', but all ` employees ' are not 'workmen ' for the purpose of the Standing Orders, and the inclusion of ticket numbers in the departmental musters will be applicable to those employees only to whom tickets have been issued; but such inclusion is not an essential characteristic of an employee.
Let us now see if such a distinction is consistent with the Standing Orders as a whole.
Standing Order No. 3, which classifies employees, defines a probationer in cl.
(c) and says that a probationer means an employee who is appointed in a clear vacancy on probation for a period not exceeding twelve months, etc.
Standing Order No. 4 does not require the issue of a ticket to a probationer; yet a probationer is an employee.
It is thus obvious that the Standing Orders do make a distinction between `employees ' and ` workmen ', and there may also be employees who have no tickets.
Some of the Standing Orders apply to workmen only, e. g., Standing Orders 12, 13, 14 and 15.
Other Standing Orders apply to all employees, whether they are workmen or not.
Standing Order No. 16 falls in the latter category ; it applies to all employees.
Standing Order No. 8 (b), we think, makes the position still more clear.
It says " Any employee, who after marking his attendance or presenting his ticket, card, or token, as the case may be, is found absent from his proper place of work during working hours without permission or without any sufficient reason, shall be liable to be treated as absent for the period of his absence.
" If every employee has to have a ticket, it is difficult to understand why this Standing Order should make a distinction between an employee who marks his attendance and another who presents his ticket, card or token.
Such a distinction is easily understandable when some employees do not possess a ticket, card or token, 473 so that they merely mark their attendance; while those who possess a ticket, card or token present it.
It has been suggested that Standing Order No. 4 is not exhaustive in the matter of issue of tickets; it talks of an issue of a ticket to every permanent workman, a card to every badli workman, a temporary ticket to every temporary workman, and an apprentice card to every apprentice.
It does not prescribe the issue of a pass or token, though the definition of a 'ticket ' includes a pass or token.
The suggestion further is that Standing Order No. 2 (a) itself authorises the issue of tickets to other employees, so that there may be one kind of tickets issued to workmen under standing Order No. 4 and another kind of tickets to other employees under Standing Order No. 2 (a).
On this view, it, is suggested that the alternatives mentioned in Standing Order No. 8 (b) really amount to an option given to an employee either to mark his attendance or present his ticket.
It is, however, difficult to understand the necessity of an option of this kind when every employee must have a ticket, particularly when the exercise of such an option is likely to defeat the very purpose for which tickets are issued in an industrial establishment.
We do not, however, think that the case of the respondent is in any way strengthened by holding that Standing Order No. 2 (a) itself authorises the issue of tickets to employees other than workmen.
Even on that construction, the failure of the Company to issue tickets under Standing Order No. 2 (a) will not deprive the employees of their real status as employees and of the benefit of the Standing Orders.
The direction for the issue of tickets will, in that view of the Standing Order, be an enabling provision only and not an essential characteristic of an employee.
Further, Standing Order No. 4 provides for the surrender of tickets issued thereunder but Standing Order No. 2 (a), if it is construed as enabling the Company to issue tickets, makes no provision for the surrender of tickets when the employee ceases to be an employee.
This absence of any provision for surrender applicable to such tickets 474 clearly implies that issue of tickets is not contemplated by the Standing Order No. 2 (a) itself.
On behalf of the respondent, however, the main argument has been of a different character.
It has been argued that there need not be one set of Standing Orders for all employees, and the Standing Orders in question being confined to those employees to whom tickets had been issued, the respondent who had no ticket was outside their purview, and the result was that the Company had committed a breach of the statutory provision in section 30 of the local Act in the sense that no Standing Orders had been made in respect of the respondent and employees like him to whom tickets had not been issued.
It hag been argued that, therefore, no action could be taken against the respondent either under the Standing Orders or even under the ordinary law of master and servant.
We are unable to accept this argument as correct.
We have pointed out that the Standing Orders themselves make a distinction between 'employees ' and `work men ', and there may also be employees who have no tickets.
To hold that the Standing Orders apply to those employees only to whom tickets have been issued will make employees synonymous with workmen a result negatived by two separate definitions given in Standing Order No. 2.
The central Act as well as the local Act contemplate the making of Standing Orders for all employees in respect of matters which are required to be dealt with by Standing Orders.
The Standing Orders in question were not objected to as being defective or incomplete by workmen, and they have been approved by the appropriate authority and they must be construed with reference to their subject or context.
In the absence of compelling reasons to the contrary, it should be held that they apply to all employees for whose benefit they have been made.
We see no compelling reasons for holding that the Standing Orders do not apply to the respondent.
In our view, and having regard to the subject or context of the Standing Orders, the words whose names and ticket numbers are included in the departmental musters " in Standing Order No. 2 (a) do 475 not lay down any essential characteristic of employee and are applicable only in cases where tickets have been issued to an employee.
The essential content of the definition of an employee is employment in the Office, Mains Department, eta., of the Company either at Nagpur or Wardha, and that of a workman the necessary declaration by the Company which would entitle him to a ticket under Standing Order No. 4.
There is also another relevant consideration which must be borne in mind in construing the Standing Orders in question.
Section 30 of the local Act imposes a statutory obligation on the employer to make, Standing Orders in respect of all his employees and a breach of the statutory obligation involves a criminal liability.
That being so, the court would be justified, if it can reasonably do so, to construe the Standing Orders so as to make them consistent with the compliance of the said statutory obligation.
We are not unmindful of the principle that in construing a statutory provision or rule, every word occurring therein must be given its proper meaning and weight.
The necessity of such an interpretation is all the more important in a definition clause.
But even a definition clause must derive its meaning from the context or subject.
In Courts vs The Kent Waterworks Company (1), the question for consideration was the interpretation of the appeal clause in an Act for Paving, Cleansing, Lighting, etc., of the Town and Parish of Woolwich (47 Geo.
III, Sess. 2, cap.
By the 16th section of the statute, " the commissioners are to make rates upon all and every the person or persons who do or shall hold, occupy, possess, etc., any land within the parish ".
The statute also gave a right of appeal to any person or persons aggrieved by any rate.
, but the appeal clause required the person or persons appealing against a rate to enter into a recognisance; the question was if this requirement was intended to exclude corporations from the purview of the ap.
peal clause, as corporations, it was urged, cannot enter, into a recognisance.
In interpreting the appeal clause, Bayley J. observed (1) ; ; 476 "But assuming that they cannot enter into a recognizance, yet if they ire persons capable of being aggrieved by and appealing against a rate, I should say that that part of the clause which gives the appeal applies to all persons capable of appealing, and that the other part of the clause which requires a recognizance to be entered into applies only to those persons who are capable of entering into a recognizance, but is inapplicable to those who are not." The same principle of interpretation was applied in Perumal Goundan vs The Thirumalarayapuram Jananukoola Dhanasekhara Sangha Nidhi (1), in construing the Explanation to O. XXXIII, r. 1, of the Code of Civil Procedure, which says inter alia that " a person is a pauper. . when he is not entitled to property worth one hundred rupees other than his necessary wearing apparel and the subject matter of the suit ".
The question was if the aforesaid provision applied to companies.
It was held that it would be wrong to construe the provision to mean that only persons who possess wearing apparel can sue as paupers.
We are of the view that the same rule of construction should apply in the present case, and the words " whose names and ticket numbers are included in the depart.
mental musters " occurring in Standing Order No. 2(a) should be read as " whose names and ticket numbers, if any, are included in the departmental musters " and should apply in the case of those employees only who possess tickets and whose ticket numbers are capable of being entered in departmental musters; they are not intended to exclude employees who do not possess tickets or to whom tickets have not been issued and consequently whose names only are so entered.
The learned Judges of the High Court were influenced by the circumstance that in an earlier case D. C. Dungore vs section section Dandige Miscellaneous Petition No. 134 of 1954 decided by the same High Court on September 23, 1955) the Company took tip the stand that the Standing Orders applied to employees to Whom tickets had been issued a stand different from and inconsistent with that taken in the present case, (1) Mad.
477 It may be pointed out, however, that 1).
C. Dungore of the earlier case was not an employee within the meaning of the relevant Act, and there could be no Standing Orders in respect of his conditions of service.
Moreover, in the matter of construction of a statutory provision no question of estoppel arises, and the learned Judges had pointed out that the respondent himself thought that the Standing Orders applied to all employees.
We have rested our decision as to the applicability of the Standing Orders not on what the appellants or the respondent thought at one time or another, but on a true construction of the Standing Orders themselves, including the definition clause in Standing Order No. 2(a).
We take the view that the Standing Orders apply to the respondent.
This is really decisive of the appeal, because if the Standing Orders apply to the respondent and his service has been terminated in accordance with Standing Order No. 16(1), the writ application which the respondent made to the High Court must fail.
The learned Attorney General appearing for the appellants addressed us on the scope and ambit of article 226 of the Constitution, and he contended that even if the respondent had been wrongfully dismissed by his private employer, the proper remedy was by mean,,; of a suit and not by invoking the special writ jurisdiction of the High Court.
These contentions raise important questions, but we do not think that we are called upon to decide them in this case.
Lastly, it has been urged oil behalf of the respondent that even if we hold that the Standing Orders apply to the respondent, we should remand the case to the High Court for a decision on merits of other points raised by the respondent, because the question whether the Standing Orders apply or not was treated as a preliminary issue by the High Court and no decision was given on other points.
We asked learned Advocate for the respondent what other points remain for decision oil his writ application, once it is held that the Standing Orders apply to the respondent and 6 478 his service has been terminated in accordance with Standing Order No. 16(1).
Learned Advocate then referred us to Standing Order No. 18, which provides for penalties for misconduct, and submitted that the provisions thereof have not been complied with by the appellants.
He particularly referred to cl.
(e) of Standing Order No. 18 and submitted that the order of suspension passed against the respondent was in violation of the safeguards mentioned therein.
The short answer to this argument is that no penalty for mis conduct has been imposed on the respondent under Standing Order No. 18.
The Company paid his salary to the respondent from the date of suspension to January 31, 1956, which also showed that no order was passed by way of punishment for misconduct.
The Company chose to terminate the service of the respondent in accordance with Standing Order No. 16, and did not think fit to proceed against the respondent for any alleged misconduct, and it was open to the Company to do so.
So far as Standing Order no 16.
is concerned, all the requirements thereof have been complied with.
That being the position, no other point remains for decision in the present case.
The result, therefore, is that the appeal succeeds and is allowed.
The judgment and order of the High Court dated September 26, 1956, are set aside and the writ petition of the respondent is dismissed.
In view of the stand which the appellants had taken in the earlier case with regard to the Standing Orders, we think it proper to say in this case that the parties must bear their own costs throughout.
Appeal allowed.
| IN-Abs | The services of the respondent, an employee of the appellant company, were terminated in accordance with the Standing Orders of the company, approved by the appropriate authorities under the provisions of the , and the Central Provinces and Berar Industrial Disputes Settlement Act, 1947.
Standing Order NO. 2(a) defined " employees " as " all persons . employed in the Office or Mains Department or Stores or Power House or Receiving Station of the Company . whose names and ticket numbers are included in the departmental musters ".
The Standing Orders also defined the term " workman " and provided that every workman should have a ticket.
No ticket had been issued to the respondent by the company, and consequently his ticket number was not included in the departmental muster.
The respondent challenged the validity of the order terminating his services by an application made before the High Court under article 226 of the Constitution on the grounds, inter alia, that the Standing Orders in question were confined to those employees only to whom tickets were issued, and that as no ticket was issued to him he was not an employee within the meaning of the Standing Orders which did not therefore apply to him and, consequently, the termination of his services under Standing Order No. 16(1) was illegal: Held, (1) that the words " whose names and ticket numbers are included in the departmental musters " occurring in Standing Order NO. 2 (a) should be read as " whose names and ticket numbers, if any, are included in the departmental musters "; Cortis vs The Kent Water Works Company ; ; ; and Perumal Goundan vs The Thirumalarayapuram jananukoola Dhanasekhara Sangha Nidhi, Mad. 624, applied.
(2)that under the Standing Orders, in which a distinction is made between 'employees ' and 'workmen ', while every workman must have a ticket, there may be employees who may have no tickets the possession of which is not an essential characteristic of an employee; and, (3)that the Standing Orders apply to all employees for whose benefit they have been made.
464 Accordingly, the Standing Orders were applicable to the respondent and the termination of his service in accordance with Standing Order No. 16(1) was valid and, therefore, the application made by him to the High Court must fail.
|
vil Appeal No. 2086 (N) of 1978.
From the Judgment and Order dated 10.12.1976 of the Rajasthan High Court in D .B.
Civil Misc.
Appeal No. 73 of 1970.
C.M. Lodha and H.M. Singh for the Appellants.
B.R. Sabharwal, P.R. Ramasesh and H. Wahi for the Re spondents.
The Judgment of the Court was delivered by DUTT, J.
This appeal is directed against the judgment and decree of the Rajasthan High Court affirming the award made by the Motor Accident Claims Tribunal, Udaipur.
763 In the night between the 3rd and 4th December, 1966, Hari Singh, since deceased, the husband of the appellant No. 1 and the father of the appellant No. 2, hired an Ambassador car belonging to the.
Rajasthan Mahila Parishad for going to his native village at 'Kangeti in Madhya Pradesh from Udai pur in Rajasthan.
When the car had gone 21 miles from Udai pur, it collided with a truck coming from the opposite direction.
It skidded and hit against a tree.
As a result of the accident, Hari Singh died on the spot and one Shanker Lal who was also travelling in the same car and happened to be the friend of Hari Singh received some injuries.
At the time of his death, Hari Singh was only 25.
He left behind him his wife, the appellant No. 1 who was only 18 and the appellant No. 2, his daughter, then only a child.
The appellants filed a petition before the Motor Acci dent Claims Tribunal, Udaipur, claiming a sum of Rs. 1 lac as compensation.
The Tribunal came to the finding that the accident which resulted in the death of Hari Singh was due to the rash and negligent driving of the car.
The Tribunal disposed of the issue as to the claim of the appellants for compensation of Rs. 1 lac as follows: "Claimants of Case No. 3 of 1967 have claimed compensation of Rs. 1 lac which appears to be excessive.
In my opinion an amount of Rs. 10,000 would be adequate.
The issue is decided accordingly.
" The Tribunal has not given any reason why the claim of the appellants for compensation of Rs. 1 lac could not be accepted.
At this stage, it may be stated that the case of the Insurance Company which was the opposite party No. 3 before the Tribunal was that its liability was only up to a sum of Rs.4,000.
Issue No. 7 that was framed by the Tribunal relating to the liability of the Insurance Company is ex tracted below: "7.
Whether the liability of opposite party No. 3 cannot exceed Rs.4,000 in each case.
" The finding of the Tribunal on Issue No. 7 is as follows: "The learned counsel for the claimants conced ed that the liability of the Insurance Company could not exceed 764 Rs.4,000 in each case.
Issue is accordingly decided in favour of the Opposite Party No.3.
" Upon the said findings, the Tribunal made an award for Rs. 10,000 in favour of the appellants against the opposite parties including the Rajasthan Mahila Parishad and the driver of the truck assessing the liability of the Insurance Company to the extent of Rs.4,000 only.
Being aggrieved by the award of the Tribunal, the appel lants preferred an appeal to the Rajasthan High Court chal lenging only the adequacy of the amount of compensation as awarded by the Tribunal.
A cross objection was also filed by the Rajasthan Mahila Parishad, the owner of the car.
The High Court, as stated already, affirmed the award and dis missed the appeal and the cross objection.
Hence this appeal by special leave.
The first point that has been urged by Mr. Lodha, learned counsel appearing on behalf of the appellants, is that the High Court was not justified in affirming the award of the Tribunal for Rs. 10,000 only as compensation.
It appears from the evidence of the appellant No. 1 that the father of the deceased had a dairy farm, a poultry farm, a flour mill and an agricultural farm.
The deceased used to look after the business and his monthly income was about Rs. 1,000 and that out of the said income, about Rs.700 used to be spent and the total saving was only Rs.300 a month.
As against this evidence, no evidence was led by the respond ents regarding the income of the deceased.
The High Court, in affirming the award of the Tribunal as to the quantum of compensation observed as follows: "It appears to us from the evidence so led by the claimants that Hari Singh at the time of his death was in fact a student and may be that whenever he could spare time, he looked after the various business activities of his father which according to Rajendra Kumari are still running.
He had devoted himself to the family business and had no prospects whatever dependent upon education.
While estimating the benefits derived from the various business activities one cannot lose sight of the con tingencies of losses and fluctuations in income that occur in such types of business.
We do realise that the loss of a husband to a young Rajput girl is something which no amount of money can compensate, yet in the circum stances of the case, we do not find 765 that the amount of compensation fixed by the Tribunal was too high or too low.
We feel ' that it represents the just and proper compen sation.
" We are unable to understand the reasons given by the High Court in finding that the amount of compensation as awarded by the Tribunal was quite adequate.
The High Court has not disbelieved the evidence of the appellant No. 1 that her husband had an income of Rs. 1,000 a month.
It is true that Hari Singh was a student at the time of his death, but he was also looking after the business of his father and earning a sum of Rs. 1,000 a month.
There is no reason to disbelieve the evidence of the appellant No. 1 about the income of Hari Singh.
Even at the modest computation, the contribution of Hari Singh towards his family could not he less than Rs.500 per month, that is, Rs.6,000 per year.
Taking the normal span of life to be 60 years, Hari Singh would have lived for another 35 years.
It is apparent that the appellants have been deprived of more than a lac of rupees and, accordingly, their claim for Rs. 1 lac on account of compensation was quite reasonable.
Both the Tribunal and the High Court were not justified in assessing the amount of compensation pay able to the appellants at Rs. 10,000 only.
The next question is as to the liability of the Insur ance Company, the respondent No. 4 herein.
It has been already noticed that the appellants conceded before the Tribunal that the liability of the Insurance Company did not exceed the sum of Rs.4, '000.
Indeed, as the law stood at the material time, the maximum liability of the Insurance Compa ny in such a case was only to the tune of Rs.4,000.
In the appeal before the High Court, the appellants did not chal lenge the finding of the Tribunal that the statutory liabil ity of the Insurance Company was Rs.4,000 Only as conceded to by the appellants.
For the first time in this Court, it is submitted that the respondent No. 4 is liable for the entire amount of compensation.
It is urged by Mr. Lodha appearing for the appellants that it was incumbent upon the respondent No. 4 to file before the Tribunal the policy of Insurance in order to show that apart from the statutory liability up to Rs.4,000, the respondent No. 4 had no fur ther liability under the policy in excess of the statutory liability.
In support of the contention, much reliance has been placed by the learned counsel on a decision of this Court in National Insurance Co. Ltd. vs Jugal Kishore & Ors.
, In that case, it has been observed that where the Insurance Company concerned wishes to take a defence in a claim petition that its liability 766 is not in excess of the statutory liability, it.
should ' file a copy of the Insurance policy along with its defence.
This decision, in our opinion, is not applicable to the facts of the instant case.
It has been already noticed that before the Tribunal the appellants had categorically admit ted that the liability of the Insurance Company extended to Rs.4,000 only.
In the circumstances, we do not think that it was incumbent upon the Insurance Company to file the policy.
The contention made on behalf of the appellants is, accordingly, rejected.
In the result, we direct that the appellants are enti tled to a sum of Rs. 1 lac (Rupees one lac only) on account of compensation.
Out of the said sum, the Insurance Company, the respondent No. 4, is liable to pay Rs.4,000 only and the respondent Nos. 1, 2 and 3 including the Rajasthan Mahila Parishad are jointly and severally liable to pay to the appellants the remaining amount.
The respondent shall depos it the decretal amount to the extent of their respective liabilities in the Motor Accident Claims Tribunal, Udaipur, within two months .from date; in default, the decretal amount or so much thereof as will remain outstanding will bear interest at twelve per cent per annum till realisation.
The appeal is allowed.
The judgment and decree of the High Court are modified to the extent indicated above, There will be no order as to costs.
G.N. Appeal al lowed.
| IN-Abs | Appellants 1 and 2 are the wife and daughter respective ly of the deceased who died in a road accident, while trav elling in a hired car, which collided with a truck.
He died on the spot.
At the time of his death he was 25.
Appellants filed a petition before the Motor Accident Claims Tribunal claiming a compensation of Rs.1 lac.
The Tribunal 's finding was that the accident was due to rash and negligent driving of the car.
Without giving reasons, the Tribunal awarded only Rs.10,000 against the owner of the car and the truck driver, and also assessed the liability of the Insurance Company to the extent of Rs.4,000.
Against the award the appellants filed an appeal to the High Court challenging the adequacy of the compensation awarded.
The owner of the car filed a cross objection.
The High Court affirmed the award and dismissed the appeal, as also the cross objection, stating that the compensation awarded was just and proper.
This appeal, by special leave, is against the High Court 's judgment affirming the Tribunal 's award.
On behalf of the appellants, it was contended that High Court was not justified in affirming the Tribunal 's award of only Rs. 10,000 as compensation.
Allowing the appeal, HELD: 1.
The appellants are entitled to a sum of Rs.l lac on account of compensation.
Out of this amount the Insurance Company, i.e., Respondent No. 4 is liable to pay Rs.4,000 and the other respondents are jointly and severally liable to pay to the appellants the remaining amount.
[766C] 762 2.
It is true that the deceased was a student at the time of his death, but he was also looking after the busi ness of his father and earning about Rs.l,O00 a month.
Even at the modest computation, the contribution of the deceased towards his family could not be less than Rs.500 per month, i.e. Rs.6,000 per year.
Taking the normal span of life to be 60 years, he would have lived for another 35 years.
It is apparent that the appellants have been deprived of more than a lac of rupees and, accordingly their Claim for Rs.l lac on account of compensation was quite reasonable.
Both the Tribunal and the High Court were not justified in assessing the amount of compensation payable to the appellants at Rs. 10,000 only.
[765B D] 3.
As the law stood at the material time, the maximum liability of the Insurance Company in such a case was only to the tune of Rs.4,000.
In the appeal before the High Court, the appellants did not challenge the finding of the Tribunal that the statutory liability of the Insurance Company was Rs.4,000 only as conceded to by the appellants themselves.
In the circumstances, it Was not incumbent upon the Insurance Company to file the policy.
[766A B] National Insurance Co. Ltd. vs Jugal Kishore & Ors., , distinguished.
[This Court directed that the decretal amount should be paid within two mouths and in case of default, it will bear interest at the rate of 12% per annum till realisation.] [766D]
|
vil Appeal No. 2 193 of 1982.
From the Judgment and Order dated 29.5.1980 of the Punjab and Haryana High Court in Regular Second Appeal No. 706 of 1973.
Dr. Y.S. Chitale and Ashok Grover for the Appellant.
R.K. Garg and D.K. Garg for the Respondents.
The Judgment of the Court was delivered by K.N. SAIKIA, J.
This appeal by special leave is from the judgment of the High Court of Punjab and Haryana in the appellant 's regular second appeal No. 706 of 1973 dismissing the appeal and allowing the respondent 's civil writ petition against the order passed by the Assistant Collector.
Late Wg.
K.K. Majumdar, of the Indian Air Force, father of the appellant laid down his life during the second world war.
He was conferred a gallantary award posthumously by the Government wherewith 442 Kanals and 10 Marlas of land bearing Chak Nos.
535 G V situated in Tehsil and District Layallpur was granted to him and was allotted to the appel lant Shri S.K. Majumdar who took possession on July 24, 1947.
Consequent to the partition of the country the family of 820 late Wg.
K.K. Majumdar had to migrate to India where the Government allotted 69 standard acres and 2 units of land to the appellant in Village Dhogri, Tehsil and District Jullundhur as compensation for the land left behind at Layallpur, Pakistan.
Out of this land 19 standard acres came under possession of the respondent Malik Labhu Masih (now deceased) as a tenant.
On February 26, 1961 Malik Labhu Masih filed an applica tion under section 18 of the Punjab Security of Land Tenures Act, 1953, hereinafter referred to as 'the Act ', to the Assistant Collector stating that he was a tenant in respect of the land in question and should be granted permission to purchase it.
As per order of the Assistant Collector Grade I, Jullundhur dated 15th January, 1962 the said Labhu Masih was granted the requisite permission subject to the payment of Rs.21,007.88 P. in 10 equal half yearly instalments of Rs.2100.80 P. each.
The appellant appealed therefrom to the Collector Jullundhur who upheld the permission to purchase but enhanced the amount payable to the appellant as landlord to Rs.23,133.53 P.
During the pendency of the said proceed ings the appellant moved an application under section 9 read with section 14A of the Act for ejectment of the respondent and obtained an order on 27th September, 1961.
The respond ent moved a revision petition before the Commissioner in the proceedings initiated under section 18 of the Act and the Commissioner made recommendation to the Financial Commis sioner for setting aside the orders of the Assistant Collec tor and the ColleCtor allowing the purchase of land by the respondent on the ground that the application of the appel lant for ejectment of the respondent had since been allowed.
The Financial Commissioner accordingly set aside the order of purchase.
The respondent impugned that order in the High Court of Punjab and Haryana in writ petition No. 1158 of 1963 and the High Court quashed that order on 30th August, 1966.
On July 3, 1970 the appellant filed a suit against the respondent for possession of the lands contending that the respondent had entered on a part of the land as tenant and subsequently applied for purchase of the land under section 18 of the Act but by virtue of section 19 DD of the Act, which was inserted on August 3, 1968 with retrospective effect, the suit property of gallantry award was exempted from the provisions of the ' Act and as such the respondent could not purchase the land under section 18 of the Act and the orders passed by the Assistant Collector as also of High Court were nullity and the respondent was consequently liable to be ejected.
The trial court dismissed the suit.
The appellant 's appeal therefrom was also having been dis missed by the Additional District Judge Jullundhur, the appellant preferred second appeal to the High 821 Court of Punjab and Haryana which also dismissed the appeal holding that section 19 DD of the Act was not applicable to the suit land and the tenant could purchase it under section 18.
Dr. Y.S. Chitale the learned counsel for the appellant submits that the High Court was in error in holding that the land in question having been granted to the appellant S.K. Majumdar, the landlord, in the year 1946 the same could not be said to be covered by the provisions of section 19 DD of the Act.
We are inclined to agree.
Though the Memorandum No. 2354 C Lahore, dated the 30th March, 1946 from D.S.D. to the Commissioner, Lahore, Rawalpindi and Multan Divisions on the subject Award of land in the Punjab for acts of gallantry in the field ' with reference to Punjab Government Memorandum No. 3583 C dated 30th November, 1944 contained the instruc tions to allot two squares rectangles of land to the heir of the grantee noted in the margin in accordance with the orders contained in the aforesaid Memorandum, and showed the appellant Shri S.K. Majumdar, it could not been said that the grant itself was to the appellant.
The said Memorandum No. 3583 C dated 30th November, 1944 clearly showed that the Government had decided that in the case of posthumous grants allotments would be made to the heirs in the following order: "(a) the male lineal descendants of the de ceased in the male line of descent.
" I, having not been in dispute that the appellant S.K. Majum dar was the male lineal descendant of the deceased Wg.
K.K. Majumdar, the allotment was to be made in his name and hence it was done so.
Section 19 DD of the Act which was inserted by the Punjab Act No. 12 of 1968 and was to be deemed always to have been inserted said: "Notwithstanding anything contained in this Act, where any land is granted for gallantry at any time before the 26th day of January, 1950 to any member of the armed forces, wheth er maintained by the Central Government or by any Indian State, then, so long as such land or, any portion thereof, as the case may be, has not passed from the original grantee into more than three successive hands by inheri tance or bequest, and is held by the grantee, or any of such hands, such land or portion, as the case may be, shall 822 not be taken into account on computing the surplus area under this Act, nor shall any tenant of such land or portion have the right to purchase it under section 18.
Provided that where such land or portion has passed into more than three such hands and the person holding such land or portion, immediately before the 3rd August, 1967, is a person to whom it has passed by inheritance or bequest, the exemption under this section shall apply, to such land or portion thereof, as the case may be, during the life time of such person.
" From the language of this section and from the fact that the date of the award of the grant of the land for gallantry having been before the 26th day of January, 1950 so long as such land or, any portion thereof, as the case may be, had not passed from the original grantee into more than three successive hands by inheritance or bequest and was held by the grantee, or any of such hands, such land or portion, as the case may be, should not be taken into account on comput ing the surplus area under the Act.
nor shall any tenant of such land or portion have the right to purchase it under section 18.
Mr. R.K. Garg the learned counsel for the respondents, while not refuting the proposition of law, points out that the land in respect of which the respondent has obtained the order of purchase as tenant is not the land granted to Wg.
K.K. Majumdar for gallantry award.
That land was in Layallpur and the suit land in respect of which the respond ent acquired socially beneficial right of purchase is situ ate at village Dhogri Tehsil and District Jullundhur in the State of Punjab and as such it cannot be exempted under section 19 DD.
Dr. Chitale answers that this land was given as compensation for the gallantry award land left behind by the awardee family at Layallpur as a result of partition of the country and as such equity demands that privilege of exemption should be acquired by the compensation land.
Besides, Dr. Chitale submits, that equity is in favour of the appellant who has acquired the right to purchase as tenant in occupation after a long time.
We are referred to the provisions of the .
It is an Act to provide for the payment of compensation and reha bilitation grants to displaced persons and for matters connected therewith.
We have not been shown in it any provi sion to the effect that any land given as compensation to 823 a displaced person for loss of gallantry award land may imbibe the convent of exemption available under section 19 DD of the Act.
We are consequently of the view that there is no basis for holding that the exemption in respect of the gallantry award land will be available in respect of the land given under the as compensation for the loss thereof.
We find no infirmity in the High Court judgment on this count.
Equity is being claimed by both the parties.
Under the circumstances we have no other alternative but to let the loss lie where it falls.
As the maxim is, 'in aequali jure, melior est conditio possidentis '.
Where the equities are equal, the law should prevail.
The respondent 's right to purchase must, therefore, prevail.
In the result, this appeal fails and hence dismissed, but without any order as to costs.
The stay order stands vacated.
N.V.K. Appeal dismissed.
| IN-Abs | The father of the appellant was conferred a gallantry award posthumously by the Government wherewith a piece of land situated in Lyallpur district was granted to him, and was allotted to the appellant who took possession on July 24, 1947.
Consequent to the partition of the country the family migrated to India where the Government allotted about 69 standard acres of land in Jullundur district as compensa tion for the land left behind in Pakistan.
Out of this land 19 standard acres came under the possession of the respond ent as a tenant.
On February, 1961 the respondent filed an application under section 18 of the Punjab Security of Land Tenures Act, 1953 to the Assistant Collector stating that he was a tenant in respect of the aforesaid land and should be granted permis sion to purchase the same.
The Assistant Collector granted the requisite permission subject to the payment of Rs.21,007.88P in ten equal half yearly instalments.
The appellant appealed to the Collector who upheld the permis sion to purchase, but enhanced the amount payable to the appellant as landlord.
During the pendency of these proceedings the appellant moved an application under section 9 read with section 14A of the Act for ejectment of the 818 respondent and obtained an order an 27th September, 1961.
The respondent moved a revision petition before the Commissioner in the proceedings initiated under section 18 of the Act, and the Commissioner made a recommendation to the Financial Commissioner for setting aside the orders of the Assistant Collector and the Collector allowing the purchase of land by the respondent on the ground that the application of the appellant for the ejectment of the respondent had since been allowed.
The Financial Commissioner, set aside the order of purchase.
The respondents ' writ petition chal lenging this order was allowed and the High Court quashed that order on 30th August, 1966.
On July 3, 1970 the appellant filed a suit against the respondent for possession of the land contending that the respondent had entered on a part of land as tenant and subsequently applied for the purchase of the land under section 18, but by virtue of section 19 DD of the Act inserted on August 3, 1968 with retrospective effect, the suit property of gallantry award was exempted from the provisions of the Act.
The Trial court dismissed the suit.
The order was affirmed in appeal by the Additional District Judge, and the second appeal to the High Court was also dismissed holding that section 19 DD of the Act was applicable to the suit land and the tenant could purchase it under section 18.
In the appeal to this Court, it was contended on behalf of the appellant that the High Court was in error in holding that the land in question having been granted to the appel lant, the landlord in the year 1946 the same could not be said to be covered by the provisions of section 19 DD of the Punjab Security of Land Tenures Act, 1953.
It was also contended that equity is in favour of the appellant as the land was as compensation for the gallantry award land left by the awardee family at Layallpur as a result of partition of the country, and that the privilege of exemption should be acquired by the compensation land, and that the appellant has acquired the right to purchase as a tenant in occupation after a long time.
Dismissing the appeal, the Court, HELD: 1.1.
From the language of section 19 DD of the Punjab Security of Land Tenures Act, 1953 which was inserted by the Punjab Act No. 12 of 1968 and from the fact that the date of the award of the grant of the land for gallantry having been before the 26th day of January, 1950 so long as such land or, any portion thereof, had not passed from the original grantee into more than three successive 819 hands by inheritance or bequest, and was held by the gran tee, or any of such hands, such land or portion, as the case may be, should not be taken into account in computing the surplus area under the Act, nor shall any tenant of such land or portion have the right to purchase it under section 18.
[822C D] 1.2.
There is no basis for holding that the exemption in respect of the gallantry award land will be available in respect of the land given under the as compensation for the loss thereof.
There is no infirmity in the High Court judgment on this Court.
[823A B] 1.3.
Equity is being claimed by both the parties.
Under the circumstances there is no other alternative but to let the loss lie where it fails.
As the maxim is, 'in aequali jure, melior est conditio possidentis ' Where the equities are equal, the law should prevail the respondent 's right to purchase must, therefore, prevail.
[823B C]
|
ivil Appeal No. 2747 of 1988.
From the Judgment and Order dated 23.2.1988 of the Rajasthan High Court in S.B. Civil Second Appeal No. 77 of 1987.
Tapas Ray, S.K. Jain and P. Agarwal for the Appellant.
Mrs. Rani Chhabra for the Respondent.
The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J.
This appeal by special leave is against the judgment and order of the Division Bench of the High Court of Rajasthan dated 23rd February, 1988.
The appellant is the tenant in the suit premises.
The premises in question is a shop situated outside Delhi Gate, Udaipur, in the State of Rajasthan.
In the said shop the appellant carried on the business of opticals.
This fact is undisput ed.
He asserted that he was also running the business of advertisement by way of display of various advertisements (hoardings) 771 boards at various places in the city of Udaipur.
The case of the appellant was that though the appellant had taken the premises on rent on the basis of oral tenancy on 1st August, 1971, the rent note in fact was executed on 30th May, 1972.
The respondent had filed the suit for eviction of the ten ant appellant on three grounds, namely, (i) that the tenant appellant had parted with possession of the roof of the said shop room by putting up an advertisement board; (ii) by putting up such advertisement board, fixing the same on the roof of the said shop room with iron angles, the appellant had caused material alteration to the premises; and (iii) the appellant had defaulted in payment of rent.
On or about 20th April 1978, the trial court decreed the suit on the ground of default in payment of rent, material alter ation and subletting.
The appellant preferred an appeal before the learned District Judge, Udaipur, who remanded the case back to the trial court for trial on all the three issues, on the ground that the appellant had not been al lowed to cross examine the respondent or to adduce evidence in defence.
On remand, the trial court held that the appel lant had caused material alteration by fixing the board on.
the roof; had parted with possession of the roof by such fixing of the board; and had committed default in payment of rent.
Accordingly, a decree was passed against the appellant for causing material alteration and for parting with the possession of the roof but no decree was passed by the trial court on ground of default because the said default was held by the learned Trial Judge to be the first default.
The appellant thereafter filed first appeal against the said judgment and decree passed by the trial court on 9th Novem ber, 1984.
By the judgment and decree dated 20th March, 1987 the learned District Judge allowed the said appeal holding, inter alia, that by displaying the advertisement board the appellant had not caused any material alteration of the premises and display of such advertisements hoardings did not amount to parting with possession of the roof of the premises.
In respect of default, on an analysis of the dates of payment it was held that there was no default in payment of rent for six months.
The learned Trial Judge had held that the default was the first default, therefore, there could be no decree for eviction on this ground.
So even if the learned District Judge would have affirmed the findings of the Trial Court on the issue of default, there could not have been a decree in the said suit on the ground of de fault.
The plaintiff respondent preferred an appeal before the High Court.
The said appeal was allowed only on the issue of parting with possession holding that the display of the board amounted to parting with possession of the prem ises.
Accordingly, the decree for eviction under section 13(1)(e) of the Rajasthan Premises (Control of Rent and Eviction) Act, 1950, hereinafter mentioned as the 'Act ', was passed.
772 Section 13 of the said Act deals with the grounds for evic tion of tenants.
By clause (a), sub section (1) of the said section provides that out withstanding anything contained in any law or contract, no Court shall pass any decree, or make any order, in favour of a landlord, evicting the tenant so long as he is ready and willing to pay rent therefore to the full extent allowable under the said Act unless it is satis fied, inter alia, that the tenant had neither paid nor tendered the amount of rent due from him for six months.
Sub clause (b) of subsection (1) of the said section makes the tenant liable to eviction if he has willfully caused or permitted to be caused substantial damage to the premises.
Clause (e) of sub section (1) of section 13 under which the decree in question, in the instant case, was passed provides as follows: "(e) that the tenant has assigned, sub let or otherwise parted with the possession of, the whole or any part of the premises without the permission of the landlord; or" as mentioned hereinbefore, the decree in this case was passed by the High Court under section 13(1)(e) of the Act on the ground that the appellant had parted with possession.
The High Court in the judgment under appeal has noted that the plaintiff appellant had not disputed that the advertise ment board was installed on the roof of the shop.
The High Court noted that the appellant has also not disputed that he was getting the rent for this board and the document which was tendered viz., Exhibit 6 showed that the Paramount Services had written a letter to the landlord respondent Gulam Abbas herein and the same had been accepted by the appellant.
The said exhibit 6 read as follows: "Shri Gulam Abbas Bhalam Wala, Udaipur.
Dear Sir, We wish to write that we have taken the site for putting up commercial board on the terrace of the shop of Saran Optician, Udaipur.
This site is with us for the last 1/2 year.
Yours faithfully, Paramount Serv ices, Sd/ Partner. ' ' 773 The High Court was of the view, that perusal of the document indicated that Paramount Services had installed that board on the terrace of the shop and the site was with them for the last six months.
The High Court further held that it transpired that the terrace of that shop had been parted away to the Paramount Services for installing the advertise ment board.
The High Court proceeded on the basis that exhibit 6, mentioned hereinbefore, showed that the site was with the Paramount Services and it has been admitted by the tenant appellant that he had charged the money for leasing out this site to the Paramount Services.
According to the High Court two factors were relevant in this case: (1) whether the site was with the Paramount Services for the last six months and (2) that the defendant had admitted that he had received the rent for this.
The High Court referred to the deposition of D .W. 1 Gopal Saran which was as follows: "USS BOARD PAR PRACHAR KE TEEN SALL KE PARDRAH SAU RUPAYE MAIN LETA THA JISMEN PAINTING AUR BOARD AUR LIKHAVAT KA KHARCH MERA THA" According to the High Court, these two factors established that the defendant had parted with part of the terrace to Paramount Services.
This according to the High Court, was wrong as it had been clearly prohibited in the lease deed exhibit 1, Clause 3 reads as under: "DUKAN KO LIPA POTA SAPPH ACHHI HALAT MEN RAKHUNGA AUR BAGAIR LIKHIT IJAZAT AAPKE KOI MAJID TAMIR NA KRAUNGA AUR NA DUSRE KISSI AUR KO MUNTKIL KAR SAKUNGA.
MAIN KHUD DUKAN PAR BAITHUNGA.
" The High Court found that the tenant appellant had mentioned that they would not part with the possession, notwithstanding that the tenant appellant had parted with the possession which was apparent, according to the High Court, from exhibit 6 and the statement of D.W. 1 that he had charged rent for installing this board.
These two factors went to show, according to the High Court, that the defend ant had parted with the possession of the part of the ter race so as to enable the Paramount Services to stall the board in the premises.
The Court accepted the submission on behalf of the respondent landlord that there was parting with possession and the landlord was entitled to a decree for eviction under section 13(1)(e) of the Act.
It may be mentioned that two other submissions were urged before the High 774 Court on behalf of the landlord respondent, namely, that the rent was tendered and that when it was refused by the land lord, the tenant had deposited the rent in the Court under section 19 A of the Act had not been established.
There was also the finding on the issue of material alteration and that was also not established by the respondent landlord.
But the High Court, in view of this finding under section 13(1)(e) of the Act, as set out hereinbefore, found it unnecessary to go into those reasons and passed a decree for eviction.
Aggrieved thereby, as mentioned hereinbefore, the tenant has come up in appeal to this Court.
We find a certain amount of confusion as to what was the actual state of affairs.
The pleadings of the plaintiff respondent, the landlord in connection with the allegations of parting with possession are set out in paragraphs 5, 6 and 8 of the plaint and these have been answered by the appellant in paragraphs 5, 6, 8 and 9 of the written state ment.
It may be appropriate at this stage to set out the same both in Hindi as well as in English.
Paragraph 5 is as follows: "Hindi Original: "5.
YEH KI PRATIVADI NE BINA VADI KO POOCHHE AVAM VADI KI ANUMATI PRAPAT KIYE BINA VIVADGRAST DUKAN KE UPAR CHHAT PAR ZITAR TRAKTAR KA BOARD LAGA DIYA HAl JO CHHAT PAR LOHE KE ANGLE MAIN FIX KIYA HUVA HAI." "In English: "5.
Without permission and consent of the plaintiff the defendant has put up the board of Jitter Tractors on the roof of the disputed shop in question which is fixed on iron angles on the roof. '" Paragraph 6 reads as under: "In English: "6.
The defendant has, without the permission and consent of the plaintiff given to the advertising agency the Board which has been displayed on the roof of the disputed shop taken by the Defendant from the Plaintiff on rent, in 775 respect of which the Defendant had no right. ' Hindi Original: "6.
YEH KI BOARD JO VIVADGRAST DUKAN JO KI PRATIVADI KE PASS VADI KI AUR SE KIRAYE PAR HAl, KI CHHAT PAR LAG RAHA HAl VAH VIGYAPAN (ADVERTISEMENT) KA BOARD HAI JISKO PRATIVADI NE VADI KI ANUMATI PRAPAT KIYE BINA ADVERTIS ING AGENCY KO LAGANE DE DIYA HAl JISKA KI PRATIVADI KO SWATEY KOYEE ADHIKAR NAHIN HAl. ' Paragraph 8 as reads as under: In English "8.
The defendant has no right to place the Board of the Advertising Agency on the roof of the shop without permission of the plaintiff." Hindi Original: "8.
YEH KI PARTIVADI KE KO BINA VADI SE POCCHHE DUKAN KI CHHAT PAR ADVERTISING AGENCY KO BOARD LAGANE DENE KA KOYEE ADHIKAR NAHIN HAI.
" Paragraph 5 of the Written Statement reads as follows: In English: "5.
With regard to paragraph 5 of the Plaint the defendant states that the Defendant had displayed a sign board on the roof of the disputed shop but it is false to state that any angle has been fixed or embedded on the wall of the shop or of the roof or on the floor of the roof.
The sign board has been placed without damaging the walls or the floor of the roof in any manner whatsoever.
The angles have not been embedded.
In putting up this sign board, there was no necessity of obtaining written permission of the plaintiff.
It was within the full knowledge of the Plain tiff and the Plaintiff never objected to the same, which means the 776 plaintiff had consented to the same." Hindi Original: "5.
VAD PATRA KE PAIRA 5 KE LIYE NIVEDAN HAI KE PRATIVADI NE EK SIGN BOARD VADGRAST DUKAN KI CHHAT PAR LAGAYA HAl PAR YEH MITHYA HAl KI DUKAN KI ATHVA CHHAT KI DIWAR ATHVA FARSH MAIN ANGLE LAGAYE HO VAH SIGN BOARD BINA DUKAN KI DIWARON ATHVA CHHAT KE FARSH KO KISI BHANTI HANI PAHUCHAE HUVE LAGAYA GAYA HAl.
GADA NAHIN GAYA HAI.
IS SIGN BOARD LAGANE MAIN VADI KO LIKHIT ANUMATI LENA AVASHAK NAHIN THA, VIASE VADI KE PURAN GYAN MAIN YEH BOARD LAGAYA THA TATHA AISA KARNE MAIN VADI NE KABHI APATTI NAHIN UTHAYEE, ARTHAT VADI KI AWAKRITI NAHI HAI.
" Para 6 of the written Statement reads as follows: "In English: "The allegations in paragraph 6 of the Plaint that the Board belonged to any other advertis ing agency is false.
the defendant himself has placed the said board in the normal course of his carrying on the business.
The defendant is using the said disputed shop on his own right for the purposes of carrying on his normal business." Hindi Original: "6.
VAD PATRA KA PAIRA 6 MAIN YEH MITHYA HAI ICE BOARD KISI ADVERTISING AGENCY KA LAGA HUVA HAI.
PRATIVADI SWAM NE VAH BOARD LAGAYA HAl TATHA APNA SADHARAN VAVASAYE KARTE HUVE LAGAYA HAl.
TATHA VADGRAST DUKAN KA PANE SADHARAN VAVSAYE MAIN HI UPYOG KAR RAHA HAl AVAM SADHI KAR KAR RAHA HAI.
" Para 8 of the Written Statement is as follows: 777 In English: "The Contents of para 8 of the Plaint are not admitted.
The Defendant has not allowed any body to put up the Board, but he has himself put up the same.
" Hindi Original: "8.
VAD PATRA KA PAIRA 8 SAVIKAR NAHIN HAl.
PRATIVADI NE BOARD, KISI KO LAGANE NAHIN DIYA HAl APITU SWAM LAGAYA HAl.
" Paragraph 9 of the Written Statement is as follows: "In English: "9.
The defendant denies all the allegations in paragraph 9 of the Plaint.
In particular the defendant states that the plaintiff has no right to bring the present suit of eviction which has been filed on false grounds.
The defendant has neither committed default in payment of rent nor he has allowed anybody to put up board on the shop, nor he has parted with possession of the lease hold property or any part thereof to anybody.
The defendant is in full control and possession (of the disput ed shop).
It may be mentioned that in the plaint the plaintiff has not alleged any act of sub letting by the defendant." Hindi Original "9. VAD PATRA KA PAIRA 9 SARVATHA ASWIKAR HAl.
VADI KO KOYEE SWATAV NAHIN HAl KI VAH MITHYA ADHARO PAR DUKAN KHALI KARVAYE NA TO PARTIVADI NE KOYEE CHOOK KI HAl, KIRAYA DENE MAIN UAR NA HI USNE DUKAN PAR KISI KO BOARD LAGANE DIYA HAl AUR NA HI KOYEE MUKTI BHOG KIRAYE LI HUEE SAMPATI KA PARTIVADI KE KISI BHI BHAG KA KISI KO BHI HYA HAl.
VAH PRATIVADI KE POORAN BHUGTI BHOG MAIN HAl.
" At the initial hearing before the trial court, namely, before the remand the plaintiff got himself examined as witness and the evidence 778 of plaintiff in examination in chief was recorded on 6.4.1979.
After recording the said evidence, the trial court recorded that the counsel for the defendant was absent and thereupon closed the case, without, however, entering into the question as to why the endorsement was made.
Against the decree of the trial court, the first appeal was filed before the learned District Judge and as stated hereinbefore, at the final hearing of the appeal, the first Appellate Court held that the defendant was not given adequate opportunity to either cross examine the plaintiff or to adduce his evidence and on that ground the order of remand was made.
The plaintiff landlord, however, did not say in Examination in chief that the board was fixed by anyone else than the defendant or that there was parting with possession of the roof of the shop room or any part thereof or by putting the said angles in the wail, which was again not admitted as correct by the appellant, any material altera tion was made.
However, a photograph of the board was pro duced by the plaintiff and the same was marked as exhibit 2.
After the case was remanded, the trial court directed the plaintiff to appear before the court and to subject himself to cross examination by the defendant and also to produce his evidence, if any.
In spite of several opportunities the plaintiff did not appear before the Court and submit himself to cross examination.
As the plaintiff neither submitted himself for further cross examination nor produced any other evidence or witness in support of the plaint the defendant led defence evidence and got himself examined.
The English translation of the said evidence of the defendant appellant was filed on behalf of the appellant at the heating of this appeal.
From the said evidence it would appear, he had stated, inter alia, as follows: "(a) I have affixed the Board on this shop for advertisement.
The said Board is affixed in cement pillars (should be pot) and for affix ing the said boards neither the roof nor the walls of the shop were dug; (b) The Board is affixed permanently and I advertise the business of parties and get its payment.
I have not parted with possession of any portion of the roof of the shop to anyone.
In 1974, I advertised for Bhatia at the Board in which I have written that I have zeator I have strength, a picture tractor was also made there I used to take Rs. 1500 for 3 years for advertisement out of which painting of Board, writing expenditure was mine.
779 CROSS EXAMINATION: (a) It is wrong to say that the Board is fixed on the roof of the shop.
I do not do business of tractor, but I deal in advertising busi ness.
Besides this I maintain 14 others boards in the city.
The above board is 10 ft.
x 4 ft.
At present Hanuman Vanaspati is advertised through the Board which was for the last 2 months prior to the Board was affixed.
(b) 14 Boards of Paramount Services are fixed prior to the year 1988 which are being main tained by me.
exhibit 6 is the letter of the said service.
I charge M/s Paramount Services Rs.500 per year.
" On the basis of the aforesaid, it was contended that it was the definite case of the defendant in Examination in chief, that the board belonged to him and that the defendant was carrying on his own business and that there was no dispute as to the same by the plaintiff.
It may be mentioned that the plaintiff had not subjected himself to crossexami nation in spite of the order of the Court after the remand, therefore, it would not be safe to rely on the examination in chief recorded which was not subjected to cross examina tion before the remand was made.
If that is so, it will appear that there is no evidence of the plaintiff in respect of allegations in the plaint.
This position appears estab lished from the facts on record.
When the plaintiff appeared for evidence in rebuttal he could have been cross examined on these points.
It was submitted that in rebuttal the plaintiff had stated only with regard to the default in payment of rent but the Plaintiff had not chosen to support his plaint case, before the defendant went to the witness box.
There was no question of cross examining the plaintiff travelling beyond the evidence of the plaintiff given in examinationin chief and thereby giving an opportunity to make out a case in crossexamination.
It, therefore, appears from the pleadings and the evidence that the respondent did not make out any case of the appellant parting with posses sion by putting up the hoarding.
In examinationin chief also he did not make out such a case and on the contrary his case was that it was that it was the defendent appellant who had put up the hoarding.
The plaintiff did not allege that the defendant appellant was not carrying on also advertising business.
It was submitted on behalf of the appellant that having refused to submit to crossexamination the plaintiff has made the evidence in examination in chief non est.
It was the case of the defendant that he was carrying on 780 the business of advertisement by putting up the hoardings of different parties.
The board was made by him, paintings and writings were also done by him and for putting the hoarding the charged from his customers.
Therefore, it appears to us that there are no clear findings that anybody was given lease or anybody was given the right to put up the hoarding and there was parting of possession in favour of anyone else.
It was, however, argued that even if the appellant had put the advertisement board hoarding he was earning a huge amount by the same and this was a factor which would indi cate that there was parting of possession by him.
It was, however, submitted on behalf of the appellant that when the shop had been let out to the defendantappellant for carrying on business it was the fight of the defendantappellant to carry on the business.
It was legally permissible to use the said shop room and also use the roof thereof and earn as much as could be done and as such it is not parting with possession.
In the premises, it appears to us that for the purpose of disposal of this appeal it is necessary to consider: (i) whether the appellant was carrying on his own advertisement business? (ii) Even if so, whether such an act can be termed as parting with possession of the roof or any part thereof by the appellant in favour of the advertiser because by putting up such hoarding he is getting a return otherwise? (iii) The next question that arises is that if it is found that it was not a business of the appellant to carry on the advertising but the appellant had allowed up advertising agency to put up its advertising hoarding, then would such an act amount to parting with possession of the roof or any part thereof by the appellant? (iv) In any event, can any case or cause of action for the suit filed on 1974 on the basis of exhibit 6, namely, the letter dated January 20, 1977 of M/s. Paramount Services be maintained? On behalf of appellant it was contended by Shri Tapash Ray, counsel for the appellant, that the judgment and order of the High Court could not be sustained and in the facts and circumstances of the case, there could not be any evic tion order passed against the appellant by virtue of section 13(1)(e) of the Act.
Undisputedly the appellant was a ten ant.
Therefore, in terms of Section 13(1) of the Act, not withstanding anything contained in any law, no decree for eviction can be passed except on the grounds mentioned in the said section.
To sustain any order of eviction, it must be rounded only on one of the grounds mentioned in the said section.
Therefore, it has to be found out whether the respondent had been able to make out any of the grounds mentioned in Section 13 of the Act.
781 It was contended on behalf of the appellant that the advertisement board had been put up by the appellant as part of his business and he had charged certain expenses in respect of the same and that, it was urged, was the finding of the courts below and the High Court was in error in holding that there was any parting with the possession.
It was submitted that simply the display of advertisement board on the disputed premises did not amount to parting with possession of the premises.
The High Court was wrong, it was urged, in accepting the plea of the respondent of parting with possession only on the basis of the letter dated 20th January, 1977 (exhibit 6).
The learned District Judge in the first appeal had accepted that there was no parting of possession.
The High Court, on the other hand, in the judg ment in appeal relying on exhibit 6 came to the conclusion that the appellant was getting rent for this board and the appel lant had accepted document exhibit 6 which Paramount Services had written to the appellant.
The High Court was wrong, it was submitted on behalf of the appellant, that exhibit 6 clearly showed that Paramount Services had installed this board on the terrace of the shop and the shop was with them for six months.
The learned District Judge on an analysis of the evidence came to the conclusion that there was no parting with possession.
The High Court on an analysis of the same evidence came to the conclusion that there was.
It is, therefore, necessary as the learned District Judge did, to consider what was the evidence before the trial court.
The plaintiff had given a statement before the trial court that a board of Paramount Advertising Agency was fixed over the disputed shop which was installed without asking him and that was of the size of 10 ' x 8 '.
At the time of filing the suit there was board of Zitter and now it is of Maharaj Vanaspati.
After making holes in the wall, it had been fixed with cement with the help of iron angles.
On the other hand, the defendant, Gopal Sharan, had stated that he had fixed the board of advertisement over the disputed shop which was fixed with cement by boring holes.
For fixing the board the walls had not been dug.
The board had been fixed on a tempo rary place on which he used to make advertisement of the business of the parties on payment.
It was the definite case in defence of the tenant that roof of the disputed shop has not been given to anyone.
In cross examination, he admitted that in 1974 advertisement of Shri Bhatia was done on the board and for the advertisement of board he took Rs. 1500 for three years.
The expenses towards the painting and fixing the board and writing were met by him.
The board of his shop was fixed below the front of his shop in the name of Sharan Optician, the photo of which is exhibit 2.
The tenant had given the receipt of Rs. 1500 to Bhatia.
It was the definite case of the tenant that he dealt with the business of advertisement and there were 14 more boards in 782 the city run by him.
It was stated that he took Rs.500 per year for 15 boards from Paramount Services.
In the photo graph, exhibit 2, one board of the defendant was fixed in the name of Sharan Optician on the disputed shop and above it there was advertisement board which was of a tractor and fixed in front of the roof.
The tenant had clearly stated that while fixing the board he did not bore the roof and the same had been fixed with the help of cement.
On the other hand, it was stated by the landlord that it was fixed in the wall with the help of angles but this fact has not been supported by any other evidence.
The learned District Judge came to the conclusion that the board was fixed to the front of the side of the roof of the disputed shop.
The roof of the disputed shop had not been bored nor any holes had been made in the wall.
In these circumstances, the learned Dis trict Judge came to the conclusion that there was no altera tion of the premises or damage.
The learned DistriCt Judge considered the question and the arguments that the defend ant appellant was not doing the work of advertisement and he had the business of spectacles and he had let out the space on rent for fixing the board on the roof and that he had got a board fixed there from which it was clear that he had parted with the possession of the space on the roof and he had further given it on rent.
Emphasis was laid on behalf of the respondent landlord on exhibit , it may be men tioned, is subsequent to the accrual to the cause of action.
The suit was filed in is dated 20th January, 1977.
Considering the aforesaid contentions and the position in law, the learned District Judge came to the conclusion that by exhibit 6 no portion of the disputed shop was given to the exclusive possession of the advertising agency or the defendant had not divested itself of any part of the roof.
Simply by displaying the advertisement board on any portion of the roof, it could not be said that the possession had been delivered to the company to which the board belonged, according to the learned District Judge.
He further held that the tenant continued to be in possession thereof.
In such circumstances, it cannot be proved on the basis of the record, the learned District Judge came to the conclusion, that the tenant had parted with the possession.
In this connection, it may be appropriate to refer to the deposition of Gopal Saran, the defendant appellant before the trial court.
He had stated that he had put up his board on the shop for advertisement purpose.
The board had been put in cement pillars and by putting up the said board neither the roof nor the wall had been dug.
The board it was stated was permanently fixed and the tenant asserted that: "I advertise the business of the parties from time to time on payment.
I have not parted with the possession of the shop or of the roof or any 783 part thereof.
" The tenant further stated that in "1974 I advertised for Bhatia on this board in which I had written that I have zeator I have strength, a picture tractor was also made there.
I used to take Rs. 1500 for three years for advertisement out of which painting of board, writing ex penditure was mine.
The board of my shop as Sharan Opticals is fixed on the front of the shop".
It appears on an analy sis of the evidence that the correct position in law, as established before the learned District Judge, was that the tenant used to carry on apart from opticals business, the business of advertising and for that he used to charge in the manner indicated therein.
He used to charge certain amount of money.
The question is whether by so doing, the tenantappellant has assigned, sub let or otherwise parted with the possession of the whole or any part of the premises without the permission of the landlord.
It is undisputed that whatever has happened has happened without the permis sion of the landlord.
On the facts found, it cannot be said or even argued that there was any assignment by the tenant, "Assignment", it has been stated in Black 's Law Dictionary, Special Deluxe Ed., p. 106, "is a transfer or making over to another of the whole of any property, real or personal, in possession or in action, or of any estate or right therein".
It has further been stated as "The transfer by a party of all its rights to some kind of property, usually intangible property such as rights in a lease, mortgage, agreement of sale or partner ship.
" It has to be examined whether there was sub letting or otherwise parting with possession in terms of Sec. 13(1)(e) of the Act.
In this connection, it may be appropriate to refer to the deposition of the tenant, wherein he had stated: "USS BOARD PAR PRACHAR KE TEEN SALL KE PANDRAH SAU RUPAYE MAIN LETA THA JISMEN PAINTING AUR BOARD AUR LIKHAVAT KA KHARCH MERE THA.
" The above, in our opinion, indicates that the board was used for publicity and paintings and other expenses were of the tenant.
Therefore, it was the tenant who was carrying on the business.
The learned trial Judge has noted the evidence on this.
The learned trial Judge in his judgment at page 96 of the paper book had observed that the defendant in his written statement had admitted about the fixation of sign board on the shop.
But the board had been displayed by not fixing anything on the wall or any angles on the roof.
The plaintiff landlord 784 had not submitted any evidence but the defendant tenant in his evidence had admitted that he had fixed the board in the wails of the cement which was fixed permanently, and he fixed the board time to time during the course of his busi ness of advertisement.
The defendant further admitted that in 1974, he had advertised the board of Bhatia in which he had written that he had a tractor and the picture of tractor was made on the board.
These in the learned trial Judge 's Judgment as well as the deposition of the tenant appellant, in our opinion, conclusively, establish that it was the tenant who was carrying on the business of advertisement by advertising the advertisements of different traders.
If that is the position, then in this situation, can it be said that there was either any assignment, sub letting or otherwise parting with possession.
Shri Tapash Ray, counsel for the appellant submitted that there was not.
Shri Rajinder Sachhar, on behalf of the landlord submitted that there was.
Reliance was placed by Shri Tapash Ray on the observations of Farwell, J. of Eng land in Stening vs Abrahams, [1931] 1 L.R. Chancery Division 470.
There the Chancery Division of the High Court of Eng land was concerned in that case whereby the lessee 's cove nant was not to "part with the possession of the demised premises or any part thereof ' and it was held that it was broken only if the lessee entirely excluded himself from the legal possession of the part of the premises.
In the facts of that case a seven years ' exclusive licence to erect an advertisement board against the front wall of the lessee 's house followed by its erection was held not to be a breach of the above covenant.
Farwell, J. in his judgment at page 473 of the report considered the question as to whether the defendants had broken the covenant against parting with possession of any part of the premises.
The plaintiffs therein had stated that by giving the A.A. Company "the right to use the front of the wall for an advertisement hoarding", the defendants had "parted with the possession of that front and 3 inch stratum of air outside it.
" The learned Judge noted that it was difficult to define the meaning of parting with possession generally.
It must always be a question of fact and the construction of the particular agreement in each case and it cannot be determined by look ing at the document alone.
The learned Judge after disclaim ing any attempt to define the meaning of parting with pos session generally and reiterating that it must always be a question of fact and construction of the particular argument in each case observed in an instructive passage at page 473 of the report as follows: "But in my view a lessee cannot be said to part with the 785 possession of any part of the premises unless his agreement with his licensee wholly ousts him from the legal possession of that part.
If there is anything in the nature of a right of concurrent user there is no parting with possession.
Retention of a key may be a nega tive indicium, and the authorities on the whole show that nothing short of a complete exclusion of the grantor or licensor from the legal possession for all purposes amounts to a parting with possession.
The fact that the agreement is in form a licence is immaterial, as a licence may give the licensees exclusive a right to the legal possession as to amount to a parting with possession.
How does the present licence exclude the defendants from any part of the premises? It no doubt gives the licensees the exclusive right to use the wall for an advertisement hoarding.
No one, including the defendants, can use the wail for that purpose.
On the other hand the defendants remain to a large extent in possession of the wall.
" It was contended in that case that the front of the wall was wholly in the control of the licensees.
That is not wholly the true view, Justice Farwell observed.
The right of the licensees to put up their advertisement hoarding did not prevent the defendants from using the wall so long as they did not interfere with their licensees.
Merely giving the licensees a right to use the wall for a particular purpose was not parting with possession within the covenant, in that case it was held.
On the other hand, on behalf of the landlord Sree Ra jinder Sacchar, referred to the decision of the King 's Bench Division of the High Court of England in Gee vs Hazleton and Others, [1932] 1 King 's Bench Division 179.
There a statuto ry tenant of a dwelling house and land had granted a licence for seven years at an annual rent to a bill posting company to erect advertisement hoarding on part of the land.
The company was granted free and uninterrupted access to "the advertising position" for bill posting, etc., purposes.
It was held in appeal from the County Court decision that although the document did not constitute the grant of a sub lease, but only of a licence, the said part of the tenant 's premises had ceased to be within the protection of the Rent Restriction Act because it was used for the busi ness purposes by the other statutory tenant of the whole and the landlord was entitled to possession of that part.
It may be stated that the principle of the aforesaid decision of Gee vs Hazleton (supra) is not quite 786 relevant for the present purpose.
In that case, the subject matter was a dwelling house with huge land around it let out for residential purpose.
There the tenant had let out a part of the land to an advertising agency for carrying on commer cial activities and the tenant was charging an amount which was by far more than the total amount which she was paying as rent for the entire premises to the landlord.
This factor was taken with the main factor that the portion of the land given to the advertising agency in that case was a grant of licence by the tenant in favour of the advertising agency giving the advertising agency exclusive possession in that land to the exclusion of the tenant.
Therefore, in that case, the Court held that there was parting with legal possession in favour of the advertising agency not because of realization of amount by the tenant more than the rent paid by her but really because on the fact it was found that exclusive possession was given to the said advertising agency of a portion of the residential unit to use for commercial activity.
In that case, possession given to the advertising agency was exclusive with the right to include advertising agency and also the right to exclude others including the tenant herself.
The proposition of law laid down in Stening vs Abrahams (supra) was approved in Gee vs Hazleton (supra).
In this connection, a reference may be made to the observations of Lord Justice Scrutton at page 185 of the report, where the learned Lord Justice had ob served as follows: "I can conceive in some advertising cases, cases of advertising boards, that different views may be taken when the advertising sta tion consists of a board put on a dwelling house.
There the paramount use of the wall is as the wall of the dwelling house; and there is also a difficulty in defining what one gets possession of when the possession granted is that of an advertising station attached to a wall.
Here there is no difficulty of that sort." Lord Justice Slesser at page 192 of the report referring to the Stening vs Abrahams (supra) noted the view that the exclusive right to legal possession could amount to parting of possession.
It is interesting to note in that case before the court Mr. A.T. Denning, as Lord Denning then was, had appeared for the landlord and had contended that if the defendant had herself used this portion of the premises for bill posting she would have been within the protection of the Rent Restriction Acts but the defendant had let it for business purposes to some one else and as such she would not be protected as to that portion.
That is not the position here.
Furthermore, under the Rajasthan Act, such kind of user does not take away tenant 's rights.
Under the said Act, 787 the tenant must be guilty either of an assignment or sub letting or otherwise parting with possession either of the whole or any part of the business without the permission of the landlord.
In this, there was no assignment.
Sub letting means transfer of an exclusive right to enjoy the property in favour of the third party.
In this connection, reference may be made to the decision of this Court in Shalimar Tar Products vs H.C. Sharma & Others, ; where it was held that to constitute a sub letting, there must be a parting of legal possession, i.e., possession with the right to include and also right to exclude others and whether in a particular case there was sub letting was substantially a question of fact.
In that case, a reference was made at page 77 of the report to the Treatise of Foa on Landlord and Tenant, 6th Edition, at page 323, for the proposition that the mere act of letting other persons into possession by the tenant, and permitting them to use the premises for their own purposes, is not so long as he retains the legal posses sion himself, a breach of covenant.
In paragraph 17 of the report, it was observed that parting of the legal possession means possession with the right to include and also right to exclude others.
In the last mentioned case, the observations of the Madras High Court in Gundalpalli Rangamannar Chetty vs Desu Rangiah, AIR 1954 Madras 182 were approved by this Court in which the legal position in Jackson vs Simons, were relied upon.
The Madras High Court had also relied on a judgment of Scrutton L.J. in Chaplin vs Smith, at page 211 of the report where it was said: "He did not assign, nor did he underlet.
He was constantly on the premises himself and kept the key of them.
He did business of his own as well as business of the company.
In my view he allowed the company to use the prem ises while he himself remained in possession of them.
" This position was also accepted in Vishwa Nath vs Chaman Lal, AIR 1975 Delhi 117 wherein it was observed that parting with possession is understood as parting with legal posses sion by one in favour of the other by giving him an exclu sive possession to the ouster of the grantor.
If the grantor had retained legal possession with him it was not a case of parting with possession.
In this connection, reference may be made to the observations of this Court in Madras Banga lore Transport Co. (West) vs Inder Singh and Others, wherein the observations of the Delhi High Court had been approved.
The concept of parting with possession in private contracts between 788 the landlord and tenant was also known in India and it means parting with legal possession to the exclusion of the gran tor himself.
In this connection, the observations of this Court in Dr. Vijay Kumar and Others vs M/s Raghbir Singh Anokh Singh, may be referred to.
There the Rent Controller had found that the appellants had parti tioned the shop in question in two portions.
The two por tions were demarcated by a wooden partition wall.
In one portion there was the clinic of the first appellant land in the other portion, the other appellant was carrying on the business of sale and purchase of motor cars.
The wooden partition wail had divided the single shop into two parts so that there were now two doors, one in the portion in the occupation of the first appellant, and the other portion in occupation of the other appellant.
One could not go directly from one portion to the other on account of the wooden partition wail.
The first appellant locked his portion.
On these findings, the Rent Controller had held that the second and third appellants were in exclusive possession of their portions.
Hence he came to the conclusion that the first appellant had parted with the possession of his portion to them.
The Rent Controller did not accept the plea of the appellants that the business which was being carried on in their portion was the joint business of the appellants.
The first appellant was assessed to income tax.
He had never shown the income from the motor business in his income tax returns.
The appellants did not produce the account books.
The Rent Controller accordingly held that the plea of joint business had not been established.
It was argued before this court that the first appellant being the father of the other two appellants established them in business and permitted them to occupy a half portion of the shop for that purpose.
As a father, it was submitted, it was natural for him to establish his sons in life.
In short, the argument was that the second and third appellants were occupying the half portion with his permission.
This Court held that that was a plausible argument but they were unable to entertain this at a later stage in the Supreme Court and further held that the new plea was not a pleading of law but was a plea in fact.
In B.M. Lall (dead) by L.Rs.
vs Dunlop Rubber & Co. Ltd.; , a distinction between the lease and licence was emphasised.
See the observations at page 27 of the report.
There was in the facts and circumstances of the case no grant of interest in land in favour of the advertis er.
In Rajbir Kaur vs M/s. section Chokosiri and Co. (AIR it was emphasised that it was the operative intention which is important.
789 In Shri Dipak Banerjee vs Smt.
Lilabati Chakroborty, 4 Judgment Today it was reiterated that in order to prove tenancy or sub tenancy two ingredients had to be established, firstly, the tenant must have exclusive right of possession or interest in the premises or part of the premises in question and secondly, the right must be in lieu of payment of some compensation or rent.
In this case, the tenant or the sub tenant did not have any exclusive posses sion or interest in the building or in any part of the building nor was that right in lieu of any payment or any compensation, on the basis of the facts as indicated herein before.
From the aforesaid, it appears to us that the question whether there is a tenancy or licence or parting with pos session in a particular case must depend upon the quality of occupation given to the licensee or the transferee.
Mere occupation is not sufficient, in our opinion, to infer either sub tenancy or parting with possession.
In Associated Hotel of India Ltd., Delhi vs S.B. Sardar Ranjit Singh, ; it was held on the question whether the occupier of a separate apartment in a premises is a licensee or a tenant, the test is whether the landlord retained control over the apartment.
Similarly, it was held by this Court in Smt.
Krishnawati vs Shri Hans Raj, [1974] 1 SCC289 that sub letting like letting, is a particular type of demise of immovable property and is distinct from permissive user like that of a licensee.
If two persons live together in a house as husband and wife and one of them who owns the house allows the other to carry on business in a part of it, it will be in the absence of any other evidence, a rash inference to draw that the owners has let out that part of the premises.
Sree Sachhar sought to argue that in consider ing the question of eviction it has to be borne in mind that the purpose of the Rent Restriction Act is to protect dwell ing house and not to protect a person who is not the resi dent of dwelling house but is making money by sub letting it.
In our opinion, however, having regard to the quality, nature and degree of the occupation of the transferee and the facts found, it cannot be said that either there was any assignment or sub letting or parting with possession to such a degree by permitting the hoarding that the tenant had lost interest.
He was using this premises for his benefit.
Unless the tenant has infarcted the prohibition of the Act, he is not liable to be evicted.
The case rests on the express provision of the Act and there is no scope to explore the latent purpose of the Act.
In the premises, the High Court 's order of eviction cannot be upheld.
As no question of non payment has been found by the trial 790 court and the learned District Judge and there is no finding of any material alteration, in our opinion, the order for eviction cannot be sustained.
The appeal, therefore, must be allowed.
The appeal is allowed and the order for eviction is set aside.
In the facts and the circumstances of the case, however, the parties will pay and bear their own costs.
N.V.K. Appeal al lowed.
| IN-Abs | The respondent Landlord filed a suit for eviction against the appellant tenant on 3 grounds, namely, (1) that the tenant had parted with possession of the roof of the shop let out to him by putting up an advertisement board, (ii) by fixing the advertisement board on the roof of the shop with iron angles, the tenant had caused material alter ation to the premises, and (iii) the tenant had defaulted in the payment of rent.
The tenant asserted that though he was carrying on optical business in the shop he was also running the business of advertisement by way of display of various advertisements (hoardings) hoards at various places in the city.
The Trial Court decreed the suit on the ground of default in payment of rent, material alteration and sub letting.
The appellant preferred an appeal and the District Judge remanded the case back to the Trial Court for trial on all issues, on the ground that the appellant had not been al lowed to cross examine the respondent or to adduce evidence in defence.
On remand, the Trial Court held that the appellant had caused material alteration by fixing the board on the roof, had parted with possession of the roof by such fixing of the board, had committed default in payment of rent, and passed a decree for eviction against the appellant for causing material alteration and for parting with the possession of the roof.
No decree was however passed on the ground of default, because the default was held to be the first de fault.
768 The appellant filed an appeal, and the District Judge allowed the appeal on the ground that by displaying the advertisement board, the appellant had not caused any mate rial alteration of the premises and that by displaying such advertisement board did not amount to parting with posses sion of the roof of the premises.
With regard to default, on an analysis of the dates of the payment, the District Judge held that there was no default in payment of rent for six months, but held that the default was the first default and consequently there could be no decree for eviction.
The respondent preferred an appeal before the High Court.
The appeal was allowed only on the issue of parting with possession, holding that the display of the advertise ment board amounted to parting with possession of the prem ises.
The High Court noted that the appellant had not dis puted that the advertisement board was installed on the roof of the shop and that he was getting the rent for this board, and the document which was tendered, viz: Exhibit 6 showed that the company Paramount Services had written a letter to the respondent landlord that they had installed the board on the terrace of the shop and the site was with them for the last six months.
The High Court accordingly concluded that there was parting with possession by the tenant, and the landlord was therefore entitled to a decree for eviction under section 13(1)(e) of the Act.
In view of this finding under section 13(1)(e) of the Act, the High Court held it was unnecessary to go into the other grounds and passed a decree for eviction.
In the appeal by the tenant to this Court on the ques tions: (1) Whether the appellant was carrying on his own advertising business? (2) Whether such an act can be termed as parting with possession of the roof or any part thereof by the appellant in favour of the advertiser because by putting up such hoarding, he was getting a return? (3) If it is found that it was not a business of the appellant to carry on the advertising, but the appellant had also an advertising agency to put up its advertising board then would such an act amount to parting with possession of the roof or any part thereof by the appellant? (4) In any event can any case or cause of action for the suit filed in 1974 on the basis of Exhibit 6 a letter dated January 20, 1977 be maintained? Allowing the appeal and setting aside the order of eviction, the Court.
HELD: 1.
Under the Rajasthan Premises (Control of Rent and Eviction) Act.
1950 the tenant must be guilty either of an assignment or 769 sub letting or otherwise parting with possession either of the whole or any part of the business without the permission of the landlord.
[787A] 2(a) Sub letting means transfer of an exclusive right to enjoy the property in favour of the third party, [787B] 2(b) The concept of parting with possession in private contracts between the landlord and tenant was also known in India and it means parting with legal possession to the exclusion of the grantor himself.
[787H; 788A] Stening vs Abrahams, [1931] 1 L.R. Chancery Division 470, referred to.
Shalimar Tar Products vs H.C. Sharma & Others, ; ; Gundalpalli Rangamanner Chetty vs Desu Rangiah, AIR 1954 Madras 182; Jackson vs Simons, and Chaplin vs Smith, , referred to.
Gee vs Hazleton and Others, [1932] 1 King 's Bench Divi sion 179, distinguished.
Vishwa Nath vs Chaman Lal, AIR 1975 Delhi 117; Madras Bangalore Transport Co. (West vs Inder Singh and Others, ; Dr. Vijay Kumar and Others vs M/s. Raghbir Singh Anokh Singh ; B.M. Lal (dead) by L.Rs.
vs Dunlop Rubber & Co. Ltd., ; ; Rajbir Kaur vs M/s. section Chokosiri and Co., ; and Shri Dipak Banerjee vs Smt.
Lilabati Chakroborty, 4 Judgment Today , referred to.
In the instant case, on the facts found, it cannot be said or even argued that there was any assignment by the tenant.
The tenant or the sub tenant did not have any exclu sive possession or interest in the building or in any part of the building nor was that right in lieu of any payment or any compensation.
Having regard to the quality, nature and degree of the occupation of the transferee, it cannot be said that either there was any assignment or sub letting or parting with possession to such a degree by permitting the hoarding that the tenant had lost interest.
He was using this premises for his benefit.
Unless the tenant has in fracted the prohibition of the Act, he is not liable to be evicted.
1789B, G] 3.
The question whether there is a tenancy or licence or parting with possession in a particular case must depend upon the quality 770 of occupation given to the licensee or the transferee.
Mere occupation is not sufficient, to infer either sub tenancy or parting with possession.
[786A] Associated Hotel of India Ltd. Delhi vs S.B. Sardar Ranjit Singh, ; and Smt.
Krishnawati vs Shri Hans Raj, , referred to.
The case rests on the express provision of the Act and there is no scope to explore the latent purpose of the Act.
[789G] 5.
The plaintiff landlord had not subjected himself to crossexamination in spite of the order of the court on remand.
It would, therefore, not be safe to rely on the examination in chief which was not subjected to cross exami nation before the remand was made.
If that is so, it will appear that there is no evidence of the plaintiff in respect of the allegations in the plaint.
There was no question of cross examining the plaintiff travelling beyond the evidence of the plaintiff given in examination in chief and thereby giving an opportunity to make out a case in cross examina tion.
It therefore, appears from the pleadings and the evidence that the respondent did not make out any case of the appellant parting with possession by putting up the hoarding.
[779D G]
|
ivil Appeal No. 912 of 1989.
From the Judgment and Order dated 11.5.1988 of the Allahabad High Court in Misc.
W.P. No. 7886 of 1985.
Yogeshwar Prasad and Mrs. Shobha Dikshit for the Appellant.
758 Satish Chandra and Madan Lokur for the Respondents.
The Judgment of the Court was delivered by KULDIP SINGH, J.
Special leave granted.
This appeal arises out of a suit filed by respondent (plaintiff) landlord in the Court of Judge, Small Causes, Gorakhpur, for eviction of the appellants (defendant) tenant from the house in question on the ground of failure to pay the rent and for realisation of arrears of rent and elec tricity charges amounting to Rs.2,560.60.
It was pleaded that the tenant was to pay a monthly rent of Rs.70 apart from Rs.3 per month as water and electricity charges and was in arrears since July, 1979 which he failed to pay.
The appellant contested the suit mainly on the ground that the rate of rent was not Rs.70 per month but it was only Rs.40 and besides that he was provided with furniture by the landlord for which he was paying Rs.30 per month.
His case further was that some time after the tenancy commenced, he returned the furniture.
The Judge, Small Causes Court, by his judgment dated 10th.
November, 1983, dismissed the suit holding that the rate of rent was Rs.40 per month and as such the appellant was not a defaulter.
The respondent filed a revision which was allowed by the Additional District Judge, Gorakhpur.
The Revisional Court held that the rate of rent was Rs.70 per month.
The appellant filed a writ petition against the revisional order before the Allahabed High Court.
The High Court allowed the writ petition, quashed the revisional order and remanded the case for deciding the revision peti tion afresh.
Thereafter, the Revisional Court again allowed the revision and set aside the judgment of the Trial Court and ordered ejectment.
The appellant again challenged the revisional order by way of a writ petition before the Alla habad High Court but the same was dismissed.
Hence this appeal.
The Trial Court primarily relied upon documents 39/C and 40/C produced by the defendants.
Document 39/C is a receipt by the plaintiff wherein details of Rs.73 are given.
It is clearly mentioned in the receipt that Rs.40 were towards house rent, Rs.30 towards furniture charges and Rs.3 water and electricity charges.
The plaintiff admitted the contents of receipt 39/C but he explained that Rs.30 towards furni ture charges were mentioned at the request of the defendant.
The plaintiff strongly relied upon the rent note 97/C where in monthly rent of the house was mentioned at Rs.70.
The Trial Court rejected the rent 759 note on the ground that the same was not signed by the defendant.
Basing its findings on the receipt 39/C, the Trial Court dismissed the suit.
The Revisional Court, on the other hand, found force in the contention of the plaintiff that the rent note 97/C was signed by the defendant.
It was held that the admission, if any, of the plaintiff in receipt 391C is contradicted by the rent note 97/C and as such cannot be taken into consideration.
The Revisional Court thus differed from the Trial Court and ordered ejectment.
Before us, the counsel for the appellant Shri Prasad contends that in the face of clear admission of the respond ent in the receipt 39/C the rent of the house was Rs.40 per month.
He further contents that the rent note, even if taken into consideration, has been explained by the receipts 39]C and 40/C.
According to him Rs.70 per month mentioned in the rent note has been explained in the receipts to be Rs.40 as house rent and Rs.30 for the furniture.
We find force in the contention of the learned counsel.
In the face of clear admission by the respondent in the two receipts the finding of the Revisional Court to the effect that the monthly rent was Rs.70 is erroneous.
Faced with this situation Shri Satish Chandra, learned counsel for the respondent invited our attention to Section 3(i) of the U.P. Urban Buildings (Regulation of Letting, Rent and Eviction) Act, 1972 (here inafter called 'the Act ') and contends that the tenancy was for a furnished building and as such failure to pay even Rs.30 in respect of furniture would attract the provisions of Section 20(2)(a) of the Act and the appellant is liable to be ejected.
Section 3(i) and Section 20(2)(a) of the Act are as under: "Section 3(i)"building", means a residential or nonresidential roofed structure and in cludes (i) any land (including any garden), garages and outhouses, appurtenant to such building; (ii) any furniture supplied by the landlord for use in such building; (iii) any fittings and fixtures affixed to such building for the more beneficial enjoyment thereof.
"Section 20(2)(a).
"that the tenant is in arrears of rent for not less than four months, and has failed to pay the same to the landlord within one month from the date of service upon him of a notice of demand." 760 Shri Satish Chandra contends that definition of building under Section 3(i) includes any furniture supplied by the landlord for use in such building and as such non payment of part of the rent meant for furniture would amount to arrears of rent and the appellant having failed to pay the same is liable to be ejected.
In other words, he contends that it was a furnished house which was let out to the appellant.
He also contends that tenancy being of a furnished house, the tenant could not under law unilaterally surrender part of the tenancy by returning the furniture.
There may be some force in the abstract proposition of law canvassed by Shri Satish Chandra on the basis of Sections 3(i) and 20(2)(a) of the Act, but there is no basis for him in the present case to advance the same.
It was never the case of the respondent at any stage that furnished house was given on rent to the appellant.
In the notice before filing the suit, and in the plaint it was specifically pleaded that rent of the house was Rs.70 per month and the tenant was in arrears.
In the written statement appellant took a clear stand that the rent of the house was only Rs.40 and Rs.30 was for furniture which, according to the appellant, he returned after the commencement of the tenancy.
The respondent filed a replica tion to the written statement of appellant.
In Clause 3 of the replication the respondent denied that either the rent was Rs.40 per month or Rs.30 was being charged for furni ture.
He stated that neither any such goods had been sup plied to the appellant by him nor the rent was agreed at Rs.40 per month.
It is thus obvious from the pleadings that at no stage the respondent pleaded that he had given furnished house on rent to the tenant.
Rather the supply of furniture was categorically denied.
In the face of clear pleadings on the record it is impermissible to raise the plea that the land lord rented a furnished house to the tenant.
It would be contrary to the pleadings.
That apart neither before the Trial Court nor before the Revisional Court and not even before the High Court this plea was raised.
Therefore, there is no force in the contention of Shri Satish Chandra and the same is rejected.
This Appeal is, therefore, allowed.
The judgments of the High Court and of the Revisional Court are set aside.
The judgment of the Trial Court is restored and the suit of respondent is dismissed.
There will be no order as to costs.
N.P.V. Appeal allowed.
| IN-Abs | The respondent landlord filed a suit for eviction of the appellantstenant from the house in question on the ground of failure to pay rent and for realisation of arrears of rent.
While the respondent pleaded that the rate of rent was Rs.70 per month, the appellant contended that it was only Rs.40 and not Rs.70, and that he was paying Rs.30 per month for the furniture, provided by the landlord which he returned sometime after the tenancy commenced.
The trial court dismissed the suit holding that the rate of rent was Rs.40 per month and, as such, the appellant was not defaulter.
In the revision filed by the respondent, the Revisional Court held that the rent was Rs.70 per month.
The appellant filed a writ petition before the High Court, which quashed the revisional order and remanded the case for deciding the revision petition afresh.
Thereafter, the revisional court again allowed the revision.
The appellant challenged the revisional order before the High Court which dismissed the same.
In the appeal, by special leave, it was contended on behalf of the appellant tenant that in the face of clear admission of the respondent in the receipt, the rent of the house was Rs.40 per month, and that the amount of Rs.70 per month mentioned in the rent note had been explained in the receipts, to be Rs.40 as house rent and Rs.30 for furniture.
On behalf of the respondent, it was contended that the tenancy 757 was for a furnished building and failure to pay a part of the rent, in respect of furniture, would attract the provi sions of section 20(2)(a) of the U.P. Urban Building (Regulation of Letting Rent and Eviction) Act, 1972 and the appellant was liable to be ejected.
It was also contended that the tenancy being of a furnished house the tenant could not under law, unilaterally surrender part of tenancy.
Allowing the appeal, HELD: It was never the case of the respondent at any stage that furnished house was given on rent to the appel lant.
In the notice before filing the suit and in the plaint, it was specifically pleaded that rent of the house was Rs.70 per month and the tenant was in arrears.
In the written statement, appellant took a clear stand that the rent of the house was only Rs.40 and Rs.30 was for the furniture, which according to him, was returned after the commencement of the tenancy.
[760C D] In the face of clear pleadings on the record, it is impermissible to raise the plea that the landlord rented a furnished house to the tenant.
It would be contrary to the pleadings.
That apart, neither before the trial court nor before the Revisional Court and not even before the High Court this plea was raised.
[760F] The trial court relied upon the rent receipts, 39/C and 40/C, produced by the appellant.
It was clearly mentioned in the receipt 39/C that Rs.40 were towards house rent and Rs.30 towards furniture charges and Rs.3 towards water and electricity charges.
The respondent admitted the contents of the receipt but explained that Rs.30 towards furniture charges was mentioned at the request of the tenant.
[758G H] In the face of the clear admission by the .respondent in the two receipts, the finding of the Revisional Court that the monthly rent was Rs.70 is erroneous.
[759D]
|
ivil Appeal No. 1728 of 1989.
From the Judgment and Order dated 15.4.1982 of the Allahabad 838 High Court in Civil Misc.
Writ Petition No. 6324 of 1980.
R.K. Garg, M.K.D. Namboodiri and section Balakrishnan for the Appellant.
S.N. Kaicker, Pradeep Kumar Jain for the Respondents.
This tenant 's appeal by special leave arises out of a suit for ejectment and recovery of arrears of rent and damages.
The suit was brought by the respondents who claimed that a shop owned by them had been let to the appellant, that the appellant had fallen in arrears of rent from 1 February, 1968 and had not paid the arrears, notwithstanding a notice of demand dated 8 January, 1975 served on the appellant.
The suit was decreed ex parte by the Trial Court and the decree was set aside by the first Appellate Court.
In writ Petition before the High Court, it was urged on behalf of the appel lant that the appellant had deposited the arrears of rent under sub section
(4) of section 20 of the U.P. Urban Buildings (Regulation of Letting, Rent & Eviction) Act, 1972, and that therefore the Court should have made an order relieving the appellant against his liability for eviction on the ground of arrears of rent.
The High Court noted that the suit was filed on 12 February, 1975 and as the appellant did not appear on 4 April, 1975, the day fixed in the summons, the suit proceeded ex parte and was decreed.
The High Court also noticed that upon subsequent application made by the appel lant the ex parte decree was set aside on 24 March, 1977, and on 30 May, 1977, the fresh date now fixed, the appellant made a deposit of Rs.2,912 accompanied by an application stating that the said date was the first date of hearing and he was making a deposit of the entire arrears of rent.
The appellant first stated that he was not obliged to deposit the entire arrears of rent as they were barred by time.
However, the appellant prayed for amendment of his plead ings.
On 29 September, 1977, the appellant sought to deposit the time barred arrears also and got the tender passed for that purpose.
In pursuance of the tender the amount was deposited on 1 October, 1977.
The amendment application was allowed, but when the matter came before the learned First Additional District Judge, he took the view that the appel lant had failed to comply with the conditions of sub section
(4) of section 20 of the Act.
He held that 30 August, 1977 was 839 the date of first hearing in the suit within the meaning of sub section
(4) of section 20.
He recorded that the parties did not dispute that the time barred arrears claimed by the respond ents were also required to be deposited under sub section
(4) of section 20.
As the time barred arrears had been deposited by the appellant on 1 October, 1977 only, the High Court took the view that the entire arrears of rent had not been deposited on or before the date of first hearing.
The High Court declined to go into the further question whether the depos its made by the appellant on 1 October, 1977 ought to relate back to 29 September, 1977.
In the result the High Court dismissed the Writ Petition.
We have heard learned counsel for the parties and we see no reason to take a different view from that adopted by the High Court.
The High Court was plainly right in holding that 30 August, 1977 was the date of first hearing in the suit.
As the suit was in the nature of a small cause suit, and as the Provincial Small Causes Courts Act did not contemplate the fixation of any date for settlement of issues, it must be taken that 30 August, 1977 was the date of first hearing in the suit, and inasmuch as the entire amount due as ar rears of rent had not been deposited within time, the High Court was right in dismissing the writ petition.
Accordingly the appeal is dismissed but there As no order as to costs.
H.L.C. Appeal dis missed.
| IN-Abs | Respondent owners ' suit for recovery of arrears of rent was decreed ex parte when the appellant tenant failed to appear in the suit; however, on a subsequent application made by him the decree was set aside on 24.3.1977.
The appellant made a deposit of Rs.2,912 on 30.5.1977 stating that the said date was the first date of hearing in the suit.
The appellant, who had first stated that he was not obliged to deposit the entire arrears as they were barred by time, later on prayed for amendment of his pleadings and sought to deposit the time barred arrears on 29.9.1977, but the deposit was actually made on 1.10.1977.
The Court al lowed the prayer for amendment but the Additional District Judge held that the appellant was liable to be evicted from the premises since he had failed to deposit the entire arrears on or before 30.8.1977 which was the date of first hearing in the suit in terms of section 20(4) of the U.P. Urban Buildings (Regulation of Letting, Rent and Eviction) Act, 1972.
The appellant 's writ petition challenging the afore said finding was dismissed by the High Court.
Dismissing the appeal, HELD: As the suit was in the nature of a small cause suit, and as the Provincial Small Causes Courts Act did not contemplate the fixation of any date for settlement of issues, it must be taken that 30.8.1977 was the date of first hearing in the suit, and inasmuch as the entire amount due as arrears of rent had not been deposited within time, the High Court was right in dismissing the Writ Petition.
[839D]
|
vil Appeal No. 41334 134 of 1984.
From the Judgment and Order dated 5.3.1982 of the Delhi High Court in L.P.A. No. 125 and 115 of 1981.
Ashok Mahajan, G.D. Gupta and R. Venkataramani for the Appellants.
Anil Dev Singh, Mrs. Indra Sawhney, Mrs. Sushma Suri and C.V.S. Rao for the Respondents.
793 The Judgment of the Court was delivered by K. JAGANNATHA SHETTY, J.
These two appeals by special leave raise the question of determination of seniority of the appellants in the cadre of Lower Division Clerks.
The appeals are preferred against the judgment of the High Court of Delhi dated March 5, 1982 in LPA No. 125 of 1981.
The appellants were originally recruited as Civilian School Masters or L.D.Cs., Leading Hand (Technical), etc.
either in the Lower Defence Installations comprising Ordnance Factories, Ordnance Depots, Workshops, Regimental Centres, Units, Command Headquarters, etc.
under the control of Army Headquarters, New Delhi.
Some of the appellants were declared as surplus in those establishments and they came to be posted/transferred to the Armed Forces Headquarters and inter service organisations as LDCs.
Their posting/transfer was done in the public interest.
They joined the service in the Armed Force Headquarters on various dates between 1960 to 1964.
Some of them were later promoted as Upper Division Clerks.
While they were thus continuing in service, rules flamed under proviso to Article 309 of the Constitution known as "The Armed Forces Headquarters Clerical Service Rules, 1968 ("The Rules")" were brought into force with effect from March 1, 1968.
The Rules inter alia, provide that the seniority in the service shall be determined on the basis of date of confirmation.
Prior to the coming into force of the Rules, the seniority in the cadre of service was required to be determined on the basis of length of service.
It was so laid down by several official memorandums of the Government or that of the Defence Ministry.
After the Rules came into force, the seniority of the appellants was sought to be disturbed on the basis of confirmation as prescribed under the Rules.
The appellants, therefore, moved the High Court of Delhi under Article 226 of the Constitu tion contending inter alia, that length of service should be the basis of inter se seniority.
They also raised some other questions with which we are not concerned.
The learned single Judge accepted the claim of the appellants and made an order dated April 8, 1981.
The relevant portion of the order runs as follows: "It is not disputed by the respond ents that the only principle of seniority laid down by various Memoranda was the principle of seniority laid down by various Memoranda was the principle of length of service.
No memo randa of Administrative Instructions are brought to my notice by 794 the respondents, where any other principle has been laid down.
The petitioners, in all the three petitioners were originally in common LDC cadre and are in the common cadre of U.D.C. now.
It cannot be said that some of them (Writ Petition No. 423 of 1975) will all be governed by the principles of length of service and no others because they have not expressly stated that their seniority should be fixed on the principles of length of serv ice.
It may be noted that in 1959 the Home Ministry issued general principles of seniori ty to be followed in all Government services except where a service follows a different set of principles.
The said Memorandum lays down that seniority of all Government employees, employed subsequent to the issuance of the said Memoranda, will be decided on the basis of the date of confirmation.
It further lays down that all confirmed employees would be treated senior to the non confirmed employees.
The petitioners would have been ordinarily governed by these principles since they joined the Armed Forces on transfer after 1959.
But the Ministry of Defence preferred to continue the principles of length of service (which they had been following prior to 1959), even after the 1959 Memorandum came into operation.
The 1963 Memorandum of the Defence Ministry incorporated the said principles and all Memoranda issued thereafter reiterated the principles of length of service.
In these circumstances, the contention of respondents cannot be accepted.
The seniority of the peti tioners shall be decided by the principle of length of service, that is, their date of joining the Army Headquarters as LDCs.
Of course, some of them entitled to additional benefit of past service under the said Memo randum were given that benefit.
Since this is the question raised in Civil Writ Petition No. 423/1975, it must succeed." Being aggrieved by the above decision, the Union of India preferred an Appeal before the Division Bench of the High Court.
The Division Bench reversed the above view holding that the seniority of the appellants must fall to be determined on the basis of confirmation as prescribed by the Rules and not on the length of service.
The view taken by the Division Bench has been challenged in these appeals.
We have perused the judgment of the Division Bench and also considered the submissions of the parties.
The view taken by the Divi 795 sion Bench appears to be erroneous.
The Rules, no doubt provide that all persons substantially appointed to a grade shall rank senior to those holding officiating appointments in the grade.
But the Rules have no retrospective effect.
It could not impair the existing rights of officials who were appointed long prior to the Rules came into force.
The office memorandums to which learned single Judge has re ferred in detail and which we have extracted above clearly laid down that length of service should be the guiding principle of arranging the inter se seniority of officials.
The appellants being governed by those memorandums had the fight to have their seniority determined accordingly before the Rules came into force.
That being their right, the Rules cannot take it away to their prejudice.
The Division Bench was, therefore, clearly in error in directing that the seniority shall follow their respective confirmations.
In construing similar office memorandums in a different context, this is what this Court has observed in Union of India vs M. Ravi Varma & Anr., ; at 1002: "As the said Office Memorandum has, except in certain cases with which we are not concerned, applied the rule of seniority contained in the Annexure thereto only to employees appointed after the date of that Memorandum, there is no escape from the con clusion that the seniority of Ganapathi Kini and Ravi Varma, respondents, who were appoint ed prior to December 22.
would have to be determined on the basis of their length of service in accordance with Office Memorandum dated June 22, 1949 and not on the basis of the date of their confirmation.
" These considerations apply equally to the present case as well.
The general rule is if seniority is to be regulated in a particular manner in a given period, it shall be given effect to, and shall not be varied to disadvantage retro spectively.
The view taken by the Division Bench, which is in substance contrary to this principle is not sound and cannot be supported.
In the result, these appeals are allowed with costs.
In reversal of the judgment of the Division Bench, we restore that of the learned single Judge.
N.P.V. Appeals allowed.
| IN-Abs | The Armed Forces Headquarters Clerical Service Rules, 1968 were brought into force with effect from March, 1968.
The rules provided that seniority in the service shall be determined on the basis of date of confirmation.
Prior to this, the seniority in the cadre of service was required to be determined on the basis of length of service, as laid down by several official memoranda of the Government or that of the Defence Ministry.
After the rules came into force, the seniority of the appellants who joined the Armed Forces Headquarters as L.D.Cs. between 1960 and 1964, on transfer/posting from the lower defence installations, in public interest, and some of whom were later promoted as U.D.Cs., was sought to be dis turbed, on the basis of confirmation as prescribed under the rules.
The appellants, therefore, moved the High Court contending that the length of service should be the basis of inter se seniority.
A Single Judge of the High Court held that ordinarily the appellants would have been governed by the general principle of seniority based on the date of confirmation as laid down in the 1959 Memorandum of the Home Ministry, but since the Ministry of Defence had preferred to continue the principle of length of service which it had been following prior to 1959, even after the 1959 Memorandum, and which had been incorporated in 1963 Memorandum and reiterated in all memoranda issued thereafter, the seniority of the appellants should be decided by length of service.
i.e., their date of joining the Army Headquarters as L.D.Cs.
On appeal by Union of India, the Division Bench held that the 792 seniority of the appellants must fail to be determined on the basis of confirmation as prescribed by the rules, and not on the length of service.
Aggrieved by this, the appel lants filed appeals before this court.
Allowing the appeals, HELD: The general rule is if seniority is to be regulat ed in a particular manner in a given period, it shall be given effect to and shall not be varied to disadvantage retrospectively.
[795F G] The Armed Forces Headquarters Clerical Service Rules, 1968 no doubt provide that all persons substantially ap pointed to a grade shall rank senior to those holding offi ciating appointments in the grade.
But the rules have no retrospective effect.
It could not impair the existing rights of officials who were appointed long prior to the Rules came into force.
[795A B] The various office memoranda clearly laid down that length of service should be the guiding principle of arrang ing inter se seniority of officials.
[795B] The appellants being governed by those memoranda had the right to have their seniority determined accordingly before the Rules came into force.
That being their right, the rules cannot take it away to their prejudice.
The Division Bench, was, therefore, clearly in error in directing that the seniority shall follow their respective confirmations.
[795B C] Union of India vs M. Ravi Varma & Anr., ; at 1002.
relied on.
|
ivil Appeal Nos. 346347 of 1988.
From the Judgment and Order dated 18.11.1986 of the Patna High Court in C.W.J.C. Nos. 990 and 991 of 1986 (R).
G. Ramaswamy, Additional Solicitor General and Ranjit Kumar for the Appellants.
Nemo for the Respondents.
The Judgment of the Court was delivered by K.N. SAIKIA, J.
These appeals by special leave are from a full bench judgment of the Patna High Court in two writ petitions under Articles 226 and 227 of the Constitution of India allowing the petitions and quashing the Bihar Govern ment 's Notification No. S.O. 1432 dated 28th December 1985 as violative of Articles 301 and 304 of the Constitution of India.
Sub section (2 a) of section 31 of the Bihar Finance Act, 1981 was substituted by Bihar Finance Act, 1984 as follows: "(2 a) A person transporting goods shall carry a declaration in such form as may be pre scribed by the commissioner supported by either a cash memo, bill or a challan, in case the movement is otherwise than as a result of sale, in respect of goods which is being transported on a goods carrier, or a vessel and shall produce such challan, cash memo or bill along with the aforesaid form of declara tion on demand before the prescribed authori ty: Provided that the Commissioner, by notifica tion in this respect, may prescribe a form of declaration or adopt a form of declaration or permit prescribed for the purpose of Sections 34 & 35 of this part, and, he may also pre scribe in the said notification, the manner in which such declaration 801 or permit shall be utilised for verification and assessment of tax payable under this part.
Provided further that the Commissioner may exempt any person or dealer or class of regis tered dealers from the requirement of this sub section.
" Under the aforesaid amended provision the following Notification was issued: The 28th December, 1985.
S.O. 1432.
In exercise of the powers con ferred by subsection (2 a) of section 31 of the Bihar Finance Act, 1981 (Bihar Act 5 of 1981) Part I, the Commissioner adopts Forms XXVIII A and XXVIII B as the declaration for the purpose of the aforesaid sub section which a person shall carry in respect of goods being transported for the purposes of verification and assessment of tax payable and prescribes the following manners in which such permit shall be utilised for verification and assess ment of tax payable under Part I of the said Act: (i) A person transporting goods, exceeding the quantity notified under section 35, on a goods carrier or a vessel shall carry Form XXVIII A or XXVIH B duly filled up in respect of goods being brought into the State or being sent out of the State; (ii) In case a form is found blank, or not containing all the particulars, it shall be deemed to be a violation of the provisions of sub section (2 a) of section 31 of the said Act.
(iii) The prescribed authority, after verifi cation of the consignment, shall make appro priate endorsement in respect of the result of verification on both the copies/counterfoils of Form XXVIII A or XXVIII B, as the case may be, and retain one copy of original counter foil and return the other copy or duplicate counterfoil to the person transporting the goods; (iv) The copy of the original counterfoil retained by 802 the inspecting authority shall be forwarded for verification and for assessment of tax to the circle in which the dealer is registered or has his place of business.
(v) ,The concerned dealer shall preserve the other copy or duplicate counterfoil of Form XXVIII A or XXVIII B, as the case may be, for production before the assessing 'authority or for inspection at any time before or after the assessment.
This notification shall come into force with effect from the 1st January, 1986.
/Bikrikar/vividh/12 1 308/85 By order of the Governor of Bihar MUKUND PRASAD Commissioner of Commercial Taxes and Special Secretary to Government." The respondent as proprietor of M/s Jai Durga Industries of Jamshedpur town, which was registered under the Bihar Sales Tax Act and the Central Sales Tax Act, purchased 165 bags of mustard (sarso) from M/s Kanpur Chand Girish Chand Jain at Dhaulpur, in the State of Rajasthan, and was trans porting the same therefrom to Jamshedpur in the State of Bihar in Truck No. RSG 533.
On the 13th of February, 1986, the officers of the Investigation Bureau Jamshedpur Divi sion, inspected the said truck and all necessary papers including a road permit in Form XXVIII B for the 165 bags of mustard (sarso) were produced at the time of inspection.
In the road permit the bill number had not been mentioned in Column No. 9 in Form No. XXVIII B.
On that ground the In specting Officers seized the goods loaded in the aforesaid truck and detained it at Mango Mufassil Police Station at Jamshedpur.
A notice was issued to the petitioner to show cause as to why penalty should not be imposed under section 31(3) of the Act.
He was directed to appear before the Inspecting Officer on the 14th February, 1986.
The Petition er being a member of the Singhbhum Chamber of Commerce and Industry, moved the said organisation to agitate the matter before the authority and on a representation by the said Chamber the truck with the goods therein were released on the 15th February 1986.
In reply to the show cause notice the appellant took the stand that no permit in the required Form was necessary and in any case it was violative of the petitioner 's Constitutional right of freedom of inter State trade and commerce.
The contention was re 803 jected and a penalty of Rs.8,330 was imposed by Order dated 29th May 1986; and thereafter the consequential demand notice No. 986 dated 2nd June 1986 was issued.
Aggrieved, the appellant filed a writ petition in the Patna High Court under Articles 226 and 227 of the Constitution of India challenging, inter alia, the Notification No. S.O, 1432 dated 28th December 1985 as ultra vires the Articles 30 1 and 304 of the Constitution of India, and also the order imposing penalty and the consequential demand notice.
The High Court held, inter alia, that the impugned Notification imposed unwarranted restrictions on inter State trade and commerce the freedom whereof stood guaranteed; that the decision of this Court in Hans Raj Bagrecha vs State of Bihar & Ors., reported in 1 S.C.R. 59 squarely covered this case; that the impugned Notification was not of regulatory character; and that the decision in Sodhi Transport Co. vs State of U.P., reported in [1986] 1 S.C.R. 939 did not apply as that case dealt with the question of transit pass only.
The Notification was accordingly quashed and the penalty order with demand notice set aside.
Mr. Ranjit Kumar the learned counsel for the appellant State submits that the amendment of sub section (2 a) of section 31, the impugned Notification No. S.O. 1432, herein after referred to as 'the Notification ', and the adoption of Forms XXVIII A and XXVIII B thereby were made with a view to preventing evasion of Sales Tax and in pith and substance it is a regulatory measure which in no way affected freedom of inter State trade; and that the High Court erroneously held the Notification to be violative of Articles 301 and 304 of the Constitution of India.
Counsel further submits that the particulars to be disclosed in the prescribed Forms XXVIII A and XXVIII B and the carrying of the Forms by the carriers would promote rather than hinder freedom of inter State trade.
It may be noted that the vires of sub section (2 a) of Section 31 of the Bihar Finance Act, hereinafter referred to as 'the Act ', whereunder the Notification was issued and the Forms were adopted by the Commissioner and of the relevant Rules referred to in the Forms, namely, Rule 41 and 42(2) were not challenged before the High Court or before this Court.
To decide the question whether the Notification and adoption of the two aforesaid Forms would be ultra vires Articles 301 and 304 of the Constitution of India, it would be relevant to refer to the Forms 804 and the Articles.
The following are the Forms: FORM XXVIII A Permit (See Rule 41) NO.
I hereby permit the transport of the consignment detailed overleaf.
This permit will be valid for one month from the date of issue.
Place . . . .
Signature Date . . .
Designation Details OF Consignment Permitted to be Transported Description Dated signature of the of goods quantity issuing the permit 1 2 3 Result of Checking on the Route Designation and Description Quantity of Dated signature head quarters of of goods the goods of the authority the authority by actually mentioned in by whom transport transported column 1. of consignment was checked.
1 2 3 4 FORM XXVIII B Form of Permit (See Rule 42(2) of the Bihar Sales Tax Rules 1983) (Original Not transferable) Serial No. (To be filled in by the permit holder before transport of goods).
Name of dealer to whom the permit is granted with registration certificate numbers.
805 2.
Name and address of the consignor.
Name and address of the consignee.
Place of despatch.
Destination.
Name of notified railway station/other places from where delivery is to be taken.
Number and date of: (i) Railway receipt (ii) Other document.
Description of consignment: Name of goods Value Quantity.
Seller 's invoice, forwarding note, number and date.
Mode of transport (vehicle No.) I/We hereby declare that the above statements are cor rect and complete in the best of my/our knowledge and be lief.
Signature of dealer/declared Manager.
Date . .
Result of Checking on the Route Designation and Description Quantity Dated signature headquarters of of goods.
of the of the authority the authority by goods mentioned in whom the trans actually column 1 and port of the transported place of check ing.
806 Note: (1) Separate form should be used for each consignment.
(2) (a) In case of transport across or beyond checkpost, a copy of the form should accompany the consignment.
(b) In case of delivery of consignment from any notified railway station/other such place the original copy of the form shall accompany the consignment in transit and thereafter shall be sent to the appropriate authority of the Commercial Taxes.
Article 301 which deals with freedom of trade, commerce and intercourse provides: "Subject to the other provisions of this Part, trade, commerce and intercourse throughout the territory of India shall be free.
" Article 304 which deals with restrictions on trade, commerce and intercourse among States provides: "Notwithstanding anything in Article 301 or Article 303, the Legislature of a State may by law; (a) impose on goods imported from other States or the Union Territories any tax to which similar goods manufactured or produced in that State are subject, so, however, as not to discriminate between goods so imported and goods so manufactured or produced; and (b) impose such reasonable restrictions on the freedom of trade, commerce or inter course with or within that State as may be required in the public interest: Provided that no Bill or amendment for the purposes of clause (b) shall be introduced or moved in the Legislature of a State without the previous sanction of the President." The right to carry on any occupation, trade or business conferred 807 by Article 19(1)(g) on citizens is subject to reasonable restrictions, and in so far as trade or commerce involves the buying and selling of goods, restrictions on the right to trade can be put in the public interest.
As regards the right of free movement, the power to legislate on the free dom of trade, commerce and intercourse is restricted by Article 19(1)(g) and the provisions of Articles 302 to 306.
Under Article 302 Parliament may by law impose such restric tions on the freedom of trade, commerce or intercourse between one State and another or within any part of the territory of India as may be required in the public inter est.
Article 303(1) provides that notwithstanding anything in Article 302 neither Parliament nor the Legislature of a State shall have power to make any law giving, or authoris ing the giving of, any preference to one State over another, or making, or authorising the making of, any discrimination between one State and another, by virtue of any entry relat ing to trade and commerce in any of the Lists in the Seventh Schedule.
Under clause (2) nothing in clause (1) shall prevent Parliament from making any law, or authorising the giving of, any preference or making, or authorising the making of, any discrimination if it is declared by such law that it is necessary to do so for the purpose of dealing with a situation arising from scarcity of goods in any part of the territory of India.
Thus Article 303(1) expressly forbids discrimination relating to trade and commerce apart from Article 14.
Trade, commerce and intercourse may be domestic or foreign or international.
Part XIII of the Constitution deals with trade, commerce and intercourse within the territory of India i.e. domestic or internal.
This again is sub divided into trade, commerce or inter course between one State and another i.e. inter state and within the same State i.e. intraState.
In Atiabari Tea Co. Ltd. vs The State of Assam and Ors. ; it has been held that the freedom of trade, commerce and intercourse guaranteed by Article 301 was wider than that contained in Section 297 of the Govern ment of India Act, 1935, and it included freedom from tax laws also.
Article 301 provides that the flow of trade shall run smooth and unhampered by any restriction either at the boundaries of the State or at any other points inside the States themselves; and if any Act imposes any direct re strictions on the movement of the goods it attracts the provisions of Article 301 and its validity can be sustained only if it satisfies the requirements of Article 302 or Article 304.
Further the operation of Article 301 cannot be restricted to legislation under entries dealing with the trade and commerce.
Gajendragadkar, J., as he then was, in the majority judgment, observed that free movement and exchange of goods throughout the 808 territory of India was essential for sustaining the economy and improving living standards of the country and that Article 301 guaranteeing freedom of trade and commerce and intercourse embodied and enshrined a principle of paramount importance that the economic unity of the country would provide the main sustaining force for the stability and progress of the political and cultural unity of the country and it was based on the theory that the peoples of the several States may sink or swim together It was also held that though the power of levying tax was essentially for existence of the Government, its exercise ' must inevitably be controlled by the Constitutional provisions and the power was not outside the purview of any constitutional limita tions.
Article 301 mandates free trade, commerce and inter course throughout the territory of India.
Inter State trade has, therefore, to be free from trade barriers.
The mobility of goods throughout the territory of India has to be free.
Free trade throughout the territory of India would be one with no tariffs and no restrictions or disadvantages of any kind of importing or exporting from the different States.
Free trade means complete freedom of inter State trade without any restrictions on the movement of goods between the States.
Anyone aggrieved by infringement of the provi sions of Article 301 can seek his remedy from the court against the offending legislative or executive action.
The word 'trade ' has been used synonymously with the word 'bus iness '.
Trade or business would mean some real substantial and systematic or organised course of activity or conduct with a set purpose.
In State of Bombay vs Chamarbaugwala, ; this Court has held that the protection afforded by Article 301 is confined to such activities as may be regarded as lawful trading activity and does not extend to activity which is 'res extra commerciurm ' and cannot be said to be trade.
The words "throughout the terri tory of India" extends the freedom not only to inter State but also to intraState transactions and movements.
Freedom under Article 301 does not mean absolute freedom but freedom from all restrictions and barriers except those which are provided in other Articles of Part XIII as well as regulato ry and compensatory measures.
The power of the Union or the State to exercise legitimate regulatory control is independ ent of the restrictions imposed by Articles 302 305 as was held in State of Madras vs Natraja, ; While examining whether there is a violation of the freedom guaranteed by Article 301, one has to scrutinise whether the impugned legislative or executive act operates to restrict or barricade trade, commerce or intercourse directly and immediately, as distinct from 809 creating some indirect or inconsequential impediment which may be regarded as remote.
In other words, regulatory or compensatory measure cannot be regarded as violative of the freedom.
Such measures may be of diverse nature or various kinds such as traffic regulation, making of declarations and filing of returns within reasonable limits.
Such measures cannot be challenged as interfering with the freedom guaran teed by Article 301 unless they are shown to be colourable measures to restrict the free flow of trade, commerce and intercourse.
Measures impeding the freedom of trade, com merce and intercourse may be legislative or executive and may be fiscal or non fiscal.
He who assails such a measure has to show that it is not regulatory but it directly and immediately interferes with the free flow of inter State trade or business.
Freedom may be impeded by impediments on the individuals carrying on trade or business, on the busi ness itself or on the vehicles, carriers, instruments and labour used in the trade or business.
In Atiabari (supra) tax on goods carried by roads outside State was struck down.
In the Automobile Transport (Rajasthan) Ltd. vs State of Rajasthan & Ors., [1963] 1 S.C.R. 491 sub section (1) of Section 4 of the Rajasthan Motor Vehicles Taxation Act which provided that no motor vehicle should be used in any public place or kept for use in Rajasthan unless the owner thereof had paid in respect of it, a tax at the appropriate rate specified in the Schedule to the Act within the time allowed was challenged on the ground that it constituted a direct and immediate restriction on the movement of trade and commerce with and within Rajasthan inasmuch as motor vehi cles which carried passengers and goods within or through Rajasthan had to pay the tax which imposed a pecuniary burden on a commercial activity and was, therefore, hit by Article 301 of the Constitution of India and was not saved by Article 304(b).
The Rajasthan High Court dismissed the Writ Petition and the appeals were dismissed by Supreme Court in accordance with the opinion of the majority.
Thus both Atiabari (supra) and Automobile (supra) dealt with fiscal measures.
In Hansraj Bagrecha vs State of Bihar & Ors., (supra) under section 5A of the Bihar Sales Tax Act 1959 as amended by the Bihar Finance Act, 1966 the purchase tax on goods declared under section 3A was to be levied at the point of purchase made from a person other than a registered dealer.
By a Notification dated September 14, 1966 the Governor of Bihar declared jute as a commodity liable to purchase tax at the rate specified in the Notification.
The appellant car ried on business in jute.
In the course of his business he purchased raw jute from producers in West Bengal, transport ed it to Kishenganj Railway Station in Bihar and then re exported it to purchasers in West Bengal.
810 He also bought raw jute in Bihar and exported it to mer chants and mill owners in West Bengal by rail from Kishen ganj Railway Station.
After the enactment of Ss. 3A and 5A the State Government issued a Notification dated December 26, 1967 purporting to exercise power under section 42 of the Bihar Sales Tax Act, 1959 read with R. 31 B of the Bihar Sales Tax Rules, 1959 notifying that no person shall tender at any railway station mentioned in Sch.
II any consignment of goods mentioned in Sch.
1 exceeding the quantity speci fied for transport to any place inside the State of Bihar and no person shall accept such tender in accordance with the conditions laid down in the said R. 31B. Under Sch.
I jute exceeding 800 kg could not be tendered for transport without a despatch permit and Kishenganj was one of the railway stations mentioned in Sch.
In July 1967 The Superintendent of Commercial Taxes prohibited the railway authorities from loading and despatching jute goods from any station in Purnea District without the production of a registration certificate.
For non production of such certif icate the railway authorities refused to despatch from kishenganj the jute goods booked by the appellant.
The appellant moved a writ petition in the High Court of Patna challenging, inter alia, the validity of Ss.
3A and 5A of the Bihar Sales Tax Act and of R. 3lB.
The High Court dis missed the petition.
With certificate the appeal was filed.
In support of the petition it was urged (i) that Ss.
3A and 5A infringed the guarantee of freedom of trade under Article 301 of the Constitution and since the amendment by the Finance Act, 1966 introducing these sections did not receive the assent of the President under article 304(b) the amendment was not save; (ii) that Ss.
3A and 5A were contrary to section 15 of the Central Sales Tax, 1956 and accordingly void; (iii) that R. 31B framed by the State Government and the Notifica tion issued on December 26, 1967 was unauthorised and liable to be struck down.
While striking down Rule 31B of the Bihar Sales Tax Rules 1959 and the Notification issued on December 26, 1967 as ultra vires, their Lordships observed that the Bihar Sales Tax Act was enacted by the legislature to con solidate and amend the law relating to the levy of tax on the sales and purchase of goods in Bihar.
The State legisla ture was competent in enacting sales tax legislation to make a provision which was ancillary or incidental to any provi sion relating to levy, collection and recovery of Sales tax and Purchase tax.
A provision which was made by the Act or by the rules which sought to prevent evasion of liability of tax on intrastate sale or purchase would, therefore, be within the competence of the legislature or the authority competent to make the rules.
But the State legislature had no power to legislate for the levy of tax on transactions which were carried on in the course of inter State trade or commerce or in the course of export.
811 Section 42 of the Bihar Sales Tax Act, 1949 prevented any person from transporting from any railway stations, steamer station, airport, post office or any other place any con signment of such goods exceeding the quantity specified with a view to ensuring that there was no evasion of tax payable under the Act.
But the power under section 42 could only be exercised in respect of levy, collection and recovery of intrastate Sales or Purchase tax.
It could not be utilised for the purpose of ensuring effective levy on inter State Sales or Purchase Tax.
When rule 3lB prohibited transport of goods to any place outside the State of Bihar unless a certificate was obtained from the appropriate authority, it sought to prohibit transport of goods pursuant to transac tions which might not even be of the nature of sale or purchase transaction; in any case it restricted transport pursuant to transactions in the course of inter State trade and commerce.
The operation of the rule was not restricted only to transactions in the course of intrastate trade and commerce but it authorised restrictions on inter State transactions and on that account it was ultra vires and consequently the Notification issued on December 26, 1967 was also declared ultra vires.
It would thus be seen that rule 3 lB and the Notification issued thereunder were struck down on the ground that they impeded inter State trade, commerce and intercourse.
It would also be clear that the Notification issued was shown to be a measure for preventing evasion of Sales Tax.
In the instant case the Notification dated 28th December, 1985 clearly states that the declara tion in the permit is indeed for the purpose of verification and assessment of tax payable.
In Indian Cement vs State of A.P., ; it was held that the restriction provided for in Article 301 can within the ambit be limited by law made by the Parlia ment and the State legislature and that no power is vested in the executive authority to act in any manner which af fects or hinders the essence and thesis contained in the scheme of Part XIII of the Constitution which is against creation of economic barriers and/or pockets which would stand against the free flow of trade, commerce and inter course.
There could be no dispute that taxation was a deter rent against free flow.
The reasonable restrictions contem plated in Part XIII have to be backed by law and not by executive action provided the same are within the limita tions prescribed under the scheme of Part XIII.
In Weston Electronics vs State of Gujarat, A.I.R. 1988 S.C. 2038 it was reiterated that while a State legislature may enact a law imposing a tax on goods imported from other States as is levied on similar goods manufactured in that State the imposition must not be such as to discriminate between goods so imported and goods so manufactured and that taxing laws could be 812 restrictions on trade, commerce and intercourse, if they hamper the flow of trade and if they were not what could be termed to be compensatory taxes or regulatory measures.
It is by now settled law that the object of Part XIII is not to make inter State trade, commerce or intercourse absolutely free.
Reasonable restrictions in public interest are permissible.
Mandate against discrimination dictates the placing of inter State trade, commerce and intercourse under no greater disadvantage than that borne by intraState trade, commerce and intercourse.
The primary object is to avoid barriers around the State borders.
Fractionalisation of the country 's trade, commerce and intercourse is to be avoided.
However, this could not mean supporting trader 's hostility towards regulations.
Coming to the impugned Notification and the two adopted Forms, namely Form XXVIII A and XXVIII B we find that there is no imposition of any tax by them.
It is, therefore, pertinent to ask what this measure actually does.
Does it directly and immediately restrain inter State trade, com merce and intercourse? Does it place the intraState carrier in a superior or advantageous position to that occupied by inter State carrier? Does it restrict inter State trade, commerce and intercourse? What are the direct and indirect effects of this measure and whether it amounts to a prohibi tion or a mere regulation? If it is a mere regulation then only the motive, purpose or policy of the State Government would be relevant.
However, if it amounts to a prohibition that would not be relevant.
If it has any effect on inter State trade, we have to ascertain the essence or incidence thereof.
The Notification only prescribed the declaration Forms to be carried on a goods carrier or vessel for transporting goods through the State of Bihar.
It does not prohibit transportation of the goods.
Before the High Court it was not disputed that the Notification and the Forms were ap plicable in respect of goods being brought into the State and being sent out of the State in excess of the quantity notified under section 35 of the Act on every goods carrier or vessel.
Thus, it would be applicable to the transport of all goods carried intra State in Bihar, and inter State to and through the State of Bihar.
Further, clause (ii) of the Notification states that if the prescribed Form is found blank or does not contain all the required particulars it would be deemed to be a violation of the provisions of sub section (2 a) of section 31 of the Act entailing penalties for the infraction thereof.
Counsel for the State submits that Form XXVIII A (Permit) is meant for those who are not registered as dealers and it has to be obtained from office, while Form 813 XXVIII B (Permit) can be filled up by the registered dealer himself.
It is further submitted that the particulars are to be furnished by the persons and this would not affect the freedom of movement of the goods carried, and that it would facilitate transportation across and throughout the State of Bihar by showing the permit wherever required and thus, instead of hindering, it will promote free movement of the goods.
We find no reason to disbelieve these statements.
We are of the view that the permits will indirectly help as sessment by ascertaining whether tax would be payable or not.
The permit would enable the carrier to cross the State territory by producing it if and when needed and thus would promote rather than impede inter State trade.
A declaration may also serve the public purpose by finding out unautho rised trade or business to which freedom of trade, commerce and intercourse would not apply.
Thus, the impugned Notifi cation has to be held to be a measure in exercise of a power incidental to the levy of Sales Tax and it could not be said to have been a colourable exercise of power to impede, restrict or barricade inter State trade in respect of which Bihar State legislature has no power to legislate.
, It is, to our mind, clearly distinguishable from the facts in Bagrecha 's case (supra).
The commonness between the two is in insistence of despatch certificate in Bagrecha and a permit in the instant case, But there the similarity ends.
While there was an ex facie purpose disclosed in the Bagre cha prohibitory Notification, in the instant case the Noti fication ex facie shows the purpose, namely, to prevent evasion and facilitate assessment of Sales Tax.
The insist ence on a permit in respect of goods entering the State in course of inter State trade Could also be necessary.
to distinguish the goods that would be transported across the territory of State and those which would reach the consump tion point within the State, and to ascertain whether tax would be payable in the latter category.
We are, therefore, of the view that the ratio decidendi of the Bagrecha case would not be applicable to the facts of the instant case.
We are also of the view that the facts in Sodi Transport Co. vs State of U.P. & Ant., (supra) would be nearer to the facts of the instant case.
In this case Section 28 of the Uttar Pradesh Sales Tax Act,. 1948 authorised the State Government to establish check posts and barriers with a view to pre venting evasion of tax or other dues payable under the Act in respect of sale of goods in the State.
Section 28 B, added by the U.P. Act 1 of 1973, makes provision for the procedure to be followed by persons who intend to transport goods from outside the State by road through the State to destinations outside the State.
It provides that when a vehicle coming from any place outside the State and bound for any other place outside the State passes through the State, the driver or the other person in charge of such vehicle shall 814 obtain in the prescribed manner a transit pass from the officer in charge of the first check post or barrier after his entry into the State and deliver it to the officer in charge of the check post or barrier before exit from the State.
If he fails to do so it shall be presumed that the goods carried thereby have been sold within the State by the owner or person in charge of the vehicle.
Rule 87 of the Uttar Pradesh Sales Tax Rules 1948, inserted by the U.P. Sales Tax (First Amendment) Rules, 1977 provides that a person who wishes to obtain a transit pass shall make an application in the prescribed form to the officer in charge of the check post concerned.
It also provides for the issue of private pass in triplicate and for inspection of the documents, consignments and goods to ensure that the state ments are true.
The appellants who claimed to be engaged in the business of transport of goods belonging to others for hire and who in the course of their business had to carry goods from one State to another State along roads lying in the State of Uttar Pradesh, questioned the validity of section 28B of the Act and Rule 87 of the Rules by filing writ petitions before the High Court.
Their contentions were (i) that section 28B and Rule 87 were outside the scope of entry 54 of the Sev enth Schedule of the Constitution; (ii) that they infringed freedom of trade, commerce and intercourse guaranteed under Article 30 1 of the Constitution; and (iii) that they im posed unreasonable restrictions on the freedom of trade guaranteed under Article 19(1)(g) of the Constitution.
The High Court having upheld the constitutional validity of the impugned provisions appeals were preferred to this court by special leave.
In the writ petition under Article 32 of the Constitu tion in addition to the contentions raised in the High Court, it was submitted that the rule of presumption con tained in section 28B of the Act virtually made a person, who had not actually sold the goods liable to pay Sales Tax, and that a transporter being just a transporter could not be treated as a dealer within the meaning of that expression as it was defined in the Act at its commencement.
It was held, that the decision of the High Court uphold ing the constitutionality of section 28B of the U.P. Sales Tax Act, 1948 and rule 87 of the U.P. Sales Tax Rules, 1948 did not call for any interference.
It was observed that the Act was traceable to entry 54 in List II of the Seventh Schedule to the Constitution.
Section 28B of the Act and Rule 87 of the rules were enacted to make the law workable and to prevent evasion of tax.
They fell within the ambit and scope of the 815 power to levy the tax itself.
When the legislature had the power to make a law with respect to any subject it had all the ancillary and incidental power to make that law effec tive.
We have seen that in Bagrecha what was insisted was a despatch certificate; in Sodhi Transport what was insisted was a transit pass while in the instant case what is being insisted is a permit disclosing particulars of the goods to be transported.
While in Bagrecha it was not protected by 304(b) in Sodhi Transport it was.
Article 304(b) clearly permits the State legislature to impose such a reasonable restriction on the freedom of trade, commerce and inter course with or within that State as may be required in the public interest.
The word 'with ' involves an element having its situs in another State.
It cannot be therefore said that the insistence on the disclosure in respect of goods enter ing Bihar from another State if otherwise legitimate would not be protected by Article 304(b).
The question, therefore, arises whether the insistence on the permit in Forms XXVIII A or XXVIII B, as the case may be, pursuant to the impugned Notification can be said to be a reasonable measure adopted by the State legislature for the express purpose of prevent ing evasion and facilitating assessment of tax.
The reasona bility has to be considered in the context of the effective ness of the State 's powers and the erosion, if any, of the powers of the Parliament in respect of inter State trade, commerce and intercourse.
In so far as carriage of goods vis a vis Sales Tax, it has also to be considered keeping in mind the fact that at some point goods imported from outside shall become assimilated with the general mass of property in a State and be subject to State taxation and the problem of determination as to when and where that point is reached.
The motive of State regulation in exercise of incidental power to tax has to be scrutinised and laissez faire hostil ity towards trade regulations or taxation has to be kept within limits.
The peculiarity of the local situation of a State may not also be entirely ignored.
To decide whether the Notification impeded inter State trade we have also to take into consideration the concept of inter State trade and its continuity.
The High Court has taken the view that an importer has to send the form in advance to the consignor so that it could be filled up to accompany the goods and that would amount to a blockade placed on the free movement of goods in inter State commerce.
It should, however, be noted that the Notification has been issued and the Forms have been adopted by the State of Bihar and would be enforced in that State.
There is nothing to indicate that the carrier would be penalised for not having filled up Forms XXVIII A or XXVIII B, as the case may 816 be, while the goods were being carried through other States.
They are to be tilled up only when the carrier is within the territory of the State of Bihar.
There is no provision to the effect that those who had not filled up the appropriate form at the earlier stages of the transit would not be allowed to fill up with the State.
The particulars required are not such as would be impossible or difficult for the cartier to furnish.
There is no prohibition on transporta tion of the goods themselves.
We are accordingly of the view that there is no direct and immediate restriction of inter State trade, commerce or intercourse as a result of the requirement to fill up and carry the Forms.
In other words, the continuity of the transport will not be obstructed or interrupted.
Stoppage of the transporting vehicle for the purpose of obtaining and filling in the appropriate Form would, in our opinion, not amount to interruption but only a stoppage.
A mere stoppage of the movement of the vehicle will not have any direct or immediate effect on the trade.
The checking of documents or the filling in and submission of Forms and returns, detour to a public weigh bridge and the like may be an inconvenience, and unless they are shown to be unreasonable and not in public interest the court may apply the maxim 'de minimise non curat lex '.
A stoppage of the vehicle for roadside repair, for taking petrol, for allowing the driver to take rest or his meals would not naturally amount to interruptions of trade, commerce and intercourse.
Public interest also will not allow transit regulations and allied measures to be violated, thwarted or evaded through the channel of inter State trade, commerce and intercourse, unless of course the measures are shown to be unreasonable.
In this view of the matter this case would squarely be covered by the decision in Sodhi Transport Co., (supra).
We accordingly hold the Notification and adoption of the Forms to have been validly made in exercise of powers incidental to the power of levying Sales Tax, and that they are reasonable and in public interest, and not ultra vires the Articles 30 1 & 304 of the Constitution of India.
In the result, the impugned judgment of the High Court is set aside, and the appeals are allowed, but without any orders as to costs.
Learned counsel for the appellant states that the State in these appeals was interested in the law being laid down, and that even if the validity of the Noti fication is upheld it will not revive the proceedings against the respondent to realise the penalty.
We have no doubt that the State will abide by it.
T.N.A. Appeals allowed.
| IN-Abs | In exercise of the powers conferred by sub section (2 a) of section 31 of the Bihar Finance Act, 1981 the Commission er of Commercial Taxes, Bihar issued a Notification dated 28th December, 1985 adopting Forms XXVIII A and XXVIII B as the declaration for the purposes of verification and assess ment of the sales tax payable.
Clause 1 of the Notification provided that a person transporting goods, exceeding the quantity notified under section 35, on a goods carrier or a vessel shall carry Form XXVIII A or XXVIII B duly filled up in respect of goods being brought into the State or being sent out of the State.
Clause 2 of the Notification provided that in case a form is found blank or not containing all the particulars, it shall be deemed to be a violation of the provisions of sub section (2 a) of section 31 of the Act.
The respondent, a registered dealer under the Bihar Sales Tax Act and the Central Sales Tax Act purchased 165 bags of mustard in the State of Rajasthan and was transport ing the same therefrom to 797 Jamshedpur in the State of Bihar.
The officers of the Inves tigation Bureau Jamshedpur Division seized the vehicle along with the goods on the ground that in the road permit the bill number had not been mentioned in column No. 9 in Form XXVIII B.
On a representation by the Singhbhum Chamber of Commerce and Industry the truck along with the goods was released.
The Inspecting Officer issued a demand notice to the respondent imposing a penalty of Rs.8,330 and rejected the contention of the respondent that no permit was neces sary because it was violative of the respondent 's Constitu tional right of freedom of inter State trade and commerce.
The appellant filed a writ petition in the Patna High Court challenging the validity of the Notification on the ground of its being violative of Articles 301 and 304 and also the demand notice imposing penalty.
The High Court held that the Notification imposed unwar ranted restrictions on the inter State trade and commerce and accordingly quashed the Notification as violative of Articles 301 and 304 and set aside the penalty order with demand notice.
In this appeal by special leave on the question whether the impugned Notification and the adoption of Forms XXVIII A and XXVIII B, for the purposes of preventing evasion of sales tax, was violative of Articles 301 and 304 of the Constitution.
Allowing the appeals and setting aside the judgment of the High Court, HELD: 1. Article 301 mandates free trade, commerce and intercourse throughout the territory of India.
The words "throughout the territory of India" extends the freedom not only to inter State but also to inter State transactions and movements.
The mobility of goods throughout the territory of India has to be free.
Free trade throughout the territory of India would be one with no tariffs and no restrictions or disadvantages of any kind of importing or exporting from the different States.
Free trade means complete freedom of inter State trade without any restrictions on the movement of goods between the States.
Anyone aggrieved by infringe ment of the provisions of Article 301 can seek his remedy from the Court against the offending legislative or execu tive action.
[808C E] 2.
The word 'trade ' has been used synonymously with the word 798 'business '.
Trade or business would mean some real substan tial and systematic or organised course of activity or conduct with a set purpose.
[808E] State of Bombay vs R.M.D. Chamarbaug wala, [1957] S.C.R. 874, applied.
Freedom under Article 301 does not mean absolute freedom but freedom from all restrictions and barriers except those which are provided in other Articles of Part XIII as well as regulatory and compensatory measures.
The object of Part XIII is not to make inter State trade, com merce or intercourse absolutely free.
Reasonable restric tions in public interest are permissible.
The reasonable restrictions contemplated in Part XIII have to be backed by law and not by executive action provided the same are within the limitations prescribed under the scheme of Part XIII.
The power of the Union or the State to exercise legitimate regulatory control is independent of the restrictions im posed by Articles 302 305.
[808F; 81 IG; 812B] State of Madras vs Nataraja, ; , applied.
While examining whether there is a violation of the freedom guaranteed by Article 301, one has to scrutinise whether the impugned legislative or executive act operates to restrict or barricade trade, commerce or intercourse directly and immediately, as distinct from creating some indirect or inconsequential impediment which may be regarded as remote.
In other words, regulatory or compensory measures cannot be regarded as violative of the freedom.
Such meas ures cannot be challenged as interfering with the freedom guaranteed by Article 301 unless they are shown to be co lourable measures to restrict the free flow of trade, com merce and intercourse.
[808H; 809A B] 5.
Measures impeding the freedom of trade, commerce and intercourse may be legislative or executive and may be fiscal or non fiscal.
Taxing laws could be restrictions on trade, commerce and intercourse, if they hamper the flow of trade and if they were not what could be termed to be com pensatory taxes or regulatory measures.
He who assails such a measure has to show that it is not regulatory but it directly and immediately interferes with the free flow of inter State trade or business.
Freedom may be impeded by impediments on the individuals carrying on trade or busi ness, on the business itself or on the vehicles, carriers, instruments and labour used in the trade or business.
[809B C] 799 Atiabari Tea Co. Ltd. vs State of Assam and others; , ; Automobile Transport (Rajasthan) Ltd. vs State of Rajasthan and others, [1963] 1 S.C.R. 491; Western Electronics vs State of Gujarat, A.I.R. 1988 S.C. 2038 and Indian Cement vs State of Andhra Pradesh, A.I.R. applied.
When the legislature had the power to make a law with respect to any subject it had all the ancillary and inciden tal power to make that law effective.
In the instant case the notification ex facie shows the purpose, namely, to prevent evasion and facilitate assessment of sales tax.
The permits will indirectly help assessment by ascertaining whether tax would be payable or not.
The permit would enable the carrier to cross the State territory by producing it if and when needed and thus would promote rather than impede inter State trade.
A declaration may also serve the public purpose by finding out unauthorised trade or business to which freedom of trade, commerce and intercourse would not apply.
Thus, the impugned notification is a measure in exercise of a power incidental to the levy of sales tax and it could not be said to have been a colourable exercise of power to impede, restrict or barricade inter State trade in respect of which Bihar State Legislature has no power to legislate.
[813B E] 6.1 Article 304(b) clearly permits the State Legislature to impose such a reasonable restriction on the freedom of trade, commerce and intercourse with or within that State as may be required in the public interest.
The word 'with ' involves an element having its situs in another State.
It cannot be, therefore, said 'that the insistence on the disclosure in respect of goods entering Bihar from another State if otherwise legitimate would not be protected by Article 304(b).
[815C] 6.2 To decide whether the notification impeded inter State trade, the concept of inter State trade and its conti nuity has also to be taken into consideration.
In the in stant case the notification clearly states that the declara tion in the permit is indeed for the purpose of verification and assessment of tax payable and there is no imposition of any tax.
The notification only prescribed the declaration forms to be carried on a goods carrier or vessel for trans porting goods through the State of Bihar.
It does not pro hibit transportation of the goods.
Therefore, there is no direct and immediate restriction of inter State trade, commerce or intercourse as a result of the requirement to fill up and carry the forms.
In other words, the continuity of the transport will not be obstructed or interrupted.
Therefore, the notification and the adoption of the forms are reasonable and in public interest and not ultra vires the Articles 301 and 304 of the Constitution of India.
[815F, 816F] 800 Hans Raj Bagrecha vs State of Bihar and others, ; , distinguished.
Sodhi Transport Co. vs State of U. P., [1986] 1 SCR939, held applicable.
|
vil Appeal No. 733 (NCE) of 1988.
From the Judgment and Order dated 25.1.1988 of the Andhra Pradesh High Court in Election Petition No. 1 of 1985.
G. Ramaswamy, Additional Solicitor General, A.V. Rangam and J. Eswanah for the Appellant.
R. Vasudev Pillai, T.V.S. Krishnamurthy Iyer, Subodh Markandeya, Smt.
Chitra Markandeya, G. Seshagiri Rao, Ms. Usha Saraswat, P. Parmeshwaran, Ms. A. Subhashini and M. Narayan Reddy inperson, for the Respondents.
842 The Judgment of the Court was delivered by THOMMEN, J.
This appeal by special leave arises from the order of the high Court of Andhra Pradesh dated 25.1.1988 in Election Petition No. 1 of 1985.
The High Court by the impugned order "set aside the proceedings of counting and the resultant declaration" made on 28.12.1985 in respect of the election to the Lok Sabha held on 27.12.1984 from 34, Nizamabad Parliamentary Constituency consisting of 7 Assem bly Segments.
The High Court directed the Secretary to the Election Commission to conduct the counting of the votes afresh in the said Constituency from which the appellant was declared elected to the Lok Sabha.
The 1st respondent, M. Narayan Reddy was one of the six candidates who contested the election.
According to the result declared by the Re turning Officer, the appellant secured 2,51,172 votes while the 1st respondent, the election petitioner, secured 2,48,725 votes.
The 1st respondent filed Election Petition under Sections 80 and 81 of the Representation of the People Act, 195 1 (43 of 1951) (hereinafter referred to as the 'Act ') seeking a declaration that the election of the appel lant was void and that the 1st respondent was duly elected from the said Constituency.
The election was challenged by the 1st respondent broad ly on three grounds: 1.
Illegalities and irregularities in the counting of votes.
Impersonation of voters, and 3.
Corrupt practices.
The High Court on the basis of the pleadings of the parties framed 25 issues, of which Issue No. 7 alone is relevant in the present proceeding.
The election was set aside by the High Court solely on the basis of Issue No. 7, the other issues having been either not pressed by the election peti tioner or found against him.
Issue No. 7 reads: "Whether the Additional Assistant Returning Officers were not authorised to perform the duties and functions of the Returning Officers as alleged by the election petitioner.?" The pleading in regard to this issue is contained in paragraph 13 of the Election Petition.
It reads: 843 "Be that as it may, the "Additional Returning Officers" in respect of this Parliamentary constituency were not appointed and authorised by the Election Commission to perform the duties and functions of the Returning Officer.
Therefore, every action taken by the said Additional Assistant Returning Officers, including the rejection of doubtful ballot, papers, is absolutely illegal, void and for bidden by law.
Hence, it is a serious irregularity affecting the validity of counting procedure adopted for counting of votes and on this ground alone the petitioner is entitled to inspection of the ballot papers and order for recount.
These irregular ities have taken place during the counting in all the count ing hails numbering 7 in total.
" This allegation was refuted by the appellant in his written statement.
He contended that the officers were properly appointed and duly authorised.
Among the witnesses who testified on behalf of the appellant in support of his contentions on this issue was R.W. 8, an Under Secretary to the Election Commission.
He produced Exs.
B 22 to B 28 and Exs.
A 86 to A 88 as well as exhibit X 1 containing documents relating to the relevant pro ceedings connected with the appointment of the Additional Assistant Returning Officers.
Certain documents initially produced and sought to be filed by the appellant as addi tional documents were marked as Exs.
C 5 to C 8 at the instance of the election petitioner, the 1st respondent herein.
The controversy under Issue No. 7, as seen above, was whether the Additional Assistant Returning Officers were duly appointed by the Election Commission.
The Court on consideration of the relevant documents held that they were not duly appointed by the Election Commission and that the votes of the 7 Assembly Segments of the said Constituency were liable to be recounted.
The Court accordingly issued directions in that behalf to the Election Commission.
The main contention of the election petitioner, appear ing in person, in the High Court as well as here has been that the officers in question were not duly appointed by the Election Commission, and that their purported exercise of power as Additional Assistant Returning Officers was without authority and in contravention of the relevant legal provi sions.
We see no merit in this contention.
844 The testimony of R.W. 8 and the documents proved by him leave no doubt that the officers in question were duly appointed by the Election Commission.
R.W. 8 says: "It is true that exhibit A 55 is the copy of the notification issued by the Election Commission of India and as is clear from the document, it was published in the A.P. Gazette.
This notification exhibit A 55 shows that the District Collec tor, Nizamabad was appointed as a Returning Officer for Nizamabad constituency.
There is another notification No. 434/AP/84(2) showing appointment of Asst.
Returning Offi cers.
At Srl. No. 34 of the said notification the Joint Collector, Nizamabad and Personal Asst.
to Collector, Niza mabad were appointed as Asst.
Returning Officers to the said Constituency.
The Commission received proposals from the Chief Electoral Officer, Andhra Pradesh, appointing Asst.
Returning Officers for all the 42 Parliamentary Constituen cies including Nizamabad constituency.
On receipt of the proposals from the Chief Electoral Officer, the Election Commission of India approved the proposals and this is the true copy of the proposal that is approved.
It is marked as exhibit B 22.
The letter received from the Chief Electoral Officer as marked as exhibit B 23.
It also contains the list of 21 Asst.
Returning Officers for Nizamabad Parliamentary Constituency.
This notification covers all the 42 Parliamen tary constituencies including that of Nizamabad.
The pream ble to the notification is given in the notification dated 19.11.84.
On that basis to this notification the approved list of Asst.
Returning Officers is attached to this notifi cation.
The notification was signed by the Under Secretary.
This notification exhibit B 24 was issued by the Under Secre tary.
This notification was approved by the Secretary, Election Commission of India, New Delhi.
exhibit B 25 shows that this was approved by Sri.
K. Ganeshan on 18.11.1984 who was at that time, the Secretary to the Election Commission of India.
, New Delhi and a notification was issued consequently on 19.11.84.
exhibit B 26 is the original notification showing the amendments made in respect of Asst.
Returning Officers in some parliamentary constituencies in the state of Andhra Pradesh and that includes Nizamabad parliamentary constitu ency also.
Serial No. 13 is amended designation of the Asst.
Returning Officer was approved by the Secretary as proposed by 845 the Chief Electoral Officer, A.P. The ultimate notification exhibit B 24 was issued by the Under Secretary but the approval was made as per exhibit B 25 by the Secretary to the Election Commission.
The notification of exhibit B 24 was communicated as per exhibit B 22 to the Chief Electoral Officer, A.P. Copies of these notifications were communicated to the Chief Secretary of Andhra Pradesh also.
The amended notification date 30 11 84 was also communicated to the Chief Electoral Officer, Andhra Pradesh and a copy of it was also communi cated to the Chief Secretary, Andhra Pradesh.
exhibit B 27 is the true copy of the notification showing the amendments in the list of the Assistant Returning Officers.
Ex B 28 is the communication of the approval of the amendments conveyed to the Chief Electoral Officer, Andhra Pradesh by telex message and copy of the notification date 30 11 84 was sent with the post copy of the message.
" exhibit X 1 contains the original documents the relevant copies of which are marked as Exs.
B 23 dated 14.11.1984, B 25 dated 18.11.1984, B 22 dated 19.11.1984, B 24 dated 19.11.1984 and B 26 dated 30.11.1984.
We have carefully examined the original documents.
We are satisfied that the testimony of R.W. 8 is fully supported by the documents he has referred to.
By exhibit B 23 dated 14.11.1984 (see page 81 of exhibit X 1) the Chief Electoral Officer, Andhra Pradesh wrote to the Secretary to the Election Commission enclosing a revised list of officers proposed for appointment as Addi tional Assistant Returning Officers for all the 42 Parlia mentary Constituencies for the purpose of counting of votes etc.
and requesting for the approval of the list by the Election Commission.
The revised list at page 137 of exhibit X 1 contains the names of the officers for 34, Nizamabad Parlia mentary Constituency.
By exhibit B 25 dated 18.11.1984 (see pages 1 2 of exhibit X 1) the list was approved by Shri K. Gane shan, the Secretary to the Election Commission.
His signa ture dated 18.11.1984 appears at page 2 of exhibit X 1.
That was an approval of the note dated 18.11.1984 put up by Shri S.R. Sethi, the Under Secretary to the Election Commission, reading "C.E.O. 's proposals at section Nos. 7 and 8 above and the action suggested at 'A ' above may be approved.
" It is thus clear that the proposal made by the Chief Election Officer and the revised list submitted by him received the approval of the Secretary to the Election Commission.
It has to be noticed in this connection that Section 19A of the Act empowers the Secretary to the Election Commission to per form, subject to certain 846 conditions, the functions of the Election Commission under the Constitution and relevant statutes and rules.
The Secre tary is, therefore, competent to give approval to the re vised list containing the names of officers proposed by the Chief Electoral Officer.
This fact of approval was duly communicated by the Secretary to the Election Commission to the Chief Electoral Officer, Andhra Pradesh by telex message sent on 19.11.1984 (see exhibit B 22 at page 158 of exhibit X 1).
It was clarified in exhibit B 22 that the notification of the Election Commission was not published in the Gazette of India and it was not required to be published in the State Gazette.
The notification of the Election Commission was sent with the post copy of the telex message.
exhibit B 24 dated 9.11.1984 which is the post copy authenticated by Shri S.R. Sethi, the Under Secretary to the Election Commission is that notification (see pages 156 157 of exhibit X 1).
It says that "In exercise of the powers conferred by sub section (1) of section 22 of the Representation of the People Act, 195 1 (43 of 195 1), the Election Commission hereby appoints . . ".
A list of the Assistant Returning Officers appointed under the notification is appointed in the table to exhibit B 24, and it begins with "Srikakulam Par liamentary Constituency".
The names of the constituencies and the officers are mentioned in the order in which they are stated by the Chief Electoral Officer in his revised list appended to exhibit B 23.
However, exhibit B 24 specifically mentions only Srikakulam Parliamentary Constituency.
At the end of the names in respect of that Constituency, the Under Secretary authenticating the notification merely says "please see pp 82 157".
These are the pages of exhibit X 1 containing the entire revised list.
By this device the entire list appended to exhibit B 23 was incorporated into exhibit 24 notification, and the need for typing out all the names in exhibit B 24 was thus avoided.
exhibit B 26 dated 30.11.1984 (see pages 177 179 of exhibit X 1) is a notification issued by the Election Commission making certain amendments to its earlier notification dated 19.11.1984.
Serial No. 17 of exhibit B 26 (at page 178 of exhibit X 1) reads: "At section No. 13 against item No. 34 Nizamabad, the entry "13.
District Manager, A.P.S.C.S.C. Nizamabad" shall be substi tuted;" This shows that the amendment in respect of 34, Nizamabad Parliamentary Constituency made by exhibit B 26 by substituting entry 17 for the relevant entry in the revised list appended to exhibit B 23 was in affirmation of the incorporation of the entire revised list in exhibit B 24.
In the light of this evidence, there is no merit in the contention 847 that the revised list was not approved by the Secretary to the Election Commission and that the notification evidenced by exhibit B 24 did not relate to 34, Nizamabad Parliamentary Constituency.
As stated earlier, exhibit B 25 evidences the approval given by the Secretary to the Election Commission to the revised list proposed by the Chief Electoral Officer and the approval was duly notified and communicated by the Under Secretary to the Election Commission to the Chief Electoral Officer, Andhra Pradesh with a request to exhibit the notification on the notice boards of the offices of the concerned District Election Officers and Returning Officers.
In this connection, it may be noticed that Under Secre taries are duly authorised to authenticate all orders, notifications and Other instruments on behalf of the Elec tion Commission (see notification No. 226/5/58 of Gazette of India dated 5.4.
1958 appended to Volume I of Paper Book page 170).
In the circumstances, we see no merit in the contention of the election petitioner, the 1st respondent herein, that the concerned officers for the Parliamentary Constituency in question had not been duly appointed by the competent au thority and that they were, therefore, not authorised to perform the duties and functions of the Assistant Returning Officers.
These Officers were appointed by the Secretary to the Election Commission who is undoubtedly to a competent authority to make such appointments and his order appointing them had been duly notified to the Chief Electoral Officer by communicating the same by an officer who was competent to authenticate such orders.
The notification was directed to be exhibited on the notice boards of the concerned offices.
No statutory provision has been brought to our notice re quiring formal publication of such notification in an Offi cial Gazette.
Publication of the notification by exhibition on the notice boards was, in our view, sufficient notice to all persons concerned.
Accordingly, we hold that the High Court was not justi fied in setting aside the proceeding of counting of votes and the resultant declaration and in ordering a fresh count ing of votes in respect of the election from the Parliamen tary Constituency in question.
Consequently, we set aside the impugned order of the High Court insofar as it relates to the findings and directions regarding Issue No. 7.
The appeal is allowed in the above terms.
In the circumstances of this case, we make no order as to costs.
G.N. Appeal al lowed.
| IN-Abs | In the Lok Sabha elections held in 1984, the appellant was declared elected from the Nizamabad Parliamentary Constitu ency.
He .secured 2,51,172 votes, while Respondent No. 1 got 2,48,725 votes.
An election petition under Sections 80 and 81 of the Act was filed in the High Court, by the First Respondent; challenging the election of the appellant on grounds of illegalities and irregularities in the counting of votes, impersonation of voters and corrupt practices.
The High Court set aside the election only on one ground that is, the Additional Returning Officers in respect of the Nizamabad Parliament Constituency were not appointed and authorised by the Election Commission to perform the duties and functions of Returning Officers and every action taken by such officers, including the rejection of doubtful ballot papers, is absolutely illegal, void and forbidden by law.
The High Court gave directions to the Election Commission for recounting.
This appeal, by special leave, is against the High Court 's order setting aside the election.
On behalf of the appellant, it was contended that the officers were duly appointed and authorised by the Election Commission.
The First Respondent contended that the officers were not duly appointed by the Election Commission and that their purported exercise of power as Additional Assistant Returning Officers was without authority and in contraven tion of the relevant legal provisions.
Allowing the appeal, 841 HELD: 1.1.
Under Section 19A of the Act, the Secretary to the Election Commission is empowered to perform the functions of the Election Commission under the Constitution, relevant statutes and the rules.
The Secretary is, there fore, competent to approve the revised list containing the names of officers proposed by the Chief Electoral Officer.
[845H; 846A B] 1.2.
Under Secretaries are duly authorised to authenti cate all orders, notifications and other instruments on behalf of the Election Commission, as per the Gazette of India notification dated 5.4.1958.
[847C] 2.1.
In the instant case, the officers concerned were duly appointed by the competent authority, viz, Secretary, Election Commission, and were authorised to perform the duties and functions of Assistant Returning Officers for the Nizamabad Parliamentary Constituency.
The appointments were also duly notified to the Chief Electoral Officer, by commu nicating the same by an officer who was competent to authen ticate such orders.
[847E] 2.2 Publication of the notification by exhibition on the notice boards was, sufficient notice to all persons con cerned.
[847F] 3.
The High Court was not justified in setting aside the proceeding of counting of votes and the resultant declara tion and in ordering a fresh counting of votes in respect of the election from the Parliamentary Constituency in ques tion.
The order of the High Court in so far as it relates to the findings and directions in this regard is set aside.
[847G]
|
vil Appeal Nos.
1144 48 of 1987.
From the Judgment and Order dated 29.9.1986 of the Rajasthan High Court in D.B. Civil Special Appeal Nos.
3, 4, 5 of 1978 and 79 of 198 1 and 354 of 1984.
Dr. L.M. Singhvi, G.L. Sanghi, V.M. Tarkunde, Dalveer Bhandari, Ms. Rachna Joshi, K.N. Toshi, Lekh Rai Mehta, Gopal Singh, Sushil K. Jain and Sudharshan Atreya for the Appellants.
852 G. Ramaswamy, Additional Solicitor General P.S. Poti, Badridas Sharma, R.C. Maheshwari and Manoj Jain for the Respondents.
The Judgment of the Court was delivered by OZA, J.
These appeals have come to this Court against the judgment of the Division Bench of the High Court of Rajasthan dated 29.9.86 wherein the learned Judges disposed of the following appeals by the impugned judgment and against this after grant of leave these appeals are before us: (1) The State of Rajasthan and Anr.
vs Prajapati Grah Nirman Samiti Ltd., D.B. Civil Special Appeal No. 3 of 1978.
(2) The State of Rajasthan & Anr.
vs Adhunik Grah Nirman Samiti Limited, D.B. Civil Special Appeal No. 4 of 1978.
(3) The State of Rajasthan and Anr.
vs M/s.
Jai Marwar Company Pvt. Ltd., D.B. Civil Special Appeal No. 5 of 1978.
(4) Trustees of Major Maharaja Hari Singh Benefit of Defence Service Personnel Charitable Trust vs The State of Rajasthan and Others, D.B. Civil Special Appeal No. 79 of 1981.
(5) State of Rajasthan and another vs Maharaja Gaj Singh Ji, D.B. Civil Special Appeal No. 354 of 1984.
Initially the three writ petitions were filed before the High Court of Rajasthan by i) Prajapati Grah Nirman Samiti Limited, ii) Adhunik Grah Nirman Samiti Ltd. and iii) M/s. Jai Marwar Company Private Limited.
It was alleged that these three parties purchased respective areas of land for price by registered sale deeds two dated 4.11.71 and one dated 5.11.71 from Shri Gaj Singh, the erstwhile ruler of the Jodhpur State.
These lands form part of Khasra No. 42 1 in the revenue records.
There is yet another adjacent land which also was in dispute in other matters than these three which was Khasra No. 426.
Facts which are not in dispute are that after attainment of independence on 15th August, 1947 the rulers of the erstwhile princely States of Banswara, Bikaner, Bundi, Dungarpur, Jaipur, Jaisalmer, Jhalawar, Jodhpur, Kishangarh, Kota, Mewar, Partabgarh, Shahpura and Tonk entered into a Covenant with the Government of India 853 integrating these states into one.
Article 12 of the said Covenant provided for the private properties of the rulers of the Covenanting States.
In clause (1) of this article it was prescribed that the ruler of each of the Covenanting State shall be entitled to the full ownership, use and enjoyment of all private properties (as distinct from State properties), belonging to him on the date of his making over the administration of the State.
In accordance with the aforesaid clause in the Covenant, a list of private proper ties of the ruler of the former State of Jodhpur was pre pared and.it was approved by the Government of India on 24th March, 1949.
In the said list of private properties the immovable properties were divided into three categories.
Category 'A ' consists of properties which were to be regard ed as the family property of the Maharaja of Jodhpur and which will not be transferred.
Category 'B ' consists of properties which were to be regarded as family properties of Maharaja of Jodhpur but which will be disposable by him if he and his heir agree to do so.
Category 'C ' consists of property which is the absolute property of the Maharaja of Jodhpur with full rights of disposal.
In the case in hand we are only concerned with Category 'C ' property and in this category Umaid Bhawan Palace alongwith the area as per plan attached including the Chittar Tank and the Bijolai Tank and buildings was included.
Maharaja Hanwant Singh who was the signatory to the Covenant died in 1952 and after his death he was succeeded by his son Shir Gaj Singh who was minor at that time.
During the minority of Shri Gaj Singh an administrator was appoint ed for the purpose of administration of the estate of the minor Maharaja.
In 1964 the Rajasthan Legislative Assembly enacted the Act which received the ascent of the President of India on 6.4.1964 and was published in the Rajasthan Gazette dated 13.4.1964.
The Act was enacted to provide for the acquisi tion of the estates of landowners.
Under Section 7 of the Act a provision was made for issuing a notification by the State Government appointing a date for the vesting in the State Government of the estates or all landowners situated anywhere in Rajasthan.
In exercise of the powers under Section 7 a notification was issued on 11th August, 1964 which was published in the Rajasthan Gazette dated 13.8.1964 and by this notification the State Government appointed 1.9.1964 as the date of vesting of all the estates of land owners situated within the State.
Notice under Section 9A of the said Act were issued on 19.11.1975 to the petitioners by Collector, Jodhpur stating that trans 854 fers of the aforesaid lands are null and void and they shall deliver possession before 29.11.1975 or within 10 days of the receipt of the notice whichever is later, to the Sub Divisional Officer, Jodhpur.
It appears that one more notice dated 8.12.1975 was issued by the Sub Divisional Officer, Jodhpur by which he appears to have taken the possession of the aforesaid lands by affixing a notice as required by Rule 8 of the Rajasthan Land Reforms and Acquisition of Land Owners Estate Rules, 1964.
The petitioner 's case before the Court below was that this land is not liable to acquisition under the said Act and therefore they sought a direction that the said orders and notices be quashed.
It was contended before the Court below that in the definition of 'land ' as defined in Section 2F after sub clause (d) of this Act provide for properties which shall not be included in the definition of 'land ' and as this property fell within the ambit of that property which was excluded from the definition of 'land ' it was contended that it could not be acquired under the provisions of Sec. 7 of the Rajasthan Land Reforms and Acquisition of Land owners ' Estate Act.
The learned Judge Justice M.L. Jain, after examining the list of private properties and the material placed on record by both the parties came to the conclusion that these lands failing within Survey No. 421 which fell within the property included in the schedule of private properties in category 'C ' and therefore it being a private property included in the inventory prepared according to the Covenant, the acqui sition under the provisions of this Act was held to be bad.
The learned Judge on the basis of documents also came to the conclusion that on 1.9.64 which was the relevant date noti fied as the date of vesting this property was not agricul tural land and was also included in the private property of the ruler of Jodhpur shown within the boundary of the site plan of Umaid Bhawan Palace.
Consequently the learned Judge came to the conclusion that the transfer made by the ex ruler in favour of these petitioners was not bad.
The learned Judge considering the submissions came to the conclusion: "Now, Shri Gaj Singh is an Ex Ruler and therefore a landown er.
The Schedule I of the Inventory of his private proper ties also specified the properties which are his absolute property with full rights of disposal.
Item No. 1(a) relat ing to Jodhpur is as follows: 855 (a) Umaid Bhawan Palace as per.
plan attached including the Chittar Tank.
A plan was attached to the inventory which contains the heading "site plan of Umaid Bhawan Palace.
Private property of His Highness and Maharaja Sahib Sahadir, Jodhpur, is shown in the red.
" It is admitted that the land in dispute to which these writ petitions relate fails within the area bounded by the red line in the said site plan.
It is, there fore futile on the part of the State Government to contend that the land though covered by the site plan, is not part of the palace as specified in the inventory.
The State maintains that the Umaid Bhawan Palace has its own walled enclosure and further a long line of hills separates the land in dispute from the main palace.
The learned Dy.
Gov ernment Advocate urged that what the law excludes is the palace and not all the lands which are shown in the site plan.
The Word 'palace ' should be constructed only to in clude the area of the palace which is bounded by walls.
I do not see any force in this argument because the definition of land excludes the palace as specified in the inventory and the inventory specifies the area of the Umaid Bhawan Palace as per plan attached and the attached plan includes the land in dispute.
I am, therefore unable to give the word "palace" a restricted meaning as convassed by the learned Dy.
Govern ment Advocate.
That being so, the disputed land fails out side the estate and has consequently not vested in the State Government.
" The learned Judge after considering various documents which were filed and which were the records of the Government as regards the nature of the land as to whether it is agricul tural land or not came to the conclusion that: "The documents clearly demonstrate that the land in dispute is not an agricultural and rather it forms part of the Abadi land.
In the revenue records, Khasra Nos. are allotted not only to agricultural plot but they are also allotted to Banjar land and to Abadi land as well.
The copies of the Jamabandi and Girdwari filed by the State shows that the land is Padat and does not carry and land revenue.
It is, therefore, clear that the land in question being an Abadi land is not covered by the provisions of the Act.
It appears 856 as has been contended that the land in order that it vests in the State Government, should be an agricultural land.
The amended long title of the Act states that it is an Act to provide for the acquisition of the Estates of landowners and for other measures of agrarian reforms removal of intermedi aries allotment of land to landless person, development of agriculture.
If the acquired land is meant for allotment to agriculturist then the land must be an agricultural land as indicated above.
The land in question was not an agricultur al land and if at all it was so at any time in the past, it long ago ceased to be so at least as early as in 1948, when according to the private property settlement, it was includ ed in the Umaid Bhawan Palace premises.
" Trustees of Major Maharaja Hari Singh Benefit of Defence Service Personnel Charitable Trust also filed a petition before the Rajasthan High Court.
This pertains to Survey No. 426 and this came up for heating before Hon 'ble the Chief Justice of Rajasthan Shri K.D. Sharma who while considering the matter observed: "At the outset, I may observe that it is not disputed before me that Umaid Bhawan Palace situated in Jodhpur is the absolute property of Maharaja Gaj Singh of Jodhpur, who has full rights of disposal thereof.
This fact is borne out by the inventory marked Annexure 1 which was prepared and approved by the Government of India in pursuance of Article 12 of the Covenant entered into by late Maharaja Hanwant Singh with the Government of India at the time of accession of the former Jodhpur State to the Union of India.
It will not be out of place to mention that the term 'land ' defined in section 2 of the Act as amended by the amendment Act, 1975, does not include forts, palaces, buildings and build ing plots specified in the inventory.
Hence, Umaid Bhawan Palace of which Maharaja Gaj Singh is the absolute owner, does not fall within the purview of the definition of the word 'land ' given in the section 2 of the Act as amended upto date." In Misc.
Petition No. 1872/75 filed by Maharaja Shri Gai Singh came up for consideration before Hon 'ble the Chief Justice of Rajasthan Shri Justice Banerjee and by order dated 20.12.
1983 relying on the judgment passed by Justice M.L. Jain in the case of Prajapati 857 Grah Nirman Samiti Ltd. vs State of Rajasthan allowed the petition of Maharaja Gaj Singh and quashed the notices which were issued.
It is thereafter that the State Government in the mat ters decided by Justice M.L. Jain and by Justice Banerjee and the trust, in the case decided by Justice K.D. Sharma went up in appeal under Letters Patent and by the impugned judgment, the Division Bench disposed of all these appeals and hence these appeals have come before us after grant of leave.
Learned counsel for the appellants contended that this Act i.e. Rajasthan Land Reforms and Acquisition of Land owners Estate Act, 1963 was brought into force in 1964.
According to the definition of 'Estate ' it could refer to either land or right, title or interest in land held by landowner.
The land, according to the learned counsel, is defined in section 2 sub clause (f).
This definition is an inclusive definition and it first refers to land held for the purpose of agriculture.
Thereafter it has been further stated that it does not include forts, palaces, buildings, building plots specified in the inventory and the inventory has also been defined in Section 2 sub clause (g) which refers to the inventory of the private properties made in pursuance of the Covenant and finally approved by the Cen tral Government.
Learned Counsel for the appellants mainly raised two questions: i) that as these lands were not agri cultural lands they do not fall within the ambit of this definition of 'land '.
It was also contended that in any event as it fails within the boundaries of Umaid Bhawan Palace which is a property included in the inventory as the private property of the rulers of Jodhpur approved by the Government of India, this will not fall within the ambit of the definition of 'land ' in Section 2F.
Consequently it could not be said to be an estate as defined in Sec.
2b and as such by application of this Act this could not vest in the State Government and in this view it was contended that the judgment delivered by the Division Bench has omitted to decide this question and for no reason felt that let a reference under Section 12 be decided.
It was also contended that the Division Bench could not come to a different con clusion then one which was reached by Justice M.L. Jain and Hon 'ble Chief Justice Shri Banerjee.
Learned counsel appearing for the State of Rajasthan attempted to contended that this property falls within the boundary of the Umaid Bhawan Palace according to the site plan could not be conclusively held as an attempt was also made to suggest that the original plan should have been summoned from the Central Government but the 858 learned counsel could not explain the admissions made at the various stages in these proceedings about the plan which was filed in these petitions and also could not give any expla nation as to why when these proceedings have been going on since 1975, the State Government could not obtain an offi cial copy of the site plan from the Government of India and produce it before the High Court.
In fact the admission in the documents and affidavits filed before the High Court and the orders passed by the revenue authorities which have been at length dealt with by the learned counsel and relied upon by the High Court could not be explained by the learned counsel appearing for the State.
Similarly the question as to whether this land was agricultural or not also was dis puted by the learned counsel on the basis that the revenue record entry showed that this has been agricultural land although the record referred to by the counsel for the appellants also indicated that this area during the State times was included in the development plan of the Jodhpur town.
Counsel for parties frankly conceded that if the lands in dispute fail within the boundaries of the Umaid Bhawan Palace as shown in the site plan which was part of the inventory prepared at the time of the Covenant and approved by Government of India, it is clear that these lands will not fall within the definition of 'land ' as described in Sec.
2(g) and therefore it could not vest in the State nor it could be acquired under the provisions of this Act and in that event these appellants are entitled to hold their lands and the question whether the lands are agricultural or not is not very material.
Learned counsel for the respondent State distinguished the case of Naveen Grah Nirman Samiti on a different footing as they claimed to be the transferees from Jai Marwar Compa ny Private Limited and this transfer Was at a time when the transfer was prohibited and that question has not been gone into by the High Court as these petitioners have chosen to come to this Court when in fact they were not parties in the judgment before the High Court.
Learned counsel for the petitioner in the petition by Naveen Grah Nirman Samiti in view of the objections raised by learned counsel for the respondent State frankly conceded that this petition was not before the High Court and in view of this he submitted that he may be permitted to withdraw this petition.
Learned counsel for the respondent also raised an objec tion about the transfer of these lands in view of Section 3(2) of Rajasthan Urban Property (Restrictions of Transfers) Act, 1973.
Section 3(2) of 859 this Act provided that after the 16th day of August, 1971 if any person has transferred any urban property owned by such person such transfer shall be deemed to be a transfer made to defeat the provisions of this Act and the property so transferred shall for the purposes of this Act be deemed to be owned by such person.
On this basis it was contended that as the transfers have been effected by Maharaj Shri Gaj Singh after 16th August, 1971 they will be void whereas learned counsel for the appellants contended that this Act was enacted in contemplation of the Rajasthan Urban Property Ceiling Act which was to be enacted and it was for the purpose of that Act that Sec.
3(2) of this Act was enacted to restrict transfer of urban property but it did not de clare transfer to be void but said that in spite of the transfer the property will be deemed to be owned by such person i.e. transferor.
The idea was that while applying the law of ceiling the holder of the property may not defeat the provisions of that Act by these transfers and ultimately this Act was repealed and the repeal was by Rajasthan Urban Property (Restrictions of Transfers) Repeal Act, 1978 and that Act did not protect anyone of these provisions.
In fact this question was raised before the Division Bench and the learned Judges of the Division Bench in the impugned judg ment observed: "In view of the repeal of 1973 Act the cloud which has been cast on the title of the petitioners in the writ petitions giving rise to these.
appeals by section 3(2) of the 1973 Act, was removed, and, therefore, we are unable to accept the contention of the learned Government Advocate.
" It is apparent that this Section prohibiting transfers was enacted keeping in view the Act on ceiling in contemplation and that is why as indicated earlier Section 3(2) did not provide that the transfer will be invalid but it only pro vided that in spite of the transfer the property will be deemed to be owned by such person thereby meaning the trans feror so that when the ceiling Act is brought into force the transferor may not take advantage of the transfer to defeat the provisions of the Ceiling Act.
In fact after the Ceiling Act was brought into force a prohibition was again imposed on the transfer and admittedly the transfers with which we are concerned are not after that as it is clear that the Rajasthan Urban Property Ceiling Act, 1972 when was enacted provided by Section 5 of that Act that the transfers which were made after the commencement of the Act was declared null and void.
In fact the learned Judges of the Division Bench considered this aspect of the matter and negatived the contention advanced by the learned counsel for the respond ents in the words indicated above and in our opinion that conclusion could not be assailed.
860 As regards the question as to whether the lands in dispute i.e which fail within Khasra Nos. 421 and 426 fall within the purview of the definition of 'land ' as contained in Section 2F of the Act is concerned it is consistently held by the High Court that as the land fell within the exception of Section 2F it would not fail within the defini tion of 'land ' (Section 2(f) reads: "land" means and land held or let for purposes of agricul ture or for purposes ancilliary thereto including waste land, forest land, land for pasture or sites of buildings and other structures occupied by cultivators of land, agri cultural labourers and village artisans and includes (a) tanks, lakes, ponds, river and water channels held for purposes of irrigation.
(b) surface of hills, (c) landing grounds or strips, and (d) shikargah but does not include forts, palace buildings and building plots, specified in the inventory.
" The last part of this provisions "but does not include forts, palace buildings, building plots specified in the inventory" is the relevant portion of the definition which was considered by the Court below and is the question which deserves to be considered.
The Inventory has also been defined in Section 2(d) which means inventory of the private property of the ruler prepared in pursuance of Article 12 of the Convenant and finally approved by the Government of India.
In the High Court in all these petitions the plea raised was that the inventory of the private property of the ex ruler of the Jodhpur State Maharaj Shri Gaj Singh contained an item of property shown as Umaid Bhawan Place and the boundaries therein were indicated to be in red in the site plan attached alongwith it.
So far as the inventory and inclusion of this property in the .inventory of the private property is concerned it is not disputed even before us.
In the High Court the site plan and the properties included in the red boundary forming part of the property Umaid Bhawan Palace was also not disputed.
All the judgments in the High Court are based on this admission and appa 861 rently the affidavits filed on behalf of the State before the High Court clearly and categorically admitted this position and even went to the extent of saying that this was verified and found to be correct and the plan filed with the petition having a red boundary was admitted and therefore it was not disputed that Khasra Nos.
42 1 and 426 fell within the boundary of Umaid Bhawan Palace which in accordance with the definition of 'land ' quoted above will be excluded from the definition and what is excluded from the definition of 'land ' in Section 2F could not vest in the State in view of language of Section 7.
Section 7 reads: Acquisition of estates (1) As soon as may be after the commencement of this Act, the Government may for the purpose of carrying out agrarian reform in accordance with the provisions of this Act, by notification in the Official Gazette,appoint a date for the acquisition of landowner 's estates in the State and for their vesting in the State Government.
(2) The date appointed under this Section in relation to the acquisition of landowners ' estates in the State in this Act referred to as the date of vesting of such estates." This talks of the vesting of the estate and the estate itself has been defined in Sec.
2B which reads: "estate" means land or right, title or interest in land held by a landowner;" This clearly talks of land or right, title or interest in land held by landowner and land as already discussed above is defined in Section 2F it is therefore clear that if this property did not fall within the ambit of the definition of land it could not be said to be estate under Section 2B and therefore could not vest in the State under Section 7.
It was in this view that counsel for both the parties frankly conceded that if this falls within the exception to the definition of 'land ' provided in Section 2F the further question about the land being agricultural or not is of no consequence.
An attempt was made by the learned counsel during the course of arguments to suggest that it is no doubt true that all through the State Government and on behalf of the State Government the affidavits that were filed in the High Court this was admitted that these lands in 862 dispute fell within the red boundary of the site plan and the site plan is the site plan of the Umaid Bhawan Palace which is included in the inventory of the private property of the ruler finally approved by the Government of India.
It is also not seriously disputed that there are orders passed by some revenue officers in respect of these matters where it has been held that these lands fell within the red bound ary which is the correct boundary of Umaid Bhawan Palace in the inventory approved by the Government of India as the private properties of the ex ruler.
Only an attempt was made by Additional Solicitor General who appeared for the State to suggest that the Central Government alone may have the original and therefore wanted this Court to summon the original but learned counsel had no explanation why this could not be done in all these years to which he had no answer and therefore it is plain that so far as these facts are concerned the State could not now be permitted to raise any objection in respect of the site plan and the boundary in red of Umaid Bhawan Palace.
After the hearing was concluded an attempt has been made on behalf of the State and certain papers have been filed which pertains to some returns filed in connection with the assessment in respect of the building Umaid Bhawan Palace which has been described as Hotel Marudhar and on that basis probably a suggestion is made that in this the ex ruler has submitted a plan for assessment of the property tax wherein he has not showed this part of the property which is the subject matter of the dispute.
Apparently these papers pertain to some proceedings of assessment of property per taining to Marudhar Hotel with which we are not concerned and on that basis it could not be said that what has been admitted all through as the boundary of the Umaid Bhawan Palace is not correct.
No reliance could be placed on these additional papers.
Before the High Court in Writ Petition No. 1924/75 Additional Collector Jodhpur who is also described as the Officer Incharge of the case has filed a counter in return and in this it is stated: That the Photostat copy and the true copy of the Covenant and the site plan submitted by the petitioner alongwith the aforesaid application have been got verified to be the true and exact copies of the original covenant and the plan attached with the inventory of the private properties of the Ex ruler of Jodhpur.
The duly verified copy of the plan is being submitted for your perusal.
" 863 and the same reply filed by the said Additional Collector has been verified on affidavit by the same officer who in his affidavit states: "That the photostat copy of the convenant as also the true copy of the plan referred in the Schedule of the inventory of the private properties of Ex ruler.
Ex ruler Jodhpur supplied to the respondents have been got verified from the Chief Engineer P.W.D. B & R Rajasthan, Jaipur and the office of the General Administration Department, Rajasthan, Secre tariat, Jaipur.
" In view of these circumstances therefore so far as the land in dispute i.e. Khasra Nos. 421 and 426 is concerned the admission made by the State and which was also clear from various documents which have been considered by the High Court in their judgments in these petitions clearly show that these lands were within the boundaries of the Umaid Bhawan Palace which is the private property in accordance with the inventory preparted and approved by Government of India and therefore which will not fall within the ambit of the definition of the 'land ' as defined in Section 2F and thus will not fall within the ambit of the 'estate ' which could vest under the provisions of this Section and in this view of the matter even without going into the the question about whether land being agricultural or not the view taken by Justice M.L. Jain is the only view which could be sus tained.
Even as regards the question as to whether this land is agricultural or not it will be relevant to note.
Learned counsel for the State has relied on some Khasra, Girdwari and Jamabandi of Sam vat 2030to 2032 relating to Khasra No. 421.
It is described as Padat and it is contended that this land will be agricultural land as it also includes waste land.
Even on the basis of the record on which reliance is placed by the learned counsel for the State that no land revenue is assessed on this land.
On the contrary counsel for the appellant referred to a notification published in the Jodhpur Government Gazette dated February 10, 1934 and this notification states that the Development Department shall have control over the disposal of land for building sites and the building regulation shall operate over the area within a radius of three miles from the Sojati Gate and it is not disputed that these lands fell within three miles radius from Sojati Gate.
Learned counsel also referred to a letter written to Urban Improvement Trust.
The Settlement Officer is alleged to have stated that the plan was careful ly perused, checked and tallied with the corresponding old settlement record of Samvat 1979 together with the site plan of Umaid 864 Bhawan Palace which indicates the private property of His Highness the Maharaja Sahib Bahadur Jodhpur duly verified on 12.11.1958 by the then Deputy Secretary, G.A.D. and the Commissioner, Jodhpur Division, Jodhpur wherein the said land is included in the premises of Umaid Bhawan Palace.
The Settlement Officer further added that the fact that this land had never been assessed to rents, that it never has been cultivated and that it is included within the Umaid Bhawan Palace is sufficient to show that it is "abadi land" within the meaning and definition under Section 158 of the Rajasthan Land Revenue Act, 1956.
The view expressed by the Government that this land does not appear to be agricultural land is fully established and it was on the basis of these documents that the learned Judge Shri M.L. Jain came to the conclusion that: "The documents clearly demonstrate that the land in dispute is not an agricultural and rather it forms part of the Abadi land.
In the revenue records, Khasra Nos. are allotted not only to agricultural plot but they are also allotted to Banjar land and to Abadi land as well.
The copies of the Jamabandi and Girdwari filed by the State shows that the land is Padat and does not carry any land revenue.
It is, therefore, clear that the land in question being an Abadi land is not covered by the provisions of the Act.
" It is clear that the contention raised by the learned coun sel for the respondent that this land is an agricultural land also cannot be accepted and in view of our conclusions reached above it is clear that the view taken by learned Judge Shit M.L. Jain is the only view which could be taken.
Consequently the appeals filed by the appellants including Prajapati Grah Nirman Sahakari Samiti Ltd. vs State of Rajasthan & Ors. are allowed.
The judgment passed by the Division Bench of High Court of Rajasthan in the appeals is set aside and it is held that no action under the provisions of Rajasthan Land Reforms and Acquisition of Landowners ' Estate Act, 1963 could be taken against the appellants and all notices or actions taken are hereby quashed.
The appel lants shall be entitled to costs of these appeals.
Costs quantified at Rs. 10,000.
So far as Civil Appeal No. 1145/87 Naveen Grah Nirman Sahkari Samiti Ltd. vs State of Rajasthan is concerned we see no reason not to permit him to withdraw.
The petition and appeal is therefore permitted to be withdrawn.
N.V.K. Appeals allowed.
| IN-Abs | After attainment of Independence, the rulers of the erstwhile princely States of Rajasthan entered into a Cove nant with the Government of India for integrating their States into one.
Article 12 of the said Covenant provided for the private properties of the rulers of the Covenanting States, and clause (i) thereof prescribed that the ruler of each of the Covenanting States; shall be entitled to full ownership, use and enjoyment of all private properties.
The immovable properties of the rulers were divided into three categories, Category 'A ', 'B ' and 'C '.
The Maharaja of Jodhpur was one such ruler who integrat ed his State in the Union.
Category 'C ' of the Covenant listed the properties of the Maharaja as his absolute property over which he had full rights of disposal, and the property known as 'Umaid Bhavan Palace ' was included in this category.
The Maharaja who was the signatory to the Covenant died in 1952, and after his death he was succeeded by his son who was a minor at that time.
Because the successor was a minor an administrator was appointed for the purpose of adminis tration of the estate.
In 1964, the Rajasthan Legislative Assembly enacted the Rajasthan Land Reforms and Acquisition of Land Owners Estate Act, 1963 which received the assent of the President on 6th April, 1964.
The Act was enacted to provide for the acquisi tion of the estates of land owners.
Section 7 thereof pro vided for the issuance of a Notification by the State Gov ernment appointing a date for the vesting in the State Government 849 of the estates of all land owners situated anywhere in the State.
Exercising powers under the aforesaid section, a Notification was issued on 11th August, 1964 by which the State Government appointed 1st September, 1964 as the date of vesting of all the estates of land owners.
The three petitioners in the writ petitions were parties who had purchased respective areas of land for price by registered sale deeds, two dated 4.11.71 and one dated 5.11.71 from the erstwhile ruler of Jodhpur state.
Notices under section 9A of the Act were issued on 19.11.1975 to these parties by the Collector stating that the transfers of the lands were null and void and they shall deliver possession before 28th September, 1975 or within 10 days of the receipt of the notice whichever is later to the Sub Divisional Officer.
This was followed by another notice on 8th December, 1975 by which possession of the lands were taken by affixing a notice as required by Rule 8 of the Rajasthan Land Reforms and Acquisition of Land Owners ' Estate Rules 1964.
The petitioners contended in the courts below that their land was not liable to acquisition under the Act and sought a direction that the orders and notices be quashed.
It was contended that in the definition of 'land ' as defined in section 2F, provide for properties which shall not be in cluded within the definition of 'land ' and as the property in the instant case was excluded from the definition of 'land ' the properties of the petitioners could not be ac quired under section 7 of the Land Reforms Act.
A Single Judge of the High Court on an examination of the list of Category 'C ' to the Covenant, and the material on the record came to the conclusion that the lands fell within the property included in the Schedule of private properties in Category 'C ' and therefore it being a private property included in the Inventory according to the Covenant the acquisition under the provision of the Act was bad.
It was further held that the transfer made by the ex ruler in favour of the petitioners was not bad.
The trustees of the Major Maharaja Hari Singh Benefit of Defence Service Personnel and Charitable Trust, the appel lants in one of the appeals also filed a Writ petition which came up before the High Court.
The High Court relying on its earlier decision allowed the petition and quashed the noti fication.
850 Letters Patent Appeals were filed by the State Govern ment and the Trust and the Division Bench disposed of all the appeals and came to a different conclusion than the Single Judge 's who decided the writ petitions.
The Division Bench held that the repeal of the Rajasthan Urban Property (Restrictions of Transfers) Act, 1973 by the Rajasthan Urban Property (Restrictions of Transfers) Repeal Act, 1978, the cloud that had been cast on the title of the purchases had been removed.
In the appeals to this Court, it was contended on behalf of the appellants that the Rajasthan Land Reforms and Acqui sition of Land Owners ' Estate Act, 1963 was brought into force in 1964 and that according to the definition of 'e state ', in section 2B it could refer to either land or right, title or interest in land held by a land owner, and 'land ' was defined in section 2F which was an inclusive definition, and that it first refers to land held for the purpose of agriculture and that the lands in the instant case, were not agricultural lands they do not fail within the ambit of the definition of 'land '.
It was also contended that the Division Bench could not come to a different con clusion than that which was reached by the Single Judge.
On behalf of the State, it was contended that the suit property fails within the boundary of the Umaid Bhavan Palace according to the site plan and that it could not be conclusively held that the properties were not agricultural lands.
Allowing the appeals, and setting aside the judgment passed by the Division Bench of the High Court, this Court, HELD: 1.
No action under the provisions of the Rajasthan Land Reforms and Acquisition of Land Owners Estate Act, 1963 could be taken against the appellant and all notices or actions taken are thus quashed.
[864F G] 2.
It is clear that the lands in the instant case will not fall within the definition of 'land ' as described in sec.
2(g) and therefore it could not vest in the State not it would be acquired under the provisions of the Act and in that event these appellants are entitled to hold their lands and the question whether the lands are agricultural or not is not very material.
[858D E] 3.
Section 2B clearly talks of land or right, title or interest in land held by land owner and land is defined in Section 2F.
It is therefore 851 clear that if this property did not fail within the ambit of the definition of 'land ' it could not be said to be 'estate ' under Section 2B and therefore could not vest in the State under Section 7.
[861F] 4.
The lands were within the boundaries of the Umaid Bhavan Palace which is the private property in accordance with the inventory prepared and approved by Government of India, and therefore will not fail within the ambit of the definition of 'land ' as defined in Section 2F and thus will not fail within the ambit of the 'estate ' which could vest under the provisions of this Section.
[863D] 5.
Section 3(2) of the Rajasthan Urban Property (Re strictions of Transfers) Act, 1973 was enacted keeping in view the Rajasthan Urban Property Ceiling Act.
Section 3(2) did not provide that the transfer will be invalid but it only provided that in spite of the transfer the property will be deemed to be owned by such person thereby meaning the transferor so that when the Ceiling Act is brought into force the transferor may not take advantage of the transfer to defeat the provisions of the Ceiling Act.
[859C] 6.
In fact, after the Ceiling Act was brought into force a prohibition was again imposed on the transfer and admit tedly the transfers in the instant case are not after the Rajasthan Urban Property Ceiling Act 1972 which provided by section 5 that the transfers made after the commencement of the Act was null and void.
It could not, therefore, be said that the transfers in the instant case after August 16, 1971 were void.
[859G] (C.A. No. 1145/87 Naveen Grah Nirman Sahkari Samiti Ltd. vs State of Rajasthan was permitted to be withdrawn, as the appellants had chosen to come to this Court when in fact they were not parties in the judgment before the High Court.).
[864G H]
|
vil Appeal No. 1945 and 1946 of 1989.
From the Judgment and Order dated 11.12.1984 of the Punjab and Haryana High Court in C.R. No. 1794 and 1795 of 1985.
Dr. L.M. Singhvi and Y.P. Rao for the Appellant.
G.L. Sanghi, J.P. Gupta and S.K. Agarwal for the Respondent.
The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J.
Special leave granted.
882 This appeal arises from the decision of the High Court of Punjab & Haryana, dated 11th December, 1984 dismissing the Civil Revision filed by the appellant.
It appears that there was a contract entered into by the parties on or about 15th May, 1979 which provided that the appellant would give to the respondent paddy to convert these into rice after lifting paddy from the godown of the appellant.
There was an agreement between ' the parties for shelling of paddy into rice, after lifting the paddy from the godown of the appel lant, at the rate of 70% of the paddy.
The shelling charge was Rs.2.20 per quintal.
The learned Subordinate Judge, First Class, directed on or about 17th March, 1980 appoint ment of an arbitrator on an application by the respondent.
On 22nd January, 1982, the arbitrator gave his award.
The arbitrator did not allow the claims of the appellant as claimed as per the terms of the agreement.
The arbitrator allowed certain claims.
It is necessary, in view of the contentions that have been raised, to refer to the award of the arbitrator.
After setting out the history the arbitrator dealt with the various contentions.
It is not necessary to refer to all the contentions and points urged before the arbitrator and upon which he has made his award.
It is sufficient if the relevant portions are dealt with.
The arbitrator, inter alia, dealt with a claim of Rs. 55,060.29 which had claimed as penalty at Rs.2 per qtl.
for not lift ing the balance of the paddy weighing 2765 3093 mts.
The arbitrator noted that he had held that there was justifica tion for the millers, millers being respondent herein, not to lift the paddy.
Assuming, however, the arbitrator noted, that if it was decided that the millers were at fault in not lifting this paddy, the arbitrator expressed the opinion that the appellant could not recover the amount claimed by way of penalty.
He expressed the view that in order to enable the appellant to claim the amount, it had to be shown that the actual losses were suffered by the Corporation.
Otherwise, it could not be claimed as pre estimated damages.
Otherwise, it would only be penalty which could not be recovered.
No evidence had been led for how many days the bags of the paddy remained in the godowns of the Corpora tion, the arbitrator noted, and what losses were incurred for getting it shelled from other quarters.
The arbitrator referred to the affidavit of one Mr. M.S. Rawat, Asstt.
Manager, that the Corporation had to get the unlifted paddy shelled by transporting to other centre as well as getting the same shelled at heavy additional expenditure.
The arbi trator noted that there was not an iota of evidence on that point.
So no actual losses stated to have been suffered by the Corporation and no proof thereof was there.
The arbitra tor further noted that an amount by way of penalty could be permitted if some losses were proved.
He, accordingly, dismissed the claim of the appellant for Rs. 55,090.19.
883 The next claim dealt with by the arbitrator was the claim of Rs.3,23,856.08 claimed by the Corporation as the cost of non delivery of 137 39549 tonnes of rice at the rate of Rs. 165 per qtl.
of paddy.
The claim of the appellant was based on the basis that the appellant had converted the undelivered rice into paddy by multiplying it with 100/70 and it came to 123,87.11 tonnes.
The arbitrator dealt with this question as follows: "At the rate of Rs. 165 per qtl.
its price works at Rs.3,23,856.08.
According to provi sions of clause g(i) of the Contract, in the event of failure to supply rice within pre scribed specification, the millers are liable to pay to the Corporation for the quantities of rice short supplied at the penal rate of 11/2 times the economic cost of the concerned variety of the paddy equivalent to the short ages.
In the contract no definition of 'Eco nomic Cost ' is furnished nor is the expression any where defined in any law.
However, Shri Pritam Singh in the statement attached to the affidavit work it out at Rs. 110 per qtl.
The procurement price of paddy is Rs.85 per qtl.
as shown therein.
He has added to it market fee and other charges including cost of gunny Rs.2 and interest charges at Re. 1.
Under the above clause of the contract, the Corporation has added 50% penalty and thus has claimed the price at Rs. 165 per qtl.
I do not think that the Corporation is enti tled to such a fantastic rate particularly when the expression 'economic rate ' has not been defined.
Even if the statement of Shri Pritam Singh is accepted the maximum price of the rice at that time should be Rs. 100 per qtl.
exclusive of gunny bag and interest charges to which in my opinion the Corporation is not entitled.
The market rate did not exceed that amount at that time.
So the calcu lated at this rate the price of the undeliv ered rice will come to Rs.1,96,277.00.
to which the Corporation is entitled.
I may add here that the above amount has been allowed to the Corporation besides from the evidence on the record I believe that the rice was short delivered.
When the paddy had been accepted by the millers unconditionally and without any reservation, they were bound to give to the Corporation 70% of the yield.
As they did not do it, so they are liable to pay the price of the undelivered rice.
884 I have already stated above that the rice after shelling to be , delivered to the Corpo ration under clause g(i)of the contract had to conform to the specification laid down by the Punjab Government under the Punjab Rice Pro curement Price Control Order, 1968 issued on the 22nd October, 1968, as amended from time to time.
The Corporation states that the rice accepted by them was done subject to the quality rice which was permissible under clause g(ii) of the contract.
This has been duly proved from the evidence placed on the record by the Corporation.
Even Shri Anil Kumar, a partner of the millers firm admitted that they received an analysis report in respect of the rice which was accepted by the Corporation to continue that the Corporation was mentioned and that they did not appeal against the cut, though there was a provision in the said order to do so.
It, therefore, means that the quality cut was admitted to have been correctly assessed under the said Punjab Rice Order and to that the millers submitted.
This item is, therefore, allowed.
" The respondent filed an application under section 14 of the Arbitration Act, 1948 (hereinafter referred to as 'the Act ') for filing of the award and prayed for making the award the rule of the court.
The appellant on 25th May, 1982 filed objections under sections 30 and 33 of the Act.
The learned Subordinate Judge, First ClasS, on 2nd December, 1982 found that the award was liable to be set aside and modified the award and passed a decree in favour of the appellant for the amount.
On 2nd March, 1984, the Additional District Judge allowed the appeal by respondent and reversed the Subordinate Judge 's order.
Aggrieved thereby, the appellant went in revision before the High Court.
The High Court on 11th December, 1984 dis missed the revision petition.
Aggrieved thereby, the appel lant has come up before this Court.
It is, therefore, neces sary to decide whether the High Court was right.
As mentioned hereinbefore, the learned Subordinate Judge had modified the award and passed a decree in favour of the appellant for the amount.
The learned Additional District Judge, however, allowed the appeal of the respondent and reversed the decision of the learned Subordinate Judge.
The High Court did not interfere with that decision because the High Court did not find any ground to interfere.
The 885 question therefore is, whether the learned Additional Dis trict Judge in the first appeal was right in holding that the award was not liable to be corrected in the manner done by the learned Subordinate Judge.
The jurisdiction to inter fere by the Court of law of an award made by the arbitrator chosen by the parties is circumscribed.
In India, there is a long history of arbitration.
Arbitration is a mode of set tlement of disputes evolved by the society for adjudication and settlement of the disputes and the differences between the parties apart from the courts of law.
Arbitration has a tradition; it has a purpose.
Arbitration, that is a refer ence of any particular dispute by consent of the parties to one or more persons chosen by the parties with or without an umpire and an award enforceable by the sovereign power were generally unknown to ancient India.
Hindus recognised deci sions of Panchayats or bodies consisting of wealthy, influ ential and elderly men of the Community and entrusted them with the power of management of their religions and social functions.
The sanction against disobedience to their deci sion was excommunication, or ostracism and exclusion from all religions and social functions of the community.
An agreement to abide by the decision of a Panchayat and its decision with regard to the line of boundary was held not to be conclusive, since a reference to arbitration and award properly so called did not exist.
See the observations in Mukkudduns of Kimkunwady vs Inamdar Brahmins of Soorpai, See also Bachawat 's Law of Arbitration at page 1.
When power came to the East India Company, they framed Regulations in exercise of the power vested in them by the British Government Some of these Regulations were touching arbitration.
Bachawat gives description of the evolution of the .
Therefore, arbitration as a mode for settlement of disputes between the parties, has a tradi tion in India.
It has a social purpose to fulfil today.
It has great urgency today when there has been an explosion of litigations in the courts of law established by the sover eign power.
New rights created, or awareness of these rights, the erosion of faith in the intrinsic sense of fairness of men, intolerant and uncompromising attitudes are all the factors which block our courts.
The courts are full of litigations, which are pending for long time.
Therefore, it should be the endeavour of those who are interested in the administration of justice to help settlement by arbitra tion, if possible.
It has also a social efficacy being the decision by the consent of the parties.
It has greater scope of acceptance today when there is a certain erosion of faith in view of the failure to appreciating the functions of the courts of law.
It has also the advantage of not only quick ness of decision but of simplicity of procedure.
But in proceedings of arbitra 886 lion there must be adherence to justice, equity, law and fair play in actions.
However, the proceedings of arbitra tion must adhere to the principles of natural justice and must be in consonance with such practice and procedure which will lead to a proper resolution of the dispute and create confidence of the people for whose benefit these processes are resorted to.
It is, therefore, the function of courts of law to oversee that the arbitrators act within the norms of justice.
Once they do so and the award is clear, just and fair, the courts should, as far as possible, give effect to the award of the parties and make the parties compel to adhere to and obey the decision of their chosen adjudicator.
It is in this perspective that one should view the scope and limit of correction by the court of an award made by the arbitrator.
We should make the law of arbitration simple, less technical and more responsible to the actual realities of the situation, but must be responsive to the cannons of justice and fair play and make the arbitrator adhere to such process and norms which will create confidence, not only by doing justice between the parties, but by creating a sense that justice appears to have been done.
Sections 30 and 33 of the Act provide for the grounds on which an award of the arbitrator can be set aside.
These were mainly, until recent changes made by statutory laws in England, in consonance with the English principles of Common Law as adopted in India.
So far as the material of the present purpose is concerned, an award of the arbitrator can only be interfered with or set aside or modified within the four corners of the procedure provided by the Act.
It is necessary to find whether the arbitrator has misconducted himself or the proceedings legally in the sense whether the arbitrator has gone contrary to the terms of reference between the parties or whether the arbitrator has committed any error of law apparent on the face of the award.
It is necessary to empha sise that these are grounds for setting aside the award but these are separate and distinct grounds.
Halsbury 's Laws of England, Vol.
2 4th Edn., para 623 reiterates that an arbi trator 's award may be set aside for error of law appearing on the face of it.
Though this jurisdiction is not to be lightly exercised.
The award can also be set aside if, inter alia, the arbitrator has misconducted himself or the pro ceedings.
It is difficult to give an exhaustive definition what may amount to a misconduct on the part of the arbitra tor.
This is discussed in Halsbury 's Laws of England (supra).
It is not misconduct on the part of an arbitrator to come to an erroneous decision, whether his error is one of fact or law, and whether or not his findings of fact are supported by evidence.
See the observations of Russell on Arbitration, 20th Edn., page 422.
In the instant case, the arbitrator has chosen to make a speaking 887 award, that is to say, he has given reasons for his conclu sion.
Whether he is obliged to give such reasons or not is another matter but since the arbitrator has chosen to give the reasons, unless it is demonstrated to this Court that such reasons are erroneous as such as propositions of law or a view which the arbitrator has taken is a view which it could not possibly be sustained on any view of the matter, then the challenge to the award of the arbitrator cannot be sustained.
As has been emphasised in M/s Sudarsan Trading Co. vs The Government of Kerala & Anr., [1989] 1 Jt.
Today SC 339 that an award could be set aside if the arbitrator has misconducted himself or the proceedings or has proceeded beyond jurisdiction.
It could also be set aside where there are errors apparent on the face of the award.
But these are separate and distinct grounds.
In case of errors apparent on the face of the award, it can only be set aside if in the award there is any proposition of law which is apparent on the face of the award, namely, in the award itself or any document incorporated in the award.
See the observations of the Judicial Committee in Champsey Bhara & Co. vs Jivraj Balloo Spinning & Weaving Co. Ltd., L 1922 IA 324.
Dr. L.M. Singhvi, learned counsel for the appellant, urged before us that the arbitrator was wrong in not award ing 50% of the added penalty as claimed by the appellant, as mentioned hereinabove.
The appellant had claimed the price of Rs. 165 per qtl.
The arbitrator was of the view that the expression 'Economic Rate ' had not been defined.
It is true that the expression 'Economic Rate ' has not been used, but the expression 'Economic Cost ' has been used.
The arbitrator has noted that the market rate did not exceed that amount at the time.
The amount of Rs. 100 per qtl.
is mentioned of such a rate as the arbitrator had noted, could only be pre estimated damages but this was not so according to the arbitrator.
The arbitrator had construed the effect of clause g(i) of the contract as mentioned hereinbefore.
It cannot be said that such a construction is a construction which is not conceivable or possible.
If that is the position assuming even for the argument that there was some mistake in the construction, such a mistake is not amenable to be connected in respect of the award by the court.
This was a fair order after considering all the records.
The conclusion arrived at by the arbitrator is a plausible conclusion.
The court has, in our opinion, no jurisdiction to interfere or modify the award in the manner sought for by the appellant and in the manner done by the learned Subordinate Judge in the first instance in this case.
In that view of the matter, the learned Additional District Judge was justified in correcting the 888 order of the learned Subordinate Judge and the High Court was also justified in not interfering with the order of the Additional District Judge.
The award on the aspects can vassed before us by Dr. L.M. Singhvi is a plausible con struction of clause g(i) of the contract.
It cannot, in our opinion, be interfered with either on the ground that there was error apparent on the face of the award or on the ground that the arbitrator has misconducted himself in not giving the effect to the penal rate as contemplated under clause g(i) of the contract referred to hereinbefore in the award.
Dr. Singhvi sought to urge that as per the terms of the contract the arbitrator was obliged to award penal rate in terms of clause g(i) of the contract.
The arbitrator has apparently not done so.
He has given reason why he has not done so.
It was submitted that he was wrong in not doing so.
We do not agree.
The arbitrator has discussed the effect of clause g(i).
He has noted that unless there was evidence about which incidentally there was none, this amount could not be treated as a pre estimate of damage.
If that be so then it was penalty.
It was not recoverable.
Reasons may not be apparent, latent was there.
Dr. Singhvi 's objection therefore cannot be accepted.
Dr. Singhvi drew our attention to the observations of this Court in M/s Sudersan Trading Co., (supra) at page 352 of the report where it was stated that if it was apparent from the award that a legal proposition which formed its basis was erroneous, the award was liable to be set aside.
Dr. Singhvi sought to urge that when the arbitrator observed that "Corporation is not entitled to recover such a claim particularly when the 'Economic Rate ' has not been defined", this, according to the statement of Dr. Singhvi, the arbi trator was mistaking the law, such a mistake of law is apparent on the face if it.
It has to be borne in mind, however, that wrong statement or conclusion of law, assuming even that it was a wrong statement of law, was not wrong statement of the proposition of law which was the basis for decision in this award.
Error of law as such is not to be presumed, if there is legal proposition which is the basis of the award and which is erroneous as observed in Champsey Bhara & Co, (supra), then only the award can be set aside.
There was no proposition of law; there was a legal deduction of law arrived at to say that the provisions of clause g(i) of the contract would be penal rate and such penal rate cannot be sustainable without evidence of the damages suf fered to that extent.
We are of the opinion that the arbi trator had taken a view which is plausible view.
Beyond this, the court has nothing to examine.
It is not necessary for a court to examine the merits of the award with refer ence to the materials produced before the arbitrator.
The Court cannot sit in appeal over the 889 views of the arbitrator by re examining and re assessing the materials.
See the observations of this Court in Puri Con struction Pvt. Ltd. vs Union of India, In the aforesaid view of the matter, it appears to us that the learned Additional District Judge was right in the view it took and the High Court, therefore, was justified in dismissing the revision.
The appeal, therefore, fails and is accordingly dismissed.
No order as to costs.
Special leave granted.
In view of the fact that the facts of this appeal are more or less identical to the Appeal arising out of S.L.P. (C) No. 3392 of 1985, this appeal is also dismissed.
No order as to costs.
Y.L. Appeals dis missed.
| IN-Abs | The Respondent entered into a contract with the appel lant Food Corporation of India on or about May 1979 whereun der the appellantCorporation was to give to the Respondent Paddy for being shelled/ converted into rice at the rate of 70% of the Paddy.
The Paddy was to be lifted from the go downs of the appellant.
The shelling charge was fixed at Rs.2/20 p. per quintal.
Some dispute having arisen between the parties, the Respondent moved an application before the Subordinate Judge for appointment of an arbitrator and the Sub Judge appointed the arbitrator who gave his award on 22nd January 1982.
In the award the arbitrator did not allow some of the claims made by the appellant, in particular, a claim of Rs.55,060/29 p which was claimed as a penalty Rs.2 per quintal for not lifting the balance of Paddy.
The arbitrator in disallowing the claim on that count, took the view that the appellant has to prove the actual losses suffered by it which the appellant failed to prove.
Another claim not allowed by the arbitrator related to Rs.3,23,856/08.
p. in respect of the cost of non delivery of 137 39548 tonnes of rice @ Rs. 165 per quintal.
The Respondent made an application section 14 of the Arbi tration Act, 1940 to make the award a rule of the Court.
The appellant filed the objections u/s 30 and 33 of the Act.
The Subordinate Judge, First Class, on 2nd December, 1982, found that the award was liable to be set aside and accordingly modified the award and passed a decree in favour of the appellant for the amount.
On 2nd March, 1984, the Addl.
Distt.
Judge, on appeal by the Respondent, reversed the order passed by the Subordinate Judge.
He held that the award was not liable to be corrected/interfered with in the manner done by the Sub Judge.
Aggrieved by the said order the appellant went in revision to the High Court.
The High Court on 11.12.84 dismissed the revision petition.
Hence this appeal by the appellant Corporation.
881 Dismissing the appeal, this Court, HELD: That the arbitrator has chosen to make a speaking award in the instant case, that is he has given reasons for his conclusions.
Since the arbitrator has chosen to give reasons, unless it is demonstrated to this Court that such reasons are erroneous as such as propositions of law or a view which the arbitrator has taken is a view which it could not possibly be sustained in any view of the matter, then the challenge to the award of the arbitrator cannot be sustained.
[886H; 887A B] Even assuming that there was some mistake, such a mis take is not amenable to be corrected in respect of the award by the Court.
This was a fair order passed after considering all the records.
The conclusion arrived at by the arbitrator is a plausible conclusion.
The Court has no jurisdiction to interfere or modify the award in the manner sought for by the appellant.
[887G H] The Addl.
Distt.
Judge was justified in correcting the order of the Subordinate Judge and the High Court was also justified in not interfering with the order of the Addl.
Distt.
Judge.
[887H; 888A] Mukkudduns of Kimkunwady vs Inamdar Brahmins of Soorpai, ; M/s. Sudarsan Trading Co. vs The Government of Kerala & Anr., [1989] 1 Jt.
Today SC 339; Champsey Bhara & Co. vs Jivraj Balloo Spinning & Weaving Co. Ltd., L 1922 IA 324, followed.
Puri Construction Pvt. Ltd. vs Union of India, , referred to.
|
Appeal No. 76 of 1958.
Appeal by special leave from the judgment and order dated September 26, 1957, of the Election Tribunal, Dharwar, in Election Petition No. 52 of 1957.
G. section Pathak, H. J. Umrigar and G. C. Mathur, for the appellant.
P. Ram Reddy, for respondent No. 1.
G. section Pathak and section, section Shukla, for the interveners.
April 22.
The Judgment of the Court was delivered by BHAGWATI J.
This is the 4th of the series of Civil Appeals before us arising out of election petitions and involving the interpretation of the relevant sections of the Representation of the People Act, 1951 (hereinafter referred to as " the Act ").
The decision of this appeal turns on the construction of section 97 'of the Act and also on the jurisdiction of the Election Tribunals to allow withdrawal or abandonment of part of the claims before them.
The appellant and respondents 1 to 3 were the contesting candidates for election to the Mysore Legislative Assembly from the Dharwar Constituency in the last General Elections.
The appellant was the Congress candidate and the first respondent was the candidate of the Lok Sevak Sangh party.
The result of the election was declared on March 3, 1957, and the appellant was declared elected by a majority of 1,727 votes.
On April 14, 1957, the first respondent pre sented to the Election Commission a Petition, being Election Petition No. 52 of 1957 under section 80 of the Act wherein besides claiming a declaration that the election of the appellant was void he claimed a further declaration that he, the first respondent, had been duly elected as he had secured the next highest number of valid votes.
The Election Petition was published in 613 the official gazette and was then referred to the Election Tribunal for trial. 'The appellant and the respondents Nos. 2 and 3 received a notice from the Election Commission requiring them to appear before the Tribunal on or before July 20, 1957.
On the said date, the first respondent submitted before the Election Tribunal what purported to be an application under 0. 23, r. 1, of the Code of Civil Procedure to the following effect : " The petitioner hereby abandons part of his claim namely " that it be further declared that the petitioner has been duly elected as the petitioner has secured the next highest number of valid votes.
" The petitioner confines his claim, therefore, to have the election of respondent No. 1 declared void and to have costs of the proceedings awarded to him.
" On July 25, 1957, the appellant filed his objections to the said application contending inter alia, that by reason of the fact that the first respondent had claimed in his Election Petition a declaration that he was duly elected, the appellant and the other respondents to the Election Petition had acquired a right under section 97 of the Act, to file recrimination against the first respondent subject of course to compliance with the necessary statutory provisions in that behalf, and that such right to file recrimination could not be affected by the purported abandonment of the relief by the first respondent.
On July 29, 1957,.
the appellant gave notice of his recrimination under section 97.
The said notice was accompanied by the statement and necessary particulars as required by section 97 read with section 83 of the Act and was given within 14 days from the date of the commencement of the trial, viz., July 20, 1957.
The particulars of corrupt practices under section 123(1) (a) and (b) and section 123(6) of the Act thus given by the appellant comprised corrupt practices of bribery and using of motor vehicles for the conveyance of voters to the poll which if proved would have led to his disqualification for standing as a candidate and from.
being a member of the Legislature for a period of six years counting from the date on which the finding of the Election Tribunal as to such practice took effect under the Act (Vide section 140).
614 On August 1, 1957, the first respondent filed an objection to the above mentioned notice under section 97 wherein he contended inter alia that the appellant was not entitled to give evidence in recrimination as the claim for further declaration had been abandoned by him.
There had been a vacancy for a Legislative Assembly seat from a neighbouring constituency on account of the death of Shri B. R. Tambakad on June 26, 1957, and the first respondent decided to con test the election in the vacancy, filed his nomination paper for the said vacancy on September 17,1957, and was duly elected on October 16, 1957, as a member of the Mysore Legislative Assembly from the Kalaghatgi Constituency.
The application of the first respondent under 0. 23, r. 1, of the Code of Civil Procedure.
, the notice of recrimination given by the appellant under section 97 and the objection filed by the first respondent to the same came up for hearing before the Election Tribunal, Dharwar, and the Tribunal framed the following issues: " (1) Whether the 1st respondent is entitled to abandon a part of his claim in the manner he has done ? (2) If so, whether the appellant will be entitled to give notice to the Tribunal of his intention to give evidence to prove that the election of the first respondent would have been void if he had been the returned candidate ? (3) Whether the notice of recrimination given by the appellant is barred by limitation ? " The Tribunal held that by virtue of the provisions of section 90(1) of the Act the procedure prescribed by the Code of Civil Procedure had been made applicable to proceedings in election petitions and as such under the provisions of 0. 23, r. 1, of the Code of Civil Procedure the first respondent had a right to abandon a part of his claim.
It further held that in view of the abandonment of part of the claim by the first respondent, viz., that he be declared as the duly elected candidate, neither the appellant nor respondents Nos. 2 and 3 would be entitled to give notice of recrimination under 615 section 97 and consequently the appellant would not be entitled to give evidence to prove that the election of the first respondent would have been void if he had been the returned candidate.
It also held that the notice of recrimination given by the appellant was not barred by limitation, inasmuch as under explanation to section 90(4) the trial of the petition was deemed to commence on the date fixed for the appellant and the respondents Nos. 2 and 3 to appear before the Tribunal, viz., July 20, 1957, and the notice of recrimination had been given by the appellant within 14 days thereof.
The Tribunal accordingly ordered that the abandonment of a part of his claims aforesaid should be noted on the petition and further ordered that the appellant could not give evidence to prove that the election of the first respondent would have been void if he had been the returned candidate inasmuch as on the abandonment of that part of the claim by the first respondent the recrimination put in by the appellant did not survive.
The appellant applied for and obtained on January 13, 1958, from this Court special leave to appeal under article 136 of the Constitution to appeal against the decision of the Election Tribunal and that is how this Civil Appeal No. 76 of 1958 has come before us.
Section 97 of the Act reads as under : " Recrimination when, seat claimed: (1) When in an election petition a declaration that any candidate other than the returned candidate has been duly elected is claimed, the returned candidate or any other party may give evidence to prove that the election of such candidate would have been void if he bad been the returned candidate and a petition had been presented calling in question his election: Provided that the returned candidate or such other party as aforesaid shall not be entitled to give such evidence unless he has, within fourteen days from the date of the commencement of the trial, given notice to the Tribunal of his intention to do so and has also given the security and the further security referred to in sections 117 and 118 respectively.
(2) Every notice referred to in sub section (1) shall 616 be accompanied by the statement and particulars required by section 83 in the case of an election petition and shall be signed and verified in like manner.
Under the terms of this section a right of recrimination accrues to the returned candidate or any other party to the Election Petition where the petitioner besides claiming a declaration that the election of all or any of the returned candidates is void, claims a further declaration that any candidate other than the returned candidate has been duly elected.
Would it then be open to the petitioner to abandon that part of 'the relief which claimed such further declaration so as to deprive the returned candidate or any other party to the petition of the right of recrimination which has thus accrued to him; or in other words, has the Election Tribunal the power to allow the petitioner to withdraw or abandon a part of his claim as aforesaid thus rendering the exercise of the said right of recrimination nugatory ? It is necessary at the outset, therefore, to understand the nature and scope of an Election Petition.
As has been observed by us in the judgment just delivered in Civil Appeals Nos. 763 & 764 of 1957 and Civil Appeal No. 48 of 1958: " An election contest is not an action at law or a suit in equity but is a purely statutory proceeding unknown to the common law and that the court possesses no common law power.
" An election petition is not a matter in which the only persons interested are candidates who strove against each other at the elections.
The public also are substantially interested in it and this is not merely in the sense that an election has news value.
An election is an essential part of the democratic process.". . . . .
An election petition is not a suit between two persons, but is a proceeding in which the constituency itself is the principal party interested.
617 (Vide Jagan Nath vs Jaswant Singh (1), A. Sreenivasan vs Election Tribunal, Madras (2), The Tipperary case (3)).
An Election Petition presented to the Election Commission is scrutinised by it and if the Election Commission does not dismiss it for want of compliance with the provisions of section 81, section 82 or section 117 of the Act, it accepts the same and causes a copy thereof to be published in the official gazette and a copy thereof to be served by post on each respondent.
The respondents to the petition not only get notice of the same but the constituency as a whole receives such notice by publication thereof in the official gazette so that each and every voter of the constituency and all parties interested become duly aware of the fact of such Election Petition having been presented.
A copy of the Election Petition published in the official gazette would also show to all of them that the petitioner in a particular Election Petition, in addition to claiming a declaration that the election of all or any of the returned candidates is void, has also claimed a further declaration that he himself or any other candidate has been duly elected.
The whole constituency is thus alive to the fact that the result of the election duly declared is questioned on various grounds permitted by law with the likely result that the election of all or any of the returned candidates may be declared void and the petitioner or any other candidate may be declared duly elected, in place and stead of the returned candidate.
The constituency may have an interest in either maintaining the status quo or if perchance the election of the returned candidate is set aside, in seeing that some other deserving candidate is declared elected in his place and stead and not necessarily the petitioner or any other candidate sponsored by him whose election could be challenged on any of the grounds mentioned in section 100(1).
It is this interest of the constituency as a whole which invests the proceedings before the Election Tribunals with a characteristic of their own and differentiates them from (1) ; , 895.
(2) (1955) II E.L.R. 278, 293.
(3) ,23. 618 ordinary civil proceedings.
Once this process has been set in motion by the petitioner he has released certain forces which even he himself would not be able to recall and he would be bound to pursue the petition to its logical end.
It may be that he may not be able to substantiate his claim for a declaration that the election of all or any of the returned candidates is void.
In that event he would of course fail and no question would arise of his obtaining a further declaration that lie himself or any other candidate has been duly elected.
All the grounds urged in the Election Petition against the returned candidates under section 100(1) of the Act would fail and the election would stand.
The voters would thus be vindicated.
If the petitioner, however, succeeds in establishing his first claim and the election of the returned candidate is declared void, the question would necessarily arise when such a further declaration has been claimed by him whether he himself or any other candidate should be declared duly elected.
In that event, the occasion would arise for considering whether the petitioner himself or any other candidate sponsored by him should be declared duly elected.
If the election of the petitioner or such other candidate could have been challenged on any of the grounds mentioned in section 100(1) such election would certainly have been void if he had been a returned candidate and the petition had been presented calling in question his election.
A recrimination could there.
fore be filed by the returned candidate or any other party to the petition under section 97.
The requisite notice under section 97 would be accompanied by the statement and particulars required by section 83 in the case of an election petition and signed and verified in like manner.
, This notice would be, in effect, a counter ' petition presented by the returned candidate or any other party to the petition accompanied by the statement and particulars required by section 83 in the case of ,in election petition and would also be supported by the deposit of security and further security referred to in sections 117 and 118 of the Act.
The election contest would then not only be between the petitioner on the one hand and the returned candidate on the other but 619 also between the returned candidate or any other party to the petition and the candidate who has been sponsored by the petitioner for such election.
An election contest as aforesaid would result in the declaration of the properly qualified candidate as duly elected and the maintenance of the purity of the elections in which the constituency as a whole is vitally interested and no person would get elected by flagrant breaches of the election law or by corrupt practices.
This is the purpose of a recrimination and the right to file a recrimination accrues to the returned candidate or any other party to the petition the moment an election petition is presented containing a claim for a further declaration that the petitioner himself or any other candidate has been duly elected.
The proviso to section 97(1) merely enacts conditions for the exercise of such right of recrimination and states that the returned candidate or such other party is not to be entitled to give such evidence unless he has, within fourteen days from the date of commencement of the trial, given notice to the Tribunal of his intention to do so and has also given the security and the further security referred to in sections 117 and 118 respectively.
If these conditions are fulfilled in the manner therein specified the returned candidate or such other party will be entitled to give such evidence which right of course would not be capable of being exercised if either of these two conditions has not been fulfilled.
The accrual of this right, however, is not postponed till the fulfilment of these conditions.
It accrues the moment an election petition containing a claim for such further declaration is presented to the Election Commission.
If once such a right has accrued to the returned candidate or any other party to the petition, can that right be affected by the petitioner seeking to withdraw or abandon that part of his claim, viz., a claim for a further declaration that he himself or any other candidate has been duly elected ? If it were permissible for him to withdraw or abandon a part of his claim on the analogy of 0. 23, r. 1, of the Code of Civil Procedure, 79 620 he would make a virtue of necessity and withdraw or abandon that part of his claim so as to avoid any investigation in the Election Petition itself in regard to himself or any other candidate sponsored by him on any of the grounds mentioned in section 100(1) including corrupt practices within the meaning of section 123 which if proved would entail a disqualification for standing as a candidate or even for voting for a period of 6 years under sections 140 and 141(b).
So far as withdrawal of petitions is concerned there are specific provisions enacted in the Act beginning with section 108.
Section 108 deals with the withdrawal of petitions before the appointment of Tribunals and provides that an election petition may be withdrawn only by leave of the Election Commission if an application for its withdrawal is made before any Tribunal has been appointed for the trial of such petition.
Section 109 deals with the withdrawal of petitions after the appointment of Tribunals and enacts that where an application for withdrawal of an election petition is made after a Tribunal has been appointed for the trial of such petition, the election petition may be withdrawn only by leave of the Tribunal and a notice of such an application fixing a date for the hearing of the application is to be given to all other parties to the petition and is to be published in the official gazette.
Section 110 prescribes the procedure for withdrawal of petitions before the Election Commission or the Tribunal and section 110(2) provides that no application for withdrawal is to be, granted if in the opinion of the Election Commission or of the Tribunal, as the case may be, such application has been induced by any bargain or consideration which ought not to be allowed.
If such an application is granted, notice of the withdrawal is to be published in the official gazette by the Election Commission or by the Tribunal as the case may be; and a person who might himself have been a petitioner may, within fourteen days of such publication apply to be substituted as petitioner in place of the party withdrawing, and upon compliance with the conditions of section 117 as to security, is to be entitled to be so substituted and to continue the proceedings 621 upon such terms as the Tribunal may think fit.
When an application for withdrawal is granted by the Tribunal and no person has been substituted as, petitioner in place of the party withdrawing as above, the Tribunal is to report the fact to the Election Commission and thereupon the Election Commission shall publish the report in the official gazette.
This will ring the curtain on the election contest and the result of the election which has been duly declared will no more be liable to be disturbed.
There are also provisions enacted in the Act which provide for the consequences of the death of a sole petitioner or of the survivor of several petitioners or the death or withdrawal of opposition by the sole respondent therein.
Section 112 provides that an election petition shall abate on the death of a sole petitioner or of the survivor of several petitioners.
If an election petition thus abates before a Tribunal has been appointed for the trial of the petition, notice of the abatement shall be published in the official gazette by the Election Commission (Vide section 113).
If on the other hand an election petition abates after a Tribunal has been appointed for the trial of the petition, notice of the abatement has to be published in the official gazette by the Tribunal (Vide section 114).
The death of a sole petitioner or of the survivor of several petitioners, however, does not spell the termination of the proceedings and section 115 provides that after a notice of the abatement of an election petition is published under section 113 or section 114 any person who might himself have been a petitioner may, within fourteen days of such publication, apply to be substituted as petitioner and upon compliance with the conditions of section 117 as to security shall be entitled to be so substituted and to continue the proceedings upon such terms as the Tribunal may think fit.
The position as it obtains on the death or withdrawal of opposition by a respondent is worked out in section 116 which provides that if before the conclusion of the trial of an election petition the sole respondent dies or gives notice that he does not intend to oppose the petition or any of the respondents dies or gives such notice and 622 there is no other respondent who is opposing the petition the Tribunal shall cause notice of such event to be published in the official gazette, and thereupon any person who might have been a petitioner may, within fourteen days of such publication, apply to be substituted in place of such respondent to oppose the petition, and shall be entitled to continue the proceedings upon such terms as the Tribunal may think fit.
The above provisions go to show that an election petition once filed does not mean a contest only between the parties thereto but creates a situation which the whole constituency is entitled to avail itself of.
Any person who might himself have been a petitioner is entitled to be substituted, on the fulfilment of the requisite conditions and upon such terms as the Tribunal may think fit, in place of the party with drawing and even the death of the sole petitioner or of the survivor of several petitioners does not put an end to the proceedings, but they can be continued by any person who might himself have been a petitioner.
Even if the sole respondent dies or gives notice that he does not intend to oppose the petition or any of the respondents dies or gives such notice and there is no other respondent who is opposing the petition, a similar situation arises and the opposition to the petition can be continued by any person who might have been a petitioner, of course on the fulfilment of the conditions prescribed in section 116.
These provisions therefore show that the election petition once presented continues for the benefit of the whole constituency and cannot come to an end merely by the withdrawal thereof by the petitioner or even by his death or by the death or withdrawal of opposition by the respondent but is liable to be continued by any person who might have been a petitioner.
If, therefore, an election petition duly presented cannot be thus withdrawn by the petitioner, is there any warrant for the contention that even though he may not be able to withdraw his petition in the manner aforesaid he can at least abandon a part of his claim on the analogy of 0. 23, r. 1, of the Code of Civil 623 Procedure? The whole petition cannot be withdrawn; but would it not be possible for the petitioner to withdraw or abandon a part of his claim as above? The provisions of section 90 of the Act are sought to be relied upon in support of this contention.
Section 90(1) provides that subject to the provisions of the Act and of any rules made thereunder, every election petition shall be tried by the Tribunal, as nearly as may be, in accordance with the procedure applicable under the Code of Civil Procedure to the trial of suits, provided however that the Tribunal shall have the discretion to refuse for reasons to be recorded in writing to examine any witness or witnesses if it is of the opinion that their evidence is not material for the decision of the petition or that the party tendering such witness or witnesses is doing so on frivolous grounds or with a view to delay the proceedings.
Under section 90(2) the provisions of the , shall subject to the provisions of this Act, be deemed to apply in all respects to the trial of an election petition.
Section 90(4) provides that any candidate not already a respondent shall, upon application made by him to the Tribunal within fourteen days from the date of commencement of the trial and subject to the provisions of section 119, be entitled to be joined as a respondent.
Section 90(5) provides that the Tribunal may, upon such terms as to costs and otherwise as it may deem fit, allow the particulars of any corrupt practice alleged in the petition to be amended or amplified in such manner as may in its opinion be necessary for ensuring a fair and effective trial of the petition, but shall not allow any amendment of the petition which will have the effect of introducing particulars of a corrupt practice not previously alleged in the petition.
It is clear from the above that the section only provides for the procedure for the trial of election petitions by the Tribunals.
It provides for the examination of witnesses, the rules of evidence to be followed, the joinder of candidates not already respondents as respondents and the amendment or amplification of particulars of a corrupt practice already alleged in the petition.
The powers of a Tribunal are, however, separately dealt with in section 92 624 which enacts that the Tribunal shall have the powers which are vested in a court under the Code of Civil Procedure, when trying a suit in respect of the following matters: (a) discovery and inspection; (b) enforcing the attendance of witnesses, and requiring the deposit of their expenses; (e) compelling the production of documents; (d) examining witnesses on oath; (e) granting adjournments; (f) reception of evidence taken on affidavit; and (g) issuing commissions for the examination of witnesses, and may summon and examine suo motu any person whose evidence appears to it to be material; and shall be deemed to be a civil court within the meaning of sections 480 and 482 of the Code of Criminal Procedure, 1898.
It will be noticed that the procedure for trial before the Tribunal and the powers of the Tribunal are treated separately thus distinguishing between the procedure to be followed by the Tribunal and the powers to be exercised by it.
There are also other provisions to be found in the Act which relate to place of trial (section 88); Power of Election Commission to withdraw and transfer Petitions (section 89); appearance before Tribunal (section 91); documentary evidence (section 93); answering of criminating questions and certificate of indemnity (section 95) and expenses of witnesses (section 96).
The effect of all these provisions really is to constitute a self contained Code governing the trial of election petitions and it would appear that in spite of section 90(1) of the Act, the provisions of 0. 23, r. 1, of the Code of Civil Procedure, would not be applicable to the trial of election petitions by the Tribunals.
If the withdrawal of a petition cannot be permitted and any person who might have been a petitioner is entitled to continue the proceedings, on a parity of reasoning, the withdrawal of a part of the claim also could not be permitted without allowing another person who might have been a petitioner an opportunity of proceeding with that part of the claim by substituting himself in place and stead of the petitioner who withdraws or abandons the same.
If the constituency as a whole is interested in the petition presented before the Election Tribunal no such withdrawal or abandonment of a part of the claim could ever be permitted without giving an 625 opportunity to any person who might have been a petitioner to continue the proceedings and pursue the petition to its logical conclusion.
The provisions of 0. 23, r. 1, of the Code of Civil Procedure also contain inherent evidence which militates against this contention.
Order 23, r. 1, sub rule (2), provides for liberty being given by the Court to a party withdrawing or abandoning a part of his claim to file a fresh suit on the same cause of action, if so advised.
In the very nature of things such liberty could not be reserved to a petitioner in an election petition.
The provisions above referred to in regard to withdrawal of petitions do not provide for the same and if they do not do so, can it be urged that the provisions of 0. 23, r. 1, sub rule (2), though they may not apply to the cases of withdrawal of petitions may nevertheless apply where the petitioner withdraws or abandons a part of his claim ? If these provisions do not apply to the withdrawal or abandonment of a part of the claim in the case of an election petition, could it then be urged that nevertheless the other provisions of O. 23, r. 1, would apply and the petitioner would be at liberty to withdraw or abandon a part of his claim ? On a due consideration of all these provisions, we are of opinion that the provisions of O. 23, r. 1, do not apply to the election petitions and it would not be open to a petitioner to withdraw or abandon a part of his claim once an election petition was presented to the Election Commission, more so when such a withdrawal or abandonment of a part of the claim would have the effect of depriving the returned candidate or any other party to the petition of the right of recrimination which had accrued to him under section 97 of the Act.
This is also the position in England.
Halsbury 's Laws of England, 3rd Ed., Vol.
14, para.
451, p. 258, contains the following passage under the caption Amendment of petition " : " The withdrawal of that portion of a petition which claims the seat cannot, however, be effected by way of amendment because the rights of the electors would be affected by their not having the opportunity of substituting another petitioner.
626 See also the passage at ibid p. 300, para.
541 : " It seems that where the petition prays the seat, recriminatory evidence may be offered, notwithstanding, that the prayer for the seat is abandoned at the trial.
The case of Aldridge vs Hurst (1) elucidates this position.
Grove J. in that case observed as follows: " Numerous provisions of the Act have reference not merely to the individual interests or rights of petitioners or respondents, but to rights of electors, of constituencies, and of the public, in purity of election and in having the member seated who is duly returned by a majority of proper votes.
It appears to us also that the scope of the Act is, that petitions should not be mere pleadings, nor framed for the purpose of intimidating or in any way inducing, the respondent to abandon his seat; still less, of course, should they be collusive; but that they should be real, well considered, and not lightly withdrawn either in whole or part . . . . . . . .
These section show that not mearely may the candidate who is not returned claim the seat, or in other words claim to have been duly elected, but that any other voter might claim the seat for a candidate who has not been returned.
" This right petitioning shows that the Act contemplates, in regard to petitions, not merely the rights of candidates not returned, but the rights of the constituency to insure that the person really elected should be their member; and this without the cost and disturbance of a new election, as the judge 's decision in favour of such claim is final." " It appears to us that it would be an infringement of this right, if, a petition having been presented by one person (in this case a candidate) claiming the Beat, the claim to the seat could be withdrawn by the mere motion of the person presenting it, after the twenty one days, when no other petition could be presented, and thus the voters be prevented from claiming (1) , 413, 414. 415, 417 627 the seat for one who may be the duly elected representative; or, on the other hand, from shewing by means of the recriminative charges which put in issue the claim, that the claimant is not a person entitled to the seat by that election or that he is disqualified for future elections; such withdrawal not being accompanied by the power to substitute another person as petitioner, by means of which the inquiry might be gone into at the trial. " " It appears to us that the withdrawal of this portion of the prayer of the petition is in pari materia with, even if it is not within, the provisions of the Act relative to the withdrawal of a whole petition." " It is also to be observed that, although petitions may be presented at the last moment, it is commonly known in the county or borough that such petitions are likely to be presented ; and if any suspicion exists that they are sham petitions, means are taken by those who are in earnest to lodge petitions; and the entire withdrawal of collusive petitions is guarded against by the provisions of the Act to which we have alluded." " In one point of view it is an argument against our allowing this prayer to be withdrawn, that, if there be no power under the withdrawal clauses to substitute a person for the petitioner as to this prayer, the constituency will be without means of proving either that the petitioner is the duly elected member, or to answer his allegation that he is elected, or to shew that he is unfit to serve in a future parliament, he himself having raised this issue by claiming the seat.
" It is, therefore, clear that there is no power in the Election Commission to allow a petitioner to withdraw or abandon a part of his claim either by having resort to the provisions of 0. 23, r. 1, of the Code of Civil Procedure or otherwise.
If that is so, the right of recrimination which has once accrued to the returned candidate or any other party to the petition under section 97 of the Act cannot be taken away, and the returned candidate or any other party to the petition would in 80 628 such circumstances be entitled to give evidence to prove that the election of the petitioner or any other candidate sponsored by him would have been void if he had been the returned candidate and a petition had been presented calling in question his election.
The counter petition which has in effect been thus filed by the returned candidate or any other party to the petition must be allowed to proceed and the right of recrimination should continue to be exercised notwithstanding the attempted abandonment of a part of his claim by the petitioner with the inevitable result that if any corrupt practice within the meaning of section 123 were proved against the petitioner or any other candidate sponsored by him it would entail upon him the disqualification for standing as a candidate or even for voting for a period of 6 years under sections 140 and 141(b).
In the present case, such proof on the part of the appellant would have not only entailed upon the lst respondent a disqualification for voting but even for standing as a candidate for a period of six years, with the inevitable consequence that his election to the Mysore Legislative Assembly from the Kalaghatgi constituency on October 16, 1957, would have been void and lie would have been unseated.
We have, therefore, come to the conclusion that the order passed by the Election Tribunal allowing abandonment of a part of the claim by the first respondent and precluding the appellant from giving evidence to prove that the election of the first respondent would have been void if he had been the returned candidate was clearly erroneous and liable to be set aside.
We accordingly allow the appeal and reverse the order passed by the Election Tribunal dated September 26, 1957.
The Election Tribunal shall proceed with the trial of the election petition on the claims as they were originally included in the petition and will also allow the appellant to exercise his right of recrimination under section 97 of the Act.
The first respondent will pay the appellant 's costs of this appeal and the costs thrown away before the Election Tribunal.
Appeal allowed.
| IN-Abs | A, the unsuccessful candidate at an election, filed an elec tion petition against B, the successful candidate, claiming a declaration ' that the election of B was void and that lie had been duly elected as he had secured the next highest number of valid votes.
On the first date of the hearing before the Election Tribunal A submitted an application under 0. 23, r. 1, of the Code of Civil Procedure abandoning the relief claiming the seat.
B objected to the abandonment and filed a notice of recrimination under section 97 of the Representation of the People Act, 1951, accompanied by the statement and necessary particulars.
A contended that B was not entitled to give evidence in recrimination as the claim for the seat had been abandoned.
The Tribunal held that section 90(1) of the Act had made the procedure prescribed by the Code of Civil Procedure applicable to proceedings in election petitions and as such A had a right under 0. 23, r. 1, of the Code to abandon a part of his claim and that A having abandoned his claim for the seat B was no longer entitled to recriminate Held, that the provisions of the Act constitute a self con tained code governing the trial of an election petition and in spite of section 90(1) of the Act, the provisions 0.
23, r. 1, of the Code of Civil Procedure were not applicable to the trial of an election petition by the Tribunal ; and it was not open to A to withdraw or abandon a part of his claim once an election petition had been presented to the Election Commission, particularly when such a withdrawal or abandonment of a part of the claim would have had the effect of depriving B of the right of recrimination which had accrued to him under section 97 Of the Act.
The right of recrimination accrued to B the moment the election petition was presented to the Election Commission containing the claim for 'the seat, and it was not open to A to defeat this right by withdrawing or abandoning the claim for the seat.
An election petition once filed does not mean a contest only between the parties thereto but continues for the benefit of the whole constituency and cannot come to an end merely by the withdrawal thereof by the petitioner or even by his death or 78 612 by the death or withdrawal of opposition by the respondent but is liable to be continued by any person who might have been a petitioner.
|
ivil Appeal No. 223 of 1989.
From the Judgment and Order dated 31.10.88 of the Cus toms Excise and Gold (Control) Appellate Tribunal, New Delhi in Appeal No. E. 12068/84 BI (Order No. 432/88 BI).
Soli J. Sorabjee, A.N. Haksar, Ravinder Narain, P.K. Ram and D .N. Misra for the Appellant.
The judgment of the Court was delivered by SABYASACHI MUKHARJI, J.
This is an appeal under section 35 L of the Central Excises & Salt Act, 1944 (hereinafter referred to as 'the Act ').
against the order dated 31.10.1988 passed by the Customs, ExciSe & Gold (Control) Appellate Tribunal (hereinafter referred to as 'the Tribu nal ').
The issue involved in this appeal mainly relates to the classification of the goods, namely, whether the products of the appellant in this case were end fittings or nuts? The question was whether the goods were classifiable under Tariff Item 52 or Tariff Item 68 of the erstwhile First Schedule to the Act.
The appellant applied for requisite central excise licence for manufacture of goods falling under Tariff Item 68 and for the purpose of such goods L 4 licence was also furnished, and also the requisite ground plans of the facto ry showing the requisite sanction of the factory in which the various goods were manufactured.
The excise authorities granted L 4 licence.
The appellant contends that the same was done after verifying the ground plans.
Necessary classi fication list was supplied on 22nd March, 1979 for approval by the excise authorities and the appellant claimed benefit of exemption of notification No. 89/79 Central Excise dated 1.3.79.
The said classification list submitted by the appel lant was approved by the Assistant Collector of Central Excise by his letter dated 25th May, 1979.
For the period from 1.4.79 to 30.6.79, the appellant filed his RT 12 for the assessment, which was also finally assessed without any protest or objection.
Inasmuch as, the appellant claimed that its goods were wholly exempted by virtue of the notifi cation No. 89/79CE dated 1.3.79, the appellant wrote to the Superintendent of Central Excise asking for dispensation from filing RT 12 every month.
The Superintendent by his order informed the appellant that it need not file RT 12, but should inform 874 the Excise Department monthly by means of a simple letter the total clearance effected in the month in question.
Thereafter, the appellant submitted classification lists in 1980, 1981 and 1982 in respect of the said goods and claimed the benefit of the exemption under notification No. 105/80 Central Excise, dated 19.6.80, which was a subsequent noti fication.
The Assistant Collector of Central Excise duly approved the said classification lists.
It is stated that the Central Excise Officers attached to the Preventive Branch visited on or around 13.7.82, the factory of the appellant and examined the products manufactured by the appellant.
The excise authorities once again, it is stated, visited the factory of the appellant on 20th July, 1982.
However, on 17th .January, 1983, a show cause notice was issued to the appellant asking it to show cause as to why excise duty should not be demanded under Tariff Item 52 in respect of 14,88,838 pieces of nuts manufactured and removed by the appellant during the period 1st April, 1981 to 19th July, 1982 without payment of appropriate excise duty there on.
It was further stated in the show cause notice to show cause why penalty should not be imposed on the appellant for failing to obtain the requisite L 4 licence under Tariff Item 52 in respect of the said goods and for failing to file price lists and classification lists in respect thereof and further to show cause why the material seized on 26th Au gust, 1982 should not be confiscated.
The appellant showed cause, and drew attention to the Indian Standard Institution publication for specification of High Pressure Connection meant for lubricating arrangement of oil in Fuel Injection Equipment for Diesel Engines which according to the appel lant, showed that the goods in question were not nuts but end products or connectors for lubricating purposes and as such were integral parts of the Diesel Engine Pipes falling under Tariff Item 68.
On 16th July, 1984, the Collector of Central Excise passed orders holding that fittings were nuts classifiable under Tariff Item 52 and that appropriate duty on the clear ances effected by the appellant during the period 1st April, 1981 to 19th July, 1982 should be paid, and that the seized goods were liable to confiscation but in lieu thereof a redemption fine of Rs.4,000 could be paid within three months, the exports effected indirectly by the appellant were not entitled to benefit of Notification No. 89/79 CE and, therefore, the differential duty in respect of those clearances was payable under Tariff Item 68 and that the show cause notice was not barred by time.
The Collector, accordingly, imposed a penalty of Rs. 1 lac.
Aggrieved thereby, the appellant went up in appeal before the Tribunal.
The Tribunal partly allowed the appeal of the appellant and 875 partly upheld the order of the Collector.
So far as the question of classification of the different fittings was concerned, the Tribunal held that the classification should have been as nuts under Tariff item 52 of the Central Excise Tariff.
The Tribunal also held that the appellant was guilty of suppression and therefore rejected the submission of the appellant that the show cause notice was barred by time.
The contention of the appellant in respect of the benefit of exemption being available to the extent of export effected indirectly on the basis of the earlier decision of the Tribunal, was accepted by the Tribunal and the order of the Collector was modified to that extent.
The Tribunal also reduced the amount of penalty imposed by the Collector from Rs. 1 lac to Rs.50,000.
Aggrieved thereby, the appellant is in appeal before this Court.
The first contention that was agitated before us and which was decided against the appellant in the order of Tribunal is, whether the goods in question involved in this appeal were classifiable under Tariff Item 52 of the Central Excise Tariff or whether these goods were classifiable under Tariff Item 68.
The Tribunal noted that these goods were described as 'nuts ' by the Consultant on behalf of the appellant in the arguments submitted before the Tribunal.
The appellants were purchasing nuts, both threaded and unthreaded, and the latter being threaded, this was to be taken for captive consumption.
Therefore, it was contended on behalf of the appellant that the function of such nuts was not merely fastening but also facilitating the flow of oil under high pressure without leakage.
It was emphasised that these nuts were leak proof.
The Tribunal on appraise ment of all the materials, held that these were nuts manu factured by the appellant.
It was evident from the Tribu nal 's judgment that the appellant was itself purchasing, both threaded and unthreaded nuts as such and the unthreaded nuts were threaded by the appellant.
Apart from captive consumption, some of these nuts were also sold as nuts to outside parties.
These facts were found by the Tribunal and recorded in its order.
The Tribunal in those circumstances was of the view that it was difficult to accept the appel lant 's contention.
The impugned goods were commercially known and bought and sold as nuts.
It is true that specifi cation of the Indian Standard Institution was drawn atten tion to.
But there was evidence, as noted by the Tribunal, about the commercial indentify of these goods.
If these goods not being defined as such and are commercially known as nuts, as found by the Tribunal then, in our opinion, such finding cannot be said to be wrong or perverse.
Such finding was arrived at after giving opportunity to both the parties and considering all relevant materials.
Such finding cannot be assailed in this appeal.
876 The functional approach to the identify of the goods as canvassed by the appellant was also duly considered by the Tribunal.
It was contended that the function of the nuts was not only to fasten but also to enable the flow of oil under high pressure without leakage.
But the Tribunal noted that the flow of oil is possible only after nuts are fastened.
To that extent, according to the Tribunal, it can be stated that nuts permit the flow of oil without leakage.
The ques tion is, however, not as to what is the process facilitated as a result of the nuts, but the question which the Tribunal itself posed is whether the nuts are fasteners or do they have any other 'independent function? The Tribunal found that it had not been shown before them that they had any such independent function.
To say that these nuts are leak proof, was only to reiterate the fact of their essential character and quality as fasteners and not to substantiate any argument as regards their independent function.
In that view of the matter, the Tribunal even taking the functional approach to the identity of the goods, came to the conclu sion that the goods in question were properly classifiable as nuts.
That conclusion of the Tribunal cannot be assailed in appeal in view of the evidence on record as noted before.
Certain decisions were referred to before the Tribunal by the appellant in support of its contention that in certain cases goods of these types had not been considered to be nuts.
These goods, as the Tribunal noted, were in the nature of bolts, nuts and rods of special type manufactured by a particular party.
Therefore, these were not classifiable as merely bolts and nuts under Tariff Item 52 of the Central Excise Tariff, but as integral parts of the machine for which they were specifically designed with a distinct and specific function in the operation of the motor cycle of which these were components parts.
It was held in those cases that the components manufactured solely on the orders of the buyers, as per their drawings and specifications, were components of mining and project machinery and, there fore, not classifiable under Tariff Item 52 CET, But the facts involved in these items of goods in the instant case, dealt with by the appellant, are different.
These goods were not manufactured according to any special specifications as integral parts of machinery.
Some of these nuts required were also purchased from market ' while those being manufac tured were also sold to outside buyers as nuts.
Attention of the Tribunal was also drawn to the case of M/s. Precision Fasteners Ltd. vs Collector of Central Ex cise, Bombay II.
In that case, however, the Tribunal did not take any final view on the product.
In view of the type of goods involved in that case, the Tribunal had remanded the matter for re adjudication.
In that view of 877 the matter, the Tribunal was of the view that the commercial identify of the goods in the instant case, was different from the goods involved in the Precision Fasteners Ltd. 's case (supra).
In the light of these submissions, the Tribu nal came to the conclusion that the goods were classifiable under Tariff Item 52 of the Central Excise Tariff.
It was this finding which is assailed before us in appeal.
We find, however, as noted hereinbefore, no cogent ground to sustain any challenge to the aforesaid finding of the Tribunal.
The Tribunal has considered all the relevant evidence.
The Tribunal has not ignored any relevant piece of evidence.
It had applied the correct principle of law ap plicable to the determination of this question.
It had also applied the test of commercial identity of the goods and examined the matter from the angle of the conduct of the appellant.
In that view of the matter, we are of the opinion that these findings of the Tribunal cannot be assailed.
The next question that has to be determined is whether the claim for duty is only to be confined to the period of six months because it was contended, in view of the facts and the circumstances narrated hereinbefore, that there was no suppression of any fact.
It may be relevant in this connection to refer to Section 11 A of the Act, which pro vides as follows: "When any duty of excise has not been levied or paid or has been short levied or short paid or erroneously refunded, a Central Excise Officer may, within six months from the rele vant date, serve notice on the person charge able with the duty which has not been levied or paid or which has been short levied or short paid or to whom the refund has errone ously been made, requiring him to show cause why he should not pay the amount speci fied in the notice: Provided that where any duty of excise has not been levied or paid or has been short levied or short paid or erroneously refunded by reason of fraud, collusion or any wilful misstatement or suppression of facts, or contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty, by such person or his agent, the provisions of this sub section shall have effect, as if for the words "Central Excise Officer", the words "Collector of Central Excise", and for the words "six months", the words "five years" were substituted.
878 Explanation: Where the service of the notice is stayed by an order of a Court, the period of such stay shall be excluded in computing the aforesaid period of six months or five years, as the case may be.
" Therefore, we have to find out whether there was any fraud, collusion, wilful misstatement or suppression of facts for the Department to be justified to claim duty beyond a period of six months.
This is a question of fact.
It was found by the Tribunal that it was not possible for the appellant to contend that the appellant had made a correct statement.
The Tribunal noted that the appellant could hardly contend that it discharged the onus of making correct declaration if it had withheld the description which was commonly used in respect of the goods not only by it self, but also by those from whom it bought or to whom it sold the products.
The appellant itself was both buying and selling these nuts and as such there was no conceivable reason why these nuts were described as end fittings in the declaration to the Department.
It may be noted that in the declaration it was so described.
The Tribunal was of the view, and it cannot be said not without justification that these goods should have been described as nuts because the appellant itself had treated these as nuts.
Therefore, from this conduct suppression is established.
The fact that the Department visited the factory of the appellant and they should have been aware of the production of the goods in question, was no reason for the appellant not to truly and properly to describe these goods.
As a matter of fact, not only did the appellant, as found by the Tribunal, not de scribed these goods properly but also gave a misleading description.
In the aforesaid view of the matter, we are of the opinion that the Tribunal was right in classifying the goods under Tariff Item 52 of the Central Excise Tariff and in upholding the demand of the duty for a period beyond six months as contemplated by Section 11 A of the Act.
The Tribunal duly gave benefit of the exemption notification in respect of the goods which had been exported.
This part of the order is not challenged and cannot be challenged.
The Tribunal, however, reduced the penalty from Rs. 1 lac to Rs.50,000.
Mr. Sorabji, learned counsel for the appellant, contended that this was not right.
There should not have been any penalty imposed.
We are, however, unable to accept that position.
Having come to the conclusion that there was deliberate suppression of wrong statement, it follows auto matically that the Tribunal was justified in upholding the imposition of penalty.
The quantum of penalty, however, was a matter which the Tribunal was free to fix as they thought fit, as the justice of the case demanded.
879 Nothing has been shown to us that the conclusion of the Tribunal was bad.
In that view of the matter, the order of the Tribunal is upheld.
The appeal must, therefore, fail and is accordingly dismissed.
N.V.K. Appeal dis missed.
| IN-Abs | The appellant company applied for a requisite central excise licence for manufacture of goods falling under Tariff Item 68 and for the purpose of such goods L 4 licence was also furnished and also the requisite ground plans of the factory in which the various goods were manufactured.
The excise authorities granted L 4 licence.
The appellant claimed benefit of exemption of Notification No. 89/79 CE dated March 1, 1979.
The classification list submitted by the appellant was approved by the Assistant Collector by his letter dated May 25, 1979.
For the period April 1, 1979 to June 30, 1979 the appellant filed his RT 12 for assessment which was also finally assessed without any protest or objection.
As the appellant claimed that his goods were wholly exempted by virtue of notification No. 89/79 CE dated March 1, 1979, the appellant wrote to the Superintendent asking for dispensation from filing RT 12 every month.
The Superintendent informed the appellant that it need not file RT 12, but should inform the excise authorities monthly by means of a simple letter the total clearance effected in the month in question.
Thereafter, the appellant submitted classification list in 1980, 1981 and 1982 and claimed benefit of exemption under notification No. 105/80 CE dated June 19, 1980.
The Assistant Collector approved the classification list.
The Central Excise Officer attached to the preventive branch visited the factory in July 1982 and examined the products manufactured by the appellant.
In January 1983, a show cause notice was issued to the appellant asking it to show cause as why excise duty should not be demanded under Tariff Item 52 in respect of the piece of nuts manu 871 factured and removed by the appellant during the period April 1, 1981 to July 19, 1982 without payment of appropri ate excise duty thereon, and also to show cause why penalty should not be imposed for failure to obtain the requisite L 4 licence under Tariff Item 52 and to show cause why the material seized on August 26, 1982 should not be confiscat ed.
The appellant showed cause and drew the attention of the authorities to the fact that the goods in question were not nuts but end products or connectors for lubricating purposes and as such were integral parts of Diesel Engine Pipes failing under Tariff item 68.
The Collector of Central Excise passed orders on July 16, 1984 holding that fittings were nuts classifiable under Tariff Item 52, and that appropriate duty on the clearance effected by the appellant during the period April 1, 1981 to July 19, 1982 should be paid and the seized goods were liable to confiscation but in lieu thereof a redemption fine of Rs.4,000 could be paid.
The Collector also imposed a penalty of Rs. 1 lakh.
The appellant went up in appeal before the Tribunal, which partly allowed the appeal and partly upheld the order of the Collector.
With regard to classification of the different fittings was concerned, it was held that the classification should have been as nuts under Tariff Item 52 of the Central Excise Tariff.
It further held that the appellant was guilty of suppression and therefore rejected the submission of the appellant that the show cause notice was barred by time.
It, however, reduced the amount of Penalty imposed by the Collector from Rs. 1 lakh to Rs.50,000.
The appellant appealed to this Court by special leave.
In the appeal to this Court, on the question whether the goods manufactured by the appellant were end products or connectors for lubricating purposes and as such were inte gral parts of the Diesel Engine Pipes failing under Tariff Item 68 as claimed by the appellant or nuts classifiable under Tariff Item 52.
Dismissing the appeal, HELD: 1.
The Tribunal was right in classifying the goods under Tariff Item 52 of the Central Excise Tariff and in upholding the demand of the duty for a period beyond six months as contemplated by section 11 A of the Act.
The Tribunal duly gave benefit of the exemption notification in respect of the goods which had been exported.
[878F] 872 2(a) The Tribunal was right in upholding the demand of duty for a period beyond six months as contemplated by section 11 A of the Act.
[878F] 2(b) Whether there was any fraud, collusion, wilful mis statement, or suppression of fact, for the department to be justified to claim duty beyond a period of six months under the proviso to section 11 A of the Act is a question of fact.
[878B] 2(c) The appellant.
was both buying and selling these nuts and as such there was no conceivable reason why these nuts were described as end fittings in the declaration to the Department.
In the declaration it was so described.
[878C D] 2(d) The fact that the officers of the Department visit ed the factory of the appellant and they should have been aware of the production of the goods in question, was no reason for the appellant not to truly and properly describe these goods.
[878D E] 2(e) Not only did the appellant, as found by the Tribu nal, not described these goods properly, but also gave a misleading description.
[878E] 3.
The Tribunal on appraisement of all the materials, held that these were nuts manufactured by the appellant.
Such finding cannot be said to be wrong or perverse.
It was arrived at after giving opportunity to both the parties and considering all relevant materials.
There is no cogent ground to sustain any challenge to the findings of the Tribunal.
The Tribunal has considered all the relevant evidence, and not ignored any relevant piece of evidence.
It had applied the correct principle of law applicable to the determination of the question.
It has also applied the test of commercial identity of the goods and examined the matter from the angle of the conduct of the appellant.
These find ings of the Tribunal cannot be assailed in appeal under section 35L of the Act.
[875E; 877B C] 4.
The Tribunal having come to the conclusion that there was deliberate suppression or wrong statement, it follows automatically that the Tribunal was justified in upholding the imposition of penalty.
The quantum of penalty was a matter which the Tribunal was free to fix as it thought fit, as the justice of the case demanded.
Nothing has been shown that the conclusion was bad.
[878G H; 879A] 873
|
No. 1325 of 1987.
937 (Under Article 32 of the Constitution of India) P. Rangaswamy, K.K. Gupta and Capt.
Virendera Kumar for the Petitioners.
K.R. Nagaraja and R.S. Hegde, for the Respondents.
The following Order of the Court was delivered: ORDER Thirty two petitioners in this application under article 32 of the Constitution are Bus Conductors in the employment of the Karnataka State Road Transport Corporation, respondent No. 1.
They have alleged that the respondent Corporation is a statutory organisation and is 'State ' within the meaning of article 12.
The normal practice prevalent in the Corporation is to initially appoint Conductors on daily wage basis and regularise them in due course.
According to them, 19 daily wage Conductors as mentioned in Annexure 'A ' to the petition were regularised and brought on the time scale of pay with effect from the original date of their employment as daily wage Conductors, while though the petitioners have served for quite a long period they have not yet been regularised.
They have alleged discrimination and claimed relief on the basis of article 14.
They have asked for a direction to the Transport Corporation to bring them on the time scale by regularisation from the date each of them came to be em ployed by the Corporation, as stated in Annexure 'B '.
The Corporation in its return to the rule has accepted the position that it is a statutory body created under section 3 of the Road Transport Corporation Act of 1950.
There is no challenge to the allegation of the petitioners that initial appointment is on daily wage basis and as and when regular vacancies arise the daily rated employees are brought on time scale of pay and services are regularised.
Paragraph 9 of the counter affidavit specifically challenged the asser tion of the petitioners that 19 similarly placed employees were confirmed on the date of initial employment on daily rated basis.
The plea in paragraph 9 is as follows: "The information furnished in Annexure A showing that 19 persons who were working in different divisions have been appointed on time scale on the same date is absolutely wrong and misleading.
The petitioners have sworn 938 false affidavit without making any effort to verify the factual position.
The date of confirmation in majority of the cases has been shown in Annexure A as the date of their appointment just to prejudice this Court.
" Learned counsel for the petitioners placed reliance on the decision of this Court in Daily Rated Casual Labour vs Union of India & Ors., and an order made on 14th of July, 1988 in Writ Petition No. 8307 11/83 which is still awaiting final disposal.
The facts of the reported decision were very different.
It would be sufficient to refer to paragraph 2 of the judgment: "The principal complaint of the petitioners is that even though many of them have been work ing for the last ten years as casual labour ers, the wages paid to them are very low and far less than the salary and allowances paid to the regular employees of the Posts and Telegraphs Department belonging to each of the categories referred to above and secondly no scheme has been prepared by the Union of India to absorb them regularly in its service and consequently they have been denied the bene fits, such as increments, pension, leave facilities etc.
which are enjoyed by those who have been recruited regularly.
They allege that they are being exploited by the Union of India " Petitioners have not made these allegations and their sole grievance is of discrimination on the basis that while they have not been regularised though they have been serving for a good number of years in some cases about 14 years the 19 persons named in Annexure 'A ' have been regu larised from the date of initial employment.
It is, there fore, not necessary to refer to the decision.
The order in the pending writ application is also on a different set of facts and, therefore, need not be further referred to.
At the hearing of the writ application, petitioners relied upon a draft seniority list published by the Corpora tion in support of their stand while the Corporation on the basis of a document appended to the counter affidavit main tained that the particulars were wrong and since the docu ment was only at the draft stage and mistakes appearing therein were yet to be corrected, no reliance can be placed on the particulars appearing therein and the original record should be referred to.
939 In view of the pointed question raised by the petition ers and the denial in the return, we made an order on 28.2.1989 to the following effect: "The dispute has arisen before us regarding the identity of all the persons.
The Registrar General is directed to assign an Officer to examine the photostat copy of the Original Record in possession of learned counsel for the respondents for the purpose of determining whether there is any discrepancy between that record and the printed list which has been furnished before us in relation to the 34 petitioners as well as the 19 employees set out in Annexure 'A ' annexed to the Writ Peti tion.
" The report dated 2nd of March, 1989 on the basis of the printed document and the photostat copies of records made available at the time of examination to the Officer shows that there are discrepancies.
The original record, however, is not available in the Court.
It is not disputed before us by counsel for the respond ents that in case benefit of regularisation has been con ferred on daily rated employees from the date of initial employment and such benefit has not been extended to the petitioners, the grievance grounded upon article 14 of the Constitution would be valid.
The matter to be examined, therefore, is with reference to factual position as to when the 19 persons in Annexure 'A ' were initially employed and when they have been regularised as against the initial employment of each of the petitioners.
This can be done only by reference to appropriate records.
We direct that a senior officer of the Corporation shall be named by respondent No. 1 to look into these allegations and at the time the ques tion is examined by such officer the petitioners shall be given appropriate opportunity of being heard, if asked for through counsel also, and all relevant documents should be looked into to ascertain whether the claim of the petition ers that they have been discriminated against in the facts indicated in their writ petition particularly with reference to Annexure 'A ' is correct; and in case it is found that the petitioners have not been given the benefit which has been given to the 19 daily rated Conductors specified in Annexure 'A ', petitioners may be conferred the same benefit as has been extended to those 19 persons unless the respondent is able to assign satisfactory and cogent reasons and states as to why petitioners are not entitled to the same benefit.
This would be so on the footing that regularisation does not require a specified period of service to have been put in.
The respondent 940 Corporation shall designate the authority within two weeks and the enquiry by him in the manner directed above shall be completed within three months.
On the basis of the report furnished by such authority the respondent is directed to take a final decision within two months thereafter.
There shall be no direction as to costs.
| IN-Abs | The petitioners who had served the respondent Corpora tion for long periods on daily wage basis prayed for regu larisation of services and grant of time scale pay from their dates of initial appointment on the ground that others similarly placed had been granted these benefits.
The Court, after noticing that there were discrepancies in the factual position adopted by the parties, DIRECTED: The matter to be examined is with reference to factual position as to when the 19 persons in Annexure 'A ' were initially employed and when they have been regularised as against the initial employment of each of the petition ers.
This can be done only by reference to appropriate records.
We direct that a senior officer of the Corporation shall be named by respondent No. 1 to look into these alle gations and at the time the question is examined by such officer the petitioners shall be given appropriate opportu nity of being heard, if asked for through counsel also, and all relevant documents should be looked into to ascertain whether the claim of the petitioners that they have been discriminated against in the facts indicated in their writ petition particularly with reference to Annexure 'A ' is correct; and in case it is found that the petitioners have not been given the benefit which has given to the 19 daily rated Conductors specified in Annexure 'A ', petitioners may be conferred the same benefit as has been extended to those 19 persons unless the respondent is able to assign satisfac tory and cogent reasons and states as to why petitioners are not entitled to the same benefit.
This would be so on the footing that regularisation does not require a specified period of service to have been put in.
[939E H]
|
ivil Appeal Nos.
2809 2812A of 1986.
From the Judgment and Order dated 6.2.1986 of the Alla habad High Court in Civil Misc.
W.P. Nos. 2274, 2983, 3860, 4558 and 3202 of 1984.
Rajinder Sachher and Bharat Sanghal for the Appellants.
Harbans Lal, Dr. Meera Agarwal, R.C. Misra and Arun Madan for the Respondents.
The Judgment of the Court was delivered by section RATNAVEL PANDIAN, J.
These five appeals by Special Leave under Article 136 of the Constitution of India are preferred against the Judgment and Or, let dated 6.2.86 passed by the Allahabad High Court in Civil Misc.
Writ Petition No. 2274/84 connected with Civil Misc.
Writ Peti tion Nos.
2983/84, 3860/84, 4558/84 & 3202/84 directing the respondents (appellants herein) to re determine the cost of the appellants ' (respondents herein) flats and instalments payable by them after hearing their grievances.
Since identical contentions are urged in all the ap peals, we are rendering a common judgment.
As it is said that Civil Appeal No. 2809/86 arising out of Civil Misc.
Writ Petition No. 2274/84 is more comprehen sive and the facts alleged therein may be taken as represen tative in character, the facts relating to this appeal are briefly stated.
The Bareilly Development Authority (hereinafter re ferred.
as 'BDA '), the first appellant was constituted under Section 4 of the U.P. Urban Planning and Development Act, 1973 by the State Government 747 for the purposes of development in the District of Bareilly., With a view to casing the acute housing problem in the said District, the BDA has undertaken construction of dwelling units for people belonging to different income groups styled as 'Lower Income Group ', 'Middle Income Group ', 'High Income Group ' and the 'Economically Weaker Sections ' (hereinafter referred as LIG, MIG, HIG and EWS respectively).
The BDA issued ' an advertisement offering to register names of intending applicants desirous of purchas ing dwelling houses/flats in any one of the different income groups intended to be constructed by the BDA.
In this appeal i.e. Civil Appeal No. 2809/86, the respondents 1 to 17 and 20 got themselves registered for allotment of flats in MIG scheme and respondents 18 and 19 in HIG scheme with the BDA in accordance with the terms and conditions contained in the brochure issued by the Authority.
The following table of the brochure shows the necessary details inclusive of the esti mated cost for the different types of flats under various categories: Type of Range of Cost Initial Interest Approx House Income payment monthly instalment MIG Rs. 1000 to Rs.64,000 Rs.5000 12% Rs.551 p.m. for Rs. 1500 p.m. 15 yrs.
HIG Rs. 1500 and Rs. 1, 15,000 Rs.7000 12% Rs. 1440 above p.m. p.m. for 10 yrs.
LIG Rs.351 to Rs.35,000 Rs.2000 11% Rs.345 p.m. for Rs. 1000 p.m. 15 yrs.
EWS Rs.350 p.m. Rs. 11,000 Rs, 100 7% Rs.89 p.m. for 20 yrs.
The note under the 'General Information Table ' given in the said brochure states that the cost shown therein is only estimated cost and it would increase or decrease according to the rise or fail in the price at the time of completion of the houses/flats.
All the respondents registered.their names ' for MIG, HIG and 748 EWS flats as the case may be and made the initial deposit.
Thereafter, the respondents in MIG group received indentical notices dated 19/20.1.84 from the Secretary, Bareilly Devel opment Authority (second appellant) intimating that the revised cost of houses/flats of MIG group as well as the amount of monthly instalment would be as follows: 1.
No. of houses available 77 2.
Cost of the house Rs. 1,27,000 3.
Down payment to be made/ Rs.35,000 paid on allotment 4.
No. of monthly instalment 180 fixed for the payment of remaining amount 5.
Rate of yearly interest 13.5% 6.
Amount of monthly instalment Rs. 1,031.50 with interest.
By the said notice, the respondents in MIG group were informed that 40% of the houses/flats mentioned in the notice would be given to the allottees who would deposit the entire cost in one cash payment and that the other allottees who intend to buy houses/flats on the above revised price/instalments must send by 28.1.84 their written accept ance on the annexed proforma to the Registration Section of the office of the BDA otherwise their claims would not be included in the lots to be drawn on 31.1.1984.
Except the respondents Nos. 13, 17, 18 and 20, all other respondents in reply to those notices gave their unequivocal and uncondi tional written consent.
Hence their names were included in the draw and on being lucky in the draw, the respondents barring the above 4 were allotted their respective houses.
After allotment, they were asked to complete the other formalities and make down payments in accordance with the notice.
dated 19/20.1.1984, by a further notice dated 3.2.1984 (Annexure 'F ').
Similar notices were issued to all the registered allottees for all types of houses and the respondents were also intimated that in case any of the registered persons does not want to purchase the house, his name would not be included in the draw but he would have his choice later on.
749 At this stage, all the respondents in these appeals approached the High Court under Article 226 of the Constitu tion of India challenging the revised terms and conditions of the BDA on the ground that the petitioners were estopped from changing the conditions subject to which the respond ents applicants had applied for registration and deposited the initial payment in the year 1980; that the enhancement of cost of the house/flat amounting almost double of the estimated cost as shown in the brochure while inviting the applications and the increase of the monthly instalments are much beyond the means of the respondents and that this arbitrary and unilateral stand of the petitioners is to the prejudice of the respondents.
On the above contentions, the respondents prayed in their respective petitions for issue of writ of mandamus directing the petitioners to maintain the allotment of the flats in their favour on the original terms and conditions, to hand over the possession of the same and further to restrain the petitioners from cancelling the original allotment.
The above plea was resisted by the petitioners strongly relying on certain conditions contained in the brochure especially of clauses 12 and 13 as per which the BDA has reserved its discretion to change, alter or modify any of the terms and/or conditions of the allotment given in the brochure; that its decision would be final with regard to any matter concerning the registration and allot ment and that the BDA has right to relax any condition in its discretion.
It has been further contended that respond ents barring 13, 17, 18 and 20 have given their written acceptance to the changed conditions as mentioned in the notice dated 19/20.1.1984 and as such they are not entitled to the reliefs claimed in the writ petition.
According to the petitioners the increase in the cost and the interest demanded from the respondents is neither arbitrary nor unreasonable and the High Court is not the proper forum for examining in detail the terms regarding payment of instal ments in the circumstances of the present case, and if the respondents were not agreeable to the changed terms and conditions, they could as well resile from their consent.
Finally, it was contended that the respondents are estopped from challenging the varied terms and conditions of the allotment after having consented.
The High Court though repelled the contention of the respondents (allottees) based on the principle of promissory estoppel, made the following observations with regard to the case of the respondents in the MIG category: "In the circumstances of the present case the fixation of monthly instalment to the tune of Rs.1031.50 from the 750 petitioners of MIG group whose income is hardly Rs. 1500 per month appears to us smack ing of arbitrariness and unreasonableness on the part of the contesting opposite party (petitioners herein)"; "In the circumstances of the present case, we are not satisfied that the contesting opposite party has succeeded in establishing its demand of double the estimated cost by facts and figures.
The end of justice demands that the authority should refix the cost of the peti tioner 's flats after hearing their grievance.
" The High Court answered the objections taken by the petitioners herein that the respondents have consented for the changed terms and conditions observing, "We think that the consent obtained from the petitioners was also not reasonable act on the part of the contesting opposite par ties (appellants herein)".
Finally, the High Court adopting the above reasoning in respect of the cases of other re spondents also falling under various categories directed the appellants herein in all the writ petitions "to re determine the cost of the petitioners ' (respondents herein) flats and instalments payable by them after heating their grievances." Being aggrieved by the impugned judgment the appellants have filed these appeals by special leave.
Shri Rajinder Sachher, St. Adv.
after taking us through the relevant documents and the additional affidavit filed by the second respondent and the reply affidavit assailed the reasonings given by the High Court contending that the said Court has erroneously held that the BDA has failed to justi fy the demand of the enhancement in the cost of houses/flats as well as the increase of the monthly instalments in dis proportionate to their income, because the income of the applicant was relevant only to determine the category of the scheme in which the applicant had to be included for eligi bility to get a house/flat under the scheme but not for enhancement of the cost of the houses/ flats and monthly instalments.
According to him since the declared policy of the BDA being 'No Profit No Loss ', it had fixed the cost of the houses/flats and the rate of instalments after taking into consideration of the escalation of the building materi al, labour charges, cost of transport and the allied valu able factors which all enter into the price fixation, and as such the High Court is not correct in going into the ques tion of computation of cost of the construction of houses/flats and 751 the plea of clerical mistakes exercising its jurisdiction under Article 226 of the Constitution of India.
He further submits that the High Court has gone wrong in importing the principle laid down in Ramana Dayaram Shetty vs The Interna tional Airport Authority of India & Ors., AIR 1979 Supreme Court 1628 to the present facts and circumstances of the case in view of the fact that in price fixation the execu tive has a wide discretion and it is only answerable provid ed there is any statutory control over its policy of price fixation and it is not the function of the High Court to sit in judgment over such matters of economic policy.
It has been vehemently urged that after the parties have entered into the field of ordinary contract, the relations are no longer covered by the constitutional provisions but by the legally valid contract which determines the rights and obligations of the parties inter se.
The fact that all respondents had applied for registra tion only on acceptance of terms and conditions contained in the brochure inclusive of Clauses 12 & 13 as well as the conditions mentioned in the Notes 1 and 2 of the 'General Information Table ' of the said brochure, and further the respondents barring respondents Nos. 13, 17, 18 and 20 in MIG group gave their reply accepting the changed terms and conditions as per letter dated 19/20.1.1984 cannot be chal lenged in view of the unassailable documentary evidence namely Annexures 'A ', 'D ', 'E ' and 'F '.
Now, we shall reproduce some of the relevant conditions of the brochure as well as the changed conditions contained in the letter dated 19/20.1.1984.
Clauses 12 and 13 of the brochure issued by the BDA and the notes 1 and 2 of the General Information Table thereto read thus: Clause 12 For allotment by lottery all the above men tioned terms and rules given in the booklet would ordinarily be followed but the Develop ment Authority will have the right to change, enhance or amend any of the terms and/or condition as and when it thinks necessary and at its discretion.
Clause 13 The decision of the Development Authority in regard to any matter in relation to the regis tration application will be final.
It would have the right to relax any of the conditions at its discretion.
The fight to sell by auc tion the Middle 752 Income Group and Higher Income Group plots/houses or any portion thereof, of the various schemes, will also vest in the Devel opment Authority.
General Information Table Note: (1) The cost shown in the column 4 is only estimated cost.
It will increase or decrease according to the rise or fall in the price at the time of completion of the property.
Note: (2) The data given in the above mentioned table can be amended as felt neces sary.
The last paragraph of the letter dated 19/20.1.84 (Annexure 'D ') reads thus: "If you want to buy the house on the above price/instalment then you must send by 28.1.1984 your written acceptance on the annexed proforma to the Registration Section of this office.
" It may be mentioned here that in this letter (Annexure 'D '), the BDA has informed the allottees of MIG about the enhancement of the cost of the houses/flats as well as the increase of the monthly instalment and the rate of yearly interest etc.
and requested the allottees to give their written acceptance so that their names could be included in the list.
The respondents except the four above have sent their written acceptance to the letter (Annexure 'D ').
For a better appreciation of the case of the appellants, we think that as an example the letter (Annexure 'E ') of the first respondent in this case namely Shri Ajay Pal Singh may be reproduced: "I, Ajay Pal Singh, S/o Shri Sujan Singh want to take a Middle Income Group house in the Housing Scheme No. 2 situated at Tibrinath of the Bareilly Development Authority on payment by instalment.
I have seen the house and am satisfied.
I accept the rules of the Bareilly Development Authority.
" 753 Only on the basis of the written acceptance, the name of the first respondent was included in the draw and he has successful in getting the allotment of House No. 37 in MIG type which fact if clearly borne out by the letter from the second respondent (Annexure 'F ').
In this connection, it is worthwhile to note that the first respondent, Shri Ajay Pal Singh is the Principal of Shri Guru Govind Singh Inter College and his educational qualifications are M.A. (Econ. & Hist.), B.Sc., B.Ed., LL.B.
From the above, it is clear that all the respondents who have sent their applications for registration with initial payment only after having fully understood the terms and conditions of the brochure inclu sive of the Clauses 12 and 13 and Notes 1 and 2 of the General Information Table as per which the BDA has reserved its right to change, enhance or amend any of the terms and/or conditions as and when felt necessary, and also the right to relax any of the conditions at its discretion, and that the cost shown in the column 4 of the brochure was only estimated cost subject to increase or decrease according to the rise or fail in the price at the time of completion of the property.
This is not only the case of the applicants of MIG scheme but also of the other applicants falling under the other categories i.e. HIG, LIG and EWS.
So it cannot be said that there was a mis statemennt or incorrect statement or an fraudulent concealment in the information supplied in the brochure published by the BDA on the strength of which all the applicants falling under the various categories applied and got their names registered.
In such a circum stance the respondents cannot be heard to say that the BDA has arbitrarily and unreasonably changed the terms and conditions of the brochure to the prejudice of the respond ents.
More so, the respondents barring respondent Nos. 13, 17, 18 and 20 after having given their written consent accepting the changed and varied terms and conditions as shown in the letter dated 19/20.1.84 are not justified in contending that the BDA has gone back on its original terms ' and conditions and has substituted new conditions to their detriment.
It is quite un understandable that the persons like the first respondent who is highly educated, occupying the post of the Principal of a College and who has accepted the changed terms and conditions by his letter is making these allega tions against the BDA.
The respondents were under no obligation to seek allot ment of houses/flats even after they had registered them selves.
Notwithstanding, they voluntarily registered them selves as applicants, only after fully understanding the terms and conditions of the brochure inclusive of Clauses 12 and 13 and Notes 1 and 2 of the General Information 754 Table which we have reproduced above, they are now trying to obtain the houses/flats at the price indicated in the bro chure at the initial stage conveniently ignoring the other express conditions by and under which the BDA has reserved its right to change the terms and conditions as and when felt necessary, evidently depending upon the escalation of the prices.
One should not loose sight of the fact that the BDA did not compel anyone of the applicants to purchase the flat at the rates subsequently fixed by it and pay the increased monthly instalments.
On the contrary, the option was left over only to the allottees.
In fact, the respond ents in Civil Appeal No. 2809 of 1986 except the four above mentioned have unconditionally accepted the changed terms and conditions.
Thus the factual position in this case clearly and unambiguously reveals that the respondents after voluntarily accepting the conditions imposed by the BDA have entered into the realm of concluded contract pure and simple with the BDA and hence the respondents can only claim the right conferred upon them by the said contract and are bound by the terms of the contract unless some statute steps in and confers some special statutory obligations on the part of the BDA in the contractual field.
In the case before us, the contract between the respondents and the BDA does not con tain any statutory terms and/or conditions.
When the factual position is so, the High Court placing reliance on the decision in Ramana Dayaram Shetty case ; has erroneously held: "It has not been disputed that the contesting opposite party is included within the term 'other authority ' mentioned under Article 12 of the Constitution.
Therefore, the contesting opposite parties cannot be permitted to act arbitrarily with the principle which meets the test of reason and relevance.
Where an author ity appears acting unreasonably this Court is not powerless and a writ of mandamus can be issued for performing its duty free from arbitrariness or unreasonableness.
" This finding, in our view, is not correct in the light of the facts and circumstances of this case because in Ramana Dayaram Shetty case there was no concluded contract as in this case.
Even conceding that the BDA has the trap pings of a State or would be comprehended in 'other authori ty ' for the purpose of Article 12 of the Constitution, while determining price of the houses/flats constructed by it and the rate of monthly instalments to be paid, the 'authority ' or its agent after 755 entering into the field of ordinary contract acts purely in its executive capacity.
Thereafter the relations are no longer governed by the constitutional provisions but by the legally valid contract which determines the rights and obligations of the parties inter se.
In this sphere, they can only claim rights conferred upon them by the contract in the absence of any statutory obligations on the part of the authority (i.e. B.D.A. in this case) in the said contractual field.
There is a line of decisions where the contract entered into between the State and the persons aggrieved is non statutory and purely contractual and the rights are governed only by the terms of the contract, no writ or order can be issued under Article 226 of the Constitution of India so as to compel the authorities to remedy a breach of contract pure and simple Radhakrishna Agarwal & Ors.
vs State of Bihar & Ors.
, ; ; Premji Bhai Parmar & Ors. etc.
vs Delhi Development Authority & Ors, ; and D.F.O. vs Biswanath Tea Company Ltd., In view of the authoritative judicial pronouncements of this Court in the series of cases dealing with the scope of interference of a High Court while exercising its writ jurisdiction under Article 226 of the Constitution of India in cases of non statutory concluded contracts like the one in hand, we are constrained to hold that the High Court in the present case has gone wrong in its finding that there is arbitrariness and unreasonableness on the part of the appel lants herein in increasing the cost of the houses/flats and the rate of monthly instalments and giving directions in the writ petitions as prayed for.
For the reasons hereinbefore stated, we set aside the judgment of the High Court and accordingly allow all the appeals.
There will be no order as to costs.
Before parting with the judgment, we would like to observe that it is open to the respondents to approach the appellants for correction of any clerical mistakes in the calculation, if any and they are at liberty to move any proper authority for any remedy if they are otherwise legal ly entitled to.
P.S.S. Appeals al lowed.
| IN-Abs | The appellant Authority offered to register names of intending applications desirous of purchasing LIG, MIG, HIG and EWS type houses/flats.
The 'General Information Table ' given in the brochure indicated the type of houses, corre sponding income groups, cost, initial payment to be made, rate of interest and approximate monthly instalments.
Note (1) under the said table stated that the cost shown therein was only estimated cost and it would increase or decrease according to the rise or fail in the price at the time of completion of the houses, while Note (2) stated that the date given therein could be amended as felt necessary.
By clauses 12 and 13 contained in the brochure the Authority reserved its discretion to change, alter or modify any of the terms and/or conditions of the allotment as and when necessary.
All the respondents registered their names for allotment of the flats in accordance with the terms and conditions in the brochure and made the initial deposit.
Subsequently, they received notices from the Authority intimating the revised cost of houses and the amount of monthly instalment rates which were almost double of those initially stated in the 'General Information Table '.
The respondents were fur ther informed that those who intend to buy houses on the revised price/instalments must send their written acceptance by the date specified other wise their claims would not be included in the lots to be drawn.
Except a few, all other respondents gave their unequivocal and unconditional written consent.
Hence their names were included in the 743 744 draws and on becoming lucky in the draw, they were allotted their respective houses.
At this stage.
all the respondents approached the High Court under Article 226 of the Constitution challenging the revised terms and conditions on the ground that the appel lants were estopped from changing the conditions subject to which the respondents had applied for registration and deposited the initial payment, that the enhancement of cost of the house amounting to almost double of the estimated cost as shown in the brochure and the increase of the month ly instalments were much beyond their means and that this arbitrary and unilateral stand of the appellants was to the prejudice of the respondents.
These petitions were resisted by the appellants by contending that the respondents were estopped from challenging the varied terms and conditions of the allotment after having consented.
The High Court found the action of the Authority in fixing the revised cost and instalments arbitrary and unrea sonable and directed the appellant Authority to re determine the cost of the flats and instalments payable by them after hearing the parties.
In these appeals by special leave it was contended for the appellant Authority that the income of the applicants was relevant only to determine the category of the scheme in which they had to be included for eligibility to get a house under the scheme but not for enhancement of the cost of the house and monthly instalments, that it had fixed the cost of the houses and the rate of instalments after taking into consideration the escalation in the price of building mate rial, labour charges, cost of transport and allied valuable factors which all enter into the price fixation, that in price fixation the executive has a wide discretion and it is only answerable provided there is any statutory control over its policy of price fixation, and that after the parties had entered into the field of ordinary contract, as in the instant case.
the relations were no longer covered by the constitutional provisions but by the legally valid contract which determines the rights and obligations of the parties inter se Allowing the appeals, HELD: 1.
Where the contract entered into between the State and the persons aggrieved is non statutory and purely contractual and the rights are governed only by the terms of the contract, no writ or order can be issued under Article 226 of the Constitution of India so as 745 to compel the authorities to remedy a breach of contract pure and simple.
[755C] Radhakrishna Agarwal & Ors.
vs State of Bihar & Ors.
, ; ; Premji Bhai Parmar & Ors. etc.
vs Delhi Development Authority & Ors. ; and D.F.O.v.
Biswanath Tea Company Ltd., referred to.
The respondents in the instant case had voluntarily registered themselves as applicants only after fully under standing the terms and conditions of the brochure, inclusive of cls.
12 and 13 and Notes 1 and 2 of the General Informa tion Table under which the Authority had reserved its right to change the terms and conditions as and when felt neces sary evidently depending upon the escalation of the prices.
The Authority did not compel anyone of the applicants to purchase the flat at the rates subsequently fixed by it and pay the increased monthly instalments.
On the contrary the option was left over only to the allottees.
All the same, the respondents gave their written consent unconditionally accepting the changed and varied terms and conditions.
[753H;754A C] The respondents after accepting the conditions imposed by the Authority had thus entered into the realm of a con cluded contract pure and simple with the Authority and hence they could only claim the right conferred upon them by the said contract and were bound by the terms of the contract unless some statute stepped in and conferred some special statutory obligations on the part of the Authority in the contractual field.
The contract between the respondents and the Authority did not contain any statutory terms and/or conditions.
[754C E] Even conceding that the Authority had the trappings of a State or would be comprehended in 'other authority ' for the purpose of Article 12 of the Constitution, while determining price of the houses flats constructed by it and the rate of monthly instalments to be paid, the 'authority ' or its agent after entering into the field of ordinary contract had acted purely in its executive capacity.
Thereafter the relations were no longer.
governed by the Constitutional provisions but by the legally valid contract which determined the rights and obligations of the parties inter se.
In this sphere, they could only claim rights conferred upon them by the contract in the absence of any statutory obligations on the part of the Authority in the said contractual field.
[754G H; 755A B] Ramana Dayaram Shetty vs The International Airport Authority 746 of India & Ors., ; The High Court while exercising its jurisdiction under Article 226 of the Constitution had, therefore, gone wrong in its finding that there was arbitrariness and unreasona bleness on the part of the appellants in increasing the cost of the houses/flats and the rate of monthly instalments, and giving directions in the writ petitions as prayed for.
[755D E]
|
view Petition Nos.
557 564 & 571,594/1987.
IN 827 CIVIL MISC.
PETITION NOS.
25279, 13195, 19336, 18600, 1563, 15031 33, 19552, 20695/1986.
IN CIVIL APPEAL NOS.
3005, 1599, 2194, 2067, 158 2148 50, 2902/86, 2533/86,223/88.
G. Ramaswamy Additional Solicitor General, A.K. Ganguli, P.P. Singh, R.P. Srivastava and P. Parmeswaran for the Petitioner.
J. Ramamurthy, B. Parthasarthi, V.J. Francis, C.S Vai dyanathan, S.R. Setia, Harish N. Salve, Ravinder Narain, D .N. Misra, section Padmanabha Mahale, Mrs. Leelawati, K.K. Gupta V. Balachandran and Uma Dutta for the Respondents.
The Judgment of the Court was delivered by SABYASACHI MUKIIARJI, J.
In these matters, the question that arises for consideration is, whether a learned Single Judge sitting in Chambers is competent to dismiss applica tion for condonation of delay in statutory appeals under Order XX A of the Supreme Court Rules, 1966, regarding appeal under section 55 of the as well as under Order XX B re garding appeals under Section 130 E of the and Section 35 L of the Central Excises & Salt Act, 1944.
It appears that an application for condonation of delay came before a learned Single Judge and in the circumstances mentioned in the Review Petition No. 557 of 1987, the appli cation was dismissed by the learned Single Judge.
That application was dismissed by one of us on 11.1 I. 86.
That order was passed by learned Single Judge under Order VI rule 2(14) of the Supreme Court Rules, 1966.
The application had been filed for the condonation of delay along with the Statutory Appeal against the Judgment/Order of the Customs, Excises and Gold Control Appellate Tribunal.
The revenue being the Collector of Central Excise, Madras in this case filed a review petition on the ground that the application for condonation of delay made in Statutory Appeals arising out of final orders of the Tribunal under several Acts should be heard by a bench of at least two Judges.
The matter was posted before this bench for consideration wheth er the learned Single Judge had jurisdiction to dismiss such application for condonation of delay or not.
In order to decide this question, it is necessary to have a cons 828 pectus of the relevant rules.
In the Supreme Court Rules, 1966 (hereinafter referred to as 'the Rules '), as amended in 1983, under Order XX B, of the said rules, provision has been made for appeals under clause (b) of Section 130 E of the and under Section 35 L of the .
According to Rule 1 thereof, the petition of appeal shall, .subject to the provisions of Sections 4, 5 & 12 of the be presented within 60 days from the date of the order sought to be appealed against or within 60 days from the date on which the order sought to be appealed against is communicated to the Appellate, whichever is later.
The time required for obtaining a copy of the order should be excluded.
There is, however, no provision providing for limitation in the con cerned Statutes.
According to Rule 2 of Order XX B, Rules 1 to 7 of Order XX A of the Rules relating to appeals under Section 51 of the shall with necessary modifications and adaptations, apply to appeals under that Order.
Rule 3 of Order XX A provides as under: "After the appeal is registered, it shall be put up for hearing ex parte before the Court which may either dismiss it summarily or direct issue of notice to all necessary par ties, or may make such orders as the circum stances of the case may require".
According to this provision, it appears that all such statutory appeals have to be placed before a Court for ex parte admission.
According to Section 5 of the : "Any appeal or any application . may be admitted after a prescribed period if the appellant or the applicant satisfies the court that he had sufficient cause for not prefer ring the appeal or making an application within such a period.
" Some grounds, according to the appellant, had been made for condonation of delay.
Apparently, in the facts of the case, the learned Single Judge did not find any merit in those grounds and refused to condone the delay.
Consequently, it was contended that the effect of the refusal of condonation of delay was dismissal of the appeal following as a result thereof.
The question is, can the learned Single Judge do it9 The 829 learned Single Judge has done it by virtue of Rule 2(14) of Order VI of the said Rules.
Order VI deals with the 'Busi ness in Chambers '.
Order VI, Rule 1 provides that the powers of the Court in relation to the matters enumerated thereun der would be exercised by the Registrar.
Order VI, Rule 2 provides that the powers of the Court in relation to certain matters may be exercised by a single Judge sitting in Cham bers.
Thereafter 28 such matters are enumerated.
Rule 2(14) of Order VI provides as follows: "Applications for enlargement or abridgement of time except where the time is fixed by the Court and except applications for condonation of delay in filing special leave petitions".
Reading the rule simply, it appears to us that it means all applications for the enlargement or abridgement of time would be cognizable by the learned Single Judge in Chambers except, those applications time for which has been fixed by the Court in terms of Order VII and also applications for condonation of delay in filing special leave petitions.
This appears to us to be logical and literal meaning of the said rule.
The question, however, has been posed is this an application for condonation of delay or an application for enlargement or abridgement of time.
This question, it ap pears to us, is concluded by the decision of this Court in Commissioner of Income Tax, Bombay City vs R.H. Pandi Manag ing Trustees of Trust, Bombay; , There a bench of three learned Judges of this Court had occasion to con sider this question.
A question arose there as to whether the application for condonation of delay in filing petition of appeal could be heard by the Judge in his Chambers.
Ray, C.J. observed in the said judgment an argument was advanced before the Hon 'ble Judge in Chambers that if an application for condonation of delay was refused by the Judge in Cham bers it would amount to dismissal of the appeal by the Judge in Chambers.
Therefore, it was said that these applications should be heard by 'the Court ' which alone was competent to dismiss the appeal.
By Court, it was urged, meant a bench of two learned Judges.
After giving notices to the learned Attorney General and the Bar Association, the matter was discussed by this Court and it was held that in view of Order VI, Rule 2(14) of the Rules set out hereinbefore, all applications for enlargement or abridgement of time except the three cases mentioned in Order VI, Rule 2(14) were to be heard by the Judge in Chambers.
At the relevant time, the three matters included, inter alia, deposit of security.
This Court observed in the said decision that an important exception was the application for condonation of delay in 830 filing special leave petitions.
It was observed that Order XLVII Rule 3 of the Rules stated that the Court might en large or abridge any time appointed by these rules or fixed by any order enlarging time, for doing any act or taking proceedings, upon such terms, if any, as the justice of the case might require, and any enlargement might be ordered, although the application therefore was not made until after the expiration of the time appointed or allowed.
A petition of appeal was required under Order XV of the Rules to be presented within 60 days from the grant of certificate of fitness.
The time to present the petition of appeal was fixed by the Rules of this Court.
It was observed, there fore, that Order XLVII Rule 3 should apply with regard to enlargement or abridgement of any time appointed by the Rules for doing any act.
This Court was of the view that Order VI Rule 2(14) spoke of the applications for enlarge ment or abridgement of time.
Here the words "enlargement or abridgement of time" took in applications for enlargement of time appointed by the Rules, that is to say, according to this Court, fixed by the Rules.
The significant feature of the Rules was that applications for condonation of delay in filing special leave petitions were excepted from the busi ness of a Chamber Judge.
The natural presumption was that but for the exception the Rule would have to be included also applications for condonation of delay in filing special leave petitions.
Any application for condonation of delay in filing petition of appeal was therefore included in applica tions for enlargement or abridgement of time.
This Court noted that the practice of the Chamber Judge hearing appli cations for condonation of delay in filing petitions of appeal within the time appointed by the Rules of this Court had been followed ever since 1966.
Cursus curiae est lex curiae.
The practice of this Court is the law of the Court.
See Broom 's Legal Maxims at p. 82.
Where a practice had existed it was convenient to adhere to it because it was the practice.
It was noted that the power of each Court over its own process is unlimited; it is a power incident to all Courts.
Reliance was placed on the observations in Cooker vs Tempest, Therefore, this Court held that applications for condonation of delay in filing petitions of appeal were within the Chamber business under Order VI Rule 2(14).
Learned Additional Solicitor General contended that the aforesaid decision requires reconsideration.
He submit ted that a prior decision of this Court and a decision of Calcutta High Court were not adverted to.
He further submit ted that this Court spoke of "enlargement or abridgement of time" fixed by the Rules.
Therefore, it could not be con tended that the application for condonation of delay would come within this purview.
Furthermore, it was argued that if the exceptions in favour of special leave petitions are maintained, there would be hostile discrimi 831 nation without any basis, namely, special leave petitions being amenable to be dealt with by the two Judges, while the learned Single Judge will dispose of the application for condonation of delay under Statutory Appeals.
This, it was submitted, is irrational and violative of Article 14 of the Constitution and the Rules should not be so construed.
The Learned Additional Solicitor General, therefore, submitted before us that we should hold that as dismissal of applica tion for condonation of delay amounts to dismissal of the appeal, it should be heard in terms of Order VII Rule 1 subject to other provisions, namely, it should be heard by not less than two Judges.
He submitted that if we were not inclined to accept this submissions in view of the decision of this Court in C. 1.
T., Bombay City vs R.H. Pandi Manag ing Trustees of Trust, Bombay, (supra), we should refer the matter to a larger bench for reconsideration of the matter.
We have considered the matter.
We are unable to accept the submission of the learned Additional Solicitor General.
We accept the reasoning to the decision of this Court in Commissioner of Income tax vs R.H. Pandi, (supra).
We find that was the practice of the Court.
That has been sanctified by the judicial decision.
We also see reason in the decision and the practice.
We do not find any reason for holding that the practice of this Court followed since 1966 requires to be altered.
Arranging the business of the Court is within the domain of the Court.
These Rules have been framed by this Court with the approval of the President of India.
Under Order I Rule 2(1)(g) of the Rules, 'Court ' means the Supreme Court of India.
Sub rule (14) of Rule 2 of Order VI empowers a Single Judge to decide certain matters which speaks of applications for enlargement or abridgement of time except where the time is fixed by the Court and except, inter alia, applications for condonation of delay in filing special leave petitions.
On a proper reading, it appears to us that the exception made only in favour of the time fixed by the Court means Court functioning judicially in terms of Order VII Rule 1 as well as time fixed by the Rules of the Court.
All other applications for enlargement or abridgement of time could be heard by the learned Single Judge.
As is clear, Order VI demarcates the power of the Registrar, and the learned Single Judge and Order VII demarcates the con stitution of the Division Courts, powers of a Single Judge and the Vacation Judge.
This is arranging the business of the Court.
This is within the power of the Court.
Two deci sions were referred to us by the learned Additional Solici tor General.
Our attention was drawn to the observations in the Division Bench Judgment of the Calcutta High Court in Promotho Nath Roy vs W.A. Lee, AIR 1921 Calcutta 415.
There the Court was concerned 832 with the provisions of Civil Procedure Code, Section 109.
The Court observed that an order dismissing an appeal as barred by limitation prescribed therefore after further refusing an application under section 5 of the to admit the appeal after the prescribed time, was 'passed on appeal ' under Section 109.
Sanderson, C.J. doubt ed the said conclusion but observed that this involved a substantial question of law.
That was an application by the defendant for a certificate that the decree of this Court, from which the appeal was sought to the Privy Council in volved a claim of Rs. 10,000 and that the appeal involved some substantial question of law.
The question was whether such application should be allowed.
A point was taken on behalf of the plaintiff that the decree of the High Court was not one 'passed on appeal ' within the meaning of clause (a) of Section 109 of the Civil Procedure Code.
There it appears that the order of Mr. Justice Greaves against which the appeal was directed, was made on 26th July, 1918.
On the 30th August, 1918, being the last date of sitting of the Court, at about 5.00 P.M. after the Court of Appeal had risen an application was made to Mr. Justice Chaudhuri sitting on the Original Side for leave to file the memoran dum of appeal without a copy of the order against which the defendant desired to appeal.
The learned Judge granted leave to the defendant to file the memorandum of appeal subject to any objection which might be taken on behalf of the plain tiff.
When the matter came before the appeal Court, the plaintiff took the point that the appeal was out of time.
The appeal Court decided that the appeal was out of time, being barred by the , and the Court further refused an application under Section 5 of the to admit the appeal after the prescribed time and the appeal was dismissed.
Having regard to the above mentioned facts, Sanderson, C.J. observed that it cannot be held that the order was not one 'passed on appeal '.
Sanderson, C.J. had some doubts on that proposition but agreed with Woodroffe, J. that the appeal involved substantial question of law.
In that appeals, a certificate was granted.
In our opinion, this decision is not relevant for the issue before us.
Whether an order dismissing an application for condonation of delay in case of Statutory Appeal is an order or appeal is not quite in issue here and is not decisive of the mat ter.
It does not solve the question whether a learned Single Judge can dismiss an application for condonation of delay in a statutory appeal.
After all, the Court functions by its arrangement under the Rules.
Order VI mentions the Chamber Business and the Business to be transacted by the Registrar and Single Judge sitting in Chambers.
The powers of the Court, that is to say, the whole Court and the powers of Division Bench normally, except those mentioned in Order VI, will be as enjoined by Rule.
1 of Order VII, 833 that is to say, a bench consisting of not less than two Judges.
In that view of the clear provisions of the Rule, we are of the opinion that the said decision of the Calcutta High Court upon which reliance has been placed does not in any manner detract the decision of this Court in C. 1.
T., Bombay City vs R.H. Pandi.
Our attention was also drawn to a decision of this Court in M/s. Mela Ram & Sons vs The Com missioner of Income Tax, Punjab; , There the appellant firm had filed appeals against orders assessing it to income tax and super tax for two years 1945 46 and 1946 47 beyond the time prescribed by Section 30(2) of the Income Tax Act.
The appeals were numbered and notices were issued for their hearing under Section 31 of the Income Tax Act, 1922.
At the hearing of the appeals before the Appellate Assistant Commissioner, the Department took the objection that the appeals were barred by time.
The appellant prayed for condonation of delay, but that was refused, and the appeals were dismissed as time barred.
The appellant then preferred appeals against the orders of dismissal to the Tribunal under Section 33 of the Act, and the Tribunal dismissed them on the ground that the orders of the Assist ant Commissioner were in substance passed under Section 30(2) and not under Section 31 of the Act and that no appeal lay against them under Section 33 of the Act.
This Court observed that an appeal presented out of time is an appeal and an order dismissing it as time barred is one 'passed in appeal '.
Section 31 of the Act was the only provision relat ing to the hearing and disposal of appeals and if an order dismissing an appeal as barred by limitation as in the present case is one passed in appeal it must fall within Section 31 and as Section 33 confers a right of appeal against all orders passed under Section 31, it must also be appealable.
These observations, in our opinion, were made entirely in different statutory context and cannot be used in the context in which the question has arisen before us in the present case.
Learned Additional Solicitor General submitted before us that in view of the fact that these two decisions were not considered by this Court in C. 1.
T., Bombay City vs R.H. Pandi, (supra) and in view of the fact that this argument in favour of statutory appeals to be heard by the learned Single Judge while the applications for condonation of delay in respect of the special leave peti tions to be heard by the bench of two learned Judges will be violative of Article 14 of the Constitution and as such this contention should be heard by a larger bench.
We are unable to accept this submission.
This Court had occasion to consider the situation in which question settled by this Court can be reviewed.
Refer ence may be made to the observations of Gajendragadkar, CJ in the Keshav Mills Co. Ltd. 834 vs C.I.T., Bombay North; , at page 921 the learned Chief Justice observed: "In dealing with the question as to whether the earlier decisions of this Court in the New Jehangir Mills, [(1960)] 1 SCR 249] case, and the Petlad Ltd. case [(1963)] Supp. 1 SCR 871] should be reconsidered and revised by us, we ought to be clear as to the approach which should be adopted in such cases.
Mr. Palkhivala has not disputed the fact that in a proper case, this Court has inherent jurisdiction to reconsider and revise its earlier decisions, and so, the abstract question as to whether such a power vests in this Court or not need not detain us.
In exercising this inherent power, however, this Court would naturally like to impose certain reasonable limitations and would be reluctant to entertain pleas for the reconsideration and revision of its earlier decisions, unless it is satisfied that there are compelling and substantial reasons to do so.
It is general judicial experience that in matters of law involving ques tions of construing statutory or constitutional provisions, two views are often reasonably possible and when judicial approach has to make a choice between the two reasonably possible views, the process of decision making is often very difficult and delicate.
When this Court hears appeals against decisions of the High Courts and is required to consider the propriety or correctness of the view taken by the High Courts on any point of law, it would be open to this Court to hold that though the view taken by the High Court is reasonably possible, the alternative view which is also reasonably possible is better and should be preferred.
In such a case, the choice is between the view taken by the High Court whose judgment is under appeal, and the alterna tive view which appears to this Court to be more reasonable; and in accepting its own view in preference to that of the High Court, this Court would be discharging.
its duty as a Court of Appeal.
But different considerations must inevita bly arise where a previous decision of this Court has taken a particular view as to the construction of a statutory provision as, for instance, Section 66(4) of the Act.
When it is urged that the view already taken by this Court should be reviewed and revised, it may not necessarily be an ade quate reason for such review and revision to hold that though the earlier view is a reasonably 835 possible view, the alternative view which is pressed on the subsequent occasion is more reasonable.
In reviewing and revising its earlier decision, this Court should ask itself whether in the interests of the public good or for any other valid and compulsive reasons, it is necessary that the earlier decision should be revised.
When this Court decides questions of law, its decisions are, under Article 141, binding on all courts within the territory of India, and so, it must be the constant endeavour and concern of this Court to introduce and maintain an element of certainty and conti nuity in the interpretation of law in the country.
Frequent exercise by this Court of its power to review its earlier decisions on the ground that the view pressed before it later appears to the Court to be more reasonable, may inci dentally tend to make law uncertain and introduce confusion which must be consistently avoided.
That is not to say that if on a subsequent occasion, the Court is satisfied that its earlier decision was clearly erroneous, it should hesitate to correct the error; but before a previous decision is pronounced to be plainly erroneous, the Court must be satis fied with a fair amount of unanimity amongst its members that a revision of the said view is fully justified.
It is not possible or desirable, and in any case it would be inexpedient to lay down any principles which should govern the approach of the Court in dealing with the question of reviewing and revising its earlier decisions.
It would always depend upon several relevant considerations: What is the nature of the infirmity or error on which a plea for a review and revision of the earlier view is based? On the earlier occasion, did some patent aspects of the question remain unnoticed, or was the attention of the Court not drawn to any previous decision of this Court bearing on the point not noticed?.
Is the Court hearing such plea fairly unanimous that there is such an error in the earlier view? What would be impact of the error on the general administra tion of law or on public good?.
Has the earlier decision been followed on subsequent occasions either by this Court or by the High Courts?.
And, would the reversal of the earlier decision lead to public inconvenience, hardship or mischief?.
These and other relevant considerations must be carefully borne in mind whenever this Court is called upon to exercise its jurisdiction to review and revise its earli er decisions.
" 836 This view was again reiterated by this Court in the Pillani Investment Corporation Ltd. vs Income Tax Officer, "A" Ward, Calcutta, and Another[1972] In the facts and circumstances of the case, in the light of the provisions of the said Rules as noticed before, we cannot say that we are satisfied that the earlier decision of this Court in C.I.T. Bombay City vs R.H. Pandi, (supra) was clearly erroneous.
In that view of the matter, it is not necessary to refer this question to a larger bench or to disturb the settled practice of this Court.
There is no substance in the contention of any discrimi nation under Article 14 of the Constitution or in Order VII rule 2(14).
Applications under Article 136 is a special class and are sui juris.
These are and should legitimately be treated separately other than all other applications including applications under Statutory Appeals.
If a sepa rate and distinct provision is made for application of condonation of delay under Article 136 of the Constitution, we do not see any conceivable ground which can be taken for contending that it is violative of Article 14 of the Consti tution.
After all Article 136 is the residuary power of this Court to do justice where the Court is satisfied that there is injustice.
These are class apart.
The practice of the learned Single Judge disposing of in Chambers applications for condonation of delay in statutory appeals is just, fair and reasonable.
Every court has the right to arrange its own affairs.
We find no reason either to upset that practice or to cast doubt on the propriety of such practice.
In this connection, reference may be made to the decision of this Court in P.N. Eswara lyer etc., etc.
vs The Registrar, Supreme Court of India, where this Court upheld the circulation system for the disposal of the Review Petitions and held that early hearing was the essential requirement if a review petition is found devoid of substance.
Such different treatment in respect of different applications has always been within the domain of Court 's arrangement of business.
These do not involve any violation of the fundamental right.
In the premises, we do not find any reason to interfere with the order passed.
We hold that a Single Learned Judge in Chambers is and was always competent to dismiss all applications for condonation of delay in statutory appeals.
We find nothing repugnant in the same and no substance in the contention that otherwise the same would be violative of Article 14 of the Constitu tion.
The Review Petitions therefore, fail and are dis missed.
N.P.V. Petitions dismissed.
| IN-Abs | An application for condonation of delay was filed by the petitioner Revenue alongwith statutory appeals against the judgment/order of the Customs, Excise and Gold Control Appellate Tribunal.
The application was rejected by a Single Judge of this Court under Order VI, Rule 2(14) of the Su preme Court Rules, 1966.
The Revenue filed review petitions on the ground that the application for condonation of delay made in statutory appeals under several Acts should be heard by a bench of at least two Judges.
It was contended that the effect of the refusal of condonation of delay was dismissal of the appeal itself, that the exception in favour of Special Leave Peti tions amounted to hostile discrimination without any basis in that the Special Leave Petitions will be amenable to be dealt with by two Judges, while a Single Judge will dispose of applications for condonation of delay under statutory appeals, which was irrational and violative of article 14 of the Constitution and, therefore, the Court should either hold that as dismissal of application for condonation of delay amounted to dismissal of the appeal itself, it should be heard by not less than two Judges in terms of Order VII Rule 1 subject to other provisions or refer the matter to a larger bench for re consideration, in view of the decision 825 of this Court in Commissioner of Income Tax Bombay City versus R.H. Pandi, Managing Trustees of Trust.
Bombay, holding that the applications for condonation of filing petitions of appeal were within the Chamber business under Order VI Rule 2(14).
On the question whether a Single Judge has jurisdiction to dismiss applications for condonation of delay in statuto ry appeals.
Dismissing the review petitions, HELD: 1.1 A Single Judge in Chambers is and was always competent to dismiss all applications for condonation of delay in statutory appeals.
There is nothing repugnant in the same that it is not violative of article 14 of the Consti tution.
[836G] 1.2 Order VI, Rule 2 of the Supreme Court Rules provides that the powers of the court in relation to a certain mat ters may be exercised by a Single Judge sitting in Chambers.
Rule 2(14) deals with applications for enlargement or abridgement of time with some exceptions.
Reading the rule simply, it means all applications for enlargement or abridgement of time would be cognizable by the Single Judge in Chambers except those applications, time for which is fixed by the court in terms of Order VII and also applica tions for condonation of delay in filing Special Leave Petitions.
[831E F] 1.3 On a proper reading, the exception made only in favour of the time fixed by the court means court function ing judicially in terms of Order VII Rule 1 as well as time fixed by the rules of the court.
All other applications for enlargement or abridgement for time could be heard by the Single Judge.
[831F G] 1.4 If a separate and distinct provision is made for application for condonation of delay under article 136 of the Constitution, it is not violative of article 14 of the Consti tution.
Applications under article 136 are a special class and are sui juris.
These are and should legitimately be treated separately other than all other applications including applications under statutory appeals.
article 136 is the resid uary power of this Court to do justice, where the court is satisfied that there is injustice.
These are class part.
There is, therefore, no discrimination under article 14 of the Constitution or in Order VI Rule 2(14).
[836C D] 2.1 Order VI demarcates the power of the Registrar and the Single Judge and Order VII demarcates the constitution of the divi 826 sion courts, powers of a Single Judge and a Vacation Judge.
This is arranging the business of the court, this is within the power of the court.
[831G] 2.2 Different treatment in respect of different applica tions has always been within the domain of Court 's arrange ment of business.
These do not involve any violation of the fundamental rules.
[836F) P.N. Eswara Iyer etc., etc.
vs The Registrar, Supreme Court of India, relied on.
3.1 The practice of one Single Judge disposing of in Chambers applications for delay in statutory appeals is just, fair and reasonable.
There is no reason either to upset that practice or to cast doubt on the proprietory of such practice, which has been valid since 1966, and which has been sanctified by the judicial decision.
There is reason in the decision and the practice.
[836E; 831D E] Commissioner of Income Tax, Bombay City vs R.H. Pandi Managing Trustees of Trust, Bombay, ; affirmed.
3.2 In the facts and circumstances of the case and in the light of the provisions of the Rules, it cannot be said that the earlier decision of this Court in Commissioner of Income Tax, Bombay City versus R.H. Pandi was clearly erro neous and, therefore, it is not necessary to refer this question to a larger bench or to disturb the settled prac tice of this Court.
[836B] Keshav Mills Co. Ltd. vs C.I.T. Bombay North, ; and Pillani Investment Corporation Ltd. vs Income Tax Officer, "A" Ward, Calcutta, and Another, , relied on.
Promotho Nath Roy vs W.A. Lee, AIR 1921 Calcutta 415 and M/s. Mela Ram & Sons vs The Commissioner of Income Tax, Punjab, ; , distinguished.
Cooker vs Tempest, , referred to.
|
Criminal Appeal No. 530 of 1978 From the Judgment and Order dated 13.9.1978 of the Punjab and Haryana High Court in Criminal Appeal No. 1154 of 1975.
M.L. Verma, S.K. Bagga and Mrs. section Bagga for the Appellant.
Tara Chand Sharma and Miss A. Subhashini for the Respondent.
The Judgment of the Court was delivered by AHMADI, J.
The appellant, having been convicted by the learned Sessions Judge, Chandigarh under Section 302.
I.P.C., and his appeal against conviction having been dis missed by the High Court of 943 Punjab & Haryana, has preferred this appeal by special leave.
The conviction of the appellant is principally based on the ocular evidence of PW 2 Kesho Gupta and PW 4 Varinder Singh.
The facts emerging from the evidence of these two main witnesses coupled With the evidence of the other prose cution witnesses may be stated as follows: PW 5 Mangal Dass was the owner of House No. 3220 in Sector 23 D, Chandigarh, consisting of the ground floor and the first floor.
The ground floor was occupied by Mangal Dass himself while the first floor consisting of four rooms and a kitchen was tenanted; two rooms and a kitchen were rented to PW 4 while the other two rooms were occupied by Sikander Lal, the father of the appellant and Amrit Lal (the acquitted accused).
PW 2 Kesho and his brother Nitya Nand (deceased) belonged to village Narnaul to which PW 4 also belonged.
They had come to Chandigarh a couple of years back and were sharing the accommodation with PW 4.
As Amrit Lal 's marriage was scheduled on December 7, 1974, a request was made to PW 4 by Sikander Lal to permit the use of the kitch en for a few days.
Accordingly, the possession of the kitch en was delivered to Sikander Lal on December 4, 1974 on a clear understanding that it would be returned to PW 4 after the marriage.
As the possession of the kitchen was not returned immediately after the marriage, PW 2 and his de ceased brother Nitya Nand demanded possession thereof from Sikander Lal.
They were initially put off but according to the prosecution the possession of the kitchen was delivered on January 1, 1975.
However, as the kitchen had to be cleaned it was not occupied by PW 2 and PW 4 till January 3, 1975 on which date the family members of Sikander Lal are stated to have re entered the kitchen.
It may here be men tioned that this part of the prosecution evidence has not been accepted by the learned Sessions Judge.
According to the learned Sessions Judge, the possession of the kitchen was not delivered to PW 4 till January 3, 1975 and that led to the quarrel in which PW 2 received a knife injury on the neck and his brother Nitya Nand lost his life.
On this aspect of the matter, the High Court has not expressed any opinion.
On a perusal of the relevant evidence we are in clined to think that the finding of fact recorded by the learned Sessions Judge in this behalf is correct.
On January 3, 1975, at about 7.15 p.m., PW 2 and his deceased brother had an heated argument with the appellant and his brother Amrit Lal in regard to the return of the kitchen.
In the course of this heated exchange PW 2 is alleged to have showered filthy abuses.
Although PW 2 denies this fact, PW 4 has admitted the same.
PW 2 also threatened to throw out the utensils and lock the kitchen.
Since 944 PW 2 was uttering filthy abuses in the presence of the appellant 's sister and Nitya Nand did not restrain him, the appellant got enraged, went into the kitchen and returned with a knife with which he inflincted one blow on the neck of PW 2 causing a bleeding injury.
In the melee the appel lant inflicted three knife blows to Nitya Nand; one on the shoulder, the other on the elbow and the third on the chest, as a result whereof Nitya Nand collapsed to the floor and later died while on the way to the hospital.
The fact that Nitya Nand died a homicidal death is not in dispute.
The appellant 's defence was that on the date of the incident PW 2 and his deceased brother had demanded vacant possession of the kitchen and on being told that PW 4 had permitted them to continue to occupy it they uttered filthy abuses in the presence of his sister and on being asked to desist from using such language PW 2 began to throw out the utensils from the kitchen.
When the appellant tried to stop him from doing so, PW 2 took out a knife from his pant pocket whereupon the appellant took shelter behind a door.
PW 2 rushed towards him with the knife but in the meanwhile Nitya Nand moved in between and sustained the injuries in question.
The courts below have, however, concluded, and in our opinion rightly, that the appellant had in the course of the quarrel given stab wounds to PW 2 and the deceased Nitya Nand.
The learned Advocate for the appellant submitted that there was no previous iII will between the parties, on the contrary the relations were cordial and the appellant was not the one who had started the quarrel but he acted in the heat of passion during a sudden quarrel without any premedi tation and hence Exception 4 to Section 300, IPC was clearly attracted.
On the other hand the learned counsel for the State argued that the High Court had rightly held that the appellant had acted in a cruel and unusual manner and was not entitled to the benefit of the said exception.
He sub mitted that the appellant had attacked an unarmed person and had caused as many as three injuries which showed that he had acted in a cruel manner.
The appellant 's counsel coun tered by pointing out from the evidence of PW 1 Dr. Goyal that the appellant had a deformity in the left leg which restricted his movement and he would ordinarily not venture to attack unless he was forced by circumstances to use the weapon to contain PW 2.
Exception 4 to Section 300 reads as under: "Exception 4: Culpable homicide is not murder if it is 945 committed without premeditation in a sudden fight in the heat of passion upon a sudden quarrel and without the offender having taken undue advantage or acted in a cruel or unusual manner.
Explanation: It is immaterial in such cases which party offers the provocation or commits the first assault." To invoke this exception four requirements must be satisfied, namely, (i) it was a sudden fight; (ii) there was no premeditation; (iii) the act was done in a heat of pas sion; and (iv) the assailant had not taken any undue advan tage or acted in a cruel manner.
The cause of the quarrel is not relevant nor is it relevant who offered the provocation or started the assault.
The number of wounds caused during the occurrence is not a decisive factor but what is impor tant is that the occurrence must have been sudden and unpre meditated and the offender must have acted in a fit of anger.
Of course, the offender must not have taken any undue advantage or acted in a cruel manner.
Where, on a sudden quarrel, a person in the heat of the moment picks up a weapon which is handy and causes injuries, one of which proves fatal, he would be entitled to the benefit of this exception provided he has not acted cruelly.
In the present case, the deceased and PW 2 had entered the room occupied by Sikander Lal and his family members and had demanded vacant possession of the kitchen.
When they found that the appel lant was disinclined to handover possession of the kitchen, PW 2 quarrelled and uttered filthy abuses in the presence of the appellant 's sister.
On the appellant asking him to desist he threatened to lock up the kitchen by removing the utensils, etc., and that led to a heated argument between the appellant on the one side and PW 2 and his deceased brother on the other.
In the course of this heated argument it is the appellant 's case that PW 2 took out a knife from his pant pocket.
This part of the appeIIant 's case seems to be probable having regard to the antecedents of PW 2.
It is on record that PW 2 was convicted at Narnaul on two occa sions under Section 411, IPC and his name was registered as a bad character at the local police station.
It was presuma bly because of this reason that he had shifted from Narnaul to Chandigarh a couple of years back and had started to live in the premises rented by PW 4.
When the appellant found that PW 2 had taken out a pen knife from his pocket he went into the adjoining kitchen and returned with a knife.
From the simple injury caused to PW 2 it would appear that PW 2 was not an easy target.
That is why the learned Sessions Judge rejected the case that Amrit Lal had held PW 2 to facilitate an attack on him by the appellant.
It further 946 seems that thereafter a scuffle must have ensued on Nitya Nand intervening to help his brother PW 2 in which two minor injuries were suffered by the deceased on the left arm before the fatal blow was inflicted on the left flank at the level of the 5th rib about 2" below the nipple It may incidentally be mentioned that the Trial Court came to the conclusion that the injury found on the neck of PW 2 was a selfinflicted wound and had therefore acquitted the appel lant of the charge under Section 307, IPC, against which no appeal was carried.
We have, however, proceeded to examine this matter on the premise that PW 2 sustained the injury in the course of the incident.
From the above facts, it clearly emerges that after PW 2 and his deceased brother entered the room of the appellant and uttered filthy abuses in the presence of the latter 's sister, tempers ran high and on PW 2 taking out a pen knife the appellant picked up the knife from the kitchen, ran towards PW 2 and inflicted a simple injury on his neck.
It would be reasonable to inter that the deceased must have intervened on the side of his brother PW 2 and in the course of the scuffle he received injuries, one of which proved fatal.
Taking an overall view of the inci dent we are inclined to think that the appellant was enti tled to the benefit of the exception relied upon.
The High Court refused to grant him that benefit on the ground that he had acted in a cruel manner but we do not think that merely because three injuries were caused to the deceased it could be said that he had acted in a cruel and unusual manner.
Under these circumstances, we think it proper to convict the accused under Section 304, Part I, IPC and direct him to suffer rigorous imprisonment for 7 years.
In the result, this appeal partly succeeds.
The order of conviction and sentence passed under Section 302, IPC is set aside and the fine, if paid, is directed to be refunded.
The appellant is convicted under Section 304 Part I, IPC and is directed to suffer rigorous imprisonment for 7 years.
S.K.A. Appeal allowed.
| IN-Abs | The deceased and his brother P.W. 2 were sharing accom modation with P.W. 4 as a tenant on the 1st Floor of a house in Chandigarh.
The father of the appellant also occupied two rooms on the same floor as a tenant.
As a marriage was scheduled in the family of the appellant 's father a request was made to P.W 4 to permit the use of the kitchen for a few days.
The possession of the kitchen was delivered on a clear understanding that it would be returned to P.W. 4 after the marriage.
The possession of the kitchen was however not delivered to P.W. 4 and that led to the quarrel.
The de ceased and his brother P.W. 2 had an heated argument with the appellant in regard to the return of the kitchen.
P.W. 2 was alleged to have showered filthy abuses in the presence of the appellant 's sister, and taken out a pen knife from his pocket and also threatened to throw out the utensils and lock up the kitchen.
The appellant got enraged, went into the kitchen and returned with a knife with which he inflict ed one blow on the neck of P.W. 2 causing a bleeding injury and also inflicted three knife blows to the brother of P.W. 2 as a result whereof he collapsed on the floor and later died while on the way to the hospital.
The appellant was convicted by the Sessions Judge under Section 302, Indian Penal Code and his conviction having been upheld by the High Court, he preferred an appeal by special leave to this Court.
It was contended for the appel lant that there was no previous iII will between the par ties, on the contrary the relations were cordial and the appellant was not the one who had started the quarrel but he acted in the heat of passion during a sudden quarrel without any premeditation and hence Exception 4 to Section 300, I.P.C. was applicable.
On the other hand counsel for the State argued that the High Court had rightly held that the appellant had acted in a cruel and unusual manner and was not entitled to the benefit of the said Exception, and that the three injuries inflicted showed that the appellant had acted in a cruel manner.
942 Partly allowing the appeal, this Court, HELD: To invoke Exception 4 to Section 300 I.P.C. four requirements must be satisfied, namely (i) it was a sudden fight; (ii) there was no premeditation; (iii) the act was done in a heat of passion, and (iv) the assailant had not taken any undue advantage or acted in a cruel manner.
The cause of the quarrel is not relevant nor is it relevant who offered the provocation or started the assault.
The number of wounds caused during the occurrence is not a decisive factor but what is important is that the occurrence must have been sudden and unpremeditated and the offender must have acted in a fit of anger.
[945B D] Where, on a sudden quarrel, a person in the heat of the moment picks up a weapon which is handy and causes injuries, one of which proves fatal, he would be entitled to the benefit of this Exception provided he has not acted cruelly.
[945D E] In the instant case, after P.W. 2 and his deceased brother entered the room of the appellant and uttered filthy abuses in the presence of the latter 's sister, tempers ran high and on P.W. 2 taking out a pen knife, the appellant picked up the knife from the kitchen, ran towards P.W. 2 and inflicted a simple injury on his neck.
It would be reasona ble to infer that the deceased must have intervened on the side of his brother P.W. 2 and in the course of the scuffle he received injuries, one of which proved fatal.
Under these circumstances, it is proper to convict the accused under Section 304, Part 1, I.P.C. and direct him to suffer rigor ous imprisonment for 7 years.
[946C E]
|
onstrued.
One should not concentrate too much on one rule and pay too little atten tion on the other, for that would lead astray and result in hardship, such construction should be avoided.
[955C D] & CIVIL APPELLATE JURISDICTION: Civil Appeal No. 30373038 of 1984 From the Judgment and Order dated 12.12.
1983 of the Bombay 950 High Court in W.P. No. 1189 of 1980.
S.K. Dholakia, A.S. Bhasme and A.M. Khanwilkar for the Appellant.
N.B. Shetya, S.B. Bhasme, section Ramachandran, R. Ramachan dran, Maknand Adkar and Mrs. M. Karanjawala for the Respond ents.
The Judgment of the Court was delivered by K. JAGANNATHA SHETTY, J.
These two appeals by special leave are by the State of Maharashtra.
They are directed against the judgment of the High Court of Bombay dated 12th January, 1983 by which the High Court issued the following two directives to the State Government: "(1) To recast the Revised/Final Sen iority List dated 20.12.
1982 vis a vis the persons shown in the category of 'Late Pass ing ' and assign them seniority strictly in accordance with Rule 2 and the other Govern ment orders referred to in Paragraph 96 of the judgment; and (2) The seniority in the Superintend ent 's cadre so fixed should also be considered as seniority for further promotions.
" The background to these directives is, in outline, this: Respondents 1 to 8 are Assistant Secretaries/Section Officers/ Superintendents in different departments of the Government of Maharashtra.
The State Government prescribed departmental examinations as a condition precedent for promotion to the cadre of Superintendents.
The examination was required to be conducted every year, and the officials have to pass within the stipulated period.
Those who could not pass within the time frame would lose their seniority but they will be promoted as and when they qualify them selves.
The Government for some reason or the other could not hold the examinations every year.
Particularly in 1968, 1969 & 1970, the Government did not hold the examinations.
The Government, however, did not pass any order extending the period prescribed for passing the examinations, nor promoted the seniors subject to their passing the examina tion.
The juniors who qualified themselves were promoted overlooking the case of seniors and seniors were only pro moted upon their passing the examination.
In the cadre of Superinten 951 dents, however, the Government revised the seniority list so as to reflect the rankings in the lower cadre irrespective of the date of promotion.
The validity of the revision of seniority was challenged before the High Court.
The High Court conceded the power to the Government to relax the rules relating to passing of the examination in case of hardship, but refused to recognise the power of the Govern ment to give seniority to those who could not pass the examination within the time schedule.
The High Court was of opinion that without specific orders of the Government relaxing the conditions of the rules, the persons could not be given seniority for 'Late Passing '.
There are also other reasons given by the High Court which we will presently consider.
But before that, it is important that we should have a chronology of the relevant rules and resolutions of the Government.
It is as follows: On 22nd August, 1951, the Government made a resolution prescribing departmental examination for the members of the Upper Division of the Subordinate Secretariat Service, and further directing that only those persons who pass the examination should be promoted as Superintendents.
The accompanying rules (The 1951 Rules) thereunder provided the procedure for passing the examination as well as the conse quences of failure to pass the examination.
On 24th August, 1955, the Government framed rules (The 1955 Rules) under the proviso to Article 309 of the Constitution specifically providing power to dispense with, or relax, the requirements of the operation of any rule regulating the conditions of service of Government servants; or of any class thereof if it causes undue hardships in any particular case.
On 15th January, 1962, the Government issued a circular purporting to restrict the scope of the rule permitting relaxation only in respect of travelling allowance rules, leave rules, etc.
The circular also clarified that the 1955 Rules could not be invoked for conferring benefit on an individual by relaxing the conditions relating to recruitment, promotion, grant of extension of service or re employment.
On 28th December, 1961, the Government made the revised rules in supersession of the 1951 Rules.
They were brought into force with effect from 1st January, 1962 (the 1962 Rules).
They were made appl icable to all persons recruited to the Upper Division of the Subordinate Secretariate Service on or after that date and also to those who have been in service prior to 1st Jan uary, 1962 unless they had already passed the examination under the 1951 Rules.
The rules 1 to 5 are as follows: "1.
Every member of the Upper Divi sion of the Subordinate Secretariat Service will be required to pass within 952 nine years from the date of his entry in the Upper Division, a departmental examination for promotion to the posts of Superintendents according to the prescribed syllabus.
For being eligible to appear for the examination a candidate must have passed the Post Recruit ment Training Examination for Junior Assistant and must have also completed not less than five years ' continuous service in the Upper Division.
(2) Subject to Rule 1, a candidate will be allowed to appear for the examination in three chances which must be availed of within a period of four years.
This period of 4 years will not be extended for any reasons irrespective of the fact whether a candidate has availed himself of 3 chances or not during the period.
Similarly no candidate will be allowed to take during this period more than 3 chances.
A candidate who does not pass the examination at the end of 9 years service in the Upper Division, will lose his seniority to all those candidates who pass the examination before he passes it.
(3) No persons shall be appointed to the post of Superintendent unless he has passed the Superintendents ' Examination.
Provided that this rule shall not apply to short term vacancies not exceeding two months.
(4) Subject to the condition of loss of seniority laid down in rule 2, a candidate will be allowed to take the examina tion in any number of chances after the com pletion of 9 years ' service.
(5) The examination will be held once a year.
XXX XXX XXX XXX " On December 28, 1970, proviso to above rule 3 has been added.
The said proviso reads: "Provided that if the Superintendent 's Examination is not held in any year, a person who has completed 9 years service and who has not exhausted all the permissible chances, may be promoted to the post of Superintendent, provided further that he is otherwise suitable for promo tion, subject to the clear condition that he will have to pass 953 the examination at the earliest opportunity whenever it is held." "It is further clarified that promo tions to the posts of Superintendents should, in view of the above amendments, be given only after ensuring that there are no persons who have passed the Superintendents Examination earlier for being promoted to the posts of Superintendents.
" We may incidentally refer to the subsequent rules made by the Government, although it is not applicable to the present case.
On June 6, 1977, the Government framed the rules called "The Maharashtra Government Subordinate Service Rules, 1977".
Rule 7 of the rules provides that if, for any reason, the examination is not held in any particular year, that year shall be excluded in computing the period speci fied under the rules.
This is, indeed, the true reflection of the underlying concept of purpose of the earlier rules.
Against this backdrop, we may now consider whether the Government was justified in re arranging the seniority by giving benefit to persons in the category of "Late Passing".
We are not concerned herein about the seniority of persons in whose favour the Government has made individual orders extending the period for passing the examination.
We will consider such cases a little later.
For the present, we may examine the rights of those "Late Passing" where the Government has not made any specific order relaxing the conditions for passing the examination.
Under the 195 1 Rules, the candidate could appear for the examination after two years of his entering into the cadre.
He has three chances and he must pass within 6 years of his joining service.
Under the 1962 Rules the scheme provided was slightly different.
Under that scheme, candidate was allowed to take the examination only after completing five years service in the cadre.
He had three chances for taking the examination and that must be availed of within four years.
That means he must pass the examination within the 9 years ' service.
Under both the Rules, the Government was required to hold the examination every year, but no examination was held in 1968, 1969 & 1970.
This is not in dispute.
For a proper appreciation of the question raised, we must first try to understand the hardship resulted by not holding the examination in 1968, 1969 & 1970.
It is as follows: The candidates recruited in 1960 have lost one chance in 1968.
Those recruited in 1961 are deprived of two chances in 1968 and 1969.
The candidates recruited in 1962 are 954 denied of three chances in 1968, 1969 & 1970 and those of the year 1963 have lost two chances in 1969 and 1970.
The last batch to lose one chance in 1970 is of the year 1964.
The aforesaid Rules expressly provided power to the Government to grant more chances for passing the examination in any individual case or in class of cases.
Under the 1955 Rules, the Government preserved power to dispense with, or relax the requirements of any rule regulating "the condi tions of service of government servants; or of any class thereof".
In the exercise of this power, the Government could dispense or relax the operation of any rule, if it causes undue hardships in any particular case.
It is need less to state that this power includes the power to relax the conditions prescribed for promotion since promotion is a condition of service.
There is no restriction as to the exercise of the power or discretion.
The High Court, howev er, has observed that the scope of this power has been constrained by the circular dated 15th January, 1962.
The circular states that the 1955 Rules permitting relaxation cannot be utilised to relax the rules which regulate condi tions of service.
It further states that the scope of the Rules should be limited only to matters relating to travel ling allowance, leave, etc.
But this appears to be an exer cise in vain.
The circular is an executive instruction whereas the 1955 Rules are statutory since framed under the proviso to Article 309 of the Constitution.
The Government could not have restricted the operation of the statutory rules by issuing the executive instruction.
The executive instruction may supplement but not supplant the statutory rules.
The High Court was in error in ignoring this well accepted principle.
When we turn to the 1962 Rules with the amendments made in 1970, it becomes more clear about the power of the Gov ernment to relax the conditions for passing the examination.
The proviso dated 28th December, 1970 to rule 3 specifically provides that if the examination is not held in any year, a person Could be promoted to the cadre of Superintendent if he has completed nine years ' service.
The only condition is that he should not have exhausted all the permissible chances.
The promotion, made should be subject to the condi tion that he will have to pass the examination at the earli est opportunity whenever it is held.
The benefit of this proviso was evidently not extended to any of the persons falling into the category of "Late Passing".
Counsel for the contesting respondents however, urged that the proviso does not entitle the candidate to get his legitimate seniority if 955 he does not pass the examination at the end of nine years ' service.
He depended upon rule 2 of the 1962 Rules which states that the candidate who does not pass the examination within 9 years ' service will lose his seniority to all those candidates who pass the examination earlier.
He also argued that the proviso is only to rule 3 and not to rule 2 and the Government has no power to restore the seniority of a person who has lost it by the operation of rule 2.
This is a question of construction of the rules which form part of the scheme prescribing a condition for promo tion.
We do not have to reflect upon the rules of interpre tation since they are well settled.
They are now like the habits of driving which have become ingrained.
They come to our assistance by instinct.
We are to use the different rules meticulously to give effect to the scheme as we use the clutch, brake and accelerator for smooth driving.
These rules are to be harmoniously construed.
We should not con centrate too much on one rule and pay too little attention on the other.
That would lead us astray and result in hard ship.
We must avoid such construction.
Rule 2 of the 1962 Rules no doubt states that a candidate who does not pass the examination at the end of nine years ' service will lose his seniority.
But this rule cannot be read in isolation as the High Court did.
It has to be read along with the other rules since it is a part of the scheme provided for promotion.
Rule 5 requires the Government to hold the examination every year.
This rule is the basis of the entire scheme and the effect of other rules depends upon holding the examination.
If examination is not held in any year, the rule 2 cannot operate to the prejudice of a person who has not exhausted all his chances.
The person who has not exhausted the avail able chances to appear in the examination cannot be denied of his seniority.
It would be unjust, unreasonable and arbitrary to penalise a person for the default of the Gov ernment to hold the examination every year.
That does not also appear to be the intent or purpose of the 1962 Rules.
If the examination is not held in any year, the person who has not exhausted all the permissible chances has a right to have his case considered for promotion even if he has completed 9 years ' service.
The Government instead of promoting such persons in their turn made them to wait till they passed the examination.
They are the persons falling into the category of "Late Passing".
To remove the hardship caused to them the Government wisely restored their legiti mate seniority in the promotional cadre.
There is, in our opinion, nothing improper or illegal in this action and indeed, it is in harmony with the object of the 1962 Rules.
956 This takes us to the question whether the Government was justified in individual cases to relax the period for pass ing the examination.
It is said that the number of persons failing into this category are not more than five.
In the rejoinder filed on behalf of the Government, it is stated that the Government made some orders extending the period for individuals to pass the examination on administrative grounds or on some genuine hardships.
It is also stated that such orders were made upon recommendations by the respective departments and those persons passed the examination within the period extended.
There is no reason to doubt the cor rectness of these statements made in the rejoinder.
The power to relax the conditions of the rules to avoid undue hardship in any case or class of cases cannot now be gain said.
It would be, therefore, futile for the respondents to make any grievance.
In the result and for the reasons stated, we allow these appeals and in reversal of the judgment of the High Court, we dismiss the writ petitions filed by the contesting re spondents.
In the circumstances of the case, however, we make no order as to costs.
Y.L. Appeals allowed.
| IN-Abs | Respondents 1 to 8 are Assistant Secretaries/Section Officers/ Superintendents who are working in different departments of the State of Maharashtra.
Under the Rules governing their Service conditions the Govt. had prescribed Departmental Examination for promotion to the cadre of Superintendents; the passing of the examination was a condi tion precedent for the officials for being promoted as superintendents.
The Examination in question was required to be conducted every year and the officials were required to pass the same within the stipulated period; and the offi cials who were not able to pass the said examination within the prescribed period were to lose their Seniority, but they were permitted to take the examination in any number of chances after the expiry of the stipulated period and they were to be promoted only when they qualify themselves.
The Govt.
as required under the Rules, could not hold the exami nation every year particularly in the years 1968, 1969 & 1970.
The Govt.
neither extended the period within which the officials were required to pass the examination nor promoted the seniors in the cadre of Superintendents subject to their passing the examination and instead thereof the juniors in the cadre who had qualified in the examination were promoted to the cadre of Superintendents.
The seniors in the cadre were promoted only when they qualified the examination i.e. later in point of time.
The Govt. issued a revised Seniority List relating to the cadre of Superintendents.
In the said List the Respond ents herein were shown juniors to those persons who had not only qualified the Dept. Examination later in point of time but also promoted after them.
Being aggrieved, the Respond ents herein challenged the validity of the revi 948 sion of the Seniority List as also the validity of the Rules being violative of article 14 & 16 of the Constitution by filing a Writ Petition in the Bombay High Court.
The High Court allowed the Writ Petn.
and issued the following two directives to the State Govt.
(1) To recast the Revised/Final Seniority List dated 20.12.1982 vis a vis the persons shown in the Category of "Late Passing" after considering the objections of the Writ Petitioners and Ors.
and assign them seniority strictly in accordance with Rule 2 and the other Government Orders referred to in paragraph 96 of the Judgment, and (2) The Seniority in the Superintendent 's Cadre so fixed should also be considered as seniority for further promo tions.
Being dissatisfied with the said order of the High Court, the State of Maharashtra filed appeals in this Court after obtaining Special Leave.
Allowing the appeals this Court, HELD: Under the 1951 Rules, the candidate could appear for the examination after two years of his entering into the cadre.
He had three chances and he must pass within six years of his joining Service.
Under the 1962 Rules a candi date was allowed to take the examination only after complet ing five years service in the cadre.
He had three chances for taking the examination and that must be availed of within four years.
That means he must pass the examination within 9 years ' service.
Under both the Rules, the Govt was required to hold the examination every year, but no examina tion was held in 1968, 1969 and 1970.
[953F G] Those recruited in 1961 are deprived of two chances in 1968 three chances in 1968, 1969 & 1970 and those of the year 1963 have lost two chances in 1969 & 1970.
The last batch to lose one chance in 1970 is of the year 1964.
[953H; 954A] Under the 1955 Rules, the Government preserved power to dispense with or relax the requirements of any rule regulat ing "the conditions of service of Government servants; or of any class thereof".
[954B] 949 There is no restriction as to the exercise of the power or discretion.[954C] The Circular dated January 15, 1962 is an executive instruction whereas the 1955 Rules are statutory since framed under the proviso to article 309 of the Constitution.
The Government could not have restricted the operation of the Statutory Rules by issuing the executive instruction.
The executive instruction may supplement but cannot supplant the statutory rules.
[954D E] Rule 2 of the 1962 Rules no doubt states that a candi date who does not pass the examination at the end of 9 years service will lose his seniority.
But this rule cannot be read in isolation.
[955D] If examination is not held every year.
The rule cannot operate to the prejudice of a person who has not exhausted all his chances.
The person who has not exhausted the avail able chances to appear in the examination cannot he denied of his seniority.
It would be unjust, unreasonable and arbitrary to penalise a person for the default of the Gov ernment to hold the examination every year.
That does not also appear to be the intent or purpose of the 1962 Rules.
[955E F] The Govt.
instead of promoting such persons in their turn made them to wait till they passed the examination.
They are the persons failing into the category of "Late Passing".
To remove the hardship caused to them the Govt.
wisely restored their legitimate seniority in the promotion al cadre.
There is nothing improper or illegal in this action and indeed, it is in harmony with the object of 1962 Rules.
[955G H] The Court need not have to reflect upon the Rules of interpretation since they are well settled.
They are now like the habits of driving which have become ingrained.
They come for assistance by instinct.
The different rules have to be used meticulously to give effect to the scheme as the clutch, brake and accelerator are used for smooth driving.
|
ivil Appeal No. 2311 of 1978.
From the Judgment and Order dated 27.3.1978 of the Allahabad High Court in Second Appeal No. 130 of 1975.
Awadh Behari and N.N. Sharma for the Appellants.
Yogeshwar Prasad and Mrs. Rani Chhabra for the Respondent.
The Judgment of the Court was delivered by K.N. SAIKIA, J.
This appeal by special leave is from the judgment and order dated 27.3.1978 of the High Court of judicature at Allahabad (Lucknow Bench), in second appeal No. 130 of 1975, dismissing the appeal and upholding the decree of the plaintiff respondent 's suit.
The plaintiff respondent Prem Behari Khare instituted suit No. 42 of 197 1 in the court of Civil Judge, Mohanlal Gun j, Lucknow praying for the reliefs, inter alia, that he be declared to be the sole and real owner of the suit house, and that the defendant appellant be permanently restrained from transferring the suit house.
The learned Civil Judge, Lucknow, by his judgment dated 133.1974 decreed the suit declaring the plaintiff to be the sole and real owner of the suit house and permanently restraining the defendant from transferring the suit house to any other person.
On first appeal by the defendant appellant the learned Additional District Judge; Lucknow by his judg 627 ment dated 23.12.1974 dismissed the appeal agreeing with the findings of the trial court that it was the plaintiff re spondent who paid the consideration and purchased the suit house benami in the name of tile defendant appellant who, therefore, had no right to create any equitable mortgage or to transfer the suit house.
The defendant appellant 's second appeal thereafter was also dismissed by the High Court of Judicature at Allahabad by the impugned judgment dated 27.3.1978.
Hence this appeal by special leave.
Mr. A.B. Rohtagi learned counsel for the appellant submitS, inter alia, that the learned courts below erred in holding that the suit house was not gifted by the plaintiff to the defendant but was held benami in her name; and that even if it was so held benami, the subsequent legislation, namely, the Benami Transactions (Prohibition) Act 1988, has put a complete bar to the plaintiff 's suit against the defendant in respect of the suit house.
Mr. Yogeshwar Prasad learned counsel for the respondent refutes submitting that the issues on gift and benami have been concluded by concurrent findings of fact of the learned courts below; and that the plaintiff 's right to the benami suit house having already become final, it will not be affected by the subsequent Act.
The first question, therefore, is whether or not to interfere with the concurrent findings of fact of the learned courts below.
It has been said in a series of deci sions that ordinarily this court in an appeal will not interfere with a finding of fact which is not shown to be perverse or based on no evidence, (Babu vs Dy.
Director, A.I.R. 1982 S.C. 756), but will interfere if material cir cumstances are ignored by the High Court.
Prasad vs Govin daswaray; , In Dhanjibhai vs State of Gujarat, ; it was observed that where a finding of fact has been rendered by a learned Single Judge of the High Court as a court of first instance and thereaf ter affirmed in appeal by an Appellate Bench of that High Court, this Court should be reluctant to interfere with the finding unless there is very strong reason to do so.
There is no reason why this should not apply to cases where the first appellate court was the district court.
It was noted in Ganga Bishan vs Jay Narayan, A.I.R. 1986 S.C. 441 that ordinarily this Court, under Article 136 of the Constitu tion, would be averse to interfere with concurrent findings of fact recorded by the High Court and the Trial Court.
But where there are material irregularities affecting the said findings or where the court feels that justice has failed and the findings are likely to result in unduly excessive hardship this court could not 628 decline to interfere merely on the ground that findings in question are findings on fact.
So also in Uday Chand Dutt vs Saibal Sen, A.I.R. 1988 S.C. 367 it was said that in an appeal by special leave under Article 136 of the Constitu tion of India where there are concurrent findings of the courts below this court is not called upon to reconsider the entire evidence in detail to ascertain whether the findings are justified.
In Ram Singh vs Ajay Chawla, A.I.R. 1988 S.C. 514 where the concurrent finding was that the appellants were in unauthorised occupation of premises of which the respondents were the owners this court did not interfere with the concurrent findings of fact.
Mr. Rohtagi lays emphasis on the facts, namely, that the plaintiff Prem Behari Khare 's wife having died in 1955 leaving behind two sons aged about 2 and 3 years respective ly, he faced great difficulties in managing the household, looking after his sons and carrying on his duties as employ ee of the Allahabad Bank; that under these circumstances he agreed to take in the defendant Mithilesh Kumari whose relation with her husband Ram Swarup was then estranged; that the relation between the plaintiff and the defendant come to be such that she bore two children to him; that there were efforts to legalise their de facto living as man and wife by obtaining defendant 's divorce from her husband, and in fact there was a decree for judicial separation in 1958; that the plaintiff had full confidence in, and affec tion towards the defendant; and that in the court he could give no reason why he purchased the house in the name of the defendant.
Under those circumstances, counsel submits, the purchase of the suit house in the name of the defendant was made for Rs.8,000 out of which Rs.2,000 contributed by the defendant, and the learned courts below ought, therefore, to have held the transaction of purchase in the name of defend ant to have been a genuine gift out of love and affection and not a benami purchase in her name.
Perusing the judgment of the Trial Court we find that whether the transaction was a benami or it was a genuine gift by the plaintiff to the defendant were main issues on which parties led evidence.
The averment that the defendant contributed Rs.2,000 towards purchase price was disbelieved by both the courts below.
The plaintiff respondent proved from the statement of his Savings Bank account of Allahabad Bank, Exts.
6, 7 and 8, that he withdrew Rs.8,250 on 8.11.1962 and stated in witness box that he purchased the suit house in the name of the defendant by sale deed execut ed on 8.11.1962 which was registered on 9.11.1962.
The plaintiff respondent has since been staying in the suit house.
As the two were living as man and wife the 629 custody of the sale deed was not very material.
We thus find that the concurrent findings are based on reasonable appre ciation of evidence on record and, therefore, can in no way be said to be perverse or unreasonable.
Counsel criticises the observation of the High Court that the relation between the two was of a rather objectionable nature.
We do not think that this observation was unwarranted or it had in any way prejudiced the defendant 's case.
The High Court has analysed the facts and correctly applied the tests to deter mine whether the transaction was benami or not discussing the case law.
We do not find any justification in the appeal under Article 136 of the Constitution of India to interfere with the concurrent findings of fact.
The next question is whether despite the decree in favour of the plaintiff respondent his suit or action will be affected by the subsequent legislation, namely, the Benami Transactions (Prohibition) Act, 1988 and its prede cessor Ordinance.
In other words, whether the effectuation of the decree has been barred.
For this it is relevant to note that the impugned High Court judgment was dated 27.3.1978.
The first appellate court 's judgment was dated 23.12.1974, the trial court judgment dated 13.3.1974 and the suit was filed in 1971.
The special leave to appeal was granted by this Court on 15.11.1978.
The Benami Transactions (Prohibition of the Right to Recover Property) Ordinance, 1988, hereinafter referred to as 'the Ordinance ', was pro mulgated on May 19, 1988 to come into force at once.
The Benami Transactions (Prohibition) Act, 1988 (Act No. 45 of 1988), hereinafter referred to as 'the Act ', received the asset of the President of India on September 5, 1988.
The provisions of Sections 3, 5 and 8 of the Act came into force at once on that date and the remaining provisions were to be deemed to have come into force on 19th day of May 1988.
It is an Act to prohibit benami transactions and the right to recover property held benami and matters connected therewith or incidental thereto.
Mr. Rohtagi submits that provisions of the Act cover past benami transactions also and that to hold so it would be permissible for this Court to refer to the 57th Report of the Law Commission of India wherein it was suggested that the legislation should not be applied to past transactions but the Parliament did not accept that suggestion, and made the law applicable to past transactions also.
Learned counsel for the respondent Submits that the provisions of the Act are prospective and not retrospective, and as such would not affect the respondent 's established right to the benami property.
He has not controverted that this Court can refer to Law Commission 's Report.
630 To decide the controversy the relevant provisions of the Act may be referred to.
As defined in section 2(a) of the Act "Benami Transaction" means any transaction in which property is transferred to one person for a consideration paid or provided by another person.
As defined in section 2(c) of the Act "property" means property of any kind, whether movable or immovable, tangible or intangible and includes any right or interest in such property.
There can, therefore, be no doubt that the transaction by which the suit house was transferred to the defendant appellant for Rs.8,000 paid or provided by the plaintiff respondent would be a benami transaction if this law is applicable to it.
There is also no doubt that the suit house being a tangible immovable would be included within this definition of 'property '.
Section 3 of the Act prohibits benami transactions by pro viding: "(1) No person shall enter into any benami transaction.
(2) Nothing in sub section (1) shall apply to the purchase of property by any person in the name of his wife or unmarried daughter and it shall be presumed, unless the contrary is proved that the said property had been purchased for the benefit of the wife or the unmarried daughter.
(3) Whoever enters into any benami transaction shall be punishable with imprison ment for a term which may extend to three years or with fine or with both.
(4) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), an offence under this section shall be non cognisable and bailable.
" The appellant having not been wife or unmarried daughter of the respondent the exception in (2) will not be applica ble.
Section 4 prohibits the right to recover property held benami by providing: "(1) No suit, claim or action to enforce any right in resspect of any property held benami against the person in whose name the property is held or against any other person shall lie by or on behalf of a person claiming to be the real owner of such property.
631 (2) No defence based on any right in respect of any property held benami, whether against the person m whose name the property is held or against any other person, shall be allowed in any suit, claim or action by or on behalf of a person claiming to be the real owner of such property.
" Having upheld the finding that the suit house has been held benami by the respondent in the name of the appellant, the question is whether to this transaction the Act shall be applicable.
The Act has not been made retrospective by any specific provision.
Is it permissible to refer to the Law Commission 's Report to ascertain the legislative intent behind the provision? We are of the view that where a par ticular enactment or amendment is the result of recommenda tion of the Law Commission of India, it may be permissible to refer to the relevant report as in this case.
What impor tance can be given to it will depend on the facts and cir cumstances of each case.
In Santa Singh vs State of Punjab, [1977] 1 S.C.R. 229 Fazal Ali, J. in order to answer the question whether the non compliance with the provisions of section 235(2) of the Criminal Procedure Code, 1973 vitiated the sentence passed by the court considered it necessary to trace the historical background and social setting under which section 235(2) was inserted for the first time in the 1973 Code and referred to the research done by the Law Commission which made several recommendations in its 48th Report for revolutionary changes in the provision.
The Statement of Objects and Reasons were also referred to in that context.
In the instance case we find that way back in 1972 the Government of India consid ered it necessary to request the Law Commission of India to examine the problem of benami held property with a view to determining whether benami transactions should be prohibit ed.
The Law Commission accordingly submitted its 57th Report on benami transactions on 7.8.1973 after studying benami system as operating in India and in England.
It also exam ined implications of the provisions of the Indian Trust Act, 1882 and other statutory modifications of the Benami Law as contained in the Code of Civil Procedure, the Transfer of Property Act, the Indian Penal Code and the Income tax Act.
It also suggested in its Report the following draft of proposed legislation: 6.33 Recommendation: In the light of the above discussion, we recommend the enactment of a separate law containing the following legislative provisions: 632 "(1) No suit to enforce any right in respect of any property held benami against the person in whose name the, property is held or against any other person shall be institut ed in any court by or on behalf of a person claiming to be the real owner of such proper ty.
(2) In any suit, no defence based on any right in respect of any property held benami, whether against the person in whose name the property is held or against any other person, shall be allowed in any court by or on behalf of a person claiming to be the real owner of such property.
(3) Nothing in this section shall apply: (a) whether the person in whose name the property is held is a manager of, or a co parcener in, a Hindu undivided family, and the property is held for)he benefit of the co parceners in the family, or (b) where the person in whose name the property is held is a trustee or other person standing in a fiduciary capacity, and the property is held for the benefit of another person for whom he is a trustee or towards whom he stands in such capacity." On 19th May 1988, the President of India promulgated the Benami Transactions (Prohibition of the Right to Recover Property) Ordinance, 1988 (No. 2 of 1988) "to prohibit the right to recover property held benami and for matters con nected therewith and incidental thereto" based on the sug gestion of the Law Commission of India made as far back as in 1973.
With this Ordinance the judicial acceptance of benami transactions was being removed with a view to help people to keep property they were holding for others.
It remedied the age old doctrine of benami and made a benamidar the real owner in law, of course with few exceptions.
The Ordinance was referred by the Government on July 22, 1988 to the Law Commission of India requesting the latter to take up the question of benami transactions for detail examination and to give its considered views as early as possible so that a Bill to replace the Ordinance could be drafted on the basis of its recommendations and got passed before the close of the Monsoon Session of the Parliament.
633 The 130th Report of the Law Commission was submitted to the Government on August 14, 1988.
The Benami Transactions (Prohibition) Bill, 1988, drafted after getting the report, was introduced in the Rajya Sabha on 31st August, 1988 and the Bill was passed.
The Law Commission devoted several pages to justify retrospective legislation and its view was that the legislation replacing the Ordinance should be retroactive in operation and that no locus penitentia need be given to the person who had entered in the benami trans actions in the past.
It reported at para 3.18 as follows: "3.18.
Therefore, viewed from either angle, the Law Commission is of the firm opinion that the legislation replacing the ordinance should be retroactive in operation and that no locus penitentia need be given to the persons who had entered into benami transactions in the past.
They had notice of one and a half dec ades to set their house in order.
No more indulgence is called for.
" However, the court has to interpret the language used in the Act, and when the language is clear and unambiguous it must.
be given effect to.
Law Commission 's Reports may be referred to as external aid to construction of the provi sions.
It may be noted that the Act is a piece of prohibito ry legislation and it prohibits benami transactions subject to stated exceptions and makes such transactions punishable and also prohibits the right to defences against recovery of benami transactions as defined in section 2(a) of the Act.
The Parliament has jurisdiction to pass a declaratory legis lation.
As a result of the provisions of the Act all proper ties held benami at the moment of the Act coming into force may be affected irrespective of their beginning, duration and origin.
This will be so even if the legislation is not retrospective but only retroactive.
The learned counsel for the respondent rightly submits that the Act contains no specific provision making its operation retrospective.
The Law Commission itself observed that democratic culture abhors ex post facto legislation and that it was necessary .to curb unlawful nefarious uses of property.
We read in Maxwell that it is a fundamental rule of English Law that no statute shall be construed to have retrOspective operation Unless such a construction appears very clearly at the time of the Act, or arises by necessary and distinct implication.
A retrospective operation is, therefore, not to be given to a statute so as to impair existing right 634 or obligation, otherwise than as regards matter of procedure .unless that effect cannot be avoided without doing violence to the language of the enactment.
Before applying a statute retrospectively the Court has to be satisfied that the statute is in fact retrospective.
The presumption against retrospective operation is strong in .cases in which the statute, if operated retrospectively, would prejudicially affect vested rights or the illegality of the past transactions, or impair contracts, or impose new duty or attach new disability in respect of past transac tions or consideration already passed.
However, a statute is not properly called a retrospective statute because a part of the requisites for its action is drawn from a time an tecedent to its passing.
We must look at the general scope and purview of the statute and at the remedy sought to be applied, and consider what was the former State of Law and what the legislation contemplated.
Every law that takes away or impairs rights vested agreeably to existing laws is retrospective, and is generally unjust and may be oppres sive But laws made justly and for the benefit of individu als and the community as a whole, as in this case, may relate to a time antecedent to their commencement.
The presumption against retrospectivity may in such cases be rebutted by necessary implications from the language em ployed in the statute.
It cannot be said to be an invariable rule that a statute could not be retrospective unless so expressed in the very terms of the section which had to be construed.
The question is whether on a proper construction the legislature may be said to have so expressed its inten tion.
Craise on Statute Law, 7th Ed. writes that the general rule of law that statutes are not operated retrospectively may be departed from (a) by express enactment and (b) by necessary implication from the language employed, and the author goes on to say: "If it is a necessary implication from the language employed that the legislature intend ed a particular section to have a retrospec tive operation, the courts will give it such an operation.
"Baron Parke," said Lord Hather ley in Pardo vs Bingham, did not consider it an invariable rule that a statute could not be retrospective unless so expressed in the very terms of the section which had to be con strued, and said that the question in each case was whether the legislature had suffi ciently expressed that intention.
In fact, we must look to the general scope and purview of the statute, and at the remedy sought to be applied, and consider what was the former state of the law, what it was that the legis lature contemplated.
" But a statute is not to be read retrospectively except of necessity .
In Main vs 635 Stark, Lord Selborne said: "Their lordships, of course do not say that there might not be something in the context of an Act of Parlia ment, or to be collected from its language, which might give towards prima facie prospec tive a larger operation, but they ought not to receive a larger operation unless you find some reason for giving it .
In all cases it is desirable to ascertain the intention of the legislature." He went on: "Words not requiring a retrospec tive operation, so as to affect an existing statute preudicially, ought not to be so construed", but in Renold vs Att.
for Novo Scotia it was held that this rule did not extend to protect from the effect of a repeal a privilege which did not amount to an accrued right.
" (pp. 392 393) As defined in Section 2(a) of the Act "benami transac tion" means any transaction in which property is transferred to one person for a consideration paid or provided by any other person.
" A transaction must, therefore, be benami irrespective of its date or duration.
Section 3, subject to the exceptions, states that no person shall enter into any benami transaction.
This section obviously cannot have retrospective operation.
However, section 4 clearly provides that no suit, claim or action to enforce any right in re spect of any property held benami against the person in whose name the property is held or against any other person shall lie, by or on behalf of a person claiming to be real owner of such property.
This naturally relates to past transactions as well.
The expression "any property held benami" is not limited to any particular time, date or duration.
Once the property is found to have been held benami, no suit, claim or action to enforce any right in respect thereof Shall lie.
Similarly, sub section (2) of section 4 nullifies the defences based on any right in respect of any property held benami whether against the person in whose name the property is held or against any other person in any suit, claim or action by or on behalf of a person claiming to be the real owner of such property.
It means that once a property is found to have been held bena mi, the real owner is bereft of any defence against the person in whose name the property is held or any other person.
In other words in its sweep section 4 envisages past benami transactions also within its retroactivity.
In this sense the Act is both a penal and a disqualifying statute.
In case of a qualifying or disqualifying statute it may be necessarily retroactive.
For example when a Law of Represen tation declares that all who have attained 18 years shall be eligible to vote, those who attained 18 yearS in the past would be as much eligible as those who 636 attained that age at the moment of the law coming into force.
When an Act is declaratory in nature .the presumption against retrospectivity is not applicable.
Acts of this kind only declare.
A statute in effect declaring the benami transactions to be unenforceable belongs to this type.
The presumption against taking away vested right will not apply in this case inasmuch as under law it is the benamidar in whose name the property stands, and law only enabled the real owner to recover the property from him which right has now been ceased by the Act.
In one sense there was a right to recover or resist in the real owner against the benami dar.
Ubi jus ibi remedium.
Where there is a right, there is a remedy.
Where the remedy is barred, the right is rendered unenforceable.
In this sense it is a disabling statute.
All the real owners are equally affected by the disability provision irrespective of the time of creation of the fight.
A right is a legally protected interest.
The real owner 's fight was hitherto protected and the Act has resulted in removal of that protection.
When the law nullifies the defences available to the real owner in recovering the benami property from the benam idar the law must apply irrespective of the time of the benami transactions.
The expression "shall lie" in section 4(1) and "shall be allowed" in section 4(2) are prospective and shall apply to present (future stages) and future suits, claims or actions only.
This leads us to the question wheth er there was a present suit between the plaintiff respondent and the defendant appellant on the date of the law coming into force.
We have noted the dates of filing the suit and judgments of the courts below.
On the date of the section 4 of the Act coming into force, that is, 19th May 1988 this appeal was pending and, of course, is still pending.
Can the suit itself be said to be pending? Lachmeshwar vs Keshwar Lal, A.I.R. 1941 F.C. 5 is an authority for holding that the hearing of appeal under the procedural law of India is.in the nature of re hearing and therefore in moulding the relief to be granted in a case on appeal, the appellate court is entitled to take into account even facts and events which have come into existence after the decree appealed against.
Consequently, the appellate court is competent to take into account legislative changes since the decision under appeal was given and its powers are not confined only to see whether the lower court 's decision was correct according to the law as it stood at the time when its decision was given.
Once the decree of the High Court has been appealed against, the matter became sub judice again and thereafter this court had seisin of the whole case, though for certain purposes e.g., execution, the decree was regarded as final and the courts below retained jurisdiction in that regard.
This was followed 637 in Shyabuddinsab vs The Gadag Betgeri Municipal Borough, ; where after the judgment of the High Court and after grant of special leave by this court the legislation was passed, and it was applied by this Court.
Their lordships, referring to The King vs The General Com missioner of Income Tax, and Mukharjee Official Receiver vs Ramratan Kaur, [1935] L.R. 63 I.A. 47 rejected the contention that unless there are express words in the amending statute to the effect that the amendment shall apply to pending proceedings, it cannot affect the proceedings.
In Dayawati vs Inderjit, ; it has been held that the word 'suit ' includes an appeal from the judgment in the suit.
The only difference between a suit and an appeal is that an appeal only reviews and corrects and proceedings in a cause already constituted but does not create the cause.
1n Mohanlal Jain vs His Highness Maharaja Shri Man Singh, [1962] 1 S.C.R. 702 it was observed that "A person is "sued" not only when the plaint is filed against him, but is "sued" also when the suit remained pending against him.
The word "sued" covers the entire proceeding, in an action." In Amerjit Kaur vs Pritam Singh, it has been held that an appeal is a reheating and in moulding relief to be granted in a case on appeal, the appellate court is entitled to take into account even facts and events which have come into existence after the passing of the decree appealed against.
For the respondent it is submitted that right of the parties to a suit would be determined on the basis of rights available to them on the date of filing of the suit.
Reli ance is placed on Nand Kishore Marwah vs Samundri Devi, ; That however was a case of eviction where the rights of the parties on the date of suit were material unlike in this case where subsequent legislation has nullified the defences of benami holders.
That case is, therefore, distinguishable.
Counsel for the respondent lastly submits that nobody should be allowed to suffer for fault of the court.
As the maxim goes, actus curiae neminem gravabit.
Nobody should suffer for an act of the court.
However, the delay in dis posal of an appeal cannot be termed an action of the court.
The consequence is that the plaintiff respondent 's suit or action cannot be decreed under the law; and hence the decree passed by the lower courts is annihiliated and the suit dismissed.
In .the result, this appeal is allowed in the manner indicated above.
Under the peculiar facts and circumstances of the case, we make no order as to costs.
N.P.V. Appeal allowed.
| IN-Abs | The respondent filed a suit in the Court of Civil Judge, praying that he be declared the sole and real owner of the suit house and that the appellant be permanently restrained from transferring the suit house.
The trial court decreed the suit accordingly.
The appellant filed an appeal before the Additional District Judge, who dismissed the same, agreeing with the findings of the trial court that the respondent had paid the price and purchased the house benami in the name of the appellant and therefore, the appellant had no right to create an equitable mortgage or to transfer the suit house.
The appellant 's second appeal was also dismissed by the High Court.
Hence, the appeal by special leave, by the appellant.
During the pendency of the appeal, the 622 Benami Transactions (Prohibition) Act, 1988 came into force.
It was contended on behalf of the appellant that the respondent and the appellant had been living as man and wife and out of affection for the appellant, the respondent had purchased the suit house in the appellant 's name for Rs.8,000, for which the appellant had contributed Rs.2,000 and, therefore, the courts below had erred in holding that the suit house was not gifted by the respondent to the appellant but was held benami in her name, and that even if it was so held benami, the subsequent legislation, namely, the Benami Transactions (Prohibition Act, 1988 had put a complete bar to the respondent 's suit against the appellants in respect of the suit house.
On behalf of the respondent, it was submitted that the issues on gift and benami have been concluded by concurrent findings of fact of the courts below and that the respond ent 's right to the benami suit house having already become final it would not be affected by the subsequent Act.
On the questions: (a) whether the concurrent findings of fact of the courts below should be interfered with or not, (b) whether despite the decree in favour of the respondent, the suit or action would be affected by the subsequent legislation, namely, the Benami Transactions (Prohibition) Act, 1988 and its predecessor Ordinance, (c) whether, on a proper construction, the legislature may be said to have expressed its intention of retrospective applicability of the legislation, and (d) whether there was a suit present between the respondent and the appellant on the date of the law coming into force, Allowing the appeal, this Court, HELD: 1.1 A retrospective operation is not to be given to a statute, so as the impair existing right or obligation otherwise than as regards matter of procedure unless that effect cannot be avoided without doing violence to the language of the enactment.
The presumption against retro spective operation is strong in cases in which the statute, if operated retrospectively, would prejudicially affect vested rights or the illegality of the past transactions, or impair contracts or impose new duty or attach new disability in respect of past transactions or consideration already passed.
However, a statute is not properly called a retro spective statute because a part of the requisites for its action is drawn from a time antecedent to its passing.
[633H; 634A C] 623 1.2 Every law that takes away or impairs rights vested agreeably to existing laws is retrospective, and is general ly unjust and may be oppressive.
But laws made justly and for the benefit of individuals and the community as a whole may relate to time antecedent to their commencement.
The presumption against retrospectivity may in such cases be rebutted by necessary implication from the language employed in the statute.
It cannot be said to be an invariable rule that a statute could not be retrospective unless so ex pressed in the very terms of the section which has to be construed.
The question is whether on a proper construction, the legislature may be said to have so expressed its inten tion.
[634C E] 1.3 Before applying a statute retrospectively, the court has to be satisfied that the statute is in fact retrospec tive.
The Courts must also look at the general scope and purview of the statute and at the remedy sought to be ap plied and consider what was the former state of law and what the legislation contemplated.
[634A B] Craise on Statute Law, 7th ed.
referred to.
1.4 Where a particular enactment or amendment is the result of the recommendation of the Law Commission of India, it may be permissible to refer to the relevant report.
What importance can be given to it will depend on the facts and circumstances of the case.
However, the court has to inter pret the language used in the Act and when the language is clear and unambiguous, it must be given effect to.
Law Commission 's Report may be referred to as external aid to construction of the provisions.
[631C; 633D] Santa Singh vs State of Punjab, [1977] 1 S.C.R. 229referred to.
In the instant case, the Law Commission was of the view that the legislation replacing the Benanti Transactions (Prohibition of Right to Recover Property Ordinance, 1988) should be retroactive in operation and that no locus peni tentia need be given to the persons who had entered in the benami transactions in the past.
[633B] 2.1 When an Act is declaratory in nature, the presump tion against retrospectivity is not applicable.
Acts of this kind only declare.
A statute in effect declaring the benami transactions to be unenforceable belongs to this type.
[636A B] 2.2 The Parliament has jurisdiction to pass a declaratory legisla 624 tion.
As a result of the provisions of the Benami Transac tions (Prohibition) Act, 1988, all properties held benami at the moment of the Act coming into force may be affected irrespective of their beginning, duration and origin.
This will be so even if the legislation is not retrospective, but only retroactive.
[633E F] 2.3 The expression "any property held benami" in section 4 of the Act is not limited to any particular time, date or duration.
Once the property iS found to have been held benami, no suit, claim or action to enforce any right in respect thereof shall lie, and the real owner is bereft of any defence against the person in whose name the property is held or any other person.
In its sweep, section 4 envisages past benami transactions also within its retroactivity.
In this sense, the Act is both a penal and a disqualifying statute.
In Case of a qualifying or disqualifying statute, it may be necessarily retroactive.
[635E H] 2.4 The presumption against taking away vested right will not apply in this case inasmuch as under law it is the benamidar in whose name the property stands, and law only enabled the real owner to recover the property from him which right has now been ceased by the Act.
In one sense there was a right to recover or resist in the real owner against the benamidar.
Ubi jus ibi remedium.
When there is a right, there is a remedy.
Where the remedy is barred, the right is rendered unenforceable.
In this sense it is a disabling statute.
All the real owners are equally affected by the disability provision irrespective of the time of creation of the right.
A right is a legally protected inter est.
The real owner 's right was hitherto protected and the Act has resulted in removal of that protection.
[636B C] 2.5 When the law nullifies the defences available to the real owner in recovering the benami property from the benam idar, the law must apply irrespective of the time of the benami transactions.
The expression "shall lie" in section 4(1) and "shall be allowed" in section 4(2) are prospective and shall apply to present (future stages) and future suits, claims or actions only.
[636D] 3.
The hearing of appeal under the procedural law of India is in the nature of re hearing and, therefore, in moulding the relief to be granted in a case on appeal, the appellate court is entitled to take into account even facts and events which have come into existence after the decree appealed against.
Consequently, the appellate court is competent to take into account legislative changes since the decision under appeal was given and its powers are not confined only to see whether the 625 lower court 's decision was correct according to the law as it stood at the time when its decision was given.
[636F G] Once the decree of the High Court has been appealed against, the matter became sub judice again and, therefore, the Supreme Court had seisin of the whole case, though for certain purposes, e.g. execution, the decree was regarded as final and the courts below retained jurisdiction in that regard.
[636G H] Lachmeshwar vs Keshwar Lal A.I.R. 1941 F.C. 5; Shyabud dinsab vs The Gadag Betgeri Municipal Borough; , ; The King vs The General Commissioner of income Tax, ; Mukharjee Official Receiver vs Ramratan Kaur.
[1935] L.R. 63 I.A. 47; Dayawati vs Inderjit, ; ; Mohanlal Jain vs
His Highness Maharaja Shri Man Singh, [1962] 1 S.C.R. 702 and Amerjit Kaur vs Pritam Singh, relied upon.
Nand Kishore Marwah vs Samundri Devi, [1987] 4 S.C.C. 382 distinguished.
Ordinarily, this Court in an appeal will not inter fere with a finding of fact which is not shown to be per verse or based on no evidence.
But where there are material irregularities affecting the said finding or where the court feels that justice had failed and the finding is likely to result in unduly excessive hardship, this Court cannot decline to interfere merely on the ground that the finding in question is finding of fact.
[627E, H; 628A] Babu vs Dy.
Director, A.I.R. 1982 S.C. 756; Prasad vs Govindaswamy; , ; Dhanlibhai vs State of Gujarat, ; ; Ganga Bishan vs Jay Narayan, AIR 1986 SC.
441; Udaychand Disst vs Saihal Sen, A.I.R. 1988 S.C. 367 and Ram Singh vs Ajay Chawla AIR 1988 S.C. 514 relied upon.
In the instant case, the concurrent findings of the courts below are based on reasonable appreciation of evi dence on record and, therefore, can in no way be said to be perverse or unreasonable.
The High Court has analysed the facts and correctly applied the tests to determine whether the transaction was benami or not.
Therefore, there is no justification in tile appeal under article 136 of the Constitu tion for interference with the concurrent findings of fact.
[629A C] However, in view of the pendency of the appeal before the Supreme Court, and consequently, the suit filed by the respondent, on 626 the date of coming into force of section 4 of the Benami Transac tions (Prohibition) Act, 1988, which nullified the defences available to the real owner in recovering the benami proper ty from the benamidar, and since the law was applicable irrespective of the time of the benami transactions, the respondent 's suit or action for recovering the suit house held benami by the appellant cannot be decreed.
[636D E] No doubt, nobody should suffer for an act of the Court, but delay in disposal of an appeal cannot be termed an action of the court.
Hence the maxim actus curiae nemenim gravabit is not applicable in this case.
[637F G] The decree passed by the lower courts is, therefore, annihilated and the suit filed by the respondent is dis missed.
[637G]
|
Criminal Appeal No. 205 of 1989.
From the judgment and Order dated 24.2.1987 of the Bombay High Court in Crl.
W.P.No. 67 of 1986.
A.M. Khanwilkar for the Appellant.
Syed Ali Ahmad, Tanweer Ahmad, Mohan Pandey and Ms. J. Ahmed for the Respondent.
The Judgment of the Court was delivered by SHARMA, J.
1.
Special leave granted.
The respondent was served with an externment order passed under Section 56 of the Bombay Police Act (hereinaf ter referred to as the Act) directing him to leave the districts of Aurangabad and Jalna for a period of two years.
The order stated that from 11.5.1980 the respondent was found to be frequently engaged in illegal business of nar cotics and since he was involved in several cases of riot and criminal intimidation causing physical hurts to the residents of the locality on account of his suspicion that they were supplying information to the police about his illegal activities, witnesses were not willing to come forward and depose against him.
He filed an appeal under Section 60 of the Act and while the appeal was pending he moved the Bombay High Court with a writ application under Article 226 of the Constitution.
During the pendency of the writ application the State Government dismissed, the re spondent 's appeal by a short order.
The writ petitioner thereafter challenged the appellate order also in the pend ing writ case.
At the time of the final hearing of the writ case before the High Court, four points were raised on behalf of the petitioner.
As the 972 first point, it was urged that since the State Government omitted to give reasons in support of the order of dismissal of the appeal, the same was vitiated in law.
The High Court agreed with the petitioner and allowed the writ application quashing the appellate order as well as the initial extern ment order on this ground alone without going to the other questions.
The State Government has challenged the High Court judgment in the present appeal.
On behalf of the appellant reliance has been placed on the decision of this Court in Pandarinath Sridhar Rangne kar vs Deputy Commissioner of Police, where in a similar plea was taken by the appellant before this Court.
It was contended that the failure on the part of the State Government indicated non application of mind.
The appellant had also urged that the allegations contained in the show cause notice were too vague in absence of details to afford him reasonable opportunity to defend himself.
Rejecting the argument, this Court held that a full and complete disclosure of particulars, as is requisite in an open prosecution, will frustrate the very purpose of an externment proceeding.
There is a brand of lawless elements in society which it is impossible to bring to book by estab lished methods of judicial trial because in such trials there can be no conviction without legal evidence.
And legal evidence is impossible to obtain, because out of fear of reprisal witnesses are unwilling to depose in public.
While dealing with the contention that the State Government was under a duty to give reasons in support of its order dis missing the appeal, the point was rejected in the following terms: "Precisely for the reason for which the pro posed externee is only entitled to be informed of the general nature of the material allega tions, neither the externing authority nor the State Government in appeal can be asked to write a reasoned order in the nature of a judgment.
" As observed, if the authorities were to discuss the evidence in the case, it would be easy to fix the identity of the witnesses who were unwilling to depose in public against the proposed externee.
A reasoned order containing a discussion would probably spark off another round of harassment.
We are, therefore, of the view that the High Court was in error in quashing the order as confirmed by the state Government in appeal.
The externment order was made several years back and the learned counsel for the appellant rightly stated that although the 973 impugned order need not be revived now, it was necessary to correct the error in the High Court 's judgment as it is likely to prejudice ' other similar cases.
Accordingly in the circumstances we set aside the impugned judgment but make it clear that the externment order shall not be enforced against the respondent any further, the appeal is according ly allowed to this extent.
R.S.S. Appeal al lowed.
| IN-Abs | An externment order was passed against the respondent under section 56 of the Bombay Police Act on the ground that he was found to be frequently engaged in illegal business of narcotics and was also involved in several cases of riot and criminal intimidation.
The respondent filed an appeal under section 60 of the Act and while the appeal was pending moved the High Court with a writ application.
The State Government dismissed the appeal by a short order.
Before the High Court it was urged that since the State Government omitted to give reasons in support of the order of dismissal of the appeal, the same was vitiated in Law.
The High Court agreed with the petitioner and allowed the writ application quasing the appellate order as well the initial externment order.
Allowing the appeal by the State to the extent of cor recting the error of law only, it was, HELD: (1) The High Court was in error in quashing the order of externment as confirmed by the State Government in appeal, on the ground that the State Government omitted to give reasons.
(2) A full and complete disclosure of particulars, as is requisite in an open prosecution, will frustrate the very purpose of an externment proceeding.
There is a brand of lawless elements in society which it is impossible to bring to book by established methods of judicial trial because in such trials there can be no conviction without legal evi dence.
And legal evidence is impossible to obtain, because out of fear of reprisal witnesses are unwilling to depose in public.
[972C E, G] 971 (3) If the authorities were to discuss the evidence in the case, it would be easy to fix the identity of the wit nesses who were unwilling to depose in public against the proposed externee.
A reasoned order containing a discussion would probably spark off another round of harassment.
[972G] Pandarinath Sridhar Rangnekar vs Deputy Commissioner of Police, , followed.
|
ivil Appeal Nos.
1909 10 of 1989.
From the Judgment and Order dated 2.4.1987 of the Del hi High Court in C.C.P. Nos. 82 and 176 of 1986.
WITH CIVIL APPEAL NO.
19 11 OF 1989.
From the Judgment and Order dated 2.4.1987 of the Del hi High Court in C.C.P. No. 82 of 1986 in C.W. No. 44 of 1975 .
K. Parasaran, Attorney General, K.K. Venugopal, F. section Nariman, Gopal Subramaniam, C.V.S. Rao, P. Parmeshwara n, C.S. Vaidyanathan, S.R. Bhat, S.R. Setia, G.D. Gupta, Ash ok K. Mahajan and section Ravinder Bhat for the appearing parties.
The Judgment of the Court was delivered by DUTT, J.
Special leave granted in all these matter section Heard learned Counsel for the parties.
The dispute between the direct recruits and the Emergency 16 Commissioned Officers (ECOs) in the Central Reserve Poli ce Force (CRPF) over the question of seniority has been goi ng on for a long time.
The Delhi High Court has, ultimatel y, held in favour of the ECOs and by the impugned judgment, t he High Court has directed the implementation of its decisi on regarding seniority and grant of consequential benefits to the ECOs.
As per the judgment of the High Court, the 37 dire ct recruits, who are now holding the posts of Commandants, th at is to say, 22 as Commandants (Selection Grade) and 15 as Commandants (NonSelection Grade), by virtue of the upgrad a tion of 88 posts of Commandants (Non Selection Grade), wi ll have to be reverted.
The direct recruits feel aggrieved by the impugned judgment of the High Court and it is contend ed on their behalf that as they were not parties in the co n tempt proceedings in which the impugned judgment of the Hi gh Court has been passed, it is not binding on them, and th at the matter should be remanded to the High Court so as to give them an opportunity of being heard.
If these conte n tions of the direct recruits are accepted, there will be further delay.
It may be mentioned that this is the second time th at the matter has come to this Court.
It is the desire of t he parties that the dispute should be amicably settled an d, pursuant to that desire, the parties including the Union of India had, from time to time, given their respective sugge s tions regarding the terms of settlement.
Unfortunately, t he suggestions or the proposed terms of settlement were n ot accepted by one party or the other.
The terms that we re suggested by the Union of India were not acceptable to t he ECOs and those of the ECOs were not acceptable to the dire ct recruits.
It is gratifying to state that at the last heating, bo th the direct recruits and the ECOs came with an agreed ter ms of settlement.
The hearing was adjourned so as to enable t he Union of India to consider the terms of settlement as agre ed to by the direct recruits and the ECOs.
Mr. Gopal Subramaniam, the learned Counsel appearing on behalf of the Union of India, states that although the Uni on of India is also of the view that the dispute between t he parties should be resolved amicably, yet the said agre ed terms of settlement were not acceptable to it and it has, in lieu of the same made two alternative suggestions for se t tlement.
Copies of the alternative suggestions have be en produced before us by Mr. Subramaniam.
Neither of the alte r na 17 tive suggestions is, however, acceptable to the ECOs.
We have considered the respective terms of settlement as put forward by the parties including the said two altern a tive suggestions.
CRPF is a sensitive police force and the re should not be any dispute and differences among the membe rs of such force.
It is the duty of the Government to mainta in peace and harmony in the force by trying to resolve a ny dispute among the members of the force in public interest.
After considering the facts and circumstances of t he case including the impugned judgment of the High Court a nd the terms of settlement, as agreed to by the direct recrui ts and the ECOs, and also the alternative suggestions of t he Union of India, we are of the view that the terms of settl e ment, as agreed to by the direct recruits and the ECO s, appear to be fair and reasonable and do not involve a ny additional financial liability of the Union of India f or placing the 35 ECOs in the posts of Commandants (Selecti on Grade) with effect from the date they were promoted as Commandants (Non Selection Grade), as provided in the agre ed terms of settlement.
On an examination of the two altern a tive suggestions made on behalf of the Union of India, we are of the view that they do not redress the grievances of the ECOs.
In our opinion, while it may be desirable that t he present position of the direct recruits should be protecte d, the giving of such protection should not be to the prejudi ce of the ECOs.
In the circumstances, in order to establish peace a nd amity between the contending parties and for ends of ju s tice, we direct that, in modification of the impugned jud g ment of the High Court, the appeals be disposed of in a c cordance with the terms of settlement, as agreed to by t he direct recruits and the ECOs, as follows: 1.
The Union of India shall withdraw the order viz. ord er No. F.2/1O/86 Estt (CRPF) PP IV dated 18.6.1986 with immed i ate effect.
The order providing for upgradation of 88 pos ts of Assistant Commandant (2nd in command) to the post of Commandants (Non Selection Grade) shall thus stand rescin d ed.
The D.P.C. 1986 and all consequential orders regardi ng promotion against upgraded posts shall also stand revoked.
To protect the 37 direct recruits who were holdi ng posts of Commandants, the Union of India shall create 37 supernumerary posts of Commandants (22 as Commandant Selec 18 tion Grade and 15 as Commandant Non Selection Grade), whi ch shall be held by the 37 direct recruits who were holding t he said posts on the date of judgment dated 2.9.1985 passed by the High Court of Delhi.
The vacancies of 13 posts occurring in the year 19 86 of Commandant (Non Selection Grade) shall be filled afre sh by means of a D.P.C.
The D.P.C. shall make promotions in accordance with rules and shall operate upon the revis ed seniority list prepared by the Department pursuant to t he judgment of the High Court dated 2.9.1985 affirmed by th is Court on 21.1.1986.
The subsequent vacancies in the years 1987 and 19 88 for the posts of Commandants (Non Selection Grade) shall be filled in accordance with rules and the promotions shall be made through D.P.C. in accordance with law/Rules.
The Union of India shall review the D.P.C. of 1985 f or the posts of Commandants and such review shall be complet ed as early as possible.
Further, 35 ECOs who have already been promoted as Commandant (Non Selection Grade) till today will hold t he posts of Commandant (Selection Grade), from the date th ey were promoted as Commandant (Non Selection Grade) with t he condition that they will not be paid any salary for the po st of Commandant (Selection Grade) till their turn comes f or promotion to Commandant (Selection Grade) against regul ar vacancies, as per the seniority list.
Each party to bear his/its own costs.
Y.L. Appeals di s posed of.
| IN-Abs | Central Reserve Police Force comprises of officers dra wn from two channels, direct recruits and Emergency Commi s sioned Officers (ECOs).
There was dispute regarding fixati on of inter se seniority of these officers which was ultimate ly resolved by the Delhi High Court by the judgment und er appeal.
The High Court by the impugned judgment held in favour of ECOs and directed implementation of its decisi on regarding seniority as also grant of benefits to ECOs.
As a result of the High Court 's judgment 37 direct recruits, w ho are at present holding the posts of Commandants, that is to say, 22 as Commandants (Selection Grade) and 15 as Comma n dants (Non Selection Grade) by virtue of upgradation of 88 posts of Commandants (Non Selection Grade) will have to be reverted.
Being aggrieved by the High Court 's judgment, th ey have appealed to this Court, after obtaining Special Leave .
The main contention advanced by the appellants is th at as they were not parties in the Contempt Proceedings where in the High Court has rendered the judgment in question, th at order is not binding upon them and as such the matter be remitted back to the High Court.
To avoid delay that will be caused in the matter if the case is sent back, the Court as also the parties desired that the dispute be amicably se t tled.
Accordingly both the direct recruits and ECOs he ld negotiations amongst themselves with a view to arrive at an acceptable settlement and after a great deal of endeavou r, they put up the terms of agreement before the Court.
T he Court thereupon gave time to the Union of India to consid er the acceptability of the agreement reached between t he contesting parties.
The Union of India conveyed to the Cou rt that the agreement was not acceptable to it though it was in favour of amicable settlement.
It suggested two other alte r natives, which were not found to be favourable to ECOs.
15 This Court considered the respective terms of the se t tlement and disposing of the appeals in terms thereof, HELD:.
Central Reserve Police Force is a sensitive for ce and there should not be any dispute and differences amo ng the members of such force.
It is the duty of the Governme nt to maintain peace and harmony in the force by trying to resolve any dispute among the members of the force in publ ic interest.
[17B] While it may be desirable that the present position of the direct recruits should be protected, the giving of su ch protection should not be to the prejudice of the ECOs.
[17 E] In order to establish peace and amity between the co n tending parties and for ends of justice, the Court direct ed that in modification of the judgment of the High Court, t he appeals be disposed of in accordance with the terms of settlement, as agreed to by the direct recruits and t he ECOs, set out in this Court 's judgment hereinbelow.
[17E F ]
|
vil Appeal Nos.
3073 16 of 1988 Etc.
From the Judgment and Order dated 8.6.1987 and 9.6.
1987 of the Andhra Pradesh High Court in W.P. Nos. 1370/87, 15090/85.34 18/ 86.
911/87, 3186/87, 3435/87, 3748/87, 4356/87, 5006/87 'and 5379 of 1987.
P.A. Choudhary, Shanti Bhushan, Badrinath, T.V.S.N. Chari, Mrs. Sunita Rao and A. Subba Rao for the Appellants.
A.S. Nambiar, T.S. Krishnamoorty, C. Sitaramayya, R.N. Keshwani, B. Kanta Rao, Ms. K. Sarda Devi, G.N. Rao and 13.
Parthasarthi, for the Respondents.
The Judgment of the Court was delivered by KULDIP SINGH, J.
The question for decision in these appeals is whether payment of less salary to a senior than his junior in the same cadre having the same pay scale is violative of the Principle of "equal pay for equal work" enshrined in Article 39(d) read with Articles 14 and 16 of Constitution of India.
Though the respondents belong to different departments and service but since, the question of law is same we are disposing these appeals by a common order.
Necessary facts relating to each batch of 1004 appeals for appreciating the controversy are as under: Civil Appeal Nos. 317 30/87, 2998/87, 294 298/88, 307 to 315/88, 305/ 88 & 3 16/88.
The first batch in this bunch of appeals is concerning the employees of the High Court of Andhra Pradesh.
The main judgment under appeal relates to the cadre of Assistant Section Officers working in the High Court.
Copyists and Assistants are the two feeder cadres to the post of Assist ant Section Officer.
Prior to 1974 copyists were in the pay scale of Rs.70~130 and were entitled to additional payment at Re.7.5p.
per every 100 words they copy in excess of 42,000 words.
As a result of pay revision they were given the pay scale of Rs.250 430 w.e.f. 1.1.1974 without entitle ment of remuneration in addition to pay.
The copyists repre sented that in the revised pay scale, the additional emolu ments which were being earned by them had not been taken into account.
On the recommendation of the High Court the State Government agreed to fix the pay of the copyists in the revised pay scale by adding into their basic pay the average remuneration of Rs.83.34 and the Dearness Allowance admissible thereon.
The amount of Rs.83.34 was taken as average remuneration which each of the copyist was earning prior to 1.1.
1974 in addition to the pay.
The pre revised pay scale of Assistants was Rs.90 192 which was revised to Rs.250 430 from 1st of January, 1974.
Although the revised pay scale of copyists and assistants was identical but because of addition of Rs.83 34 in the pay fixation, the copyists started drawing more salary than the assistants.
Promotion to the cadre of Assistant Section Officers in the pay scale of Rs.340 640 is from the two cadres of copyists and assistants.
One Janikirama Rao, a copyist, was promoted to the said post in the year 1984.
On the basis of his last pay drawn as copyist his basic pay fixed as Assistant Sec tion Officer, was higher than those who were promoted to the said post from the cadre of assistants during the period 1982 84.
The pay fixation was done under Fundamental Rule 22(a)(i) of Andhra Pradesh Fundamental Rules (hereinafter called 'Fundamental Rules '.) Though junior Shri Janikirama Rao was thus drawing more salary than his seniors in the same cadre.
Those seniors filed Writ Petition 2 135/83 in the High Court of Andhra Pradesh praying that the grant of higher salary to a junior person is violative of the Princi ple of "equal pay for equal work".
The learned Single Judge allowed the writ petition and directed that the Assistant Section Officers senior to Shri Janikirama Rao be paid the same salary as he was drawing.
Writ Appeal filed by the State of Andhra Pradesh against the judgment was dismissed by the Division Bench holding that grant of 1005 higher pay packet to a junior person that the senior under any circumstances is discriminatory.
Connected writ peti tions were allowed by the High Court being covered by the judgments in Writ Petition 2 135/83 and writ appeal.
No counter was filed by State of Andhra Pradesh in these writ petitions and on the basis of the averment in the petitions that juniors were getting higher salary than the seniors, the writ petitions were allowed.
Civil appeals are directed against the orders of the High Court.
Civil Appeal Nos. 1071 73/87, 1149 1150/86.
In this batch of civil appeals Tirumala Tirupathi Devas thanam is the appellant and these appeals are directed against the High Court order.
B.V. Krishnamurthy and 62 others working as Upper Division Clerks in the Devasthanam filed Writ Petition No. 12337 of 1984 before the High Court of Andhra Pradesh praying that the Devasthanam be directed to pay salary to them at par with one D. Gopaliah, Upper Division Clerk who was junior to them.
Service particulars of Gopaliah and one of the petitioners Krishnamurthy only need mention.
Gopaliah joined as Lower Division Clerk in 1967 and was given Selection Grade in 1974.
Family Planning Incentive Increment of Rs. 11 was added to his pay in 1977.
He was promoted as Upper Division Clerk in 1979 but was reverted in 1981 as he could not pass the accounts test.
He was given further increase in pay as a result of Government Order which provided higher pay to those Lower Division Clerks who completed 15 years service as such.
In June, 1983 Gopaliah was drawing Rs.811 as his basic pay in the cadre of Lower Division Clerks.
He was again promoted as Upper Divi sion Clerk in pay scale 575 950 on 1.7.
1983 and in that cadre his basic pay was fixed at Rs.861.
On the other hand, Krishnamurthy joined as Lower Division Clerk in 1970.
He was promoted as Upper Division Clerk on 3rd of November, 1981 and Rs.615 was fixed as his basic pay in that cadre.
On 1st of July, 1983 Krishnamurthy was drawing Rs.635 as his basic pay.
It is under these circumstances that Gopaliah though junior to Krishnamurthy started drawing higher pay as Upper Division Clerk.
The writ petition was allowed by the learned Single Judge by one line order following his decision in another writ petition concerning the employees of the Andhra Pradesh State Electricity Board.
Neither the facts nor the distinctive features of the present case were noticed.
Writ Appeal No. 504 of 1985 was dismissed in limine by the Divi sion Bench of the Andhra Pradesh High Court.
In three con nected petitions payparity was sought with the same junior Gopaliah.
In the fourth petition one Gangiah was the named junior for claiming pay hike.
All these 1006 petitions were allowed following the earlier decision.
Hence these appeals.
Civil Appeal Nos. 299/88 and 300 to 30 1/88.
These appeals are directed against the judgment of the Andhra Pradesh Administrative Tribunal in Petition No. 1531 of 1985 and connected petitions.
The petitioners before the Tribunal were junior assistants working in different depart ments.
They were promoted as senior assistants on various dates between 1976 and 1978.
They opted to be absorbed as auditors in the Pay and Accounts Office, Hyderabad, where they were finally absorbed with effect from 12th of July, 1978.
One Swaminathan who was recruited as typist, was promoted as senior assistant on 11th of January 1978.
He also opted to work as auditor in the Pay and Accounts Of fice, Hyderabad.
He was finally absorbed in the said depart ment with effect from 4th of September, 1978.
The writ petitioners and Swaminathan came to the Pay and Accounts Office, Hyderabad from different departments.
Since Swamina than was absorbed as auditor in the pay and accounts depart ment later in time than the petitioners, he ranked junior to them.
But in view of his length of service and grant of selection grade, he had been drawing higher pay in his parent department.
On his joining the Pay and Accounts Office his pay was fixed on a higher basic pay as compared to the petitioners as the last pay drawn by him had to be protected under the Fundamental Rules.
Thus though he was junior to the petitioners, he started drawing higher pay than them.
The seniors raised contention before the Tribunal that on the basis of "equal pay for equal work" they were entitled to the same pay as given to their junior.
The Tribunal allowed the petitions holding that for whatever reasons a junior is paid higher pay packet than his senior the principle of "equal pay for equal work" is violated and the senior is entitled to the same pay.
Following its judg ment the Tribunal allowed two connected petitions.
Hence these appeals by the State of Andhra Pradesh.
Civil Appeal No. 3 17 of 1988.
This appeal also relates to Pay and Accounts Office.
In this case the petitioners before the Tribunal were Lower Division Clerks senior to one P. Arunachala Prasad who was initially a typist but was promoted as Lower Division Clerk subsequent to the petitioners.
Since he was drawing more pay as typist, on his promotion to the post of Lower Division Clerk his pay fixed was higher than the petitioners.
The claim 1007 of the petitioners for same pay as paid to Arunachala Prasad was allowed.
Civil Appeal Nos.
200 to 203 of 1988.
These appeals relate to Animal Husbandry Department of the Andhra Pradesh Government.
Some live stock assistants filed a petition before the Andhra Pradesh Administrative Tribunal claiming higher pay which was being drawn by their respective juniors in the same cadre.
In the reply filed on behalf of State before the Tribunal it was explained that junior live stock assistants were senior in the lower cadre but could not be promoted earlier due to their failure to undergo the prescribed training and they had earned selec tion grade on the basis of length of service.
On promotion their basic pay was fixed under Fundamental Rules which came to be higher than their seniors.
Without considering the reasons for the disparity in pay the Tribunal allowed the petitions holding that the senior must be paid the same salary as his junior, in the cadre, was drawing.
Civil Appeal Nos. 2453, 2454 and 2476 to 2479 of 1988.
These appeals concern the office of Registrar Co opera tive Societies Andhra Pradesh.
Respondents inspectors filed a petition before the Andhra Pradesh Administrative Tribunal saying that one Jagmohan was junior to them but was drawing higher salary.
The Tribunal allowed the petition in the following words: "It may be true that in certain circumstances within the framework of the rule, Shri Jagmo han came to receive higher pay than his sen iors . . what will be done in such a case is to bring the pay of the senior on par with the junior.
It is how the 'principle of equity ' in pay is to be met." Five connected petitions were also allowed by the Tribunal.
Mr. Shanti Bhushan appearing for the appellants in the first batch has argued that so long as there is rational basis for giving higher pay to a junior in the same cadre, the seniors can have no grievance.
According to him copyists and assistants being two feeder cadres to the post of As sistant Section Officer, the last pay drawn in the lower cadre has to be the basis under the Fundamental Rule for fixation of pay in the cadre of Assistant Section Officers.
Since the copyists were draw 1008 ing higher pay than the assistants, they were rightly fixed at a higher pay than the assistants who were promoted earli er.
He says pay earned by the copyists before joining as Assistant Section Officer is a legitimate incident of serv ice which entitles them higher pay than their seniors.
Mr. P.A. Choudhary appearing for some of the appellants contended that if all the considerations, factors and inci dents of service are identical then only the principle of 'equal pay for equal work ' is attracted.
But if there is a justification under the Rules or otherwise for giving a higher pay to the junior then the principle in the abstract sense is not attracted.
Mr. T.S. Krishnamoorthy, Mr. A.S. Nambiar and Mr. Kanta Rao appearing for the respondents supported the judgments under appeals and contended that grant of higher pay to a junior in the same cadre, doing same work and shouldering same responsibilities, is per se discriminatory and viola tive of the principle of equal pay for equal work.
Our attention was invited to Rule 27 of the Fundamental Rules which permits the competent authority to grant pre mature increment to a Government servant on a time scale of pay.
They further contended that juniors getting higher pay than a senior in the same cadre is an anomaly causing heart burn which can be removed by directing the authorities to fix the seniors at par with the juniors by exercising power under Rule 27 of the Fundamental Rules.
The factual basis in all these appeals is identical.
The facts clearly show that in every case the pay fixation of the junior was done under the Fundamental Rules and there were justifiable reasons for fixing the junior at a higher pay than his seniors in the cadre.
It was not disputed that the said pay fixation was in confirmity with the Fundamental Rules.
Neither before us nor before the courts below the validity of Fundamental Rules was challenged by any of the parties.
Without considering the scope of these Rules and without adverting to the reasons for fixing the juniors at a higher pay, the High Court and the Tribunal have in an omnibus manner come to the conclusion that whenever and for whatever reasons a junior is given higher pay the doctrine of 'equal pay for equal work ' is violated and the seniors are entitled to the same pay.
We do not agree with the High Court/Tribunal.
Doctrine of 'equal pay for equal work ' cannot be put in a straight jacket.
Although the doctrine finds its place in the Direc tive Principles but this Court, in 1009 various judgments, has authoritatively pronounced that fight to 'equal pay for equal work ' is an accompaniment of equali ty clause enshrined in Articles 14 and 16 of the Constitu tion of India.
Nevertheless the abstract doctrine of 'equal pay for equal work ' cannot be read in Article 14.
Reasonable classification, based on intelligible criteria having nexus with the object sought to be achieved, is permissible.
"Equal pay for equal work" does not mean that all the members of a cadre must receive the same pay packet irre spective of their seniority, source of recruitment, educa tional qualifications and various other incidents of serv ice.
When a single running pay scale is provided in a cadre the constitutional mandate of equal pay for equal work is satisfied.
Ordinarily grant of higher pay to a junior would ex facie be arbitrary but if there are justifiable grounds in doing so the seniors cannot invoke the equality doctrine.
To illustrate, when Payfixation is done under valid statuto ry rules/executive instructions, when persons recruited from different sources are given pay protection, when promotee from lower cadre or a transferee from another cadre is given pay protection, when a senior is stopped at Efficiency Bar, when advance increments are given for experience/passing a test/ acquiring higher qualifications or as incentive for efficiency; are some of the eventualities when a junior may be drawing higher pay than his seniors without violating the mandate of equal pay for equal work.
The differentia on these grounds would be based on intelligible criteria which has rational nexus with the object sought to be achieved.
We do not therefore find any good ground to sustain the judg ments of the High Court/Tribunal.
In Federation of All India Customs & Central Excise Stenographers (Recognised) and others vs The Union of India and others, JT 19, Sabyasachi Mukharji, J. considered earlier judgments of this Court on the point and observed: "Equal pay for equal work is a fundamental right.
But equal pay must depend upon the nature of the work done, it cannot be judged by the mere volume of work, there may be qualitative difference as regards reliability and responsibility.
Functions may be the same but the responsibilities make a difference.
One cannot deny that often the difference is a matter of degree and that there is an element of value judgment by those who are charged with the administration in fixing the scales of pay and other conditions of service.
So long as such value judgment is made bona 1010 fide, reasonably on an intelligible criteria which has a rationale nexus with the object of differentiation such differentiation will not amount to discrimination.
It is important to emphasise that equal pay for equal work is a concomitant of Article 14 of the Constitution.
But it follows naturally that equal pay for unequal work will be a negation of that right.
" In State of U.P. & Ors.
vs Shri J.P. Chaurasia & Ors., JT the question for consideration was as to whether it is permissible to have two pay scales in the same cadre for persons having same duties and having same respon sibilites.
Jagannatha Shetty, J. speaking for this Court observed: "It is against this background that the prin ciple of 'equal pay for equal work ' has to be construed in the first place.
Second, this principle has no mechanical application in every case of similar work.
It has to be read into article 14 of the Constitution.
Article 14 permits reasonable classification rounded on different basis.
It is now well established that the classification can be based on some qualities or characteristics of persons grouped together and not in others who are left out.
Those qualities or characteristics must, of course, have a reasonable relation to the object sought to be achieved.
In service matters, merit or experience could be the proper basis for classification to promote efficiency in administration.
He or she learns also by experience as much as by other means.
It cannot be denied that the quality of work performed by persons of longer experience is superior than the work of newcomers.
Even in Randhir Singh 's case, this principle has been recognised.
O. Chinnappa Reddy, J. observed that the classification of officers into two grades with different scales of pay based either on academic qualifications or experi ence on length of service is sustainable.
Apart from that, higher pay scale to avoid stagnation or resultant frustration for lack of promotional avenues is very common in career service.
There is selection grade for District Judges.
There is senior time scale in Indian Administrative Service.
There is super time scale in other like services.
The enti tlement to these higher pay scales depends upon seniority cum merit or merit cum seniori ty.
The differentiation so made in the same cadre will not amount to discrimination.
The classif 1011 cation based on experience is a reasonable classification.
It has a rationale nexus with the object thereof.
To hold otherwise, it would be detrimental to the interest of the service itself.
" The argument based on Rule 27 was never raised before the High Court/Tribunal.
There is neither any material on the record nor any justification before us to direct the appellant authorities to act under Rule 27 of the Fundamen tal Rules.
The respondents may if so advised approach the appropriate authorities for any such relief.
The appeals are accepted.
Judgments of the Andhra Pra desh High Court and the Andhra Pradesh Tribunal are set aside and the writ petitions/petitions/applications of the respondents before the High Court/Tribunal are dismissed.
There will be no order as to costs.
The respondents are white collared salaried persons and it may be too harsh for them to refund the salary already paid to them.
Therefore, in the interest of justice, we direct that the additional salary paid to them as a result of High Court/Tribunal judgments upto 31 3 1989 shall not be recovered from them.
Y.L. Appeals al lowed.
| IN-Abs | The common question that arose for decision by this Court in these groups of matters is whether payment of less salary to a senior than his junior in the same cadre having the same scale of pay is violative of the principle of "equal pay for equal work" enshrined in Article 39(d) read with Article 14 and 16 of the Constitution.
The said ques tion in each group of matters arises thus: The first batch in this bunch of appeals (CAs 317 30/87 etc.) relate to the case of Assistant Section Officers of Andhra Pradesh High Court.
It may be pointed out that copy ists and Assistants are the two feeder channels to the post of assistant Section Officers.
Prior to 1974 the Copyists were in the pay scale of Rs.70 130 and were entitled to additional payment at Rs.7.5P every 100 words they copy in excess of 42,000 words.
Consequent upon pay revision, they were given the pay scale of Rs.250 430 w.e.f. 1.1.1974 with out entitlement of remuneration in addition to pay.
The Copyists represented that while revising their grade, tile additional emoluments, which they were getting prior to revision of pay, has not been taken into consideration.
On recommendation of the High Court, the State Government agreed to fix the pay of the Copyists in the revised grade by adding to their basic pay Rs.83.34P, that being the average remuneration that each Copyist was earning prior to 1.1.74 and the Dearness Allowance admissible thereon.
The pre revised scale of pay of Assistants was Rs.90 192 which was revised to Rs.250 430 from 1.1.1974.
Even though the Scale of Pay of Copyists and Assistants was the same, Copyists started drawing more salary on account of addition of Rs.83.34P aforesaid.
Consequently on promotion to the Post of Assistant Section Officer, the salaries of those 1001 promoted from the cadre of Copyists were fixed higher than those who were promoted from the cadre of Assistants.
One Janakirama Rao, a Copyist was promoted to the cadre of Assistant Section Officer in 1984.
On the basis of his last pay drawn as Copyist, his pay as Assistant Section Officer was fixed higher than those who were promoted to the said post from the cadre of Assistants during the period 1982 84, under F.R. 22(a)(i) of Andhra Pradesh Fundamental Rules.
The Seniors filed writ petitions in the High Court contending that the grant of higher pay to juniors in the same cadre is violative of the principle "Equal pay for equal work".
The High Court allowed the Writ Petitions and directed that the Assistant Section Officers seniors to Janakirama Rao be paid the same salary as he was drawing.
Division Bench held that grant of higher pay packet to junior person than his seniors under any circumstances is discriminatory.
Hence these appeals by the State of Andhra Pradesh.
Another batch of appeals is filed by Tirumala Tirupathi Devasthanam.
One B.V. Krishnamurthy and 62 others working as Upper Division Clerks in the Devasthanam had filed writ petition in the High Court praying that the Devasthanam be directed to pay salary to them at par with one D. Gopaliah, U.D.C. who was junior to them.
Particulars of D. Gopaliah and one of the petitioners may only be stated.
Gopaliah joined as Lower Division Clerk in 1967 and was given Selec tion Grade in 1974.
Family Planning incentive of Rs. 11 was added to his salary in 1977.
He was promoted as U.D.C. in 1979 but was reverted in 1981.
He was given further increase in pay as L.D.C. on completion of 15 years service, as provided in the Rules and in June 1987, he was drawing basic pay of Rs.811.
He was again promoted as U.D.C. on 1.7.1983 and in that cadre, on the basis of his pay in the lower grade, his salary as per Rules was fixed at Rs.861.
On the other hand Krishnamurthi who joined as Lower Division Clerk in 1970, and promoted as U.D.C. on 3.11.1981, his salary was fixed at Rs.615.
On 1st July 1983 Krishnamurthy was drawing Rs.635.
In these circumstances Gopaliah though junior to Krishnamurthy started drawing more salary.
Following his earlier decision, the learned Single Judge allowed the Writ Petitions filed by Krishnamurthy and others similarly placed.
Their Writ Appeals were dismissed.
Hence these appeals by Devasthanam.
The third group of appeals by the State of Andhra Pra desh (CAs 299/88 & 300 301/88) are directed against the order of the Andhra Pradesh Administrative Tribunal.
The Writ Petitioners therein were Assistants working in differ ent departments of the State.
They were all absorbed in the Pay & Accounts Office, Hyderabad w.e.f. 12th July 1002 1978.
One Swaminathan was also absorbed as Assistant in the said office w.e.f. 4th September 1978.
In view of his length of service and grant of Selection grade, he had been drawing higher salary in his parent Department.
Accordingly on his joining Pay & Accounts Office, his salary, as per Rules, was protected and he was fixed at higher basic pay than the Writ Petitioners.
The Seniors raised contention before the Tribunal on the basis of "Equal pay for equal Work".
The Tribunal allowed the Writ Petitions, holding that for whatever reason a junior is paid higher pay packet than his senior, the prin ciple of "Equal pay for equal work" is violated and the senior is entitled to the same pay.
In other cases, also, the same question junior drawing more salary than senior and the seniors claiming parity of pay is involved.
Before this Court it was contended by the appellants employers that so long as there is rational basis for giving higher pay to junior in the same cadre, the seniors can have no grievance.
The last pay drawn in the lower cadre has to be the basis for fixation of salaries under the Fundamental Rules and following that basis, the salaries have been rightly fixed.
According to some appellants if all the consideration, factors and incidents of service are identical then only the principle of "Equal pay for equal work" is attracted.
If there is justification under the Rules or otherwise for giving a higher pay to the junior then the principle in the abstract sense is not attracted.
Allowing the appeals, this Court, HELD: Doctrine of "Equal pay for equal work" cannot be put in a straight jacket.
Although the doctrine finds its place in the Directive Principles, this Court, in various judgments, has authoritatively pronounced that right to "equal pay for equal work" is an accompaniment of the equal ity Clause enshrined in Article 14 and 16 of the Constitu tion of lndia.
[1008H; 1009A] Reasonable classification, based on intelligible crite ria having nexus with the object sought to be achieved, is permissible.
[1009B] "Equal pay for equal work" does not mean that all the members of the cadre must receive the same pay packet irre spective of their 1003 seniority, source of recruitment, educational qualifications and various other incidents of service.
When a single run ning pay scale is provided for a post in a cadre, the Con stitutional mandate of equal pay for equal work is satis fied.
Ordinarily grant of higher pay to a junior would ex facie be arbitrary but if there are justifiable grounds in doing so, the seniors cannot invoke the equality doctrine.
[1009B C] The differentia on grounds such as, when persons re cruited from different services are given pay protection, when promoters from lower cadre or a transferee from another cadre is given any pay protection, when a senior is stepped at efficiency bar, when advance increments are given for experience/passing a test/acquiring higher qualifications or as incentive for efficiency, would be based on intelligible criteria which has rational nexus with the object sought to be achieved, and which does not violate the mandate of equal pay for equal work.
The orders appealed against were there fore reversed.
[1009D E]
|
Appeals Nos.165 168 of 1956.
Appeals from the judgment and order dated March 22, 1955, of the Mysore High Court in Writ Petitions Nos. 20 to 22 and 25 of 1954.
788 H. N. Sanyal, Addl.
Solicitor General of India, R. Ganapathy Iyer and R. H. Dhebar, for the appellant.
A. V. Viswanatha Sastri, K. R. Choudhury and G. Gopalakrishnan, for the respondent.
April 28.
The Judgment of the Court was delivered by S.K. DAS J.
These four appeals brought by the Income tax Officer, Special Circle, Bangalore, on a certificate granted by the High Court of Mysore, are from the judgment and order of the said High Court dated March 22, 1955, by which it quashed certain proceedings initiated, and orders of assessment made, against the respondent assesse in the matter of reassessment of income tax for the years 1945 46, 1946 47, 1947 48, and 1948 1949.
The relevant facts are these.
The respondent K. N. Guruswamy was carrying on business as an excise contractor in the Civil and Military Station of Bangalore, hereinafter called the retroceded area, in Mysore.
He was assessed to income tax for each of the four years mentioned above under the law then in force in the retroceded area by the Income tax Officer having jurisdiction therein.
For 1945 46 the original assessment was made on February 12,1946, for 1946 47 on January 21, 1949, for 1947 48 on January 22, 1949, and for 1918 49 also sometime in the year 1949.
The tax so assessed was duly paid by the assessee.
On January 5, 1954, more than four years after, the Income tax Officer, Special Circle, Bangalore, served a notice on the assessee under section 34 of the Indian Income tax Act, 1922, for the purpose of assessing what was described as escaped ' or 'under assessed ' income chargeable to income tax for the said years.
The assessee appeared through his auditors and contested the jurisdiction of the Income tax Officer to issue the notice or make a re assessment under section 34 of the Indian Income tax Act, 1922.
On February 19, 1954, the Income tax Officer overruled the assessee 's objection, and made a re assessment order for the year 1945 46.
On February 25, 1954, the assessee filed four writ petitions in the Mysore High Court in 789 which he challenged the jurisdiction of the Income tax Officer to take proceedings under section 34 or to make an order of re assessment in such proceedings; he asked, for appropriate orders or writs quashing the pending proceedings for three years and the order of re assessment for 1945 46.
During the pendency of the cases in the High Court, the Income tax Officer was permitted to make an assessment order for 1946 47, subject to the condition that if the assessee succeeded in establishing that the Income tax Officer had no jurisdiction, that order would also be quashed.
The High Court heard all the four petitions together, and by its judgment and order dated March 22, 1955, allowed the writ petitions and quashed the proceedings in assessment as also the two orders of reassessment, holding that the Income tax Officer had no jurisdiction to initiate the proceedings or to make the orders of re assessment.
The High Court, however, granted a certificate that the cases were fit for appeal to this Court, and these four appeals have been brought on that certificate.
Before us, the appeals have been heard together and will be governed by this judgment.
For a clear understanding and appreciation of the issues involved in these appeals, it is necessary to set out, in brief outline, the political and constitutional changes which the retroceded area has from time to time undergone; because those changes had important legal consequences.
Under the Instrument of Transfer executed sometime in 1881, when there was installation of the Maharaja of Mysore by what has been called " the rendition of the State of Mysore ", the Maharaja agreed to grant to the Governor General in Council such land as might be required for the establishment and maintenance of a British cantonment and to renounce all jurisdiction therein.
Pursuant to that agreement, the retroceded area was granted to the Governor General in Council, and jurisdiction therein was exercised by virtue of powers given by the Indian (Foreign Jurisdiction) Order in Council, 1902, made under the Foreign Jurisdiction Act, 1890.
The laws administered in the area included various enactments made applicable thereto from time to 790 time by the promulgation of notifications made under the aforesaid Order in Council, and one of such enactments was the Indian Income tax Act, 1922.
The year 1947 ushered in great political and constitutional changes in India, which affected not merely what was then called British India but also the Indian States, such as Mysore etc.
The Indian Independence Act, 1947, brought into existence two independent Dominions, India and Pakistan, as from August 15, 1947.
The Act, however, received Royal assent on July 18, 1947.
Section 7 set out the consequences of the setting up of the two new Dominions: one such consequence was that the suzerainty of His Majesty over the Indian States lapsed, and with it lapsed all treaties, agreements etc., between His Majesty and the rulers of Indian States, including all powers, rights, authority or jurisdiction exercisable by His Majesty in an Indian State by treaty, grant, usage, suffrage etc.
In view of the aforesaid provision perhaps in anticipation of it, the retroceded area was given back to the State of Mysore on July 26, 1947 by a notification Made by the Crown Representative under the Indian (Foreign Jurisdiction) Order in Council, 1937.
This did not, however, mean that the Mysore laws at once came into force in the retroceded area.
On August 4, 1947, the Maharaja of Mysore enacted two laws: the Retrocession (Application of Laws) Act 1947, being Act XXIII of 1947, and the Retrocession (Transitional Provisions) Act, 1947 being Act XXIV of 1947.
The combined effect of these laws was this: all laws in force in the retroceded area prior to the the date of retrocession, which was July 26, 1947, continued to have effect and be operative in the retroceded area (vide section 3 of Act XXIII of 1947) and the Mysore officers were given jurisdiction to deal with proceedings under the laws in force prior to the date of retrocession (see section 12 of Act XXIV of 1947).
This state of affairs continued till June 30, 1948, on which date was promulgated the Mysore Income tax and Excess Profits Tax (Application to the Retroceded Area) (Emergency) Act, 1948, being Act XXXI of 1948.
Section 3 of this Act said 791 "Notwithstanding anything to the contrary in section 3 of the Retrocession (Application of Laws) Act, 1947, (i) the Mysore Income tax Act, 1923, and (ii) the Mysore Excess Profits Tax Act, 1946, except sub section (4) of section 2, and all rules, orders and notifications made or issued tinder the aforesaid Acts and for the time being in force shall with effect from the first day of July, 1948, and save as otherwise provided in this Act, take effect in the Retroceded Area to the same extent and in the same manner as in the rest of Mysore.
" Section 6 said " Subject to the provisions of this Act, the Indian Income tax Act, 1922, and the Excess Profits Tax Act, 1940, as continued by the Retrocession (Application of Laws) Act, 1947, are hereby repealed.
" The repeal of the Indian Income tax Act, 1922, effected by section 6 aforesaid, was subject to other provisions of Act XXXI of 1948, and one such provision which is material for the dispute before us was contained in section 5, the relevant portion whereof was in these terms " section 5.
Notwithstanding anything to the contrary in the Mysore Income tax Act, 1923, or the Mysore Excess Profits Tax Act, 1946, (a). . . . . . . . . . (b)in respect of the total income or profits chargeable to income tax or excess profits tax in the Retroceded Area prior to the first day of July, 1948, but which has not been, assessed until that date, the provisions of the Indian Income tax Act, 1922,and the Excess Profits Tax Act, 1940, as in force in the Retroceded Area immediately before that date shall apply to proceedings relating to the assessment of such in come or profits until the stage of assessment, and the determination of the income tax and excess profits tax payable thereon, and the Mysore Income tax Act, 1923, or the Mysore Excess Profits Tax Act, 1946, as the case may be, shall apply to such proceedings after that stage ; 101 792 (c). . . (d). . . (e). . .
The effect of sections 3, 5 (b) and 6 of Mysore Act, XXXI of 1948, inter alia, was that though the Indian Incometax Act, 1922, stood repealed and the Mysore Incometax Act, 1923, came into effect from July 1, 1948 the former Act as in force in the retroceded area prior to July 1, 1948, continued to apply in respect of the total income chargeable to income tax in the retroceded area prior to July 1, 1948 but which had not been assessed until that date, and it further applied to all proceedings relating to the assessment of such income until the stage of assessment and the determination of incometax but the Mysore Act, 1923, applied to such proceedings after that stage.
On August 5, 1948, was promulgated the Retroceded Area (Application of Laws) Act, LVII of 1948, which came into effect from August 15, 1948.
Sections 3 and 4 of Act LVII of 1948, are material for our purpose and may be quoted "section 3.
Except as hereinafter in this Act provided, (3) all laws in force in Mysore shall apply to the Retroceded Area; and (b)the laws in force in the Retroceded Area immediately before the appointed day shall not, from that day, have effect or be operative in the Retroceded Area,." " section 4.
The enactments in force in Mysore which are set out in the first column of Schedule A to this Act shall apply to the Retroceded Area subject to the modifications and restrictions specified in the second column of the said Schedule and, the provisions of this Act.
" Schedule A, paragraph (2), sub paragraph (b) repeated ' in substance what was stated earlier in section 5 (b).
of Act XXXI of 1948.
It read " 2.
Notwithstanding anything to the contrary in the Mysore.
Income tax Act, 1923, or the Mysore Excess Profits Tax Act, 1946 (a). . . . 793 (b) in respect of the total income or profits chargeable to income tax or excess profits tax in the Retroceded Area prior to the first day of July 1948, but which has not been assessed until that date, the provisions of the Indian Income tax Act, 1922, and the Excess Profits Tax Act, 1940, as in force in the Retroceded Area immediately before that, date shall apply to proceedings relating to the assessment of such income or profits until the stage of assessment, and the determination of the income tax and excess profits tax payable thereon, and the Mysore Incometax Act, 1923, or the Mysore Excess Profits Tax Act, 1946, as the case may be, shall apply to such proceedings after that stage; " There were further far reaching political and constitutional changes in 1949 50.
The Maharaja of Mysore had acceded to the Dominion of India in 1947; this, however, did not empower the Dominion legislature to impose any tax or duty in the State of Mysore or any part thereof.
By a proclamation dated November 25, 1949, the Maharaja of Mysore accepted the Constitution of India, as from the date of its commencement, as the Constitution of Mysore, which superseded and abrogated all other constitutional provisions inconsistent therewith and in force in the State.
On January 26, 1950, the Constitution of India came into force, and Mysore became a Part B State within the Constitution of India.
On February 28, 1950, there was a financial agreement between the Rajpramukh of Mysore and the President of India in respect of certain matters governed by articles 278, 291, 295 and 306 of the Constitution.
Under article 277 of the Constitution, however, all taxes which immediately before the commencement of the Constitution were being levied by the State continued to be so levied, notwithstanding that those taxes were mentioned in the Union List, until provision to the contrary was made by Parliament by law.
Such law was made by the Finance Act, 1950, by which the whole of Mysore including the retroceded area became " taxable territory " within the meaning of the Indian Income tax Act, 1922, from April 1, 1950, and the 794 Indian Income tax Act again came into force in the retroceded area from the aforesaid date.
Section 13 of the Finance Act, 1950, dealt with repeals and savings.
As the true scope and effect of sub section
(1) of section 13 is one of the questions at issue before us, it is necessary to read it.
" If immediately before the 1st day of April, 1950, there is in force in any Part B State other than Jammu and Kashmir or in Manipur, Tripura or Vindhya Pradesh or in the merged territory of CoochBehar any law relating to income tax or super tax or tax on profits of business that law shall cease to have effect except for the purposes of the levy, assess ment and collection of income tax and super tax in respect of any period not included in the previous year for the purposes of assessment under the Indian Income tax Act, 1922, for the year ending on the 31st day of March, 1951, or for any subsequent year, or, as the case may be, the levy, assessment and collection of the tax on profits of business for any chargeable accounting period ending on or before the 31st day of March, 1949: Provided that any reference in any such law to an officer, authority, tribunal or court shall be construed as a reference to the corresponding officer, authority, tribunal or court appointed or constituted under the said Act, and if any question arises as to who such corresponding officer, authority, tribunal or court is, the decision of the Central Government thereon shall be final.," Now, the legal effect of the constitutional changes referred to above, so far as it has a bearing on the present dispute, may be briefly summarised as follows: the Indian Income tax Act, 1922, remained in force in the retroceded area till June 30, 1948 ; from July 1, 1948, the Mysore Income tax Act, 1923, applied, subject to this saving that the Indian Income tax Act continued to apply in respect of the total income chargeable to income tax in the retroceded area prior to July 1, 1948, and the provisions of that Act as in force in the retroceded area prior to that date applied to all proceedings relating to the assessment of such income 795 upto the stage of assessment and determination of income tax payable thereon.
This position continued till April 1, 1950, when the Finance Act, 1950, came into force and the Indian Income tax Act, 1922, again came into force in the retroceded area, subject to the saving mentioned in section 13(1) thereof.
The principal question before us, as it was before the High Court, is one of jurisdiction.
Did the Income tax Officer concerned have jurisdiction to issue the notice under section 34 of the Indian Income tax Act, 192 and to make a re assessment order pursuant to sue notice ? The High Court pointed out that though the notice did not clearly say so, the Income tax Officer clearly acted under section 34 of the Indian Income tax Act, 1922, as it was in force in the retroceded area prior to July 1, 1948, and the writ applications were decided on that footing.
The four main lines of argument on which the respondent assessee rested his contention that the Incometax Officer concerned had no jurisdiction were these : firstly, it was urged that section 34 of the Indian Incomtax Act, 1922, was not saved by section 13(1) of the Finance Act, 1950, because what was saved was the prior law " for the purposes of the levy, assessment and collection of income tax ", which expression did not include re assessment proceedings; secondly, it was argueed that, even otherwise, the financial agreement made between the President of India and the Rajpramukh of Mysore on February 28, 1950, which received constitutional sanctity in article 278 of the Constitution rendered the impugned proceedings unconstitutional and void; thirdly, it was submitted that the Indian Income tax Act, 1922, as in force in the retroceded area stood repealed on June 30, 1948, by Mysore Act XXXI of 1948, and the saving provisions in section 5(b) thereof or in paragraph (2), sub paragraph (b), of Schedule A to Mysore Act LVII of 1948, did not save section 34 in so far as it permitted re assessment proceedings in respect of years in which there had been an assessment already; and lastly, it was contended that after June 30, 1948, and until April 1, 1950, the Income tax Officer in the retroceded area could re open 796 the assessment under section 34 of the Mysore Incometax Act, 1923, within a period of four years specified therein, but there was no authority to re open the assessment under section 34 of the Indian Income tax Act.
Following its own decision, City Tobacco Mart and Others vs Income tax Officer, Urban Circle, Bangalore (1), on certain earlier writ petitions (nos. 52 and 53 of 1953 and 105 and 106 of 1954), the High Court held in favour of the assessee on the construction of section 13 (1) of the Finance Act, 1950 and also oil the effect of the saving provisions in section 5 (b) of Mysore Act XXXI of 1948, and paragraph (2), sub paragraph (b) of Schedule A to Mysore Act LVII of 1948.
On these findings, it held that the Income tax Officer concerned had no jurisdiction or authority to start the impugned pro ceedings or to make the impugned orders of assessment.
It did not feel called upon to pronounce on the validity of the argument founded on the financial agreement dated February 28, 1950.
In Civil Appeals 143 145 of 1954, Civil Appeals 27 to 30 of 1956 and Civil Appeals 161 to 164 of 1956, Lakshmana Shenoy vs The Income tax Officer, Ernakulam (2), in which judgment has been delivered today, we have fully considered the arguments as to the true scope and effect of section 13(1) of the Finance Act, 1950, and of the financial agreement of February 28, 1950, taken along with the recommendations of the Indian States Finances, Enquiry Committee.
We have held therein that the expression I levy, assessment and collection of income tax in section 13 (1) is wide enough to comprehend re assessment proceedings under section 34 and that the financial agreement aforesaid, on a true construction of the recommendations of the Enquiry Committee, does not render the impugned proceedings Unconstitutional and void.
That decision disposes of these two arguments in the present appeals.
The two additional points which remain for consideration depend on the interpretation to be put on the saving provisions in section 5(b) of Mysore Act XXXI of 1948 and paragraph (2), sub paragraph (b) of Schedule (1) A.I.R. 1955 MYS.
(2) [1959] S.C.R. 751.
797 A to Mysore Act LVII of 1948.
These provisions are expressed in identical terms, and the question is if they save section 34 of the Indian Income tax Act with regard to re assessment proceedings.
We think that they do.
It is worthy of note that the saving provisions say that the Indian Income tax Act, 1922, as in force in the retroceded area prior to July 1, 1948, shall apply in respect of the total income chargeable to income tax prior to that date and it shall apply to proceedings relating to the assessment of Such income, until the stage of assessment and determination of income tax payable thereon. 'Total income ' means the total amount of income, profits and gains computed in the manner laid down in the Act, and there are no good reasons why the word 'assessment ' occurring in the saving provisions should be restricted in the manner suggested so as to exclude proceedings for assessment of escaped income or under assessed income.
On behalf of the assessee our attention has been drawn to the words "in respect of the total income chargeable to income tax. . but which has not been assessed until that date " occurring in the saving provisions and the argument is that, those words show that there was no intention to permit reopening of assessments which had been made already.
We are unable to accept this argument.
In its normal sense, I to assess ' means 'to fix the amount of tax or to determine such amount '.
The process of re assessment is to the same purpose and is included in the connotation of the term " assessment ".
The reasons which led us to give a comprehensive meaning to the word " assessment " in section 13 (1) of the Finance Act, 1950, operate equally with regard to the saving provisions under present consideration.
We agree with the view expressed in Hirjibhai Tribhuvandas vs Income tax Officer, Rajnandgaon and another (1), that section 34 of the Income _tax Act contemplates different cases in which the power to assess escaped income has been given; where there has been no assessment at all, the, term " assessment " may be appropriate and where there was assessment at too low a rate or with (1) A.I.R. 1957 M.P. 171.
798 unjustified exemptions, the term re assessment ' may be appropriate, and it may have been necessary to use two different terms to cover with clarity the different cases dealt with in the section ; but this does not mean that the two terms should be treated as mutually exclusive or that the word 'assessment ' in the saving provisions should be given a restricted meaning.
The object of the saving provisions was obviously to make the prior law available in all cases in which the income was assessed or was assessable according to that law before July 1, 1948, and it is difficult to see why only a part of the process of assessment should be saved and the other part repealed.
We, therefore, hold that the saving provisions save section 34 of the Indian Income tax Act, 1922, in its entirety, as it was in force in the retroceded area prior to July 1, 1948, and the contention of the respondent that it stood repealed from that date is not correct.
As to the period of limitation, it would be the period laid down in section 34 of the Indian Income tax Act as it was in force in the retroceded area prior to July 1, 1948.
The result, therefore, is that these appeals succeed and the judgment and order of the High Court of Mysore dated March 22, 1955, are set aside and the writ petitions filed by the respondent assessee are dismissed.
The appellant will get his costs in this Court and the High Court.
Appeals allowed.
| IN-Abs | The respondent was carrying on business as an excise con tractor in the Civil and Military Station of Bangalore in the State of Mysore, called the retroceded area.
The jurisdiction ' over this area was originally exercised by the Governor General in Council by virtue of an agreement with the Maharaja of Mysore, and the income tax law applicable was the Indian Income tax Act, 1922.
On July 26, 1947, the retroceded area was given back to the State of Mysore but the income tax law in force in that area prior to that date continued to have effect and be operative till June 30, 1948, on which date was promulgated the Mysore Income tax Act and Excess Profits Tax (Application to the Retroceded Area) (Emergency) Act, 1948, the effect of which was that the Indian Income tax Act, 1922, stood repealed and the Mysore Income tax Act, 1923, came into force subject to certain saving provisions.
On August 5, 1948, was promulgated the Retroceded Area (Application of Laws) Act, 1948.
Between 1947 and 1950 there were political and constitutional changes which ultimately resulted in Mysore becoming a Part B State within the Constitution of India.
The legal effect of these changes was that the income tax law applicable to the retroceded area till June 30, 1948, was the Indian Income tax Act, 1922 ; from July 1, 1948, the Mysore Income tax Act, 1923, became applicable except that the Indian Income tax Act continued to apply in respect of the total income chargeable to income tax in the retroceded area prior to July 1, 1948, and the provisions of that Act as in force in the retroceded area prior to that date applied to all proceedings relating to the assessment of such income upto the stage of assessment and determination of income tax payable thereon.
This position continued till April 1, 1950, when the Finance Act, 1950, came into force and as a result the Indian Income tax Act, 1922, became applicable again to the retroceded area, subject to the saving provisions of section 13(1) of the former Act.
In respect of the assessment for the four years between 1945 and 1949, the respondent was assessed to income tax under the law then in force in that area; subsequently, in 1954 the Income tax Officer served a notice on the respondent under section 34 of the Indian Income tax Act, 1922, for the purpose of assessing " escaped " or " under assessed " income chargeable to income tax for the said years.
The respondent challenged the jurisdiction of the Income tax Officer to take proceedings under section 34 or to make an order of re assessment on the grounds inter alia (1) that section 34 Of the Indian Income tax Act, 1922, was not saved by section 13(1) of the Finance Act, 1950, because what was saved was the prior law " for the purposes of the levy, assessment and collection of income tax ", which expression did not include re assessment proceedings, (2) that the 787 financial agreement made between the President of India and the Rajpramukh of Mysore dated February 28, 1950, rendered the impugned proceedings unconstitutional and void, (3) that the Indian Income tax Act, 1922, as in force in the retroceded area stood repealed on June 30, 1948, by the Mysore Income tax and Excess Profits (Application to the Retroceded Area) (Emergency) Act, 1948, and the saving provisions in section 5(b) thereof or in para (2), sub para (b) of Sch.
A to the Retroceded Area (Application of Laws) Act, 1948, did not save section 34 in so far as it permitted re assessment proceedings in respect of years in which there had been an assessment already, and (4) that after June 30, 1948, and until April 1, 1950, the Income tax Officer in the retroceded area could re open the assessment under section 34 Of the Mysore Income tax Act, 1923, within a period of four years specified therein, but there was no authority to re open the assessment under section 34 Of the Indian Income tax Act.
Held : (1) that the expression " levy, assessment and collection of income tax " in section 13(1) Of the Finance Act, 1950, was wide enough to comprehend re assessment proceedings under section 34 Of the Indian Income tax Act, 1922, and that the financial agreement between the President of India and the Rajpramukh of Mysore, on a true construction of the recommendations of the Indian States Finance Enquiry Committee, did not render the impugned proceedings unconstitutional or void ; Lakshmana Shenoy vs The Incomc tax Officer, Ernakulam, [1959] S.C.R. 751, followed.
(2) that the saving provisions in the Mysore Income tax and Excess Profits (Application to the Retroceded Area) (Emergency) Act, 1948, and the Retroceded Area (Application of Laws) Act, 1948, made the prior law available in all cases in which the income was assessed or was assessable according to that law before July 1, 1948, and, therefore, they saved section 34 of the Indian Income tax Act, 1922, with regard to re assessment proceedings ; City Tobacco Mart and Others vs Income tax Officer, Urban Circle, Bangalore, A.I.R. 1955 Mys.
49, overruled.
Hirjibhai Tribhuwandas vs Income tax Officer, Rajnandgaon and another, A.I.R. 1957 M. P. 171, approved.
(3) that the Income tax Officer had the authority to re open the assessments in the present case because the period of limitation was that laid down in section 34 of the Indian Income tax Act, as it was in force in the retroceded area prior to July 1, 1948.
|
ivil Appeal Nos. 123124 of 1985.
From the Judgment and Order dated 21.9.1984 of the Punjab and Haryana High Court in R.S.A. No. 1716 of 1978 and R.S.A. No. 1898 of 1978.
Shanti Bhushan, Vishnu Mathur, Mrs. Roxna Swamy and Rajinder Singh for the Appellants.
T.A. Ramachandran and Ramesh K. Keshwani for the Re spondents.
The Judgment of the Court was delivered by OZA, J.
These appeals arise out of the judgment of Punjab & Haryana High Court dated 21.9.1984 in Regular Second Appeal Nos.
1716/78 and 1698/78 wherein the learned Judge dismissed the two second appeals and maintained the judgment of the appellate court i.e. Additional District Judge granting a decree for half share of the property each in favour of Smt.
Pan Bai and Smt.
Sohan Bai, the two daugh ters of deceased Smt.
Mam Kaur.
In order to clearly understand the facts the pedigree of the family would be relevant: 1015 Hari Singh Sanehi Singh Hazari Singh Smt.
Mam Kaur Jawana Singh Lakhi Singh Smt.
Pan Bai Smt.
Sohan Bai Munshi ' (Plaintiff in (Plaintiff in Singh & Ranjit Singh suit out of suit out of five others and6 other sons which RSA No. which RSA No.(defendants (Defendants 7 1698 of 1978 17 16 of 1978 Nos.1to 6) to 13) has arisen) has arisen) Hazari Singh owned agricultural lands the dimensions and its identity is not in dispute before us and he died in November 1918 leaving behind his widow Smt.
Mam Kaur who inherited the property.
Hazari Singh had left behind two daughters i.e. Smt.
Pan Bai, Plaintiff in the suit out of which second appeal before the High Court was No. 1698/78 and Smt.
Sohan Bai who was also a plaintiff in suit out of which second appeal before the High Court was No. 17 16/78.
In 1944 it is alleged that Smt.
Mam Kaur adopted Ranjit Singh grandson of Sanehi Singh and son of Lakhi Singh.
This Ranjit Singh had six other brothers and it is alleged that in 1945 Smt.
Mam Kaur gifted all the lands which she had inherited from her husband by an oral gift to Ranjit Singh.
As regards the two events i.e. adoption and gift there is some controversy in respect of the respective dates.
It appears and it was contended by the counsel for the appel lants that adoption was first and gift was only a consequen tial act to accelerate the succession whereas learned coun sel for the respondents contended that gift was first where as adoption was subsequent.
But it is not disputed that the gift also is nothing more than an oral gift and the same is about adoption.
Munshi Singh and his five brothers filed a suit for declaration challenging this gift and adoption made by Smt.
Mam Kaur in favour of Ranjit Singh.
By judgment and decree dated 24. 7.1947 the suit was decreed and it was held that the adoption of Ranjit Singh was invalid and the gift also was held ,to be invalid and a declaration was granted in respect of the gift so far as it affected the reversionary rights.
Against this judgment Ranjit Singh preferred an appeal but this was also dismissed.
On 4th June, 1963 Smt.
Mam Kaur sold away the entire lands to Ranjit Singh and his brothers for an amount of Rs.50,000.
Thereafter 1016 to claim pre emption a suit was filed by Smt.
Pan Bai and the other suit was filed by Munshi Singh and his five broth ers on the ground that as reversioners they have a superior right to pre emption.
In these preemption matters ultimately the Court held that Smt.
Pan Bai had a superior right as compared to Munshi Singh and his brothers and therefore and earlier date was given to Smt.
Pan Bai to deposit the sale amount and seek pre emption failing which her suit was to be dismissed and a later date was given to Munshi Singh and his brothers to deposit the sale amount and opt for pre emption.
Similar condition of dismissal of the suit for failure of depositing the amount was imposed.
So far as Smt.
Pan Bai is concerned she did not deposit the amount and therefore her suit for pre emption was dismissed where as Munshi Singh and others deposited the amount and obtained a decree of preemp tion which was executed and they obtained possession and in this manner they stood substituted in the sale.
In January 1965 Smt.
Mam Kaur died and Smt.
Sohan Bai filed a suit bearing No. 403/65 seeking a decree for posses sion of half of the share on the plea that in view of the declaratory decree dated 24.7.
1947 which was confirmed on appeal that on the death of Smt.
Mam Kaur succession had to be traced to Hazari Singh i.e. Sohan Bai 's father and she being the direct heir of Hazari Singh was entitled to half share in the land.
It was also pleaded that Smt.
Mam Kaur had already parted with her widow 's estate by gift deed made by her in 1945 in favour of Ranjit Singh and therefore she had no subsisting title which she could transfer by way of sale by the sale deed dated 4.9.63 and thus by this sale deed as she herself had no title she could not convey any title in favour of Ranjit Singh and his brothers.
Sohan Bai 's suit was decreed but on appeal it was remanded.
In the mean time Smt.
Pan Bai also filed a similar suit which was numbered 203/68 to claim possession of the remaining half share on the same ground, as was filed by Smt.
Sohan Bai.
The two suits were consolidated and the trial court by its judgment dated 2nd January, 1973 decreed Smt.
Sohan Bai 's suit but dismissed the suit filed by Smt.
Pan Bai on the ground that as Smt.
Pan Bai had filed a suit claiming on the basis of pre emption earlier she was estopped from disputing the validity of sale made by Smt.
Mam Kaur.
Against this judgment of the trial court losing parties filed their appeals before the Additional District Judge who by his judgment and decree dated 25.9.78 maintained the decree in the suit of Sohan Bai and reversed the trial court judgment in the suit of Smt.
Pan Bai and held that both the daughters were entitled to succeed to half share each in the property.
Against this judgment the defendants in Smt.
Sohan Bai 's case filed a regular second appeal which was No. 1716/78 1017 and defendants in Smt.
Pan Bai 's case filed regular second appeal which was No. 1698/78 in the Punjab & Haryana High Court.
Both these second appeals Were disposed of by the impugned judgment of the High Court.
Most of the facts are not in dispute.
The main contro versy raised in these appeals is that in the earlier suit the adoption and gift both were declared as invalid in a suit for declaration filed by the reversioners, what will be its effect? On the one hand counsel for the appellants contended that in fact adoption was followed by gift more or less in the nature of a step to accelerate the succession and when the court declared both to be invalid it clearly meant that the donee who was the adopted son Ranjit Singh was not left with any rights in the properties whereas on behalf of the respondents it was contended that adoption no doubt was declared invalid but so far as gift was concerned it was declared invalid in a suit for declaration by rever sioners to the limited extent that this gift will not affect the rights of the reversioners thereby meaning that so far as the life estate of Smt.
Mam Kaur was concerned it was transferred by this gift deed but the right of the rever sioners to succeed on the death of Smt.
Mam Kaur was pro tected as it was declared that this gift will not affect the rights of the reversioners.
A controversy was also raised as to which adoption or gift was first in time and what is its effect? Learned counsel for the appellants contended that as the adoption and gift both were declared invalid although a declaration was granted in a suit by reversioners but it clearly meant that nothing remained with the so called donee and therefore when Hindu Succession Act come into force because of Section 14 clause (1) Smt.
Mam Kaur became the absolute owner and therefore she had a valid right to trans fer the property by sale.
It was also contended that Ranjit Singh in whose favour the gift was alleged to have been made himself agreed to purchase this property alongwith his brothers; this indicates that he accepted the position that Smt.
Mam Kaur after coming into force of the Hindu Succes sion Act had acquired the absolute rights and she could convey the property by sale.
In any event his accepting to purchase the property from Smt.
Mam Kaur, amounts to an admission that there was no right created in his favour by gift which was declared invalid and on this basis learned counsel for the appellants contended that the appellants are entitled to succeed and the High Court was not right in granting the decree on the basis of the claim of the two daughters who claimed to be the heirs of Hazari Singh.
Alternatively it was 1018 also contended by learned counsel for the appellants that even if the gift in favour of Ranjit Singh is accepted it is clear that Smt.
Mam Kaur had succeeded to the property as an heir of her husband and because of Hindu women 's right to property Act, 1937 Smt.
Mam Kaur had a limited estate.
As it is well settled that this limited estate in favour of Smt.
Mam Kaur had all the rights which an heir could have in immovable property but in the case of female heirs the only limitation was in respect of alienation and alienation could only be of the rights that she could alienate and that amounts to only life interest.
It is also well settled that the alienaee in this case Ranjit Singh will get the property till the life time of Smt.
Mam Kaur and it is also well settled that if during the life time of Smt.
Mam Kaur Hindu Succession Act came into force, as the property in suit was in the hands of alienee i.e. Ranjit Singh he will not get the benefit of Section 14(1) and will not become the abso lute owner but on the death of Smt.
Mam Kaur the property will revert back to the heirs of Smt.
Mam Kaur 's husband.
It was also contended that in spite of the fact that a gift creating a life interest in favour of Ranjit Singh was in existence but Smt.
Mam Kaur still had the residuary rights of disposing of the property after her death if during her lifetime the Hindu Succession Act came into force.
As in the present case it did come into force, the limited rights which remained with Smt.
Mam Kaur became full rights on coming into force of the Hindu Succession Act and therefore if Smt.
Mam Kaur transferred by sale the property the sale would convey at least the residuary rights vested in her i.e. the right of absolute ownership at most subject to possession of the alienee during her lifetime and on this basis it was contended that the sale made by Smt.
Mam Kaur is valid and therefore the view taken by the High Court is not correct.
On the other hand learned counsel for the respondents contended that as the gift was valid the property was trans ferred in favour of the alienee i.e. Ranjit Singh although it was the life estate but with the Hindu Succession Act coming into force she could not be said to be possessed of the property as there were no rights in the property vested in Smt.
Mam Kaur and even if the widest meaning is given to 'possessed of ' still it could not be contended that she had any rights left with her.
Therefore during her lifetime the alienee alone had the rights in property.
The effect if any of the earlier decree was that on her death the property will revert back and in that event it will revert back to the heirs of her husband not to her heirs and in this view it was contended that the judgment passed by the High Court is correct.
As regards the effect of Smt.
Pan Bai 's suit for pre emption 1019 leading to estoppel also contentions were advanced.
Learned counsel for the appellants on the basis of decisions of this Court in Jagannathan Pillai vs Kunjithapa dam Pillai and Ors., ; and Gopal Singh and Another vs Dile Ram (dead) by LRs and others, contended that as the gift at best could be said to be effective during the lifetime of Smt.
Mam Kaur she had a residuary right left in her which she could dispose of.
Alternatively it was contended that gift in favour of Ranjit Singh was declared invalid and therefore she could be said to be possessed of the property in view of language of Section 14(1) of the Hindu Succession Act.
It was also contended that in the sale deed, Ranjit Singh himself was one of the purchasers and the sale deed indicates that at the time of sale Smt.
Mam Kaur delivered possession to the purchasers.
On these basis it was contended that it appears that Ranjit Singh had given the possession of the property back to Smt.
Mam Kaur before this sale deed was executed.
Learned counsel for the respondents on the other hand contended that the decree declaring the gift bad was only a declaratory decree in favour of the reversioners that clear ly meant that so far as reversioners rights on the death of Smt.
Mam Kaur are concerned they could not be affected by gift but it did not mean that Smt.
Mam Kaur did not transfer her rights by gift in favour of Ranjit Singh.
It was there fore contended that in view of decision in Kuldip Singh and others vs Surain Singh and Others, which is a judgment of a Bench .of three Judges of this Court, Smt.
Mam Kaur could not be said to be a person possessed of anything and therefore no benefit could be obtained by Section 14(1) so far as Smt.
Mam Kaur is concerned and it was therefore contended that the judgment passed by the High Court could not be assailed.
It was also contended that so far as the question of re conveyance by Ranjit Singh in favour of Smt.
Mam Kaur is concerned, the question has been examined on the basis of evidence by the two courts below and a positive finding has been arrived at by the courts that the evidence is not sufficient to come to the conclu sion that there was transfer of possession from Ranjit Singh to Smt.
Mam Kaur before the sale deed was executed.
It was also contended that the two decisions on which reliance is placed by the learned counsel are clearly distinguishable on facts as in these two judgments on the date the Hindu Suc cession Act came into force, the widow was possessed of the property and therefore it was held that she acquired the rights as full owner.
1020 So far as the contention of the learned counsel for the appellant about the transfer of possession from Ranjit Singh back to Smt.
Mam Kaur is concerned the learned courts below have come to a positive finding of fact that there was no transfer of possession in favour of Smt.
Mam Kaur before the sale deed by her was executed and while coming to the con clusion the courts below have considered the effect of the recital in the sale deed executed by Smt.
Mam Kaur and the fact that Ranjit Singh is one of the purchasers and having gone through the judgments, in our opinion, the conclusions could not be said to be erroneous and therefore the conten tions of the learned counsel for the appellants on that ground could not be accepted.
As regards the question about the declaration of the gift to be invalid, the judgment which granted the decree in favour of the reversioners clearly indicated that it was a decree of declaration saying that the gift had no effect on the rights of the reversioners.
The words in the operative part of the judgment stated: "For the reasons aforesaid the plaintiffs succeed and are granted a decree for declara tion that Mst.
Mam Kaur did not validly adopt Ranjit defdt.
and that gift in favour of Ranjit defdt.
shall not affect the right of the reversioners after the death or termina tion of the interest in the suit land of Mst.
Mam Kaur.
" In this view of the matter it is therefore clear that what was held was that the gift will not affect the rights of the reversioners on the death of Smt.
Mam Kaur but it could not be disputed that so far as Smt.
Mam Kaur during her lifetime is concerned as she had gifted away the property to Ranjit Singh and delivered possession she had no rights left with her.
The contentions advanced by learned counsel in respect of residuary rights also is of no consequence as it is apparent that Smt.
Mam Kaur who was enjoying the limited estate before the Hindu Succession Act came into force, transferred her rights by gift and if a valid gift is ef fected it could not be contended that there were any residu ary rights left with her.
In fact what residuary rights could be thought of were not the rights of the widow but the right of the reversioners to get as heirs of her husband on her death and on that basis it could not be said that she could be said to be possessed of any right in the property which she held as a limited owner on the date the Hindu Succession Act came into force.
In Jagannathan Pillai 's case the 1021 property was re conveyed in favour of the widow and this Court therefore observed: "The case of the widow who had temporarily lost the right in the property by virtue of the transfer in favour of the alienee or the donee cannot be equated with that of a strang er by forgetting the realities of the situa tion.
Surely, the Act was intended to benefit her.
And when the widow becomes possessed of the property, having regained precisely that interest which she had temporarily lost during the duration of the eclipse, Section 14(1) would come to her rescue which would not be the matter in the case of a stranger who cannot invoke Section 14( 1).
" In Gopal Singh 's case, this Court while examining the facts, clearly stated as under: "It is pertinent to note that the compromise decree reads as follows: I allow the appeal of the appellants and modify the judgment of the trial court to the extent that gift deed in respect of the land measuring 21 15 17 bighas comprising Khata Khatauni No. 3/16 to 27 bighas situated in village Barsu Ballah is hereby rejected and declared ineffective.
The aforesaid land along with the other land shall be divided in equal shares after the death of Sheru alias Bhushe hari and Dhari shall himself give due share to Hari Ram in accordance with the aforementioned order.
" The operative portion of the compromise decree which was quoted by this Court in the judgment clearly indicated that as the gift deed was ineffective in respect of the lands mentioned therein the widow continued to enjoy the rights and benefits till the Hindu Succession Act came in force as it is observed: "The effect of the aforesaid was that the gift was ineffective and Smt.
Bhushehari continued to enjoy the right and benefit she had during her limited ownership until 1956".
Under these circumstances therefore these cases do not help the appellant.
It is clear that in view of gift made in favour of Ranjit Singh,Mam Kaur on the date on which Hindu Succession Act came into 1022 force, was not possessed of any fight in the property and therefore she could not get any advantage from the coming into force of the Hindu Succession Act.
This Court in Kuldip Singh 's case clearly held: "It is clear from the questions reproduced above that, on the principles laid down by this Court in the case of Mangal Singh and others (supra) it has to be held in the present case that the property in dispute cannot be held to be possessed by Smt.
Mehtab Kaur, because, after gifting the property to Hamam Singh, and parting with the possession of the property, she was not left with any fights at all under which she could regain possession in her own life time.
The gift executed by her was binding on her, even though it may not 'have been binding on the reversioners.
She could not, therefore, avoid the deed of gift and could not claim back possession from Hamam Singh or his successors in interest.
Having thus completely parted with her fights, she could not be held to be possessed of the property when the Act came into force and consequently she could not become full owner of it.
" It is clear that on the date on which Smt.
Main Kaur executed the sale deed, in fact she had no title to the property nor she was in possession thereof.
As regards the contention about Smt.
Pan Bai on the basis of estoppel is concerned it is clear from the language of Section 115 of the Evidence Act that doctrine of estoppel can not be invoked merely because Smt.
Pan Bai filed a suit for pre emption.
Section 115 of the Evidence Act reads thus: "When one person has, by his declaration, act or omission, intentionally caused or permitted another person to believe a thing to be true and to act upon such belief, neither he nor his representative shall be allowed, in any suit or proceeding between himself and such person or his representative, to deny the truth of that thing.
" In view of this learned counsel did not seriously press the contention.
Consequently we see no reason to entertain the appeal.
The appeals are therefore dismissed and the decree passed by the learned courts below is maintained.
In view of the circumstances of the case we pass no orders as to costs.
| IN-Abs | One Hazari Singh died in November 1918 leaving behind his widow Smt.
Mam Kaur and two daughters viz., Smt.
Pan Bai and Smt.
Sohan Bai.
The widow inherited the agriculture properties of her husband.
The present appeals have arisen out of the two suits filed by the two daughters aforesaid claiming their half share in the property.
The circumstances that led to the filing of the suits may be stated thus: Smt.
Mam Kaur, the widow, adopted Ranjit Singh grand son of Sanehi Singh and son of Lakhi Singh (one of the collater als) in 1944 and gifted all the lands to him inherited by her from her husband.
Both the adoption as also the gift were made orally.
Munshi Singh and his brothers (reversions) filed a suit challenging the validity both of the adoption of Ranjit Singh and the gift of the properties to him.
By a decree of the Court both the adoption as also the gift in favour of Ranjit Singh were declared invalid and a declaration was granted in respect of the gift so far as it affected the reversionary rights.
Thereupon on 4th June, 1963, Smt.
Mam Kaur sold away the entire property to Ranjit Singh & his brothers for Rs.50,000.
Pan Bai, daughter of deceased Hazari Singh and Munshi Singh and others (revisioners) filed suits claiming pre emption rights to purchase the properties in question.
By a decree of the Court it was held that Pan Bai has a superior right to purchase the property.
Accordingly first preference was granted in favour of Smt.
Pan Bai to deposit the sale amount and seek pre emption failing which her suit was to be dismissed and a later date was given to Munshi Singh and others.
Pan Bai did not deposit the amount with the result Munshi Singh & others deposited the amount and took possession of the properties and came to be substi tuted in the sale.
1013 On the death of Mam Kaur in January, 1965, Smt.
Sohan Bai (her 2nd daughter) filed a suit for a decree for posses sion of half of the share on the plea that in view of the declaratory decree of 24.7.47, on the death of Smt.
Mam Kaur, succession had to be traced to Hazari Singh i.e. her father.
Pan Bai, also filed a suit for the same relief.
The Trial Court decreed the suit filed by Smt.
Sohan Bai but dismissed the suit filed by Smt.
Pan Bai on the ground that as Smt.
Pan Bai had flied a suit claiming on the basis of pre emption earlier, she was estopped from disputing the validity of the sale made by Smt.
Mam Kaur.
On appeal the Additional District Judge maintained the decree passed in the suit of Smt.
Sohan Bai and reversed the trial Court 's Judgment in the suit filed by Smt.
Pan Bai and held that both the daughters were entitled to succeed to half share each in the property.
Against the order of the Additional District Judge, defendants in both the suits filed Regular Second Appeals in the High Court which were dismissed by the impugned judgment.
Hence these appeals.
Before this Court it was inter alia contended by the appellants that ; in an earlier suit the adoption and the gift having been declared invalid, the donee who was the adopted son of Ranjit Singh was not left with any rights in the properties; on the other hand it was contended by the Respondents that no doubt adoption was declared invalid but so far as gift was concerned, it was declared invalid in a suit for declaration by reversioners to the limited extent that this gift will not affect the rights of the reversion ers thereby meaning that so far as the life estate of Smt.
Mam Kaur was concerned, it was transferred by the gift deed but the right of the reversioners to succeed on the death of Smt.
Mam Kaur was protected as it was declared that this gift will not affect the rights of the reversioners.
Dismissing the appeals, this Court, HELD: The gift will not affect the rights of the rever sioners on the death of Smt.
Mam Kaur but it could not be disputed that so far as Smt.
Mam Kaur during her life time is concerned, as she had gifted away the property to Ranjit Singh and delivered possession, she had no rights left with her.
[1020E F] What residuary rights could be thought of were not the rights of the widow but the right of the reversioners to get as heirs of her husband on her death and on that basis it could not be said that she could be said to be possessed of any right in the property which she held 1014 as a limited owner on the date the Hindu Succession Act came into force.
[1020G H] On the date on which Smt.
Mam Kaur executed the sale deed, in fact, she had no title to the property nor she was in possession thereof.
[1022D E] Jagannathan Pillai vs Kunjithapadam Pillai & Ors., ; Gopal Singh & Ors.
vs Dile Ram (dead) by Lrs. & Ors., Kuldip Singh & Ors.
vs Surain Singh and others, referred to.
|
ivil Appeal No. 1065 of 1987.
From the Judgment and Order dated 21.10.1986 of the Kerala High Court in S.A. No. 491 of 1980.
G. Vishwanatha Iyer, section Balakrishnan and M.K.D. Namboo dri for the Appellants.
T.S. Krishnamoorthy Iyer, A.K. Srivastava and S.C. Birla for the Respondent.
The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J.
This appeal by leave is from the judgment and order of the High Court of Kerala, dated 21st October, 1986.
It arises in the following circumstances: The building in question which is a shop building No. T.C. 887, M.G. Road, Pazhavangadi, Trivandrum, is part of a pucca three storeyed building belonging to one M.P. Philip and as per his settlement the disputed shop building and two other rooms devolved on one of his sons M.M. Philip.
While this disputed shop building was in the possession of a tenant under the owner, the owner mortgaged the disputed building and the remaining portions to the first defendant with a direction to receive the rent from the tenant.
The mortgagor directed the tenant also to attorn to this mortga gee.
The first defendant subsequently in the course of his management of the mortgaged property, gave the building on lease to the appellants for a higher rent when the former tenant vacated the same.
Subsequently, the owner executed a subsequent mortgage with a direction to redeem the mortgage in favour of the first defendant and before the subsequent mortgagee took steps to redeem the mortgage, the owner assigned his equity of redemption to the respondent.
The respondent and the subsequent mortgagee together as plain tiffs 1 and 2 filed a suit to redeem the mortgage of the first defendant impleading the appel 977 lants as well as respondents and claimed recovery of the khas possession of the building.
The appellants contended that they are tenants of the building inducted into posses sion by the mortgagee as a mode of enjoyment that the mort gage deed authorised the mortgagee to enjoy the building by letting it out and they were not liable to be evicted through a decree of court in a redemption suit without an order under the Kerala Building (Lease & Rent Control) Act, 1965 (hereinafter referred to as 'the Act ').
The trial court decreed the suit and directed recovery of possession of the shop building on the ground that the mortgagee could not induct a tenant and give him any right to continue in pos session even after the redemption of the mortgage.
On appeal by the appellants, the first appellate court held that the disputed building was a shop building which was never in the enjoyment of the owner and the mode of enjoyment of the owner of the property was by letting it out and when the mortgagee enjoyed the property in that manner, by letting it out, the person put in possession as a tenant was entitled to continue in possession even after redemption, until evicted under the Rent Control Act.
The first appellate court further found that the mortgage deed impliedly autho rised the mortgagee to let out the building.
In that view the decree for khas possession of the shop building in possession of the appellants was denied to the respondent.
The respondent filed a second appeal before the High Court, raising the following three contentions: (1) Whether under section 76(a) of the Trans fer of Property Act, 1882, a tenancy created by the mortgagee in possession of an urban immovable property would be binding on the mortgagor after redemption of the mortgage, assuming that the tenancy was such as a pru dent owner of property would have granted in the usual course of management.
(2) Whether a tenancy created in exercise of a general power to grant a lease expressly or impliedly conferred on the mort gagee would survive the redemption of the mortgage in view of Sec.
111(c) of the Trans fer of Property Act, 1882; and (3) Whether a tenant inducted on the property by a mortgagee with possession, would after redemption of the mortgage be protected under the provisions of section 11(1) of the Act.
The High Court was of the view that as the appellants had not pleaded that they were inducted into possession by the mortgagee as 978 prudent act of management, it was not open to the appellants to contend that they could continue in possession even after redemption.
Further, the High Court was of the view that it was not open to the mortgagee to induct a person into pos session which conferred any right on the tenant to continue in possession even after redemption.
The High Court categorically came to the conclusion that protection under section 76(a) of the was never claimed in the written statement.
On the other hand, it was contended by the appellants that this was a pure question of law unconnected with the question of fact and, therefore, no pleadings were necessary and even without pleading such contention could be raised and considered by the Court at the time of argument.
Whether a particular lease is bona fide or prudent act of management, is primari ly a question of fact, though whether on account of the bona fide or prudent act of the mortgagor his lessee was entitled to continue even after the mortgage was determined, is a question of law.
The High Court was of the view that the decision on the question of law is dependent on the question of fact whether the lease was bona fide or a prudent act of a person of ordinary prudence, who would manage it as if it were his own.
On that question of fact, there should be definite pleading so that the plaintiff must have an oppor tunity of meeting the claim and adduce evidence in rebuttal.
The High Court therefore could not sustain the right of the tenant under section 76(a) of the , as a matter of prudent management.
There was no issue in this respect and the judgment of the trial court did not show, according to the High Court, that such a contention was raised.
The only contention that was raised was that the lease was with the knowledge or consent of the mortgagor.
The High Court further came to the conclusion that there was no evidence in support of that contention.
The finding of the District Judge that the mortgagee had implied authority of the mortgagor to let out, was not only lacking in plead ings or issue, but it was also not warranted by the provi sion of the mortgage deed or the evidence.
The High Court relied on several decisions and came to the conclusion that the provision of Sec.
76(a) of the , which was an exception to the general rule embodied in Sec.
111(c) applies in appro priate cases ordinarily only to the management of agricul tural lands and had seldom been extended to urban property so as to tie up in the hands of lessee or to confer on him rights under special statutes.
The High Court further came to the conclusion that the general 979 proposition of law is that no man can convey a better fight than he himself has.
Therefore, a mortgagee in possession cannot create tenancy with a right to continue in possession beyond the period of redemption.
Normally, lease by the mortgagee is determined when the mortgage is redeemed since there is no privity between the mortgagor and the lessee.
The question of prudent management under Sec.
76(a) of the by granting of lease or otherwise normally arises only in rural agricultural lands and not in urban immovable property.
The High Court further came to the conclusion that a mere authorisation to the mortgagee to lease the property itself does not amount to any intention to allow expressly the creation of a tenancy beyond the term of the mortgage.
Only where the words of the mortgage deed clearly and expressly allowed creation of tenancy beyond the term of the mortgage that the lease would be binding on the mortgagor.
In that view of the matter, the High Court held that the learned District Judge was wrong in holding that the defendants Nos. 2 & 3 were not liable to be evicted in this suit and that they could be evicted only through an order of a competent Rent Controller.
In the premises, the second appeal was allowed and a decree for eviction was passed.
Aggrieved thereby, the appellants have come up before this Court.
The question is was the High Court right.
The first contention of Sri Vishwanatha Iyer, learned counsel for the appellants, was that in view of the terms of the mortgage in the instant case, the appellants were enti tled to be in possession after redemption of mortgage as against the mortgagor.
He drew our attention to the mortgage deed dated 4th July, 1960.
The mortgagor in that mortgage deed stated that he was the absolute owner of the property and therefore he was mortgaging the property.
Thereafter, the deed proceeded to state as follows: "This property is hereby secured to you on otti for a term of 2 years for Rs.7,000 which I have received as recited hereunder.
There fore, you may possess and enjoy the property by collecting the rent from the tenants and after the expiry of two years I shall pay you the sum of Rs.7,000 and get a release of the otti ands the expenses for the release should be shared by us.
" The mortgagee was to enjoy the property by collecting the rent from the tenants.
This mortgage was renewed for the second time on 980 17th August, 1977.
The second mortgage deed recited that the shop in Item I which was in possession of Carona Shoe Compa ny, was given for enjoyment.
Therefore, the fact that the tenant was there, is accepted.
It was contended that as no amount was being paid as interest, the mortgagee was entitled to the benefit, that is to say, the rent from the premises in question.
It was contended that the High Court was wrong in holding that it was not an act of prudent management.
Sri Iyer referred to the document dated 3rd June, 1977 which recited as follows: "But the portion where the Ringal shop was situate alone was given possession to you and the remaining portion forming upstairs to the shop previously Ringal Shop, now Carona Shoe Mart, and the shed portion behind it was let out to Chellamma Pillai by the mortgagor and she is occupying it while so the mortgagor has executed a subsequent mortgage and an agree ment for sale to Chellamma Pillai and she is entitled to redeem you and recover posses sion of the building." These contentions, in our opinion, are concluded by the decision of this Court in PomaI, Kanji Gvoindji & Ors.
vs Vrajlal Karsandas Purohit & Ors., [1988] 4 Jmt.
Today SC 307, wherein it was held that except in cases where the leases specifically and categorically make exceptions in favour of the tenants that they would continue to be in possession even after the expiry or termination of the mortgage, and those leases are acts of prudent management, the tenants inducted by the mortgage would be entitled to the protection under the Rent Act after the redemption of mortgage .and in no other cases.
Sri Iyer, in our opinion, is wrong in contending that in the instant case the mortgage deed specifically empowered the mortgagor to induct tenant who would continue to be in possession even after the redemption or end of the mortgage.
It is true that the mortgage deed recited that the tenants were there.
It is also true that the mortgage deed also enjoined that the method of realisation of the rent as the method of having the usufruct of the mortgage by the mortga gee.
But it must be understood that so long as the mortgage subsisted, there was relationship of tenant and landlord.
It could not be so after the mortgage was redeemed.
There is nothing in the mortgage deed in the instant case which warranted the conclusion that the mortgagee could 981 induct tenants who Would continue beyond the term of the existence of the mortgage or who would be given rights even after the expiry of the mortgage.
Sri Iyer then submitted that this Court in the aforesaid decision had referred to another decision of this Court, namely, Jadavji Purshottam vs Dhami Navnitbhai Amaratlal & Ors., where it was held that if the lease granted to the tenant by the mortgagee had the approval or concurrence of the mortgagor, the same would entitle the tenant to claim tenancy rights even as against the mortgagor after he had redeemed the mortgage, then in such a case, such tenants would continue to be in possession.
Sri Iyer drew our attention to the observations of this Court in the aforesaid decision at para 13 of page 236 of the report.
With reference to the term of the mortgage in the instant case and the communications between the parties, Sri Iyer tried to contend that the lease granted in favour of the appellants by the mortgagee had the approval or concurrence of the mortgagor.
We are, however, unable to accept or find in the correspondence any such approval or concurrence.
We have referred to the mort gage deed and the sale deed as mentioned hereinbefore.
Sri Iyer drew our attention to a letter dated 7th October, 1977 addressed to the Rent Controller with a copy to the General Manager, Carona Shoe Co. Ltd. Therein, the respondent had negotiated or made an offer and expressed preference for the appellant company.
The letter contained the following state ments: "Under the circumstances, I have now finally decided to settle all the issues and start the construction of the rear portion as early as possible as I have two more offers (other than yours) for renting out the entire ground floor (about 1,500 sq.
ft.) which includes the space now occupied by you and a portion of the first floor.
I am writing this letter to you because my first preference is for your company.
The main reason is that you are conducting the business in the same shop for some years.
Second thing is that I have already agreed to you at the discussion even though there was no written consent.
In the light of the above, I give below my terms and conditions for renting out the shop with additional space annexed, if you are interested to continue the business in my building.
Of course, the expenses (portion) for the same will have to be borne by you.
But I will provide you with a very good show room considering your requirements.
Necessary bathroom, lavatory, office cabin etc.
will also be provided in consulta 982 tion with your representative.
I had a discus sion with Mr L.W. Baaker, A.R.I.B.A. (The British Architect who is doing so many artis tic modern buildings and show room etc.
throughout India including the Chitralekha Film Studio) and the article Director and Interi or Decorator of our Studio regarding the subject.
" Thereafter, certain terms and conditions of the proposed lease were suggested.
Ultimately, however, no such lease was executed.
This communication strictly, in our opinion, negates the submission that there was any concurrence or approval of the mortgagor of the continuance of the appel lant 's as tenants after the expiry or redemption of the mortgage.
It was then submitted by Sri Iyer that in view of the provisions of the Act, it was not possible for the respond ents to execute the decree.
After an exhaustive discussion of the relevant authorities, it has been held by this Court in Pomal Kanji Govindji 's case (supra) that in respect of the urban immovable properties, the tenants do not get any protection after the redemption of mortgage.
Sri Iyer, however drew our attention to Sec. 11 of the Act, to contend that notwithstanding anything contained in any other law or contract, a tenant shall not be evicted, whether in execu tion of a decree or otherwise, except in accordance with the provisions of the Act.
He drew our attention to the defini tion of 'tenant ' under sec.
2(6) of the Act which defines a tenant as a person by whom or on whose account rent is payable for a building and includes the heir or heirs of a deceased tenant and a person continuing in possession after the termination of the tenancy m his favour.
Similarly, landlord is defined under section 2(3) of the Act as follows: "(3) "landlord" includes the person who is receiving or is entitled to receive the rent of a building, whether on his own account or on behalf of another or on behalf of himself and other or as an agent, trustee, executor, administrator, receiver or guardian or who would so receive the rent or be entitled to receive the rent, if the building were let to a tenant.
" But in view of the said definitions, we are of the opinion that between the appellants and the respondent, there was never any landlord or tenant relationship.
The appellants were never the tenants of the respondent.
Sri Iyer drew our attention to the observations of this 983 Court in Raj Brij Krishna & Anr.
S.K. Shaw & Bros., , where it was held that the non obstante clause would be applicable.
Our attention was drawn to the observa tions of Fazal Ali, J. at page 150 of the report.
There, the Court observed that Section 11 of the Bihar Buildings (Lease, Rent & Eviction) Control Act, 1947 was a self con tained section, and it was wholly unnecessary to go outside the Act for determining whether a tenant was liable to be evicted or not, and under what conditions he could be evict ed.
But in the instant case, the appellants were not the tenants.
The respondent, the original mortgagor, would never after the redemption of the mortgage have treated the appel lants to be tenants.
There was no relationship ever between the appellants and the respondent.
The mortgagor had a separate and distinct interest which was wiped out on the redemption of the mortgage or expiry of the period of mort gage.
The mortgagor on redemption of mortgage gets back his own right, he is not the successor in interest of the mort gagee.
Interest, if any, created by the mortgagee on the mortgagor 's right, must disappear on ceasing of interest of the mortgagee.
In that view of the matter, in our opinion, thus the said observations would not be of any relevance to the present case.
Similarly, reliance was placed on the observations of this Court by Sri Iyer in M/s Raval & Co. vs
K.G. Ramachandran & Ors., ; The observa tions that the definitions of 'landlord ' and 'tenant ' might apply even if the contractual tenancy has come to an end.
But that is not the situation here in the instant case.
In the said case, Bhagwati, J. as the Chief Justice then was, in his judgment at page 439 of the report observed that sub section (1) of section 4 of the Act in question i.e., Tamil Nadu Buildings (Lease & Rent Control) Act, 1960 con templated that an application for fixation of fair rent of a building might be made by the tenant or the landlord.
The definition of 'tenant ', it was observed, included contractu al tenant as well as tenant remaining in possession of the building after determination of the contractual tenancy, i.e. statutory tenant, and both contractual tenant and statutory tenant could, therefore, apply.
It was, therefore, submitted in this case that on the analogy of the contractu al tenant, the appellants were entitled to the protection of the Act.
We are unable to agree.
It is not a question of a contractual tenancy coming to an end.
The limited estate created in favour of the mortgagee having disappeared, all rights emanating from that limited estate disappear and the superior fight of the mortgagor comes not in place of the mortgagee but as a result of an independent title, and as such the mortgagor cannot be bound by any act created or any relationship contracted between the mortgagee and the ten ant, unless it is permitted by the mortgage deed Reliance was also placed on certain observations of 984 this Court in V. Dhanpal Chettiar vs Yesodai Ammal, 14.
Therein, it was held that under the State Rent Acts, the concept of contractual tenancy has lost much of its significance and force.
Therefore, giving of the notice was a mere surplusage and unlike the law under the , it does not entitle the landlord to evict the tenant.
In our opinion, the observations of the said decision cannot have any assistance or significance for the purpose of the issues involved in the present controver sy.
Our attention was also drawn to the observations of this Court in Pomal Kanji Govindji 's case (supra) at para 42 of page 326 and it was contended that in this case impliedly the mortgage deed specifically and categorically made an exception in favour of the tenants that they would continue in possession even after the termination or redemption of the mortgage and that these leases were acts of prudent management.
In this connection, reference may be made to Section 60 of the .
It is this which gives the mortgagor right to redeem after the date fixed for payment.
The mortgagor 's right of redemption and the mortga gee 's right of foreclosure or sale are co extensive.
Simi larly, Section 76(a) of the which determines the liabilities of the mortgagee and imposes the obligation to manage the property as a person of ordinary prudence.
In the instant case, it has been held by the High Court that the induction of the appellants as tenant was not an act of prudent management.
Our attention was also drawn by Sri Iyer to the observa tion of this Court in Gian Devi Anand vs Jeevan Kumar & Ors., ; in support of his submission that in the emerging jurisprudence of tenancy legislation the dis tinction between statutory tenant and contractual tenant has disappeared.
The said view, in our opinion, would be of no avail as the respondent is not the successor in interest and does not come in place of the mortgagee but by virtue of its independent title.
Reliance was also placed on the observations of this Court in G. Ponniah Thevar vs Nalleyam Perumal Pillai & Ors., ; That decision, in our opinion, has no application.
The person inducting the tenant appellant was a co widow who had a life interest in the lands.
It was observed that the terms of the statutory protection applied clearly to all tenancies governed by the Madras Cultivating Tenants Protection Act irrespective of the nature of fights of the person who leased the land so long as the lessor was entitled to create a tenancy.
In our opinion, the said observations would not be applic 985 able.
The said decision deals with the right of the co widow in the land.
Reference may be made to the facts of that case at page 504, para 10.
In our opinion, in view of the said facts, the decision would not apply to the facts of the instant case.
On the other hand, in view of the facts and ratio of the principle of the decisions in Jadavji Purshot tam, (supra) and PomaIii Govindji, (supra) we are of the opinion that the contentions of Sri Iyer cannot be sus tained.
The non obstante clause in Section 11(a) of the Act is applicable only to a decree for eviction obtained by a landlord against a tenant.
The appellants were never the tenants of the respondent.
In the aforesaid view of the matter, we are unable to accept the submissions urged in this case and, therefore, the appeal must fail.
But in view of the fact that the appellants have been carrying on the business for some time in the premises in question in order to enable them to adjust their business, we direct that the order for eviction of the appellants should not be executed upon 31st October, 1989 if the appellants give an undertaking within a period of four weeks from this date to give vacant possession in a peaceful manner on 3 1st October, 1989; and also containing the usual terms of undertaking.
In default of such undertak ing being given within the time aforesaid, the decree will be forthwith executed.
The appeal is accordingly dismissed with costs.
Y.L. Appeal dis missed.
| IN-Abs | The appellants are tenants.
The premises in dispute is a shop building bearing No. T.C. 887, M.G. Road, Pazhavangadi, Trivandrum, part of a Pucca three storeyed building owned by one M.P. Phillip.
As per the settlement the shop in dispute devolved on one of his sons, while the shop was in the possession of the tenant.
During the tenancy owner mortgaged the premises in dispute and the remaining portions to the first defendant with a direction to receive the rent from the tenant.
The tenant was asked to attorn to the mortgagee.
The first defendant in course of management of the property gave the building on lease to the appellants for a higher rent; the earlier tenant having vacated the same.
The owner thereafter executed the second mortgage with a direction to redeem the mortgage in favour of the first defendant and before the subsequent mortgagee took steps to redeem the mortgage, the owner assigned his equity of redemption to the respondent.
The Respondent and the subsequent mortgagee together as plaintiffs 1 & 2 filed a suit to redeem the mortgage of the first defendant impleading the appellants as parties and claimed recovery of the Khas possession of the building.
The appellants contended (i) that they are tenants of the build ing inducted into possession by the mortgagee as a mode of enjoyment; (ii) that the mortgage deed authorised the mort gagee to enjoy the building by letting it out and that they were not liable to be evicted through a decree of Court in redemption Suit without an order under the Kerala Building (Lease and Rent Control) Act 1965.
The trial Court decreed the suit and directed recovery of possession of the Shop building.
It took the view that the mortgagee could not induct a tenant and give him any right to continue in possession even after the redemption of the mortgage.
975 On appeal, the first appellate Court held that the disputed building was a shop building which was never in the enjoyment of the owner; mode of enjoyment of the owner being by letting it out and when the mortgagee enjoyed the proper ty in that manner by letting it out, the person put in possession as a tenant was entitled to continue in posses sion even after redemption, until evicted under the Rent Control Act.
It also found that the mortgage deed impliedly authorised the mortgagee to let out the building.
In that view of the matter, the trial Court 's order was set aside.
The Respondent thereupon filed a second appeal before the High Court The High Court took the view that it was not open to the mortgagee to induct a person into possession which conferred any right on the tenant to continue in possession even after redemption.
Accordingly it allowed the appeal and a decree for eviction was passed.
Hence this appeal by the appellants tenant.
Dismissing the appeal, but directing that the decree for eviction should not be executed till the 31st October, 1989 if the appellants give usual undertaking to deliver vacant possession on 31st October, 1989, this Court, HELD: That the mortgagor on redemption of mortgage gets back his own right; he is not the successor in interest of the mortgagee.
Interest, if any, created by the mortgagee on the mortgagor 's right, must disappear on ceasing of the interest of the mortgagee.
[983C D] The limited estate created in favour of the mortgagee having disappeared, all rights emanating from that limited estate disappear and the superior right of the mortgagor comes not in place of the mortgagee but as a result of an independent title, and as such the mortgagor cannot be bound by any act created or any relationship contracted between the mortgagee and the tenant, unless it is permitted by the mortgage deed [983G H] The mortgagor 's right of redemption and the mortga gee 's right of foreclosure or sale are co extensive.
[984D] Jadavji purshottam vs Dhani Navnitbhai Amaratlal & Ors., and Pornal Kanji Govindji & Ors.
vs Vrajlal Karsandas Purohit & Ors., [1988] 4 Judgment Today SC 307, followed.
976 Raj Brij Raj Krishna & Anr.
S.K. Shaw & Bros., ; M/s. Raval & Co. vs
K.G. Ram Chandran & Ors., ; ; V. Dhanpal Chettiar vs Yesodai Ammal, ; ; Gian Devi Anand vs Jeevan Kumar & Ors., ; and G. Ponnial Thevar vs Nalleyam Perumal Pillai & Ors., ; not applicable.
|
on of application of princi ple of 'Equal Pay for Equal Work ' it has to be borne in mind that it is open to the State to classify employees on the basis of qualifications, duties and responsibilities of the posts concerned.
If the classification has reasonable nexus with the objective sought to be achieved, efficiency in the administration, the State would be justified in prescribing different pay scale but if the classification does not stand the test of reasonable nexus and the classification is rounded on unreal, and unreasonable basis it would be viola tive of Article 14 and 16 of the Constitution.
Equality must be among the equals, unequals cannot claim equality.
[962G H; 963A B] & ORIGINAL JURISDICTION: Writ Petition (Civil) No. 4611 of 1983.
(Under Article 32 of the Constitution of India) Gobinda Mukhoty and K.N. Rai for the Petitioner. A. Mariarputham for the Respondents.
The Judgment of the Court was delivered by SINGH, J.
By means of this petition under Article 32 of the Constitution the petitioner has raised a grievance that the Respondent Authorities have practised discrimination in violation of Articles 14 and 16 of the Constitution in refusing to pay him salary in the scale of pay prescribed for similarly placed employees.
He has invoked the doctrine of "Equal Pay for Equal Work" as enshrined under Article 39(d) of the Constitution.
In order to appreciate petitioner 's grievance it is necessary to refer to relevant facts giving rise to this petition.
The petitioner was initially appointed in 1967 to the post of Teacher Co ordinator in the pay scale of Rs.2 10 425 in the Research Project "Rehabilitation Unit in Audiology and Speech Pathology" a project funded by the Indian Council of Medical Research under PL 480 research scheme with the special assistance of the Social Rehabilita tion Services (formerly Vocational Rehabilitation Adminis tration).
The aforesaid unit was taken over by the All India Institute of Medical Sciences on 1.7. 1970 alongwith the staff attached to the said unit.
The petitioner 's services stood transferred to the All India Institute of Medical Sciences (hereinafter referred to as the Institute) and the petitioner continued to hold the post of Teacher Coordinator in the Institute.
On the recommendation 961 of the Head of the Department of Rehabilitation Unit the petitioner 's post was redesignated as 'Hearing Therapist ' with effect from 3.8.
1972 but he continued to draw the salary in the same scale of pay of Rs.210425.
In pursuance to the recommendations of the Third Pay Commission as adopt ed by the Institute the pay scale of Hearing Therapist was revised to Rs.425 700 with effect from 1.1.1973.
Since then the petitioner has continued to draw salary in the pay scale of Rs.425 700.
The petitioner made several representations to the respondentauthorities to revise his pay scale and to place him in the pay scale prescribed for the "Speech Pa thologist" and "Audiologist" in the pay scale of Rs.650 1200.
Since no relief was granted to him he invoked the jurisdiction of this Court by means of this petition under Article 32 of the Constitution.
The petitioner 's main grievance is that 'Hearing Thera pist ' perform the same duties and functions as 'Senior Speech Pathologist ', 'Senior Physiotherapist ', 'Senior Occupational Therapist ', 'Audiologist ', and 'Speech Patholo gist ', yet the respondents have practised discrimination in paying salary to the petitioner in a lower scale of pay.
The petitioner has asserted that the qualification prescribed for the aforesaid posts are almost similar and they are working in the same institution under the same employer but the respondent authorities have practised discrimination in refusing to accept the petitioner 's claim for equal pay.
The petitioner has further raised a grievance that the Third Pay Commission ignored the claim of 'Hearing Therapist ' although it has granted higher scale of pay for similar posts of 'Speech Therapist ', 'Senior Speech Pathologist ' and 'Audiol ogist '.
He has asserted that Speech Therapists performing similar kind of duties as performed by the petitioner have been granted higher pay scale in other organisations like Safdarjang Hospital, P.G.I. Chandigarh, Medical College Rohtak and Ali Yaver Jung National Institute for the Hearing Handicapped, Hyderabad.
The petitioner contends that the respondents have failed to implement the Directive Princi ples of 'Equal Pay for Equal Work ' as contained in Article 39(d) of the Constitution in violation of Articles 14 and 16 of the Constitution.
He has claimed relief for the issuance of writ of mandamus directing the respondents which include All India Institute of Medical Sciences and Union of India for fixing the petitioner 's pay in the scale of Rs.400 950 with effect from 1.1.1970 and thereafter in the scale of Rs.650 1200 with effect from 1.1.1973.
In defence the re spondents assert that the petitioner cannot compare himself with Senior Speech Therapist, Senior Physiotherapist, Senior Occupational Therapist, Audiologist or Speech Therapist as qualifications, duties and functions of those posts 962 are altogether different and distinct from those prescribed for Hearing Therapist.
There is no equality between the petitioner and persons holding the aforesaid posts.
The Institute has created different posts with different pay scales having regard to the qualifications, duties, func tions and responsibilities of the posts.
The petitioner is not entitled to equate himself with the incumbents holding the posts of Senior Speech Therapist, Senior Physiothera pist, Senior Occupational Therapist, Audiologist and Speech Therapist.
The petitioner 's plea of discrimination is em phatically denied.
The doctrine of "Equal Pay for Equal Work" is not ex pressly declared a fundamental fight under the Constitution.
But Article 39(d) read with Articles 14 and 16 of the Con stitution declares the constitutional goal enjoining the State not to deny any person equality before law in matters relating to employment including the scales of pay.
Article 39(d) read with Articles 14 and 16 of the Constitution enjoins the State that where all things are equal and person holding indentical posts, performing indentical and similar duties under the same employer should not be treated differ ently in the matter of their pay.
The doctrine of 'Equal Pay for Equal Work ' is not abstract one, it is open to the State to prescribe different scales of pay for different posts having regard to educational qualifications, duties and responsibilities of the post.
The principle .of 'Equal Pay for Equal Work ' is applicable when employees holding the same rank perform similar functions and discharge similar duties and responsibilities are treated differently.
The application of doctrine would arise where employees are equal in every respect but they are denied equality in matters relating to the scale of pay.
The principle of "Equal Pay for Equal Work" has been enforced by this Court in Randhir Singh vs Union of India & Ors., ; ; Dhirendra Chamoli & Anr.
vs State ofU. P., ; V.J. Thomas & Ors.
vs Union of India & Ors.
,[1985] (Supp.) SCC 7; P. Savita vs Union of India & Ors., [1985] (Supp.) SCR 101; Bhagwan Dass vs State of Haryana, [1987] 4 SCC 634 and Jai Pal & Ors.
vs State of Haryana & Ors.
, [1988] 3 SCC 354.
In all these cases this Court granted relief on the application of the doctrine of 'Equal Pay for Equal Work '.
While considering the question of application of prin ciple of 'Equal Pay for Equal Work ' it has to be borne in mind that it is open to the State to classify employees on the basis of qualifications, duties and responsibilities of the posts concerned.
If the classification has reasonable nexus with the objective sought to be achieved, efficiency in the administration, the State would be justified in prescribing 963 different pay scale but if the classification does not stand the test of reasonable nexus and the classification is rounded on unreal, and unreasonable basis it would be viola tive of Articles 14 and 16 of the Constitution.
Equality must be among the equals, Unequals cannot claim equality.
In the writ petition, the petitioner claimed parity with the pay scale prescribed for Senior ' Speech Therapist, Senior physiotherapist, Senior Occupational Therapist, Audiologist and Speech Pathologist but during the course of hearing Sri Gobind Mukhoty, learned counsel for the peti tioner confined the petitioner 's case for parity with 'Aud iologist ' only.
He urged that the educational qualifica tions, duties and functions of 'Hearing Therapist ' and 'Audiologist ' are similar, if not the same, and there is no reasonable justification for prescribing lower pay scale of pay to Hearing Therapist.
A Hearing Therapist is required to treat the deaf and other patients suffering from hearing defects.
His function is to help in rehabilitation of those whose hearing capacity is impaired.
The Hearing Therapist 's main function is to train the patient to facilitate maximum expressive and receptive communication skill.
An 'Audiolo gist ' pertains to the science of hearing.
His work is de signed to coordinate the separate professional skills which contribute to study, treatment and rehabilitation of persons with impaired hearing.
A person holding the post of Audiolo gist is a specialist in the non medical evaluation, habili tation and rehabilitation of those who suffer from language and speech disorders.
Generally, Hearing Therapist and Audiologist both perform duties and functions is helping rehabilitation of patients suffering from hearing disorders, their duties and functions appear to be similar, but the petitioner has not placed material before the Court to demonstrate that the duties and functions performed by Hearing Therapist is same or similar as that performed by an Audiologist.
The petitioner has placed reliance on a certif icate issued by the Head of Department of Otorhinolaryngolgy which enumerates duties, functions which the petitioner has been performing while working as Hearing Therapist.
Accord ing to this certificate the petitioner has been carrying out the following functions: "1.
Diagnosis of the impairment of hearing cases.
(Detailed diagnosis).
Audiological evaluation i.e. heating aid evaluation, hearing and prescription and autitory training.
964 3.
Parent counselling and guidance.
Referring to different experts for their opinion such as Physiotherapist, Occupational Therapist, Clinical Psy chologist, Ear Mould Technician, Paediatrician, Paediatric Neurologist and Opthalmologist, Audiometry Technical and to ENT Specialist.
Speech and language therapy.
Integration of hearing handicapped with normal persons.
Integration of hearing loss children with normal hearing children.
Guidance to the teachers of normal schools where there is any hard of heating case is studying.
Writing of papers and books on the basis of personal experience and research.
Speech therapy to normal hearing persons as and when referred to them.
Referring the hearing handicapped children to special schools for the deaf and when a child is unable to study in a normal school.
Educational rehabilitation of any age group of hear ing loss cases. ' ' The petitioner has, however, failed to place material before the Court showing the corresponding duties and functions of an Audiologist in the Institute.
In the absence of duties and functions of an Audiologist it is not possible for the Court to record findings that the duties and functions performed by Hearing Therapist is similar to those performed by an Audiologist more so when the respondents have denied the petitioner 's claim in the counter affidavit.
The peti tioner 's claim that he performs the same duties and func tions as those performed by an Audiologist under the same employer cannot therefore be accepted.
Even assuming that the petitioner performs similar duties and functions as those performed by an Audiologist, it is not sufficient to 965 uphold his claim for equal pay.
As already observed, in judging the equality of work for the purposes of equal pay, regard must be had not only to the duties and functions but also to the educational qualifications, qualitative differ ence and the measures of responsibility prescribed for the respective posts.
Even if the duties and functions are of similar nature but if the educational qualifications pre scribed for the two posts are different and there is differ ence in measure of responsibilities, the principle of 'Equal Pay for Equal Work ' would not apply.
Under the relevant Rules framed by the Institute qualifications for the two class of posts, namely, Audiologist and Hearing Therapist ' are as under: Audiologist Qualifications Hearing Therapist Qualifications Essential Essential 1.
A graduate in Science/ 1.
A graduate in Science or Arts or Medicines, from Arts of a recognised Univer a recognised University.
sity in India or abroad.
Master 's degree in Audiology 2.
Trained teacher for the or Otolaryngology from a deaf, such as Certified recognised Institution/ Teacher for Deaf University (C.T.D . Dip.) 3.
Three years teaching/ 3.
Teaching experience at a research experience in recognised school for the deaf the field of Audiology.
in India for not less than three years.
Desirable 1.
Ph.D. in Audiology from a recognised University.
Practical experience of working in a speech and Hearing Rehabilitation Centre.
Journalistic or literary activity in relation to Audiology.
966 A perusal of the above chart would show that different educational qualifications are prescribed for the two posts.
For an Audiologist a Master 's Degree in Otolaryngology or Audiology is an essential qualification but no such Master 's Degree is prescribed for Hearing Therapist instead a diploma as Certified Teacher for Deaf is the essential qualification for the said post.
A comparison of the qualifications pre scribed for the two posts clearly indicates that higher qualification is prescribed for the post of Audiologist.
There appears to be qualitative difference in the responsi bilities of the two posts as an Audiologist possesses higher qualification.
It is therefore manifest that on the basis of educational qualifications two posts cannot be equated.
Even if the functions and duties of two posts are similar it is open to the State to prescribe different scales of pay on the basis of difference in educational qualifications.
Different treatment to persons belonging to the same class is a permissible classification on the basis of educational qualifications.
There are several decisions of this Court where educa tional qualifications have been recognised as a valid basis for classification.
In State of Mysore vs Narasingh Rao, ; this Court held that higher educational qualifications such as success in S.S.L.C. examination are relevant considerations for fixation of higher pay scale for tracers who had passed the S.S.L.C. examination and the classification of two grades of tracers in Mysore State, one for matriculate tracers with higher pay scale and the other for non matriculate tracers with lower pay scale, was held valid.
It is pertinent to note that matriculate and non matriculate tracers both constituted the same service per forming the same duties and functions, yet the Court held that higher pay scale prescribed for the matriculate tracers on the basis of higher educational qualification was not violative of Articles 14 and 16 of the Constitution.
In Union of India vs Dr. (Mrs.) S.B. Kohli, ; classification made on the basis of educational qualifica tion for purposes of promotion was upheld by this Court on the ground that the classification made on the basis of such a requirement was not without reference to the objectives sought to be achieved and there could be no question of discrimination.
In State of Jammu & Kashmir vs Triloki Nath Khose & Ors., ; cadre of Assistant Engineers included of Degree holders and Diploma holders, they consti tuted one class of service but for promotion to the post of Executive Engineers only those Assistant Engineers were eligible for promotion who possessed Bachelor 's Degree in Engineering and the Diploma holders were eligible only if they had put in 7 years minimum service no such restriction was prescribed for Degree holders.
The 967 Diploma holder Assistant Engineers challenged the validity of the rule on the ground that it denied them equal opportu nity of promotion, in violation of Articles 14 and 16 of the Constitution.
On a detailed consideration a Constitution Bench of this Court upheld the classification on the ground of difference in educational qualification.
The Court held that classification rounded on the basis of educational qualification had a reasonable nexus to achieve administra tive efficiency in Engineering Services.
The Court approv ingly referred to the decisions of the Court in State of Mysore vs Narasing Rao, ; ; Ganga Ram vs Union of India, ; and Union of India vs Dr. (Mrs.) S.B. Kohli, ; The Court upheld the classifi cation and refused to grant any relief to Diploma holder Engineers.
In Mohammad Shujat Ali & Ors.
vs Union of India & Ors.
; , another Constitution Bench of this Court upheld the classification of Supervisors into two classes, graduates and non graduates for the purpose of promotion to the post of Assistant Engineers on the ground of educational qualification although both the class of supervisors constituted the same service.
In Federation of All India Customs & Central Excise Stenographers (Recog nised) & Ors.
vs Union of India & Ors.
, ; claim of Personal Assistants and Stenographers attached to the Head of Departments in the Customs and Central Excise Department of the Ministry of Finance for equal pay in parity with the Personal Assistants and Stenographers at tached to the Joint Secretaries and Officers above them in the Ministry of Finance was rejected by this Court on the ground of the functional requirement of the work done, training, and responsibility prescribed for the two posts.
In State of U.P. & Ors.
vs Sh.
J.P. Chaurasia & Ors., ; the question arose whether it was permissible to have two different pay scales in the cadre of Bench Secre taries, for persons performing the same duties and having the same responsibilities.
In the light of the various decisions of this Court it was held that the principle of "equal pay for equal work", has no mechanical application in every case of similar work.
Articles 14 and 16 permit rea sonable classification rounded on rational basis, it is, therefore, permissible to provide two different pay scales in the same cadre on the basis of selection based on merit with due regard to experience and seniority.
The Court held that in such a situation the principle of equal pay for equal work did not apply.
We would like to emphasise that the principle of equal pay for equal work cannot be invoked invariably in every kind of service, particularly, in the area of professional services.
In Dr. C. Girijambal vs Government of Andhra Pradesh, ; it was contended 968 before the Court that medical officers holding the degree of Graduate from the College of Integrated Medicine (GCIM) and holders of Licentiate in Indigenous Medicine (LIM) performed the same functions and discharged the same duties in dispen saries and therefore on the principle of "equal pay for equal work" both class of persons were entitled to the same scale of pay.
Medical officers holding the qualifications of GCIM or the qualification of LIM or the qualification of Diploma in Ayurvedic Midicine (DAMO), being in charge of dispensaries run by Zilla Parishads were not treated alike as the State Government had prescribed different scales of pay for.
medical officers.
On behalf of the aggrieved Doc tors it was contended that the functions and duties dis charged by the three class of doctors in the dispensaries run by Zilla Parishads were the same and their qualifica tions were also similar and yet the State Government prac tised discrimination in prescribing different scale of pay for them.
This Court held that the principle of equal pay for equal work could not be invoked or applied in the area of professional services like medical practioners.
The Court observed as under: "Dealing with the first contention we would like to observe at the outset that the princi ple of equal work cannot be invoked or applied invariably in every kind of service and cer tainly it cannot be invoked in the area of professional service when these are to be compensated.
Dressing of any injury or wound is done both by a doctor as well as a com pounder, but surely it cannot be suggested that for doing this job a doctor cannot be compensated more than the compounder.
Similar ly, a case in Court of law is argued both by a senior and a junior lawyer, but it is diffi cult to accept that in matter of remuneration both should be treated equally.
It is thus clear that in the field of rendering profes sional services at any rate the principle of equal pay for equal work would be inapplica ble.
In the instant case Medical officers holding the qualification of GCIM, or the qualification of LIM or the qualification of DAM, though in charge of dispensaries run by Zilla Parishads cannot therefore, be treat ed on par with each other and if the State Government or the Zilla Parishads prescribe different scales of pay for each category of Medical officers no fault could be found with such prescription.
" We fully agree with the above observations and accord ingly we hold that in the instant case since the Hearing Therapist and 969 Audiologist both render professional services and there is qualitative difference between the two on the basis of educational qualification the principle of equal pay for equal work cannot be invoked or applied.
The Pay Commission considered the case of Hearing Therapists and it did not accept their claim for higher scale of pay.
The Pay Commis sion was in a better position to judge the volume of work, qualitative difference and reliability and responsibility required for the two posts.
The Pay Commission made recom mendations for pay scales on the basis of value judgment which has an intelligible criteria on the basis of educa tional qualifications.
The scant material placed before the Court by the petitioner, is not sufficient to hold that the recommendations of Pay Commission are without any rational basis or that it permits discrimination.
The petitioner 's contention that Speech Therapists have been granted higher scale of pay in other Institutions, namely, Rohtak Medical College, National Institute for Hearing Handicapped, Hyderabad, Safdarjang Hospital, and P.G.I. Chandigarh cannot be taken into consideration as the petitioner has failed to place any material showing the duties and functions performed by the Speech Therapist in the aforesaid Institutions or the qualifications prescribed for the same.
Merely because Speech Therapists performing similar duties and functions in other Institutions are paid higher pay scale is no good ground to accept the petition er 's claim for equal pay.
There may be difference in educa tional qualifications, quality and volume of work required to be performed by the Hearing Therapists in other Institu tions.
In the absence of any material placed before the Court it is not possible to record findings that the peti tioner is denied equality before law.
Moreover, if the employer is not the same the principle of 'Equal Pay for Equal Work ' would not be applicable.
We do not consider it necessary to discuss the matter further as the petitioner has not placed requisite material before the Court for the application of the principle of 'Equal Pay for Equal Work '.
In view of the above discussion we are of the opinion that the petitioner has failed to demonstrate that any discrimination has been practised against him in the matter relating to pay, therefore the question of application of the principle of 'Equal Pay for Equal Work ' does not arise and the petitioner is not entitled to any relief.
The peti tion fails and is accordingly dismissed but there will be no order as to costs.
N.V.K. Petition dis missed.
| IN-Abs | The petitioner was initially appointed in the year 1967 to the post of 'Teacher Co ordinator ' in the pay scale of Rs.210 425 in a Research Project funded by the Indian Coun cil of Medical Research.
As the unit where the petitioner was employed was taken over by the All India Institute of Medical Sciences on 1.7.1970 his services stood transferred to the said Institute and he continued to hold the post of Teacher Coordinator in the Institute.
Though the post was redesignated as 'Hearing Therapist ' with effect from 3.8.72, the same scale of pay, viz Rs.210 425 continued.
Pursuant to the recommendations of the Third Pay Commis sion the pay scale of 'Hearing Therapist was revised to Rs.425 700 with effect from 1.1.1973, and since then the petitioner continued to draw salary in the said scale.
The petitioner made several representations to the respondentauthorities to revise his pay scale and to place him in the pay scale prescribed for 'Speech Pathologist ' and 'Audiologist ' viz. Rs.650 1200.
Since no relief was granted the petitioner invoked the jurisdiction of this Court by means of a writ petition under Article 32.
The petitioner contended in his writ petition, that as 'Hearing Therapist ' he performs the same duties and func tions as 'Senior Speech Pathologist ', 'Senior Physio Thera pist ', 'Senior Audiologist ' and 958 'Speech Pathologist ' that the qualifications prescribed for the aforesaid posts are almost similar and they are working in the same institution under the same employer, yet the respondent authorities practised discrimination in refusing to accept his claim for equal pay.
It was further contended that the Third Pay Commission ignored the claim of 'Hearing Therapist ' although it had granted higher scale of pay for similar posts of 'Speech Therapist ', 'Senior Speech Patholo gist ', and 'Audiologist ', and that 'Speech Therapists ' performing similar types of duty as are performed by the petitioner had been granted higher pay scale in other organ isations like Safdarjung Hospital, PGI Chandigarh, and Medical College, Rohtak.
The respondents having thus failed to implement the Directive Principle of 'Equal pay for equal work ' as contained in article 39(d) of the Constitution in violation of articles 14 and 16, the petitioner claimed relief for the issuance of a writ of mandamus directing the re spondents for fixing his pay in the scale of Rs.410 950 with effect from 1.1.1970, and thereafter in the scale of Rs.650 1200 with effect from 1.1.1973.
The respondents contested the writ petition by asserting that the petitioner cannot compare himself with 'Senior Speech Therapist '. 'Senior Physio Therapist ', 'Senior Occu pational Therapist ', 'Audiologist ' or 'Senior Therapist ' as qualifications, duties and functions of these posts are altogether different and distinct from those prescribed for 'Hearing Therapist ', that there is no equality between the petitioner and the persons holding the aforesaid posts, that the Institute had created different posts with different pay scales having regard to the qualifications, duties, and responsibilities of the posts.
The petitioner 's plea of discrimination was emphatically denied.
Dismissing the writ petition, the Court, HELD: The principle of 'Equal pay for equal work ' cannot be invoked invariably in every kind of service, particular ly, in the area of professional services.
[967H] Dr. C. Girijambal vs Government of Andhra Pradesh, ; relied on.
In the instant case, even assuming that the petitioner performs similar duties and functions as those performed by an 'Audiologist ', it is not sufficient to uphold his claim for equal pay.
In judging the equality of work for the purposes of equal pay, regard must be had not only to the duties and functions but also to the educational qualifica tions, 959 qualitative difference and the measures of responsibility prescribed for the respective posts.
Even if the duties and functions are of similar nature but if the educational qualifications prescribed for the two posts are different and there is difference in measure of responsibilities, the principle of 'Equal Pay for Equal Work ' would not apply.
[964H; 965A B] State of Mysore vs Narasing Rao, ; ; Union of India vs Dr. (Mrs.) S.B. Kohli, ; ; Jammu & Kashmir vs Triloki Nath Khose & Ors., ; ; Ganga Ram vs Union of India, ; ; Mohammad Shujat Ali of All India Customs & Central Excise Stenographers (Recog nised) & Ors.
vs Union of India & Ors.
, ; and State of U.P. & Ors.
vs Sh.
J.P. Chaurasia & Ors., ; referred to.
Merely because Speech Therapists performing similar duties and functions in other institutions are paid higher pay scale is no good ground to accept the petitioner 's claim for equal pay.
In the absence of any material placed before the Court it is not possible to record findings that the petitioner is denied equality before the law.
Moreover, if the employer is not the same the principle of 'Equal pay for equal work ' would not be applicable.
[969E F] The doctrine of 'Equal Pay for Equal Work ' is not an abstract one, it is open to the State to prescribe different scales of pay for different posts having regard to educa tional qualifications, duties and responsibilities of the post.
The principle of 'Equal Pay for Equal Work ' is ap plicable when employees holding the same rank perform simi lar functions and discharge similar duties and responsibili ties are treated differently.
The application of the doc trine would arise where employees are equal in every respect but they are denied equality in matters relating to the scale of pay.
The principle of 'Equal Pay for Equal Work ' has been enforced by this Court.
[962D F] Randhir Singh vs Union of India & Ors., ; ; Direndra Chemoli & Anr.
vs State of U.P., ; V.J. Thomas & Ors.
vs Union of India & Ors.
, [1985] (Supp.) SCC 7; P. Savita vs Union of India & Ors., [1985] (Supp.) SCR 101; Bhagwan Dass vs State of Haryana, [1987] 4 SCC 634 and Jai Pal & Ors.
vs State of Haryana & Ors.
, [1988] 3 SCC 354, referred to.
|
ivil Appeal No. 2789 of 1980.
From the Judgment and Order dated 29.5.1980 of the Punjab and Haryana High Court in Civil Revision No. 2 16 of 1980.
R.F. Nariman and D.N. Misra for the Appellant.
989 Rakesh Sahney, K.M.M. Khan and Vineet Kumar for the Respondent.
The Judgment of the Court was delivered by section RATNAVEL PANDIAN, J.
This appeal by special leave under Article 136 of the Constitution is against the judg ment and order dated 29.5.1980 in Civil Revision No. 216 of 1980 passed by the High Court of Punjab and Haryana at Chandigarh.
The respondent herein being the owner of the tenanted premises (i.e. two sheds) filed a petition for ejectment before the Rent Controller against the tenant, the appellant herein on the ground that the tenant had not paid the rent from 1.5.74.
The monthly rent for the premises was orginally Rs.950.
According to the landlord under the provisions of Haryana Urban (Control of Rent and Eviction) Act, 1973 (hereinafter referred to as the 'Act ') the rent of the demised premises was liable to be increased from Rs.950 to Rs. 1142 per mensem.
The landlord gave notice to the tenant to pay the rent at the enhanced rate of Rs. 1142 per mensem with effect from 26th June 1974 but the tenant defaulted in making the payment of rent and as such he was liable to be ejected from the premises on the ground of nonpayment of rent.
The tenant resisted the application stating that the landlord was not entitled to claim enhanced rent at the rate mentioned in the ejectment application under the provisions of the Act and no legal notice was served on him claiming the arrears of rent and he had already paid the rent upto March 1975 by means of cheques and he had tendered the arrears of rent together with interest and cost as assessed by the Rent Controller on 5th December 1977 and hence the sole ground of his ejectment from the demised premises was no longer available to the landlord.
In the replication the landlord denied that the tenant had paid the rent to him for the period from May 1974 to 30th November 1977 @ Rs.1142 per mensem.
In the alternative, he claimed that the rent to the extent of Rs.36,100 was due to him from the tenant @ Rs.950 per mensem for the period 1st May 1974 to 30th June, 1977 and that the tenant having defaulted in making the payment was liable to be ejected.
It may be stated that the applica tion for eviction was filed on 7.6.77.
The Rent Controller held that the landlord was not entitled to recover the rent @ Rs. 1142 p.m. but only @ Rs.950 p.m. as agreed between the parties and he had failed to pay the rent from 1.4.75.
On the basis of the above finding the Rent Controller directed the eject 990 ment of the tenant from the premises by granting two months ' time.
This order of the Rent Controller, on appeal, was con firmed by the Appellate Authority.
On being aggrieved with the Order of the Appellate Authority, the tenant preferred a Civil Revision Petition before the High Court under Sub section (6) of Section 15 of the Act.
On behalf of the tenant, it was urged before the High Court on the strength of Clause 'C ' of Rule 4 and Clause (1) of Rule 5 of the Haryana Urban (Control of Rent and Eviction) Rules 1976 framed under Section 23 of the Act that since in the appli cation for ejectment no specific amount of arrears due was mentioned, the application was not maintainable.
The High Court rejected this plea observing thus: "Admittedly, no such objection as to the non compliance of the said rules was taken either in the written statement or before the Rent Controller, inasmuch as it was not raised even before the Appellate Authority.
Moreover, it has not been shown that any prejudice was caused to the tenant on account of this non compliance on the part of the landlord.
Under these circumstances, no such plea can be available to the tenant in this revision petition for the first time particularly when it does not affect the merits of the case nor has it caused any prejudice to him.
" Thereafter, coming to the question of arrears of rent, the High Court found thus: "Moreover, the tenant clearly stated on 5th December 1977 that according to him, the total amount, due from him at the rate of Rs.950 p.m. from 1st April 1975 to 31st May 1977 was Rs.24,700 out of which Rs.21,696 had already been paid by him to the landlord, which he subsequently failed to prove by leading evi dence.
Under these circumstances, since the tenant failed to prove the payment of the arrears of rent as claimed by him in his statement recorded on 5th December 1977 he was liable to ejectment on the ground of non payment of rent as provided under Section 13(2)(i) of the Act.
" On the above finding, the Revision Petition was dis missed.
Hence this present appeal.
We shall point out at this juncture that the amount of Rs.21,696 991 which the tenant claims to have paid includes a sum of Rs. 18,844.14 which was found by the Rent Controller and the Appellate Authority as arrears of rent.
Mr. R.F. Nariman, learned counsel appearing on behalf of the appellant/tenant assails the impugned judgment of the High Court on two legal grounds; firstly, that the High Court has ignored to note that the statutory obligation cast on the Rent Controller as per the proviso attached to Sec tion 13(2)(i) of the Act requiring him to calculate and determine the quantum of arrears of rent even at the first instance has not been complied with and secondly that the application for ejectment was not in accordance with the mandatory provisions of Rule 4(c), 5(1) and 6 of the Rules framed under the Act and as such the impugned judgment is liable to be set aside on both the grounds.
We shall now take the first ground of attack.
Before dealing with the point of law involved, it may be necessary to extract the relevant portion of Section 13(2)(i) of the Act with its first proviso with which we are concerned.
"13(2) A landlord who seeks to evict his tenant shall apply to the Controller, for direction in that behalf.
If the Controller, after giving the tenant a reasonable opportu nity of showing cause against the application, is satisfied (i) that the tenant has not paid or tendered the rent due from him in respect of the building or rented land within fifteen days after the expiry of the time fixed in the agreement of tenancy with his landlord or in the absence of any such agreement by the last day of the month next following that for which the rent is payable.
Provided that if the tenant, within a period of fifteen days of the first hearing of the application for ejectment after due service, pays or tenders the arrears of rent and inter est, to be calculated by the Controller, at eight percenturn per annum on such arrears together with such costs of the application, if any, as may be allowed by the Controller, the tenant shall be deemed to have duly paid or tendered the rent within the time aforesaid.
" The answer to the first legal question mainly turns on the 992 interpretation of the proviso to Section 13 which refers to the following essential conditions namely: 1.
There must be an application for ejectment before the Court; 2.
The tenant, within a period of fifteen days of the first hearing of the application after due service, pays or tenders: (a) the arrears of rent; and (b) the interest to be calculated by the Controller at eight per cent per annum on such arrears together with such costs of the application, if any as may be allowed by the Controller; If the above said two conditions are satisfied, then the tenant shall be deemed to have duly paid or tendered the rent within the time required by law.
The last paragraph of Section 13(2) enjoins that where the above second condition of the proviso is not fulfilled the Controller shall make an Order directing the tenant to put the landlord in possession of the building and where he is satisfied that the rent has been paid the application of the landlord must be rejected.
Therefore, the sole question which has to be determined in the case on hand is whether or not the deposit made by the appellant was legally valid.
On facts, the Rent Control ler, the Appellate Authority and the High Court found that the appellant/tenant has not deposited the actual rent due payable by him except a part of it namely Rs.2902.96 along with the interest of Rs.261.27 and the cost of Rs.35 totall ing to Rs.3199.23 which deposit was less by Rs.18844.14 even calculated at the rate of Rs.950 per mensem.
In fact, the learned counsel who appeared for the appellant/tenant before the Appellate Authority has conceded the arrears of rent which fact is found in paragraph 6 of the Order of the Appellate Authority reading thus: "The learned counsel for the appellant frankly conceded before me that he did not challenge the finding of the Court below that the re spondent was in arrears of rent in the amount of Rs. 18,844 on the date he tendered the arrears of rent together with interest and costs assessed by the Rent Controller.
" 993 An attempt on the part of the tenant that he had paid that amount has been totally rejected by all the Courts.
Only on the above finding, the Courts below held that the tenant had not deposited the full and valid rent actually due but only a small part of it and as such it is manifest that the second condition enjoined by the proviso was not fulfilled at all and on that ground alone it could be held that the deposit was not valid one.
The learned counsel, Mr. R.F. Nariman drew our attention to two judgments of this Court in Sheo Narain vs Sher Singh, ; and Sham Lal (dead) by Lrs.
vs Atme Nand Jain Sabha (Regd.), Dal Bazar, ; In our considered view both these decisions cannot be of any as sistance to the appellant in the present case because the points for determination that arose in those two cases were different.
Mr. R.F. Nariman then advanced an argument that a statu tory duty is cast under Section 13(2)(i) of the Act on the Rent Controller to calculate and determine the arrears of rent as well as the interest to be paid by the tenant within a period of 15 days of the first hearing of the application for ejectment after due service, but since the Controller has failed to discharge that obligation no eviction can be ordered particularly when there is a dispute with regard to the quantum of arrears of rent.
From the judgment on appeal, it seems that a contention substantially identical to the one presently made was advanced before the High Court which repelled the same holding thus: "Going through the whole scheme of the Act, there is no provision that the Rent Controller should decide at the first date of hearing the amount due as arrears of rent . . . . .
If this argument of the learned counsel for the peti tioner is accepted, in that situation the tenant will have another opportunity for making the payment of the arrears due from him, which, as stated earlier, is neither the scheme of the Act nor is in consonance with the language used in the proviso to Section 13(2)(i).
On the first date of hearing, it is the duty of the tenant to calculate the ar rears of rent, which according to him are due from him and which he intends to tender on the first date of hearing . . . . . .
Since payment of rent is obligatory on the tenant and that too within the time prescribed in Section 13(2)(i) of the Act, it is for him to calculate the rent which is in arrears and pay the same as provided by the statute.
" 994 After a careful scrutiny of the Section 13(2)(i) and the first proviso annexed thereto, we see no force in the sub missions of the learned counsel that there is any statutory duty cast on the Rent Controller even in the first instance to determine and calculate the arrears of rent and the interest but on the contrary the proviso requires the tenant to pay or tender the actual arrears of rent within 15 days of the first hearing of the application for ejectment after due service alongwith the interest to be calculated by the Controller at 8 per cent per annum on such arrears together with such costs of the application, if any, as may be al lowed by the Controller.
What the proviso requires is that the Controller has to calculate the interest at 8 per cent per annum on such arrears of rent and determine the costs of the application, if any.
If the argument of the learned counsel is to be accepted then in every case the Rent Con troller has to hold an enquiry at the first instance and determine the arrears of rent even on the first date of hearing which is in the nature of things not possible with out any evidence, nor is it contemplated under the scheme of the Act.
When there is a statutory obligation on the tenant either to pay or tender the arrears of rent within a period of 15 days of the first hearing of the application for ejectment after due notice it is for him to calculate the exact arrears of rent due and to pay or tender the same and if the tenant tails to do so he is deemed to have not paid or made the valid tender of the rent.
Hence we hold that this argument advanced on behalf of the appellant is miscon ceived and fallacious.
For the reasons aforementioned, we hold that there is no merit in the first contention.
We shall now examine the second legal contention with reference to Rules 4(c), 5(1) and 6 of the Rules under the Act which rules read as follows: 4.
Application for eviction.
Section 13 Application under section 13 of the Act, shall besides the particulars mentioned in Rules 5 and 6 contain the following particulars name ly: (emphasised) (a) xxxxxxxxxx (b) xxxxxxxxxx (c) The amount of arrears due and the period of default.
995 5(1) Applications Section 4 and 13(1) In addition to the particulars mentioned in rules 3, 4 and 6 as far as these may be applicable, every application made under this Act shall contain simple and concise narrative of the facts which the party by whom or on whose behalf the statement of pleading is made, believes to be material to the case and which he either admits or believes that he will be able to prove.
(emphasised) 6.
Particulars to be furnished to the Controller Section 21(1) Every landlord and every tenant of a building or rented land shall furnish to the Controller, or any person authorised by him in that behalf, the follow ing particulars namely: (emphasised) (a) name and number of the building or rented land, if any, or its description and bound aries sufficient to identify it; (b) street and municipal ward or division in which the building or rented land is situated; (c) name and address of the landlord, if the particu lars are furnished by the tenant and name of the tenant, if the particulars are furnished by the landlord; (d) whether the building is a residential, non residential or a scheduled building; and (e) nature of amenities provided by the land lord to the tenant Mr. R.F. Nariman laid stress on the word "shall" occur ring in the above rules particularly Rule 4(c) and contended that these rules are mandatory in character and so the non compliance would amount to violation of the imperative (i.e. mandatory) provisions of these rules.
According to him the respondent/landlord has not specified the 'amount of arrears due ' in strict substantial compliance of Rule 4(c) and as such the present application for ejectment has to be thrown.out.
The answer to the above contention depends upon whether these rules are mandatory or directory which ques tion has to be adjudged in the light of the intention of the legislature as disclosed by the object, purpose and scope of the statute.
No doubt, if the statute is mandatory , 996 the things done not in the manner or form prescribed have no effect or validity, but if it is directory, the non compli ance may not lead to any serious and adverse consequence.
A valuable guide for ascertaining the intention of the Legis lature is found in Maxwell "The Interpretation of Statutes" (Twelfth Edition) Chapter 13 at page 3 14) under the caption "Intentions attributed to the legislature when it expresses none" reads thus: "Passing from the interpretation of the lan guage of statutes, it remains to consider what intentions are to be attributed to the legis lature on questions necessarily arising out of its enactments and on which it has remained silent. . . . . . .
It is impossible to lay down any general rule for determining whether a provision is imperative or directory." Lord Cambell in Liverpool Borough Bank vs Turner, ; at pp. 507,508 observed: "No universal rule can be laid down for the construction of statutes as to whether manda tory enactments shall be considered directory only or obligatory with an implied nullifica tion for disobedience.
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.
" Lord Penzance in Howard vs Bodington, at p. 211 said: "I believe, as far as any rule is concerned, you cannot safely go further than that in each case you must look to the subject matter; consider the importance of the provision that has been disregarded, 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 matter is what is called imperative or only directo ry." In 'Craies on Statute Law ' (Sixth Edition) at page 63, the following quotation is found: 997 "When a statute is passed for the purpose of enabling something to be done, and prescribes the formalities which are to attend its per formance, those prescribed formalities which are essential to the validity of the thing when done are called imperative or absolute; but those which are not essential and may be disregarded without invalidating the thing to be done, are called directory" See Montreal Street Rly.
Co. vs Normandin, ; With reference to non compliance of the directory enact ment in 'Craies on Statute Law ' it is said at page 261: "But on the other hand, if a statute is merely directory, it is immaterial, so far as relates to the validity of the thing to be done, whether the provisions of the statute are accurately followed out or not.
" See also 'On the Construction of Statutes ' by Crawford.
In Woodward vs Sarsons, at page 746 it is explained as to what is called an absolute enactment or mandatory enactment as follows: "An absolute enactment must be obeyed or fulfilled exactly, but it is sufficient if a directory enactment be obeyed or fulfilled substantially.
" In Seth Bikhraj Jaipuria vs Union of India, [1962] 2 SCR p. 880 a question arose whether Section 175(3) of the Government of India Act, 1935 which requires that contracts on behalf of the Government of India shall be executed in the form prescribed is mandatory or directory.
The Supreme Court at page 893 expressed its view as follows: "Where a statute requires that a thing shall be done in the prescribed manner or form but does not set out the consequences of non compliance, the question whether the provision was mandatory or directory has to be adjudged in the light of the intention of the legisla ture as disclosed by the object, purpose and scope of the statute.
If the statute is manda tory, the thing done not in the manner or form prescribed can have no effect or validity; if it is directory, penalty may be incurred for non compliance, but the act or thing done is regarded as good." 998 In Raza Buland Sugar Co. Ltd. vs Municipal Board, Ram pur; , , certain questions arose for consider ation whether the whole of Section 131(3) of U.P. Municipal ities Act was mandatory or the part of it requiring publica tion in the manner laid down in Section 94(3) of the said Act i.e. in a Hindi Newspaper was merely directory; Wancboo, J as he then was speaking for the majority said: "The question whether a particular provision of a statute which on the face of it appears mandatory, inasmuch as it uses the word "shall" as in the present case is merely directory cannot be resolved by laying down any general rule and depends upon the facts of each case and for that purpose the object of the statute in making the provision is the determining factor.
The purpose for which the provision has been made and its nature, the intention of the legislature in making the provision, the serious general inconvenience or injustice to persons resulting from whether the provision is read one way or the other, the relation of the particular provision to other provisions dealing with the same subject and other considerations which may arise on the facts of a particular case including the language of the provision, have all to be taken into account in arriving at the conclu sion whether a particular provision is manda tory or directory.
" See also K. Kamaraja Nadar vs Kunju Thevar and Others, and Ch.
Subbarao vs Member, Election Tibunal, Hyderabad, 13.
It is apposite to refer to the observation of this Court in Hari Vishnu Kamath vs Syed Ahmad Ishaque, ; dealing with this problem: "It is well established that an enactment in form mandatory might in substance be directory and that the use of the word "shall" does not conclude the matter.
" Reference may be had to (1) State of U.P. & Ors.
vs Babu Ram Upadhya, ; and (2) Ajit Singh vs State of Punjab, ; The word "shall" in its ordinary import is obligatory.
Nevertheless, the word "shall" need not be given that conno tation in each and 999 every case and the provisions can be interpreted as directo ry instead of mandatory depending upon the purpose which the legislature intended to achieve as disclosed by the object, design, purpose and scope of the statute.
While interpreting the concerned provisions, regard must be had to the context, subject matter and object of the statute in question.
On a close scrutiny of the relevant rules referred supra in the light of the above principles of statutory interpre tation, we are of the view that the non compliance of rule 4(c) i.e. the non mentioning of the quantum of arrears of rent, does involve no invalidating consequence and also does not visit any penalty.
From the above discussion we hold that the rules 4(c), 5(1) and 6 are not mandatory but only directory.
In that view, we see no force in the contention of the learned counsel that the non mentioning of the amount of arrears of rent due in the application for ejectment has adversely affected the proceedings of this case and as such the appli cation for ejectment is liable to be dismissed on that score.
Accordingly, we reject this contention also.
In the present case, the tenant himself was well aware of the amount of arrears of rent due about which we have already mentioned in the earlier portion of this judgment.
The present objection as to the non compliance of the rules admittedly was not taken either in the written statement or before the Rent Controller or before the Appellate Authori ty.
For the first time such a contention was raised before the High Court which has tightly rejected the same, observ ing thus: "It has not been shown that any preju dice was caused to the tenant on account of this non compliance on the part of the land lord.
" We are in full agreement with the above view of the High Court as no prejudice is writ large in the present case because proof of prejudice is also one of the necessary criteria besides non compliance of the provision to invali date the Act complained of as held by Chinnappa Reddy, J in Dalchand vs Municipal Corporation, Bhopal and Another, In the result, both the contentions raised by the appellant fail.
For the reasons hereinbefore mentioned, the appeal is dismissed with costs.
Y.L. Appeal dis missed.
| IN-Abs | This is a tenant 's appeal filed after obtaining Special Leave from the Court.
The Respondent landlord of tenanted premises (i.e. two sheds) filed a petition for ejectment of the appellant from the premises in question before the Rent Controller.
According to the Respondent landlord the monthly rent payable by the appellant was Rs.950 p.m. which was liable to be enhanced under the provisions of Haryana Urban (Control of Rent and Eviction) Act, 1973 from Rs.950 to Rs.1142 p.m.
Accordingly, the respondent caused a notice to be given to the appellant claiming rent @ Rs. 1142 w.e.f. 26.6.1974 till June 1977 and since the appellant defaulted in making payment of the rent, he was liable to be ejected from the demised premises.
The tenant denied that the rent was liable to be enhanced as claimed by the landlord.
He further asserted that he had already paid rent upto March 1975 by means of cheques and that he had tendered the ar rears of rent together with interest and costs as assessed by the Rent Controller on 5.12.1977.
On this reasoning he urged that he was not liable to be evicted on the ground taken in the Petition.
The landlord in the replication denied the receipt of rent for the period from May 1974 to November, 1977 @ Rs.1142 p.m. Alternatively he claimed that the rent to the extent of Rs.36,100 was due to him from the appellant @ Rs.950 p.m. from 1st May, 1974 to June 30, 1977.
The Rent Controller held that the landlord respondent was not entitled to recover the rent @ Rs.1142 p.m. but only Rs.950 p.m. as agreed between the parties and the appellant has failed to pay the rent from 1.4.1975.
Accordingly, the Rent Controller directed the ejectment of the appellant from the premises by granting him two months time.
987 The appellate authority having affirmed the order of the Rent Controller, the appellant filed a Civil Revision before the High Court under Sub section
(6) of Sec. 15 of the Act.
Before the High Court it was urged by the appellant that since in the application for ejectment no specific amount of arrears of rent due was mentioned as contemplated by CI.
(c) of Rule 4 and Clause (1) of Rule 5 of the Haryana Urban (Control of Rent and Eviction) Rules he could not be evict ed.
Finding no substance in the said contention, the High Court rejected the Civil Revision.
Hence this appeal.
The appellant raised two contention before this Court viz., that the High Court has ignored to note the statutory obligation cast on the Rent Controller as per the proviso attached to Sec.
13(2)(1) of the Act requiring him to calcu late and determine the quantum of arrears of rent; even at the first instance has not been complied with and (ii) that the application for ejectment was not in accordance with the mandatory provisions of Rule 4(c) 5(1) and 6 of the Rules framed under the Act.
Dismissing the appeal, this Court, HELD: The proviso to Sec. 13(2)(i) requires the tenant to pay or tender the actual arrears of rent within 15 days of the first hearing of the application for ejectment after due service alongwith the interest to be calculated by the Controller at 8 per cent per annum on such arrears together with such costs of the application, if any, as may be al lowed by the Controller.
[994B] When there is a statutory obligation on the tenant either to pay or tender the arrears of rent within a period of 15 days of the first hearing of the application for ejectment after due notice it is for him to calculate the exact arrears of rent due and to pay or tender the same and if the tenant fails to do so he is deemed to have not paid or made the valid tender of the rent.
[994D] The non compliance of Rule 4(c) i.e. the non mentioning of the quantum of arrears of rent, does involve no invali dating consequence and also does not visit any penalty.
[999B C] Rules 4(c), 5(1) and 6 are not mandatory but only directory.
[999C] If the statute is mandatory, the things done not in the manner or form prescribed have no effect or validity.
But if it is directory, the non compliance may not lead to any serious and adverse consequence.
[995H; 996A] 988 The word "shall" in its ordinary import is obligatory.
Nevertheless the word "Shall" need not be given that conno tation in each and every case and the provisions can be interpreted as directory instead of mandatory depending upon the purpose which the legislature intended to achieve as disclosed by the object, design, purpose and scope of the statute.
[998H; 999A B] No prejudice is writ large in the present case because proof of prejudice is also one of the necessary criteria besides non compliance of the provision to invalidate the Act.
[999G] Sheo Narain vs Sher Singh, ; , Not applicable.
Sham Lal (dead) by Irs.
vs Atme Nand Jain Sabha (Regd.) Dal Bazar, ; , Not applicable.
Montreal St. Rly.
Co. vs Normandin, ; , re ferred to.
Seth BikhrajJaipuria vs Union of India, ; , referred to.
Raza Buland Sugar Co. Ltd. vs Municipal Board, Rampur, ; , referred to.
K. Kamraj Nadar vs Kunju Thevar and Others, , referred to.
Subbarao vs Member, Election Tribunal, Hyderabad, ; , referred to.
State of U.P. & Others vs Babu Ram Upadhya, ; , referred to.
Ajit Singh vs State of Punjab, ; , referred to.
|
rit Petition (Civil) NO. 194 of 1988.
etc etc.
764 (Under Article 32 of the Constitution of India).
D.D. Thakur, T.S. Krishnamurthi Iyer, Rajesh Mitra, Ms. Santosh Kalra, H.K. Puri, R.L. Roshan, S.S. Sabharwal, S.K. Sabharwal, and M.K.D. Namboodiri for the Petitioners.
P.P. Rao, S.N. Kacker, G. Rath, Mrs. A. Mathur, A. Mariarputham, C.M. Nayyar, D.S. Narula, Kailash Vasudev, Mrs. Uma Jain and P.K. Mehta for the Respondents.
The following Order of the Court was delivered: O R D E R The writ application under Article 32 and the transferred writ petitions from the Delhi High Court relate to selection of medical graduates for undertaking post graduate study for the year 1988 under the Delhi University.
In Dr. Dinesh Kumar vs Motilal Nehru College, Allahabad & Ors., this Court emphasised the desirability of post graduate education in the Medical Faculty as far as possible to have uniformity throughout the country.
It, therefore, commended to the educational institutions which followed the system of one year house job followed by two years ' post graduate course to switch over to the pattern of a three year post graduate course with house job in the first year.
On September 25, 1987, in the very same matter, when the Court made an order reported in ; , it was pointed out that in some States the post graduate course is for a term of two years with one year housemanship while in the other States it is a full term of three years.
This Court, therefore, directed with a view to bringing about uniformity on the basis of the principle accepted in the earlier decision that for admission beginning from 1993, there would be only one pattern, namely, a three year integrated course without any separate housemanship.
The University of Delhi decided to adopt the three year course for the post graduate degree and a two year course for the diploma commencing from the academic Session of 1988.
With a view to mitigating hardship to candidates/students who had already completed the house job and had become entitled to undergo the postgraduate course in two years, as a transitory provision, the University decided to continue the practice prevailing prior to 1988 for a year.
The University evolved a scheme where under the number of seats for the post graduate course and diploma course available in the previous year for a student who had completed one year 's housemanship were left untouched.
The number of such seats are 198 for the degree course 765 and 111 for the diploma course.
Out of these 25% being placed at the disposal of the Government of India to be filled up on all India selection basis, the exact number available to be filled up by the University worked out to 149 and 84 respectively.
As a transitional provision intended for the 1988 Session only the University agreed to fix 75% quota (representing 139 seats in the three year degree course and 66 seats in the two year diploma course).
The following was specified a part of the Scheme: "Important Note Candidates who have done house job/junior Residency for a period of one year are not eligible for admission to 3 years Post Graduate Degree and 2 years PostGraduate Diploma Course.
" The prospectus, however, prescribed one common selection test.
A set of writ petitions were filed before the Delhi High Court challenging the scheme of the University mainly on the basis that when there was one selection test, merit should prevail and classification in the manner indicated by the scheme was bad.
Reliance was placed before the High Court on observations of this Court that for post graduate degree the test of excellence should prevail and the level of high proficiency should be maintained.
The High Court made an interim order requiring the University to have the selection completed on the basis of merit adjudged in the common selection test.
This is a dispute essentially between the University and the freshers who have not done housemanship on one side and the seniors who have already completed housemanship for one year on the other.
There can be no dispute that the seniors and the freshers belong to two separate categories and cannot be said to be equals.
If the University had not prescribed a common selection test for these two categories, the question of test of comparative merit would not have arisen.
If that had not been done perhaps the High Court would not have made its direction and the difficulty which has arisen would not have cropped up.
The classification of freshers and those who have completed a year 's housemanship, though a perceptible one, loses its importance in view of the traditional situation that in the system prevailing prior to 766 1987, both the groups were treated as qualified for appearing at the selection test for post graduate study.
We are told by learned members at the Bar that after transitory Note extracted above disappears in the coming year, the old practice shall again revive.
This is an unfortunate situation.
There being no limit to participation in the selection test for post graduate study candidates who become unsuccessful year after year, in the absence of any limit, keep on taking chances.
This certainly is not a desirable feature and should be looked into by the appropriate authorities quickly.
If the merit list of the selection examination is followed, more of seniors are entitled to admission and the scheme of reservation would not work.
As we have already pointed out in the name of what counsel calls convenience (and how inconvenient it was is not known), the Delhi University made an initial mistake of having a common selection test for two categories of candidates.
While we reiterate the view expressed by this Court on more than one occasion that selection in the higher courses should be on the basis of merit, in the peculiar facts and circumstances arising in this case purely confined to a transitory measure, the situation has to be handled not by first principles but by a somewhat informed pragmatic adhocism.
This has to be so because the situation would not reoccur.
Again the initial mistake of the Delhi University had brought some amount of confusion and it has mounted up following the intervention by the High Court.
The time available is too short as under the Scheme intended to apply to the whole country the course has to begin on the 2nd of May, 1988.
In this background we are of the view that the impasse created on account of the rival claims advanced by the freshers and the seniors has to have a rough and ready solution yet not arbitrary and as acceptable and satisfying as possible.
We find that the two year degree course speciality wise has 149 seats while the three year degree course has 139 seats.
For convenience we extract the particulars made available at page 4 of the Bulletine of Information.
It may be pointed out that there are 1003 candidates as against total 270 vacancies (degree and diploma courses together) for the seniors; and there are 331 candidates as against 205 vacancies for the two courses for the freshers.
With a view to providing some more seats for seniors we suggested to Mr. Rao appearing for the University that the number of seats may be increased and he has on instructions agreed, provided the Union of India provides funds and the Medical Council agrees to accommodate.
There are 21 specialities as indicated above.
We direct that the University shall create one seat in every speciality and thus 21 additional seats will 767 be available over and above the 149 seats fixed by the University representing the 75% quota.
To this enhanced number of seats the 25% reservation of All India Selection shall not apply.
From the reserved seats made for the freshers, 21 seats being one from every speciality shall be taken away and made available to the seniors.
Thus 42 seats in all will be available for the seniors in the Post Graduate course to be filled up on the basis of inter se merit keeping the senior group apart.
The creation of the 21 seats will involve additional funds to be provided by the Union of India.
It will also require approval of the Medical Council of India and there will perhaps also be necessity for permitting the variation of guide student ratio.
Since it is for one year and there would be no scope for recurrence and this has arisen in peculiar circumstances explained above, we direct the Government of India to take our order made without hearing it with a sense of understanding and make the necessary provisions.
We also suggest to the Indian Medical Council to provide the necessary accommodation by relaxing the requirements.
These may be done quickly so that the time schedule may not be affected.
N.P.V. Petitions disposed of.
| IN-Abs | Pursuant to the directions of the Supreme Court in Dr. Dinesh Kumar & Ors vs Motilal Nehru Medical College Allahabad, & Ors. ; regarding uniformity in post graduate medical education, respondent No. 1 the University of Delhi, decided to adopt the three years course for the post graduate degree and a two years course for the diploma commencing from the academic session of 1988.
However, with a view to mitigating hardship to candidates/students who had already completed the house job and had become entitled to undergo the post graduate course in two years, as a transitory provision, the respondent University decided to continue the practice prevailing prior to 1988 for a year.
It evolved a scheme whereunder, the number of seats for the post graduate course and diploma course available in the previous year for a student who had completed one year 's housemanship were left untouched.
As a transitional provision, the University agreed to fix 75% quota, for the 1988 session only.
As per a Note in the scheme, candidates who had done house job/Junior Residency for period of one year were not eligible for admission to 3 years post graduate degree and 2 years post graduate diploma course.
The prospectus, however, prescribed one common selection test for both the categories.
A set of writ petitions were filed before the High Court challenging the scheme of the University mainly on the basis that when there was one selection test, merit should prevail and classification in the manner indicated by the scheme was bad.
The High Court made an interim 763 order requiring the University to have the selection completed on the basis of merit adjudged in the common selection test.
Disposing of the Writ Petitions and some cases transferred from the High Court, ^ HELD: The seniors who have already done one year 's housemanship and freshers belong to two categories and cannot be said to be equal.
The question of test of comparative merit would not have arisen if the University had not prescribed a common selection test for these two categories.
If the merit list of the selection test is followed, more seniors are entitled to admission and the scheme of reservation would not work.
[765F G] While selection in the higher course should be on the basis of merit in the peculiar facts and circumstances of this case, purely confined to a transitory measure, the situation has to be handled not by first principles but by a somewhat informed pragmatic adhocism especially because the situation would not reoccur.
[766D] The impasse created on account of rival claims by freshers and seniors has to have a rough and ready solution yet not arbitrary and as acceptable and satisfying as possible.
[766F] With a view to providing some more seats for seniors, the respondent University should create one seat in every speciality.
Thus, 21 additional seats will be available over and above the seats fixed by the University representing 75%.
From the reserved seats made for the freshers, 21 seats, being one from every speciality, should be taken away and made available to the seniors.
Thus, 42 seats in all will be available for the seniors in the Post Graduate course to be filled up on the basis of inter se merit, keeping the senior group apart.
[766G H; 767A B] The Central Government should make the necessary provisions for funds.
The Indian Medical Council may provide the necessary accommodation by relaxing the requirements.
[767D] Dr. Dinesh Kumar vs Motilal Nehru College, Allahabad & Ors., ; , referred to.
|
tion (Civil) No. 339 of 1986.
(Under Article 32 of the Constitution of India) S.P. Pandey and Mrs Rekha Pandey for the Petitioner.
J.R Dass, D.K Sinha, D Goburdhan and R.K. Mehta for the Respondent.
PG NO 308 The Judgment of the Court was delivered by RANGANATH MISRA, J.
A letter addressed to the learned Chief Justice of this Court from two citizens of Patna in regard to the Mental Hospital at Kanke near Ranchi in Bihar State was considered as a public interest litigation and registered as an application under Article 32 of the Constitution.
On 7.4.1986, this Court called upon the State of Bihar to file its counter affidavit and the Chief Judicial Magistrate of Ranchi or any other Judicial Magistrate nominated by him to visit the hospital and submit a report about the conditions prevailing in the Hospital.
The Chief Judicial Magistrate visited the hospital on 8.6.1986, and on several other occasions thereafter and submitted a detailed report on 15th of July, 1986.
He found that there were 1580 beds.
The Hospital was in the sole management of the Health Department of the State of Bihar.
The State received financial contributions from West Bengal and Orissa.
There is a Managing Committee of the Hospital consisting of 14 members in all with the Commissioner of South Chotanagpur Division as its Chairman.
The sanctioned strength of medical officers was 16 but only 9 had been filled up and there were 7 vacancies.
In the Hospital the male patients wing had 10 blocks in all, apart from the Isolation Ward, the Medical Ward and the Infirmary Ward.
These are in 10 double storied blocks and three single storied wards in charge of separate doctors.
The female patients ' unit consisted of two double storied and two single storied blocks.
Each block had the capacity of 120 patients.
Some of the patients had to pay for their treatment while the treatment to the general category was intended to be free.
All the three residential quarters within the complex meant for the medical officers were occupied by others, one by the suspended Superintendent, the other by the retired Superintendent and the third one was by the Acting Superintendent.
Three doctors were residing in the quarters meant for non gazetted officers and the remaining doctors were staying in private houses at Ranchi about 11 kilometers away.
The Chief Judicial Magistrate found that there was acute shortage of water in the Hospital.
There was only one tubewell within the campus located in the male block.
There were five ordinary wells but there was no motor pumps installed in any one of them.
These wells were the only source of supply of water.
Several representations had been made to the State Government for supplying water on permanent basis to the Hospital but there was no response from the Government.
PG NO 309 The Chief Judicial Magistrate was surprised that none of the toilets within the hospital complex was in order.
The sanitary fittings were not operating having got chocked.
The patients were, therefor, forced to ease themselves in the adjacent open field.
Consequently the environment had become polluted and unhygienic.
Though there were fan points and even electric fans were hanging from the roof in some places, no fan excepting the one in the chamber of the Superintendent was in working condition.
He also found that though there were electric connections with bulbs and tubes yet light was not available and, therefore, total darkness prevailed in the campus between dusk and dawn.
The Superintendent explained to the Chief Judicial Magistrate that the Hospital had no electrician and the Institution had to depend upon the mercy of the State Electricity Board and despite correspondence there was no response.
He found that old iron cots had been provided in the year 1925 and only 300 more had been added by purchase.
The total number of patients were 1580.
Most of the iron cots having been broken were out of use and, therefore, only 300 beds were actually available.
None of the wards had doors and windows in working condition.
The Superintendent pointed to him that he had made repeated requests to the Public Works Department of the State Government but no letter had even been acknowledged.
In the absence of device to close the doors and windows there had been occasions when mentally ill patients had jumped through the windows or had run out from the rooms.
To meet such situations, the broken cots were mostly used to block the passages.
The Chief Judicial Magistrate further found that the mattresses and linen were in very bad shape, he noticed several patients to be lying on the bare floor; some of the patients were using a single blanket both as mattress and cover.
Some patients were naked in the absence of clothing and others were found wearing torn shirts and pants.
Mosquito nets were not available pillows were not provided and the patients were left to their fate.
The Chief Judicial Magistrate noticed marks of buy bitings as also mosquito biting on the body of the patients.
In the absence of clothing the patients were forced to wear the same shirt and pant for four to six weeks without a wash on account of unavailabiliy of water.
The Superintendent told the Chief Judicial Magistrate that Government of Bihar had sanctioned Rs. 3 a day per patient for the two meals and breakfast and it was wholly inadequate.
The Managing Committee had recommended for sanction of Rs. 10 per patient per day but PG NO 310 there had been no response.
The diet as prescribed included an egg, 250 gms.
of milk every day and meat and fish, once in a week, but in the absence of appropriate funds those had been discontinued for years.
The Chief Judicial Magistrate having visited the place on several occasions noticed that there was no account of the stock of medicines; life saving drugs were not stored properly in the absence of a refrigerator.
The instruments were not in working condition and the employees meant for working the instruments were idlying away their time.
The patients were now referred to Medical College Hospital at Ranchi for X ray and E.C.G. as and when necessary.
Many of the patients told the Chief Judicial Magistrate that they had not been getting any medicine for months together.
The Chief Judicial Magistrate had noticed that several doctors were not available in the Hospital for days together.
Some of the patients in the wards complaind to him that the doctor was not visiting the ward even for one hour in a week; he carne across a weak and emaciated patient who told him that he had not been given any food for two days on the plea that he was suffering from diarrhoea and he had not even been given any treatment. C)n the 11th of July, 1980, when he visited the Hospital along with the local Additional District Magistrate? he found not a single doctor on duty though that was the time when all the doctors, were supposed to be on duty within the campus.
Though this was the actual position.
the attendance register showed all the doctors to be present as required according to the duty chart .
The Chief Judicial Magistrate collected the death rate from the Superintendent for the period between 1977 and 1986 which are as per the particulars given below: Year Male Female Total 1977 38 11 49 1978 72 12 84 1979 74 31 l05 1980 66 24 90 1981 39 33 172 PG NO 311 1982 173 50 231 1983 87 44 131 1984 152 94 246 1985 90 69 159 From 1 1 1986 30 6 1986 49 25 74 In Paragraph 28 of the Report the Chief Judicial Magistrate stated: "This chart clearly shows abrupt rise in the graph of death rate after 1980.
1984 was the most unfortunate year for Arogyashala, when maximum escapes and deaths took place.
Mass scale escapes and deaths of patients in 1984 is said to be the result of internal politics in the Arogyashala campus, for which, the then Superintendent and Dr. Durga Bhagat and Deputy Superintendent.
Dr. B.B. Singh are said to be largely responsible.
" The Magistrate further reported that the present acting Superintendent had failed to improve the administration.
He lacked adequate control over his colleagues and the staff.
The out going Superintendent residing within the campus was inciting the people and the acting Superintendent was gradually losing his grip and control over the administration.
The innocent, miserable and vioceless patients were the victims of the situation.
The practice prevailing in the Hospital had been that the Superintendent alone was competent to admit patients and as such the guardians and attendants of the patients seeking admission into the Hospital had been exploited by a group of persons friendly with the Superintendent and those who did not come to terms with the Superintendent had been denied the benefits of the Hospital.
This led to friction and unpleasant relationship.
He recommended that a non medical man, if possible, a retired army officer or a District Judge could be posted as the head of the Hospital to take control and tone up the deteriorating situation.
He found that a large garden was attached to the Hospital but on account of the all pervading mismanagement there was no return but one Dr. Buxy had recently been put in charge of the garden and had improved the same.
Last of all in his report he adverted to the fact that some petients who had recovered and their number he found was about 300, being both men and women were not in a position either to return to their take to any employment in the absence of any facility.
He found that these persons who PG NO 312 no more required treatment should be removed from the Hospital so that there would be room available for patients who required treatment; unnecessary expenditure on such large number of people could be avoided and the standard of discipline within the Institution could be improved and there could be a general toning up of the atmosphere.
Along with the report he gave various relevant details in the annexures.
Annexure 11 is a list of criminal patients who had come from different jails for treatment and had been declared fit for discharge.
We may refer to the cue of one Rupa Santhal.
This person was admitted to the Hospital on 28.9.1947 at the instance of the Superintendent of Chittagang Hill Tract Jail, where on being convicted by the Deputy Commissioner of Chittagang Hill Tract for an offence punishable under Section 326 IPC, he had been imprisoned for undergoing the sentence.
Obviously he could not have been detained in jail for 41 years for the offence under Section 326 IPC.
Several letters were sent from the Hospital but there was no response.
We may also refer to the case of Madhu Mahanta who was admitted to the Hospital on 15.11.1950 at the instance of the Superintendent, District Jail, Keonjhar in the State of Orissa.
He had been convicted under Section 302 IPC and was languishing in the Hospital for 36 years though he had been cured several years back.
The Magistrate has given a list of 13 persons of this category.
We are astonished that even when prisoners are transferred for treatment from jails where they were undergoing sentences of imprisonment, no follow up action has been taken from the jails on their own and even when the Hospital authorities had required the prisoners to be taken back no response has been made.
This only exhibits total callousness.
We have given sumptuous extracts from the report of the Chief Judicial Magistrate with a view to bringing out as clear a picture as possible of the shocking and savage conditions that prevail in the mental hospital.
There can be no two opinion that the hospital was in a shape a shade worse than Oliver Twist 's Orphanage.
From all accounts, perhaps.
many of zoos housing animals have better conditions than those that prevail in this hospital.
While the mentally ill require a soothing environment for treatment, as psychatrists say, the State of Bihar as converted what was once a prestigious mental hospital Into a den to house about sixteen hundred patients.
The reports of the Chief Judicial Magistrate gives the reader the feeling of a medieval torture house.
On 11.8.1986, the Court noticed the report and observed: PG NO 313 "The report makes a painful reading and shows how badly is this institution managed and in what in human condition the patients are made to live & work there.
It is surprising that the State of Bihar has allowed this institution to de generate into the present condition.
It is necessary that immediate steps should be taken to improve the functioning of this institution in all respects.
We would therefore direct the Chief Secretary and Health Secretary to the Government of Bihar to file affidavit or affidavits putting forth a definite scheme for improving the working of the Institution and for remedying the drawbacks and deficien cies pointed out in the report, including the neglect of patients by the Medical Superintendent attached to the Institution.
This matter must have urgent priority since it concerns the well being of the mentally handicapped.
We would therefore direct that the affidavit be filed within three weeks from today setting out a time bound programme for improving the functioning of the Institution.
We would like to observe that the Chief Judicial Magistrate has made an excellent job of the task assigned to him and we express our sense of appreciation for the work done by him.
These observations may be sent to the High Court of Patna and the Chief Judicial Magistrate".
On 1.9.1986, the Health Secretary filed a short affidavit together with a scheme for the improvement of the Hospital.
The opening words of the scheme have to be quoted to be believed: "The Government of Bihar are aware of the conditions prevailing in the Mansik Arogyashala, Kanke, and the Government for sometime in past have been discussing measures to be taken for improvement of the same.
The subject was discussed by the representatives of the State of Bihar with the members of the Planning Commission at a meeting held at New Delhi in the month of january, 1986, and accordingly it is contemplated to develop the Mansik Arogyashala, Ranchi on the lines of NIMHANS in Bangalore The scheme indicated that a letter had been written to the Director, NIMHANS at Bangalore for information on 17th of April, 1986, i.e. 4 1/2 months before the scheme was filed PG NO 314 in this Court.
There is no indication as to what was received from the Director or as to what further follow up action was taken during the 4 1/2 months.
The scheme indicated that out of 16 sanctioned posts three posts were earmarked for West Bengal Government and were vacant; out of 13 posts, 9 had been filled up and 4 were vacant and were to be filled up by October, 1986.
The scheme admitted with reference to the water supply system that the internal system was choked and was not functioning.
In the year 1985 86, Rs.10 lakhs had been sanctioned for renovation of water supply system and the Public Health Engineering Department could utilise only Rs.61,000 during the financial year; therefore, the balance amount of Rs.9,39,000 was again to be sanctioned in the year 1986 87.
The lavatories and bathrooms were not in working condition as accepted and the scheme proposed that the Superintendent of the Hospital is to supervise the sanitary system.
In regard to electricity it was indicated that the electric fittings, fixtures and other equipments would be replaced by March, 1987 which meant six months beyond the date when the scheme was framed.
It was proposed that a 100 KV Generator set was to be installed.
In regard to cots and mattresses it was stated that 400 of them would be acquired in the year 1986 87 and the remainder in the year 1987 88.
It was stated that the doors and windows required total replacement and it was indicated that Rupees six lakhs were sanetioned during the financial year for repair work.
In regard to diet it was indicated in the scheme: "In the State of Bihar, the rate of the diet per patient for the hospital is Rs.3.00 per day except the T.B. patient to whom the rate of diet is Rs.4.15 per day.
In the year 1986 87, rate of diet per patient has been increased to Rs.3.55.
The Superintendent of Kanke hospital has been directed to improve dietary management".
It was admitted that E.C.G. machine was out of order and efforts would be made to instal the machine in the financial year.
It was also proposed in the scheme that there would be a regular Superintendent posted soon.
In regard to supply of medicines it was stated that the prescribed rate was Rs.1.00 per patient per day and it has been increased to Rs.1.90 per patient per day from 1986.
PG NO 315 On 20th of October, 1986, this Court made the following order: "1.
In respect of each patient in the Ranchi Mansik Arogayashala the daily allocation for diet will be increased from the existing inadequate articles of that value shall be supplied to each patient.
Arrangements should be made forthwith to supply adequate quantity of pure drinking water to the hospital, if necessary, by engaging water tankers to transport potable water from outside.
Immediate arrangements should be made for the restoration of proper sanitary conditions in the lavoratories and bathrooms of the hospital.
All patients in the hospital who are not at present having mattresses and blankets should be immediately supplied the same within 15 days from today.
Such of the patients who have not been given cots should also be provided cots within six weeks from today so that no patient shall be thereafter without a cot.
The ceiling limit at present invogue in respect of cost of medicines allowable for each patient will stand removed, with immediate effect and the patients will be supplied medecines according to the prescription made by the doctors irrespective of the costs.
The State Government shall forthwith take steps to appoint a qualified Psychiatrist and a Medical Superintendent for the hospital and they should be posted and takecharge in the Institution within six weeks from today.
The Chief Judicial Magistrate, Ranchi to whom a copy of this order will be forwarded by the Registry shall visit the hospital once in 3 weeks and submit quarterly reports to this Court as to whether the aforesaid directions given by us are being complied with.
" On 20th of November, 1986, the Health Secretary gave a report as to programme relating to aspects covered by the scheme.
It indicated that no reply had been received from NIMHANS and therefore, an officer had been sent from Bihar PG NO 316 to obtain the information.
The medical officers against the vacant posts had been posted; water supply and electricity were yet to be attended to.
The repair to the building was in progress and other aspects were yet to be attended.
A Superintendent in the rank of Civil Surgeon had been posted.
The Chief Judicial Magistrate furnished a further report in December, 1986.
While he noticed certain improvements, he pointed out that there were 400 female patients and there was only one lady doctor in the Hospital.
There was no lady Psychiatrist or Psychologist.
The Superintendent had written to the Government about it but there has been no response.
On 14th of September, 1987, the Court noticed the fact that the State of West Bengal was in huge arrears in the matter of payment of contribution to the running of the Hospital.
Counsel for State of Bihar had agreed to send details of the arrears to the State of West Bengal within a fortnight and the Court directed the West Bengal Government to pay the same.
The State of West Bengal filed its affidavit through the Joint Secretary in the Department of Health and Family Welfare.
The affidavit while accepting the fact that 38% of the seats in the hospital were reserved for West Bengal alleged that in the absence of furnishing of proper accounts by the State of Bihar, the payment of contribution had not been made in time by the State of West Bengal after 1979 80.
It agreed to pay Rs.20 lakhs during the year and the balance in suitable instalments in future.
The State of Orissa has pointed out in its affidavit that it has been regularly paying its contribution of Rs.3 lakhs and was not in arrears.
The Deputy Director (Medical) Health Services, Government of Bihar filed an affidavit claiming that the rate of diet had been enhanced with effect from 1.12.1986 and in diet all the patients were provided rice, bread, dal, vegetable, egg, milk, loaf, biscutt, tea, fruit .
Fish, meat and chicken were being provided alternatively thrice a week.
Old Pipe lines had been replaced and the flow of water was increased; storage facility for water had been arranged.
Medicine as per requirement is being provided without refering to any ceiling limit.
new X ray machine has been purchased; the old E.C.G. machine has been condemned and a new one has been purchased.
One of the petitioners filed an affidavit denying many of the aforesaid claims.
On 14th of March, 1988, this Court made the following order: PG NO 317 "We have perused the affidavit filed by Shri Subodh Chandhra Naryayan, one of the petitioners, wherein several allegations of mismanagement have been made.
It has also been alleged that in spite of the direction of this Court that the daily diet expenses should be Rs.10 per patient actually Rs.7 is being spent and though this Court had directed that there should be no ceiling of expenses for medicines beyond Rs.2 per patient is not being issued.
We are of the view that copy of the affidavit should be sent to the Chief Secretary, State of Bihar with a direction that he would personally look into the matter and should send a report within four weeks.
" A report, beyond the time indicated in the order dated 14th of March, 1988, was furished by the Chief Secretary and the same was covered by an affidavit of the Joint Secretary of Department of Health and Family Welfare of the State Government.
The Chief Secretary reported: "The entirc hospital complex is spread over a sprawling area.
The buildings are old.
but they have been extensively repaired and white washed.
Many old cots.
matresses linen etc. have been replaced by new ones.
Government has spent several lakhs of rupees on improvements in the running of the Agrogyashala during the last two years.
In course of my visit, l did not find that patients were being given inadequate food or medicine. ' ' He also found that the toilets had not been attended to, the position of water supply was not satisfactory, the automatic boiler had not yet been repaired or replaced.
The Court 's Order of 14th of March, 1988, indicated that the affidavit filed by Subodh Chandra Narayan containing several allegations of mismanagement was to be forwarded to the Chief Secretary and with reference to the allegations therein, he was to send his report.
We do not find that the report of the Chief Secretary covers all the aspects.
The hospital authorities would not, in their own interests, be too ready to expose their own deficiencies during the visit of the Chief Secretary.
Therefore, to have been satisfied and to report that during his visit he did not find any patient being given inadequate food or medicine is no appraisal of the situation.
The fact that lakhs of rupees had been spent on improvement is indeed of no consequence PG NO 318 until the Agorgyashala is restored to acceptable hospital standards.
The report gives us a feeling that the Chief Secretary was more conscious about the expenditure made by the State Government than assessing the actual situation.
From his report, however, it is clear that inspite of several orders made by this Court and assurances held out by the State Government of Bihar, the defects were not being remedied.
The awareness of the governmental authorities of the sordid situation prevailing in the hospital, as admitted in the scheme furnished to this Court, the non compliance in an effective way with the directions made from time to time by this Court and the general lethargy shown in rising from slumber leaves a clear impression in our mind that the institution cannot be run as a mental hospital of that magnitude unless there be change in the administrative set up, the control is altered and a total new service to patient oriented thrust given to the institution.
In a welfare State and we take it that the State of Bihar considers itself to be one such it is the obligation of the State to provide medical attention to every citizen.
Running of the mental hospital, therefore, is in the discharge of the State 's obligation to the citizens and the fact that lakhs of rupees have been spent from the public exchequer (perhaps without or inadequate return) is not of any consequence.
The State has to realise its obligation and the Government of the day has got to perform its duties by running the hospital in a perfect standard and serving the petients in an appropriate way.
The reports and affidavits of the Government of Bihar and its officers (not the reports furnished to the Court by the judicial officers) have not given us the satisfaction of the touch of appropriate sincerity in action.
The scheme which was furnished to the Court was a half hearted one and no attempt therein was made to bring about any improvement except attending to certain obvious deficiencies and shortfalls.
The hospital has been in existence from pre independence period.
There have been epoch making breaks through in the field of psychiatry and treatment of psychiatric patients.
The approach to mental health and the techniques of psychiatry have changed.
Psychologists have developed their art and their tools.
The method of care ar d attention for the mentally ill has also undergone a sea change.
When we had called upon the State of Bihar to give a scheme for improving the conditions of the hospital, this Court had not intended a scheme for removing the deficiencies in the old hospital; we had really intended to look forward to a scheme of re orientation which the scheme did not even remotely touch except to say that NIMHANS at Bangalore has contacted.
PG NO 319 The state Government authorities have not been able to assess the priorities.
Provision of beds, though the scheme indicated had to be fully made by end of March, 1988, the report of the Chief Secretary and the accommpanying affidavit have not cleared that position.
Provision for electricity and water has taken too long, though both are basic necessities of life.
The fact that the existing lavatories have taken more than two years to repair is a slur on the administration.
There does not seem to be the slightest interest on the part of the persons handling the matter, to improve the environment.
In these cir cumstances, it becomes difficult for the Court with any sense of confidence to leave the management to the Health Department of the State of Bihar if the institution has to run as a good and useful hospital.
We are cognizant of the position that it is difficult for the Court to monitor the management of a hospital particularly when it is located a thousand kilometres away; but since there have been some improvements with the Court 's intervention, to get out of the picture at this stage would only mean that the situation will again deteriorate no sooner the Court 's attention is withdrawn.
As we have already pointed out mere restoration of the hospital to its old position would only bring into existence an archaic institution sans modernism.
In our opinion, it will be much better if a Committee of Management is appointed with full powers to look after all aspects of the institution.
It is appropriate to take note of the position that this institution receives contribution from two other States.
38 % of these beds, being about 600, are reserved for the State of West Bengal and the Government of West Bengal is to pay for the same.
Similarly 75 beds are reserved for the State of Orissa and a sum of Rs. 3 lakhs is payable by the Orissa Government.
There is no reason why the management of the hospital should be left exclusively to the Health Department of State of Bihar and the participating Governments should not be associated in such management.
Taking note of the performances of the State administration of Bihar in regard to the hospital we are of the view that association of the States of West Bengal and Orissa in the management is likely to bring about some positive result.
We would, accordingly, constitute a Committee of Management for the Mental Hospital in the manner indicated below.
Chairman A consenting sitting Judge of the Patna High Court, Ranchi Bench, to be nominated by the Chief Justice of Patna High Court.
PG NO 320 Members (1) Commissioner of Ranchi Division.
(2) Station Commander, Ramgarh area, Ranchi.
(3) Secretary of Health, Bihar Government.
(4) Secretary of Health, West Bengal Government.
(5) Secretary of Health, Orissa Government.
(6) Deputy Commission of Ranchi.
(7) Principal of the Ranchi Medical College.
(8) District Judge, Ranchi.
(9) Superintendent of the Hospital.
The Commissioner of Ranchi Division and the Station Commander shall be Vice Chairmen and in the absence of the Chairman, shall in the order indicated act as Chairman when any of them too is absent.
The Superintendent shall act as the Secretary.
We hope and expect that the concerned Governments and authorities would accord the necessary consent/permission to the nominated officers to act on the Committee and the Committee would be able to have its first meeting in the first half of November, 1988.
The Committee should meet every month in the first six months with a view to removing the defects and deficiencies within a time frame say of six months at the most and for reviewing the improvements in the conditions of the hospital.
If it is satisfied that the situation has improved, the meetings thereafter may be quarterly.
The Commissioner of the Ranchi Division shall make a monthly report with in 2 weeks of the end of every month about the state of the hospital during the first year and such reports as and when received by the Registry should be placed before the Court.
The State of West Bengal is in arrears in regard to its contribution for several years.
Though counsel for the State of Bihar had undertaken to furnish accounts, the same has not yet been done.
The Committee shall ensure that the accounts are furnished to the State of West Bengal by the 15th of December, 1988.
In its affidavit, the State of West Bengal has indicated that it would pay Rs.20 lakhs out of the dues during the current financial year and would pay the balance in suitable instalments.
As the improvement to the hospital would involve huge expenditure, we direct the State PG NO 321 of West Bengal to pay Rs.50 lakhs out of its dues by 31st of March, 1989 and the balance amount shall be paid in two six monthly instalments, one by 30th of September, 1989, and the other by 31st of March, 1990.
The Government of West Bengal and the Committee shall ensure that this time frame is adhered to.
The entire arrears collected from the West Bengal Government shall be earmarked for development of the hospital to be expended in the manner approved by the Committee and no portion thereof would be otherwise spent.
We are of the view that if the hospital is transformed into a better one, just as the hospital run by NIMHANS at Bangalore, the quality of the hospital would improve and the patients would have the benefit of modern scientific treatment.
The Committee shall, therefore, take expeditious steps to explore the possibility of transforming the Mental Hospital at Ranchi into the pattern obtaining in the hospital run by NIMHANS at Bangalore by taking such steps as are necessary and furnish a report to this Court by the end of February, 1989 when that question will have to be considered by this Court after hearing the concerned State Governments and the parties.
The State of Bihar shall provide a basic fund of Rs.50 lakhs in the year ending 31st of March, 1989, to be spent for improvement of the Hospital in the manner approved by the Committee and in case the Committee is of the view that further funds are necessary, it would be open to the Committee to make a report to this Court whereupon appropriate directions shall be given.
There have been repeated allegations that the lady patients who have already been cured are not being released from the hospital.
At one stage the explanation offered by the hospital authorities and the State administration was that the relations, even though notified, are not taking them back.
The hospital is not a place where cured people should be allowed to stay.
It is, therefore, necessary that there should be a rehabilitation centre for those who after being cured are not in a position to return to their families or on their own seek useful employment.
The Committee shall, therefore, take immediate steps to have a rehabilitation centre at a convenient place around Ranchi where appropriate rehabilitation schemes may be operated and the patients after being cured, irrespective of being male or female, if they are not being taken back by the members of their families could be rehabilitated.
The funds made available to the Committee may be utilised for such purpose.
PG NO 322 We must reiterate that Court monitoring of an institution like the present one is indeed difficult but we cannot close the proceedings at this stage for the reasons we have already indicated.
Parties including the Committee shall have liberty to move this Court from time to time.
We make it clear that the directions regarding payment of the funds are pre emptory in nature and no application for modification thereof shall be entertained.
This matter shall be deemed to be pending to deal with the various reports from the Committee and for purposes of giving other directions.
| IN-Abs | A letter petition in regard to the Mental Hospital at Ranchi was considered as a public interest application under Article 32 of the Constitution, and the Court called upon the State of Bihar to file its counter affidavit.
At the same time, the Court directed the Chief Judicial Magistrate to visit the hospital and submit a report about the conditions prevailing there.
The hospital was in the sole management of the Health Department of the State of Bihar.
The State of Bihar received financial contributions from the States of West Bengal and Orissa on the basis of the number of beds reserved for each State.
The report submitted by the Chief Judicial Magistrate made a painful reading.
In the affidavit submitted by the State of Bihar it was stated that the Government was aware of the conditions and had since taken some steps to improve the working of the hospital, and had also drawn up a scheme to develop the hospital on the lines of NIMHANS in Bangalore.
From time to time, the Court had issued directions and made specific orders regarding provision of better food.
clothing, medical treatment, housing and improvement of sanitation, etc.
While keeping the matter pending, the Court, HELD: (1) In a welfare State it is the obligation of the State to provide medical attention to every citizen.
The State has to realise its obligation and the Government of the day has got to perform its duties by running the hospital in a perfect standard and serving the patients in an appropriate way.
[318D E] (2) It is clear that inspite of several orders made by this Court and assurances held out by the State Government of Bihar.
the defects were not being remedied.
The awareness PG NO 307 of the governmental authorities of the sordid situation prevailing in the hospital, as admitted in the scheme furnished to the Court, the non compliance in an effective way with the directions made from time to time by the Court and the general lethargy shown in rising from slumber leaves a clear impression that the institution cannot be run as a mental hospital of that magnitude unless there be change in the administrative set up, the control is altered and a new service to patient oriented thrust given to the institution.
[3I8 C] (3) The scheme which was furnished to the Court was a halfhearted one and no attempt therein was made to bring about any improvement except attending to certain obvious deficiencies and short falls.
The Court had looked forward to a scheme of re orientation which the scheme did not even remotely touch.
[318F G] (4) The State Government authorities have not been able to assess the priorities.
There does not seem to be the slightest interest on the part of the persons handling the matter, to improve the environment.
In these circumstances, it is difficult to leave the management exclusively to the Health Department of the State of Bihar if the institution has to run as a good and useful hospital.
Association of the States of West Bengal and Orissa in the management is likely to bring about some positive result.
It would, therefore, be much better if a Committee of Management is appointed with full powers to look after all aspects of the institution.
[319A; B D] (5) The Court accordingly constituted a Committee of Management for the Mental Hospital and gave directions regarding the financial contribution from the participating States, and also laid down guidelines regarding the functioning and management of the hospital.
The Court further directed that the Committee shall take expeditious steps to explore the possibility of transforming the hospital into the pattern obtaining in the hospital run by NIMHANS at Bangalore.
[321C D]
|
Petition No. 28180 of 1988.
IN Writ Petition No. 9 13 of 1988 (Under Article 32 of the Constitution of India.) Mrs. K. Hingorani and Ms. Santosh Singh for the Petitioner .
A.K. Sen (Not Present), Dr. L.M. Singhvi, Vivek Gambhi r, Parveen Kumar and B.D. Sharma for the Respondents.
S.P. Singh for the Impleading party.
The following Order of the Court was delivered: ORDER This Court on 9.9.1988 after hearing counsel for t he petitioners in the writ petition made an ex parte order to the following effect: "Issue notice returnable on Tuesday, the 13 th September, 1988.
In view of the allegations made in Par a graph 4 of the affidavit given by Vijay Trivedi, the R e spondent No. 2 is prohibited from performing any Chun ri Ceremony within Sri Rani Satiji 's Mandir and the responden ts are directed to enforce this order on the th September, 19 88 and on any other occasion thereafter until further order section The entire collection of money shall be separately account ed for and should be deposited into a nationalised bank, so that appropriate directions after hearing both the parti es may be made by this Court in regard to the same . . " On 10th of September, 1988, the annual Satiji Mela w as scheduled to be celebrated within the said temple premises .
The management of the temple, respondent No. 2, in t he writ petition has now applied for vacating the ad inter im order and for a 68 direction to the District Magistrate, Jhunjhunu to retu rn the keys of the Bhetpatras of the temple and the box es containing the articles of gold and silver and also for a direction to him not to interfere in the matter of colle c tion of money as also collection of articles of gold a nd silver of deities located in the premises of the temple a nd to make such other orders as may be necessary to meet t he situation.
We have heard Dr. Singhvi in support of the petitio n, Mrs. Hingorani for the petitioners in the writ petiti on asking for sustaining the interim order and Mr. Sharma f or the State of Rajasthan.
An affidavit has been filed by t he District Magistrate of Jhunjhunu in the course of heari ng which has also been placed before us.
Broadly two aspects require consideration: (1) wheth er the 'Chunry ' ceremony should be permitted to be perform ed within the temple and (2) whether out of the amounts whi ch are being deposited in the nationalised bank in terms of t he interim order, the expenses for maintenance of the temp le complex, performance of the daily rites as also the usu al charities should not be made.
Under the Commission of Sati (Prevention) Act, 198 7, glorification of Sati is strictly prohibited and that a ct has been declared to be an offence.
Dr. Singhvi by referri ng to different dictionaries has tried to impress upon us th at Chunry as such is not connected with glorification of Sa ti and is a ceremony connected with the traditional form of offering worship known as Sodash Upachar while Mrs. Hingor a ni and Mr. Sharma do not accept the submission made by D r. Singhvi and have maintained that in the State of Rajasth an Chunry ceremony is always associated with glorifying Sa ti and the celebration is a part of the traditional process of religious offerings in Sati temples.
This certainly is n ot the stage in the proceedings for a final view of the que s tion as to whether performance of Chunry ceremony amounts to glorification of Sati and the determination must be left to the final stage.
We do not think it would be appropriate f or us to express any view beyond this point at this stage as the same may embarrass the bench which would ultimately he ar the matter.
We are, therefore, of the view that the restraint i m posed on holding the Chunry ceremony within the temp le should continue without any variation.
The contention of D r. Singhvi that Chunry is a part of Sodash Upachar will have to be examined at length at the later stage.
69 Now a look at the other aspect.
There can be no t wo opinions that pending disposal of the writ petition, t he temple complex has to be maintained and out of the inco me earned maintenance expense must be met.
The submissi on advanced by Mrs. Hingorani that the temple should be co n verted forthwith into rehabilitation camps for uncared f or ladies is certainly not one requiring any serious consider a tion.
There is no provision in the statute or in any oth er law which would warrant such change of user of the premise section Similarly if out of the income of this institution a ny contribution was being made to sustain some social instit u tions of utility, the support should not die out.
The r e spondent No. 2 is free to move the District Magistrate of Jhunjhunu in regard to these two aspects and in case t he District Magistrate is satisfied that appropriate fun ds should be released out of the deposits in the bank for o ne or both of the purposes indicated above he would be free to direct such money as may be found necessary to be withdra wn from the bank for being utilised for the purposes as may be specified by the District Magistrate m his order to be mad e.
This disposes of the Civil Miscellaneous Petition.
| IN-Abs | By an ex parte order made in the writ petition on 9 th September, 1988, the Court prohibited respondent No. 2, t he management of the Sri Rani Satiji 's Mandir, from performi ng Chunri ceremony within the temple and directed the enti re collection of money to be separately accounted for a nd deposited into a nationalised bank.
In this miscellaneous petition, the management soug ht vacation of the ad interim order and lot a direction to t he authorities not to interfere in the matter of collection of money as also articles of gold and silver of deities.
Disposing of the miscellaneous petition, the Court, Ordered: 1.
The restraint imposed on holding the Chunri ceremo ny within the temple should continue without any variatio n. [68G H] 2.1 Pending disposal of the writ .petition, the temp le complex has to be maintained.
Therefore, out of the inco me earned maintenance expenses must be met.
[69A] 2.2 If out of the income of this institution any contr i bution was being made to sustain some social institutions of utility, the support should not die out.
[69B C] 2.3 The respondent No. 2 is free to move the Distri ct Magistrate in regard to these two aspects and in case t he latter is satisfied that appropriate funds should be r e leased out of the deposits in the bank for 67 one or both of the above said purposes, he would be free to make an appropriate order in respect thereof.
|
vil Appeal Nos. 80 & 81 of 1975.
From the Judgment and Order dated 26/27.8.1974 of the Gujarat High Court in I.T. Reference Nos. 7 and 29 of 1973.
S.C. Patel for the Appellant.
Dr. V. Gauri Shanker and Ms. A. Subhashini for the Respondent.
The Judgment of the Court was delivered by PATHAK, CJ.
The appellant is an assessee who derives income 867 from various sources, including income from the Shrimati Arundhati Balkrishna Trust, Ahmedabad.
In assessment pro ceedings for the assessment year 1964 65 the Income Tax Officer found that a sum of Rs. 10,880 had been debited to the interest account maintained in the books of the Ahmeda bad Trust as interest paid to the Harivallabhadas Kalidas Estate Account.
Upon further scrutiny, he discovered that substantial debits totalling Rs.2,19,804 included withdraw als from the Estate Account by the Ahmedabad Trust on ac count of the personal expenses of the assessee.
After taking into consideration earlier withdrawals from the Estate Account by the Ahmedabad Trust for the purpose of investment and making adjustments for deposits during the year, the Income Tax Officer concluded that the net withdrawals from the Estate Account for personal expenditure were Rs.3,10,806 He held that the proportionate interest of Rs.6,199 out of the total interest of Rs. 10,880 paid by the Ahmedabad Trust to the Estate Account was referable to such withdrawals, and.
therefore constituted an inadmissible deduction.
Similarly, for the assessment year 1966 67 the Income Tax Officer found that a sum of Rs.25,496 had been shown in the books of account of the Ahmedabad Trust for the relevant previous year as interest paid to the Estate Ac count.
He held that of this sum, an amount of Rs.12,833 was referable to withdrawals for purposes other than investment, and accordingly he disallowed the claim of interest to that extent.
The assessee appealed to the Appellate Assistant Com missioner of Income Tax, and failing there he proceeded in second appeal to the Income Tax Appellate Tribunal, claiming that the entire amount of interest should have been allowed as a deduction for each year.
An additional question raised in respect of the assessment year 1964 65 related to the point whether the assessee was liable to tax on the net income only received by her from the Trust or the income determined in accordance with the provisions of the Income Tax Act in the case of the Trust.
The Appellate Tribunal dismissed the appeals of the assessee.
At the instance of the assessee the Appellate Tribunal referred the following questions of law to the High Court of Gujarat in respect of the assessment year 1964 65: "(1) Whether, on the facts and in the circumstances of the case, the Tribunal was fight in not holding that out of the interest payment of Rs.10,880, Rs.6,199 was not an admissible deduction against the income from other sources? 868 (2) Whether, on the facts and in the circumstances of the case, the income includible in the total income of the assessee is income determinable as per provisions of the Income Tax, 1961 in the case of the Trust or the income receivable by the assessee from the said trust?" The question referred to the High Court for assessment year 1966 67 was: "Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that out of the interest payment of Rs.25,496, Rs. 12,833 was not an admissible deduction against the income from other sources?" The High Court held that the question relating to the disallowance of part of the interest for the two assessment years was rightly decided against the assessee and in favour of the Revenue.
On the second question in the reference for the assessment year 1964 65, the High Court held that the income includible in the total income of the assessee was income determinable in accordance with the provisions of the Income Tax Act in the case of the Trust and not the income actually received or receivable by the assessee from the Trust or according to the entries in the books of accounts of the Trust.
In the result that question was also answered against the assessee and in favour of the Revenue.
In regard to the question arising in each of the assess ment years 1964 65 and 1966 67 relating to the disallowance of part of the interest claimed as a deduction by the asses see, the High Court relied on the view taken by it earlier in Shrimati Padmavati Jaykrishna vs Commissioner of Income Tax., The judgment of the High Court was considered in appeal by this Court in Padmavati Jaikr ishna vs Addl.
Commissioner of Income Tax, Gujarat, and this Court affirmed the view taken by the High Court.
For the reasons which found favour with this Court in that case, we must answer the question in the two appeals before us against the assessee and in favour of the Revenue.
Turning to the additional question referred to the High Court fo r the assessment year 1964 65, it seems to us clear that what is assessable in the hands of the assessee must be the income of the Trust received by it on behalf of the asses see.
It is apparent from section 161(1) of the 869 Income Tax Act, 1961 that a representative assessee, that is to say a trustee, as regards the income in respect of which he is representative assessee, is subject to the same du ties, responsibilities and liabilities as if the income were income received by or accruing to or in favour of him bene ficially, and he is liable to assessment in his own name in respect of that income; but any such assessment is deemed to be made upon him in his representative capacity only, and the tax is levied upon and recovered from him in like manner and to the same extent as it would be leviable upon and recoverable from the person represented by him.
And section 166 of the.
Act clarifies that the provisions relating to the liability of a representative assessee will not prevent either the direct assessment of the person on whose behalf or for whose benefit income is receivable, or the recovery from such person of the tax payable in respect of such income.
The Income Tax Officer has the option to proceed either against the trustee or against the beneficiary, but in either case the income to be assessed must be in the same figure.
What the trustee receives as the income pertaining to the beneficiary is received by him under an obligation to pass on that income to the beneficiary.
However, in most cases administration charges and expenses have to be met out of the Trust 's income and it is only the net income which reaches ' the beneficiary.
If the income had to pass directly to the beneficiary and not under trust through a trustee the beneficiary would have equally to meet those outgoings, leaving a net income in his hands which for the purposes of the Income Tax Act would have been computed after reducing the gross income by the deductions admissible under the Act.
It seems to us clear that it is not the income shown in the books of account of the Ahmedabad Trust actually paid to the assessee after deduction of the outgoings from the income received in the hands of the Ahmedabad Trust, but the real income of the Ahmedabad Trust has to be included in the total income of the assessee after taking into consideration the different items of permissible deductions in relation to that income.
We are of opinion that the High Court is right in the view which it has taken.
In the result, the appeals fail and are dismissed with costs.
H.L.C. Appeals dismissed.
| IN-Abs | The appellant was an assessee who derived income from a Trust.
For assessment years 1964 65 and 1966 67 the Income Tax Officer disallowed deduction of two mounts claimed as interest paid by the Trust for amounts withdrawn from an Estate Account for investment on the ground that a portion of the amounts withdrawn from the Estate Account had been utilized for personal expenditure by the assessee.
The appellants appeals to the Assistant Commissioner having been rejected, she preferred second appeals to the Appellate Tribunal raising an additional question in respect of the assessment year 1964 65 that she was liable to tax on the net income only received by her from the Trust and not on income determined in accordance with the provisions of the Income Tax Act in the case of the Trust.
The Tribunal dis missed the appeals but at the instance of the appellant referred the two questions of law arising therein to the High Court which answered both of them against the assessee.
Dismissing the appeals, HELD: It is not the income shown in the books of account of the Trust actually paid to the assessee after deduction of the outgoings from the income received in the hands of the Trust, but the real income of the Trust has to be in cluded in the total income of the assessee after taking into consideration the different items of permissible deductions in relation to that income.
[869E F] It is apparent from section 161(1) of the Income Tax Act, 1961 that a representative assessee, that is to say a trus tee, as regards the income In respect of which he is a representative assessee, is subject to the same duties, responsibilities and liabilities as if the income were income received by or accruing to or in favour of him bene ficially, and he is 866 liable to assessment in his own name in respect of that income; but any such assessment is deemed to be made upon him in his representative capacity only, and the tax is levied upon and recovered from him in like manner and to the same extent as it would be leviable upon and recoverable from the person represented by him.
And section 166 of the Act clarifies that the provisions relating to the liability of a representative assessee will not prevent either the direct assessment of the person on whose behalf or for whose bene fit income is receivable, or the recovery from such person of the tax payable in respect of such income.
The Income Tax Officer has the option to proceed either against the trustee or against the beneficiary, but in either case the income to be assessed must be in the same figure.
What the trustee receives as the income pertaining to the beneficiary is received by him under an obligation to pass on that income to the beneficiary.
However, in most cases administration charges and expenses have to be met out of the Trust 's income and it is only the net income which reaches the beneficiary.
If the income had, to pass directly to the beneficiary and not under trust through a trustee, the beneficiary would have equally to meet those outgoings, leaving a net income in his hands which for the purposes of the Income Tax Act would have been computed after reducing the gross income by the deductions admissible under the Act.
[868H; 869A E] (ii) The High Court was right in deciding the question relating to the disallowance of part of the interest claimed as a deduction against the assessee.
[868F] Padmavati Jaikrishna vs Addl.
Commissioner of Income Tax, Gujarat, , referred to.
|
ition (Criminal) No. 1 45 1 of 1985.
(Under Article 32 of the Constitution of India. ) R.K. Jain and Yogeshwar Prasad, R.K. Khanna, R.K. Bha tt and Dalveer Bhandari for the Petitioner.
V.C. Mahajan, Tapas Ray, A.S. Nambiar, S.B. Bhasm e, Kapil Sibal, R.B. Misra, A. Subhashini, Y.P. Rao, Ms. section Janani, Ms. Urmila Kapur, D.K. Sinha, J.R. Dass, P.K. Man o har, Ms. section Vasudevan, M. Veerappa, Uma Nath, R.K. Mehta, V. Krishnamurthy, A.S. Bhasme, K.R. Nambiar, B.D Sharma, Ka i lash Vasudev, D.N. 62 Mukherjee, D. Goburdhan, Ms. Kamini Jaiswal, T.V.S.N. Char i, Mahabir Singh, Probir Chowdhry, M.N. Shroff, A. Subba Ra o, R.S. Suri, G. Probhakar, K. Ram.
Kumar, S.K. Bhattachary a, L.R. Singh, A.K. Sanghi, C.V. Subba Rao, R. Venkataraman i, Salman Khurshid, Gopal Singh, Mrs. Vimla Sinha and Mrs. H. Wahi for the Respondents.
The following Order of the Court was delivered: ORDER This writ petition filed in 1985 has been heard on different occasions and several orders and directions ha ve been made from time to time with a view to providing reli ef to delinquent children detained in jails.
On August 2 9, 1988, this Court made an order wherein so me such directions have been excerpted and it is not necessa ry to make any detailed reference to those directions now.
In 1986 the District Judges of the entire country in response to the directions made by this Court supplie d, inter alia, the particulars of under trial and convict ed children found in regular jails within their respecti ve jurisdiction.
On the basis of the said reports it was fou nd that in Assam, Bihar, Orissa, Punjab and West Bengal, t he number of such children in regular jails was 64, 247, 60, 63 and 437 respectively.
There was no such child in any regul ar jail of Gujarat but in varying numbers not exceeding 30 to 35 they were found in other States.
Thereafter some of t he States have filed affidavits indicating release from custo dy or transfer of such children from jails and have stated th at the position at present is very different and the number is either nil or negligible.
With the lapse of two years ' time since such reporti ng was done there is every likelihood of a change in th at position.
Even otherwise, in the intervening period t he Juvenile Justice Act, 53 of 1986, (hereinafter referred to as the 'Act ') has come into force in the whole of the cou n try excepting the State of Jammu & Kashmir with effect fr om 2.10.1987.
The Act provides for setting up of juveni le homes, special homes and observation homes by the Sta te Governments.
Chapter IV provides for dealing with delinque nt juveniles.
In this back drop it is necessary to get fre sh detailed reports from the District Judges and update t he figures as to the exact number of delinquent juveniles, as defined in section 2(a) of the Act, still detained in regul ar jails.
At the same time it is necessary that a report as to whether juvenile 63 Courts as required under section 5 of the Act have been set up and juvenile homes, special homes and observation homes ha ve been established as required by sections 9, 10, and 11 should be obtained.
Every District Judge is, therefore, directed by this order to report within 4 weeks from today to the Regi s try of this Court through the Registrar of the appropria te High Court as to the exact position obtaining on 28.2.
19 89 in regard to the particulars indicated above.
We would li ke to place on record that on the earlier occasion response to directions by this Court had taken more than six month s; repetitive adjournments had become necessary and complian ce was effected by indicating coercive steps.
We hope and tru st there would be no repetition.
Section 62 of the Act empowers the State Governments to make rules to carry out the purposes of the Act.
The sche me of the Act is such that it cannot be properly enforc ed unless apropriate rules are framed and brought into forc e. Counsel appearing before us for the different States are n ot in a position to make a definite statement that the Stat es they represent have framed rules and brought them in to force.
We, therefore, direct that the District Judges whi le making their reports shall also indicate whether rules ha ve been framed and whether such rules are already in forc e. Counsel appearing before us are also directed to inform t he Registry by written memorandum about the framing of rul es and bringing them into force in the respective States.
If such rules have not been framed in any State, by this ord er we direct such State or States to frame the same on or before 7th of April, 1989 and to bring them into for ce without any further delay thereafter.
Section 2(h) defines 'juvenile ' to mean: "a boy who has not attained the age of sixteen years or a girl who has not attained the age of eighteen years.
" Official reports indicate that 35 to 40 per cent of t he total population of the country would be covered by t he definition.
As such about 30 crores of young boys and gir ls come within the purview of the Act.
There can be no t wo opinions that these children of today are the citizens of tomorrow 's India and the country 's future would necessari ly depend upon their proper hygiene physical and mental.
T he problem is, therefore, gigantic; at the same time, there is demand for immediate attention.
Several counsel appeari ng before us have told us and we agree with their submissio ns that unless the importance of the matter is properly pe r ceived and the response is adequate both in 64 regard to sufficiency of actions and immediacy of attentio n, the purpose of the Act cannot be fulfilled.
Children requi re the protective umbrella of society for better growth a nd development as they are not in a position to claim the ir entitlement to attention, growing up, food, education a nd the like.
It is the responsibility of the society and is o ne of the paramount obligations of those who are in charge of governance of the country today to attend to the children to make them appropriate citizens of tomorrow.
We are of the view that in the setting indicated t he matter perhaps requires overseeing by the Court.
For coord i nation between the Union Government and the State Governme nt and between authorities within the State, at the initi al stage and it would be in the interest of children that t he matter is obverseen by this Court and when the machinery is properly geared the responsibility of overseeing may be entrusted to the respective High Courts.
With a view to working out the modality and to ma ke overseeing convenient, it is necessary that a scheme shou ld be evolved.
Counsel appearing before us have suggested th at a group of advocates should be entrusted with the work of making a draft scheme and place it before the Court for i ts consideration.
We accordingly nominate Messrs V.C. Mahaja n, Yogeshwar Prasad, R.K. Jain, Tapas Roy and Mukul Mudgal w ho are advocates appearing for some of the States to draw up a scheme and file it in the Registry of the Court by 7 th April, 1989.
As we pointed out earlier from the reports it has be en found that the number of children in regular jails were t he highest in West Bengal and Bihar.
Mr. Tapas Roy representi ng the State of West Bengal relies upon an affidavit fil ed before this Court to contend that the position has substa n tially changed subsequent to the reports and at prese nt perhaps the number of children in regular jails is eith er nil or very small.
He has personally undertaken to colle ct the particulars and furnish the same by way of the memora n dum to the Registry on or before 7th of April, 1989.
So f ar as the State of Bihar is concerned, Mr. Goburdhan is not in a position to make any statement.
From the analysis prepar ed based upon the report of the District Judges, it appea rs that there were 27 children in the District Jail of Deogar h, about 13 in the jails at Patna and 17 in the jails at Bh a galpur.
We are of the view that Mr. A.S. Nambiar, Sr.
Adv o cate of this Court should be appointed as Commissioner to visit these jails in the three districts of Bihar and co l lect the necessary particulars of juvenile delinquents 65 housed in those jails and report to this Court on or befo re 7th of April, 1989.
He shall be provided all facilities by the State Government and its officers as may be deem ed reasonable and necessary for implementing this direction.
He shall also be entitled to reimbursement of his expenses.
It becomes necessary that the Registry should ha ve appropriate funds to meet the expenses from time to tim e. We, therefore, direct that the Union of India shall depos it a sum of Rs.50,000 while each of the States of Bihar a nd West Bengal and Uttar Pradesh is directed to deposit a s um of Rs. 15,000.
Such deposits shall be made on or before 15 th of April, 1989.
The expenses have of course to be met by a ll the States but in due course an order directing other Stat es to pay to the fund and final apportionment, if necessar y, shall be ordered.
Notice be issued to the learned Attorney General to appear and assist the Court in this proceeding.
The directions indicated above must be worked out with in the time frame as we are fixing the case for further heari ng at 2.00 P.M. on 24th of April, 1989.
| IN-Abs | Pursuant to the directions made by the Supreme Cour t, with a view to providing relief to delinquent childr en detained in jails, in 1986 the District Judges of the enti re country supplied the particulars of under trial and convic t ed children found in regular jails within their jurisdi c tion.
With the passage of time and the coming into force of the Juvenile Justice Act, 1986 it became necessary to g et fresh detailed reports for updating the information.
The Supreme Court issued directions and, HELD: 1.
Children require the protective umbrella of society for better growth and development as they are not in a position to claim their entitlement to attention, growi ng up, food, education and the like.
It is the responsibili ty of the society and is one of the paramount obligations of those who are in charge of governance of the country tod ay to attend to the children to make them appropriate citize ns of tomorrow.
[64A B] 2.
Every District Judge is directed to report to th is Court the figures as to the exact number of delinque nt juveniles still detained in regular jails and whether juv e nile courts, juvenile homes, special homes and observatio ns homes as provied in the Juvenile Justice Act, 1986 have be en established.
[62H; 63A] 61 2.1 A Senior Advocate of this Court is appointed as Commissioner to visit the jails in the three Districts of the State of Bihar, viz. Deogarh, Patna and Bhagalpur a nd collect the necessary particulars of juvenile delinquen ts housed in those jails and report to this Court.
He shall be provided all facilities by the State Government and sha ll also be entitled to reimbursement of his expense section [64H;65A B] 3.
Section 62 of the Juvenile Justice Act, 1986 empowe rs the State Government to make rules to carry out the purpos es of the Act.
The scheme of the Act is such that it cannot be properly enforced unless appropriate rules are framed a nd brought into force.
The District Judges while making the ir reports shall also indicate whether rules have been fram ed and whether such rules are already in force.
Counsel for t he respective States are directed to inform this Court by written Memorandum about the framing of rules and bringi ng them into force in the respective States.
If such rul es have not been framed in any State, such State or States a re directed to frame the same and bring them into force witho ut any further delay.
[63C E] 4.
For facilitating the monitoring of the implementati on of the Juvenile Justice Act, 1986, a group of nominat ed advocates is entrusted with the work of making a dra ft Scheme and placing it before the Court for its consider a tion.
[64D E] 5.
The Registry of this Court should have appropria te funds to meet the expenses from time to time.
The Union of India is directed to deposit a sum of Rs.50,000 while ea ch of the States of Bihar and West Bengal and Uttar Pradesh is directed to deposit a sum of Rs.15,000.
[65B C]
|
78 and 79 of 1950.
Application under article 32 of the Constitution of India for a writ of mandamus.
G.N. Joshi, for the petitioners.
S.M. Sikri, for the respondent.
November 8.
The judgment 0 the Court was delivered by MAHAJAN J.
These two applications for enforcement of the fundamental right guaranteed under article 19 (1) (g) of the Constitution of India have been made by a proprietor and an employee respectively of a bidi manufacturing concern of District Sagar (State of Madhya Pradesh).
It is contended that the law in force in the State authorizing it to prohib it the manufacture of bidis in certain villages including the one 761 wherein the applicants reside is inconsistent with the provisions of Part III of the Constitution and is conse quently void.
The Central Provinces and Berar Regulation of Manufac ture of Bidis (Agricultural Purposes) Act, LXIV of 1948, was passed on 19th October 1948 and was the law in force in the State at the commencement of the Constitution.
Sections 3 and 4 of the Act are in these terms; " 3.
The Deputy Commissioner may by notification fix a period to be an agricultural season with respect to such villages as may be specified therein.
(1) The Deputy Commissioner may, by general order which shall extend to such villages as he may specify, prohibit the manufacture of bidis during the agricultural season.
(2) No person residing in a village specified in such order shall during the agricultural season engage himself in the manufacture of bidis, and no manufacturer shall during the said season employ any person for the manufacture of bidis.
" On the 13th June 1950 an order was issued by the Deputy Commissioner of Sagar under the provisions of the Act for bidding all persons residing in certain villages from engag ing in the manufacture of bidis.
On the 19th June 1950 these two petitions were presented to this Court under article 32 of the Constitution challenging the validity of the order as it prejudicially affected the petitioners ' right of freedom of occupation and business.
During the pendency of the petitions the season mentioned in the order of the 13th June ran out.
A fresh order for the ensuing agricultural season 8th October to 18th November 1950 was issued on 29th September 1950 in the same terms.
This order was also challenged in a supplementary petition.
Article 19 (1) (g) runs as follows : "All citizens shall have the right to practise any profession, or to carry on any occupation, trade or busi ness.
" 762 The article guarantees freedom of occupation and busi ness.
The freedom guaranteed herein is, however, subject to the limitations imposed by clause (6) of article 19.
That clause is in these terms : "Nothing in sub clause (g) of the said clause shall affect the operation of any existing law in so far as it imposes, or prevent the State from making any law imposing, in the interests of the general public, reasonable restric tions on the exercise of the right conferred by the said sub clause, and, in particular, nothing in the said sub clause shall affect the operation of any existing law in so far as it prescribes or empowers any authority to prescribe, or prevent the State from making any law prescribing or empowering any authority to prescribe, the professional or technical qualifications necessary for practising any pro fession or carrying on any occupation, trade or business.
" The point for consideration in these applications is whether the Central Provinces and Berar Act LXIV of 1948 comes within the ambit of this saving clause or is in excess of its provisions.
The learned counsel for the petitioners contends that the impugned Act does not impose reasonable restrictions on the exercise of the fundamental right in the interests of the general public but totally negatives it.
In order to judge the validity of this contention it is neces sary to examine the impugned Act and some of its provisions.
In the preamble to the Act, it is stated that it has been enacted to provide measures for the supply of adequate labour for agricultural purposes in bidi manufacturing areas.
Sections 3 and 4 cited above empower the Deputy Commissioner to prohibit the manufacture of bidis during the agricultural season.
The contravention of any of these provisions is made punishable by section 7 of the Act, the penalty being imprisonment for a term which may extend to six months or with fine or with both.
It was enacted to help in the grow more food campaign and for the purpose of bring ing under the plough considerable areas of fallow land.
The question for decision is whether the statute under the guise of protecting public interests arbitrarily 763 interferes with private business and imposes unreasonable and unnecessarily restrictive regulations upon lawful occupation; in other words, whether the total prohibition of carrying on the business of manufacture of bidis within the agricultural season amounts to a reasonable restriction on the fundamental rights mentioned in article 19 (1) (g) of the Constitution.
Unless it is shown that there is a reason able relation of the provisions of the Act to the purpose in view, the right of freedom of occupation and business cannot be curtailed by it.
The phrase "reasonable restriction" connotes that the limitation imposed on a person in enjoyment of the right should not be arbitrary or of an excessive nature, beyond what is required in the interests of the public.
The word "reasonable" implies intelligent care and deliberation, that is, the choice of a course which reason dictates.
Legisla tion which arbitrarily or excessively invades the right cannot be said to contain the quality of reasonableness and unless it strikes a proper balance between the freedom guaranteed in article 19 (1) (g) and the social control permitted by clause (6) of article 19, it must be held to be wanting in that quality.
Clause (6) in the concluding paragraph particularizes certain instances of the nature of the restrictions that were in the mind of the constitution makers and which have the quality of reasonableness.
They afford a guide to the interpretation of the clause and illustrate the extent and nature of the restrictions which according to the statute could be imposed on the freedom guaranteed in clause (g).
The statute in substance and effect suspends altogether the right mentioned in article 19 (1) (g) during the agri cultural seasons and such suspension may lead to such dislocation of the industry as to prove its ultimate ruin.
The object of the statute is to provide measures for the supply of adequate labour for agricultural purposes in bidi manufacturing areas of the Province and it could well be achieved by legislation restraining the employment of agri cultural labour in the manufacture 764 of bidis during the agricultural season.
Even in point of time a restriction may well have been reasonable if it amounted to a regulation of the hours of work in the busi ness.
Such legislation though it would limit the field for recruiting persons for the manufacture of bidis and regulate the hours of the working of the industry, would not have amounted to a complete stoppage of the business of manufac ture and might well have been within the ambit of clause (6).
The effect of the provisions of the Act, however, has no reasonable relation to the object in view but is so drastic in scope that it goes much in excess of that object.
Not only are the provisions of the statute in excess of the requirements of the case but the language employed prohibits a manufacturer of bidis from employing any person m his business, no matter wherever that person may be residing.
In other words, a manufacturer of bidis residing in this area cannot import labour from neighbouring places in the district or province or from outside the province.
Such a prohibition on the face of it is of an arbitrary nature inasmuch as it has no relation whatsoever to the object which the legislation seeks to achieve and as such cannot be said to be a reasonable restriction on the exercise of the right.
Further the statute seeks to prohibit all persons residing in the notified villages during the agricultural season from engaging themselves in the manufacture of bidis.
It cannot be denied that there would be a number of infirm and disabled persons, a number of children, old women and petty shop keepers residing in these villages who are inca pable of being used for agricultural labour.
All such persons are prohibited by law from engaging themselves in the manufacture of bidis; and are thus being deprived of earning their livelihood.
It is a matter of common knowledge that there are certain classes of persons residing in every village who do not engage in agricultural operations.
They and their womenfolk and children in their leisure hours supplement their income by engaging themselves in bidi business.
There seems no reason for prohibiting them from carrying on this occupation, The statute as 765 it stands, not only compels those who can be engaged in agricultural work from not taking to other avocations, but it also prohibits persons who have no connection or relation to agricultural operations from engaging in the business of bidi making and thus earning their livelihood.
These provi sions of the statute, in our opinion, cannot be said to amount to reasonable restrictions on the right of the appli cants and that being so, the statute is not in conformity with the provisions of Part III of the Constitution.
The law even to the extent that it could be said to authorize the imposition of restrictions in regard to agricultural labour cannot be held valid because the language employed is wide enough to cover restrictions both within and without the limits of constitutionally permissible legislative action affecting the right.
So long as the possibility of its being applied for purposes not sanctioned by the Consti tution cannot be ruled out, it must be held to be wholly void.
Mr. Sikri for the Government of Madhya Pradesh contends that the legislature of Madhya Pradesh was the proper judge of the reasonableness of the restrictions imposed by the statute, that that legislature alone knew the conditions prevailing in the State and it alone could say what kind of legislation could effectively achieve the end in view and would help in the grow more food campaign and would help for bringing in fallow land under the plough and that this Court sitting at this great distance could not judge by its own yardstick of reason whether the restrictions imposed in the circumstances of the case were reasonable or not.
This argument runs counter to the clear provisions of the Con stitution.
The determination by the legislature of what constitutes a reasonable restriction is not final or conclu sive;it is subject to the supervision by this Court.
In the matter of fundamental rights, the Supreme Court watches and guards the rights guaranteed by the Constitution and in exercising its functions it has the power to set aside an Act of the Legislature if it is in violation of the freedoms guaranteed by the Constitution.
We are therefore of opinion 98 766 that the impugned statute does not stand the test of reason ableness and is therefore void.
The result therefore is that the orders issued by the Deputy Commissioner on 13th June 1950 and 26th September 1950 are void, inoperative and ineffective.
We therefore direct the respondents not to enforce the provisions con tained in section 4 of the Act against the petitioners in any manner whatsoever.
The petitioners will have their costs of these proceedings in the two petitions.
Petitions allowed.
Agent for the petitioners in Nos. 78 and 79: Rajinder Narain.
Agent for the respondent in Nos. 78 and 79: P.A. Mehta.
| IN-Abs | The Central Provinces and Berar Regulation of Manufac ture of Bidis (Agricultural Purposes) Act, LXIV of 1948, a law which was in force at the commencement of the Constitu tion of India, provided that" the Deputy Commissioner may by notification fix a period to be an agricultural season with respect to such villages as may be specified therein" and that "the Deputy Commissioner may by general order which shall extend to such villages as he may specify, prohibit the manufacture of bidis during the agricultural season.
" The Act provided further that" no person residing in a, village specified in such order shall during the agricultur al season engage himself in the manufacture of bidis, and no manufacturer shall during the said season employ any person for the manufacture of bidis." An order was issued by the Deputy Commissioner under the provisions of the Act forbid ding all persons residing in certain villages from engaging in the manufacture of bidis during a. particular season.
A manufacturer of bidis and an employee in a bidi factory residing in one of the said villages applied under article 32 of the Constitution for a writ of mandamus alleging that since the Act prohibited the petitioners from exercising their fundamental right to carry on their trade or business which was guaranteed to them by cl.
(1) (g) of article 19 of the Constitution, the Act was void: Held, (i) that the object of the statute, namely, to provide measures for the supply of adequate labour for agricultural purposes in bidi manufacturing areas of the Province could well have been achieved by legislation re straining the employment of agricultural labour in the manufacture of bidis during the agriculrural season without prohibiting altogether the manufacture of bidis.
As the provisions of the Act had no reasonable relation 760 to the object in view, the Act was not a law imposing "reasonable restrictions" within the meaning of cl.
(6) of Art 19 and was therefore void.
(ii) The law even to the extent that it could be said to authorize the imposition of restrictions in regard to agri cultural labour cannot be held to be valid because the language employed was wide enough to cover restrictions both within and without the limits of constitutionally permissi ble legislative action affecting the right, and so long as the possibility of its being applied for purposes not sanc tioned by the Constitution cannot be ruled out, it must be held to be wholly void.
The phrase "reasonable restriction" connotes that the limitation imposed on a person in enjoyment of the right should not be arbitrary or of an excessive nature, beyond what is required in the interests of the public.
The word "reasonable" implies intelligent care and deliberation, that is, the choice of a course which reason dictates.
Legisla tion which arbitrarily or excessively invades the right cannot be said to contain the quality of reasonableness and unless it strikes a proper balance between the freedom guarnteed in article 19 (1) (g) and the social control permit ted by el.
(6) of article 19, it must be held to be wanting in that quality.
Held also, that the determination by the Legislature of what constitutes a reasonable restriction is not final and conclusive.
The Supreme Court has power to consider whether the restrictions imposed by the Legislature are reasonable within the meaning of article 19, cl.
(6) and to declare the law void if in its opinion the restrictions are not reasonable.
|
Case No. 351 of 1951.
Appeal under article 132 of the Constitution from the Judg ment and Order of the High Court of Judicature at Madras (Subba Rao and Venkatarama Ayyar JJ.) dated 11th December, 1951, in Writ Petition No. 746 of 1951.
The facts of the case and arguments of the counsel are set out in detail in the judgment.
N. Rajagopal Iyengar, for the appellant.
R. Ganapathi Iyer, for the 1st respondent.
M.C. Setalvad, Attorney General for India (G. N. Joshi, with him) for the Union of India.
K.A. Chitale, Advocate General of Madhya Bharat (G. N. Joshi, with him) for the State of Madhya Bharat.
January 21.
Fazl Ali J. delivered Judgment as follows.
Patanjali Sastri C.J., Mahajan, Mukherjea, Das and Chandrasekhara Aiyar JJ.
agreed with Fazl Ali 5.
221 FAZL ALI J.
This is an appeal from an order of the Madras High Court dismissing the petition of the appellant praying for a writ of certiorari.
The appellant was one of the persons who had filed nomination papers for election to the Madras Legislative Assembly from the Namakkal Constituency in Salem district.
On the 28th November, 1951, the Returning Officer for that constituency took up for scrutiny the nomination papers filed by the various candidates and on the same day he rejected the appellant 's nomination paper on certain grounds which need not be set out as they are not material to the point raised in this appeal.
The appellant thereupon moved the High Court under article 226 of the Constitution praying for a writ of of certiorari to quash the order of the Re turning Officer rejecting his nomination paper and to direct the Returning Officer to include his name in the list of valid nominations to be published.
The High Court dismissed the appellant 's application on the ground that it had no jurisdiction to interfere with the order of the Returning Officer by reason of the provisions of article 329(b) of the Constitution.
The appellant 's contention in this appeal is that the view expressed by the High Court is not correct, that the jurisdiction of the High Court is not affected by article 329 (b) of the Constitution and that he was enti tled to a writ of certiorari in the circumstances of the case.
Broadly speaking, the arguments on which the judgment of the High Court is assailed are two fold : (1) that the conclusion arrived at by the High Court does not follow from the language of article 329 (b) of the Constitution, whether that article is read by itself or along with the other articles in Part XV of the Constitu tion; and (2) that the anomalies which will arise if the construc tion put by the High Court on article 329 (b) is accepted, are so startling that the courts should lean in favour of the construction put forward on behalf of the appellant.
29 222 The first argument which turns on the construction of article 329 (b) requires serious consideration, but I think the second argument can be disposed of briefly at the out set.
It should be stated that what the appellant chooses to call anomaly can be more appropriately described as hardship or prejudice and what their nature will be has been stated in forceful language by Wallace J. in Sarvothama Rao vs Chairman, Municipal Council, Saidapet (1) in these words : "I am quite clear that any post election remedy is wholly inadequate to afford the relief which the petitioner seeks, namely, that this election, now published be stayed, until it can be held with himself as a candidate.
It is no conso lation to tell him that he can stand for some other elec tion.
It is no remedy to tell him that he must let the election go on and then have it set aside by petition and have a fresh election ordered.
The fresh election may be under altogether different conditions and may bring forward an array of fresh candidates.
The petitioner can only have his proper relief if the proposed election without him is stayed until his rejected nomination is restored, and hence an injunction staying this election was absolutely neces sary, unless the relief asked for was to be denied him altogether in limine.
In most cases of this kind no doubt there will be difficulty for the aggrieved party to get in his suit in time before the threatened wrong is committed; but when he has succeeded in so doing, the Court cannot stultify itself by allowing the wrong which it is asked to prevent to be actually consummated while it is engaged in trying the suit.
" These observations however represent only one side of the picture and the same learned Judge presented the other side of the picture in a subsequent case [Desi Chettiar vs Chinnasami Chettiar(2)] in the following passage : "The petitioner is not without his remedy.
His remedy lies in an election petition which we understand he has already put in.
It is argued for him (1) mad. 585 at 600.
(2) at 1272.
that that remedy which merely allows him to have set aside an election once held is not as efficacious as the one which would enable him to stop the election altogether;and certain observations at p. 600 of Sarvothama Rao vs Chairman, Munic ipal Council, Saidapet(1) are quoted.
In the first place, we do not see how the mere fact that the petitioner cannot get the election stopped and has his remedy only after it is over by an election petition, will in itself confer on him any right to obtain a writ.
In the second place, these observations were directed to the consideration of the propriety of an injunction in a civil suit, a matter with which we are not here concerned.
And finally it may.
be observed that these remarks were made some years ago when the practice of individuals coming forward to stop elections in order that their own individual interest may be safe guarded was not so common.
It is clear that there is anoth er side of the question to be considered, namely, the incon venience to the public administration of having elections and the business of Local Boards held up while individuals prosecute their individual grievances.
We understand the election for the elective seats in this Union has been held up since 31st May because of this petition, the result being that the electors have been unable since then to have any representation on the Board, and the Board is functioning, if indeed it is functioning, with a mere nominated fraction of its total strength; and this state of affairs the peti tioner proposes to have continued until his own personal grievance is satisfied." These observations which were made in regard to elec tions to Local Boards will apply with greater force to elections to legislatures, because it does not require much argument to show that in a country with a democratic consti tution in which the legislatures have to play a very impor tant role, it will lead to serious consequences, if the elections are unduly proracted or obstructed.
To this aspect of the matter I shall have to advert later.
but it is suffi cient for the present purpose (1) Mad, 585 at 600.
224 to state firstly that in England the hardship and inconven ience which may be suffered by an individual candidate has not been regarded as of sufficient weight to induce Parlia ment to make provision for immediate relief and the ag grieved candidate has to wait until after the election to challenge the validity of the rejection of his nomina tion paper, and secondly, that the question of hardship or inconvenience is after all only a secondary question, be cause if the construction put by the High Court on article 329 (b) of the Constitution is found to be correct, the fact that such construction will lead to hardship and inconven ience becomes irrelevant.
Article 329 is the last article in Part XV of the Constitution, the heading of which is "Elections", and it runs as follows : "Notwithstanding anything in this Constitution (a) the validity of any law relating to the delimitation of constituencies or the allotment of seats to such constit uencies, made or purporting to be made under article 327 or article 328, shall not be called in question in any court; (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.
" In construing this article, reference was made by both parties in the course of their arguments to the other arti cles in the same Part, namely, articles 324, 325, 326, 327 and 328.
Article 324 provides for the constitution and appointment of an Election Commissioner to superintend, direct and control ejections to the legislatures; article 325 prohibits discrimination against electors on the ground of religion, race, caste or sex; article 326 provides for adult suffrage; article 327 empowers Parliament to pass laws making provision with respect to all matters relating to, or in connection with, elections to the legislatures, subject 225 to the provisions of the Constitution; and article 328 is a complementary article giving power to the State Legislature to make provision with respect to all matters relating to, or in connection with, elections to the State Legislature.
A notable difference in the language used in articles 327 and 328 on the one hand, and article 329 on the other, is that while the first ' two articles begin with the words" subject to the provisions of this Constitution" the last article begins with the words "notwithstanding anything in this Constitution.
" It was conceded at the bar that the effect of this difference in language is that whereas any law made by Parliament under article 327, or by the State Legislatures under article 328, cannot exclude the jurisdic tion of the High Court under article 226 of the Constitu tion, that jurisdiction is excluded in regard to matters provided for in article 329.
Now, the main controversy in this appeal centres round the meaning of the words "no election shall be called in question except by an election petition" in article 329 (b), and the point to be decided is whether questioning the action of the Returning Officer in rejecting a nomination paper can be said to be comprehended within the words, "no election shall be called in question.
" The appellant 's case is that questioning something which has happened before a candidate is declared elected is not the same thing as questioning an election, and the arguments advanced on his behalf in support of this construction were these: (1) That the word "election" as used in article 329 (b) means what it normally and etymologically means, namely, the result of polling or the final selection of a candidate; (2) That the fact that an election petition can be filed only after polling is over or after a candidate is declared elected, and what is normally called in question by such petition is the final result, bears out the conten tion that the word "election "can have no other meaning in article (b) than the result of polling or the final selec tion of a candidate; 226 (3) That the words "arising out of or in connection with" which are used in article 324 (1) and the words "with respect to all matters relating to, or in connection with" which are used in articles 327 and s28, show that the fram ers of the Constitution knew that it was necessary to use different language when referring respectively to matters which happen prior to and after the result of polling, and if they had intended to include the rejection of a nomina tion paper within the ambit of the prohibition contained in article S29 (b) they would have used similar language in that article and (4) That the action of the Returning Officer in reject ing a nomination paper can be questioned before the High Court under article 226 of the Constitution for the follow ing reason: Scrutiny of nomination papers and their rejec tion are provided for in section 36 of the Representation of the People Act, 1951.
Parliament has made this provision in exercise of the powers conferred on it by article 327 of the Constitution which is "subject to the provisions of the Constitution".
Therefore, the action of the Returning Offi cer is subject to the extraordinary jurisdiction of the High Court under article 226.
These arguments appear at first sight to be quite im pressive, but in my opinion there are weightier and basical ly more important arguments in support of the view taken by the High Court.
As we have seen, the most important ques tion for determination is the meaning to be given to the word "election" in article 329 (b).
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 em brace 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 227 elected.
In Srinivasalu vs Kuppuswami(1), the learned Judges of the Madras High Court after examining the question, expressed the opinion that the term "election" may be taken to embrace the whole procedure whereby an "elected member" is returned, whether or not it be found necessary to take a poll.
With this view, my brother, Maimjan J. expressed his agreement in Sat Narain vs Hanuman Prasad (2); and I also find myself in agreement with it.
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 elections" 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 329 (b).
That the word "election" bears this wide meaning whenever we talk of elections in a democratic country, is borne out by the 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 subject is dealt with quite concisely in Halsbury 's Laws of England in the following passage(s) under the heading" Commencement of the Election ": "Although the first formal step in every election is the issue of the writ, the election is considered for some purposes to begin at an earlier date.
It is a question of fact in each case when an election begins in such a way as to make the parties concerned responsible for breaches of election law, the test being whether the contest is "reason ably imminent".
Neither the issue of the writ nor the publi cation of the notice of election can be looked to as fixing the date when an election begins from this point of view.
Nor, again, does the nomination day afford any criterion.
The election will usually begin at least earlier than the issue of the writ.
The question when the election begins must be care (1) at 255.
(2) (3) See page 237 of Halsbury 's Laws of England, 2nd edition, Volume 12.
228 fully distinguished from that as to when "the conduct and management of" an election may be said to begin.
Again, the question as to when a particular person commences to be a candidate is a question to be considered in each case.
" The discussion in this passage makes it clear that the word ' 'election" can be and has 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.
The next important question to be considered is what is meant by the words "no election shall be called in ques tion".
A reference to any treatise on elections in England will show that an election proceeding in that country is liable to be assailed on very limited grounds, one of them being the improper rejection of a nomination paper.
The law with which we are concerned is not materially different, and we find that in section 100 of the Representation of the People Act, 1951, one of the grounds for declaring an elec tion to be void is the improper rejection of a nomination paper.
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 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 appropri ate 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 signifi cance which the rejection of 229 a nomination paper has consists in the fact that it can be used as a ground to call the election in question.
Arti cle 329(b)was apparently enacted to prescribe the manner in which and 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 contemplat ed, one of them being that conflicting views may be ex pressed 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.
I think that a brief examination of the scheme of Part XV of the Constitution and the Representation of the People Act, 1951, will show that the construction I have suggested is the correct one.
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 execu tive 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.
The other two articles in Part XV, viz, articles 325 and 326, deal with two matters of princi ple to which the Constitution framers have attached much importance.
They 30 230 are : (1) prohibition against discrimination in the prepa ration of, or eligibility for inclusion in, the electoral rolls, on grounds of religion, race, caste, sex or any of them; and (2) adult suffrage.
Part XV of the Constitution is really a code in itself providing the entire ground work for enacting appropriate laws and setting up suitable ma chinery for the conduct of elections.
The Representation of the People Act, 1951, which was passed by Parliament under article 327 of the Constitution.
makes detailed provisions in regard to all matters and all stages connected with elections to the various legislatures in this country.
That Act is divided into II parts, and it is interesting to see the wide variety of subjects they deal with.
Part Il deals with "the qualifications and disquali fications for membership", Part III deals with the notifica tion of General Elections, Part IV provides for the adminis trative machinery for the conduct of elections, and Part V makes provisions for the actual conduct of elections and deals with such matters as presentation of nomination pa pers.
requirements of a valid nomination, scrutiny of nomi nations, etc., and procedure for polling and counting of votes.
Part VI deals with disputes regarding elections and provides for the manner of presentation of election peti tions, the constitution of election tribunals and the trial of election petitions.
Part VII outlines the various cor rupt and illegal practices which may affect the elections, and electoral offences.
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.
The provisions of the Act which are material to the present discussion are sections 80, 100, 105 and 170, and the provi sions of Chapter II 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 231 petition presented in accordance with the provisions of this Part".
Section 100, 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 elec tion.
" These are the main provisions regarding election matters being judicially dealt with, and it should be noted that there is no provision anywhere to the effect that anything connected with elections can be questioned at an intermediate stage.
It is now well recognized that where a right or liability is created by a statute which gives a special remedy for en forcing it, the remedy provided by that statute only must be availed of.
This rule was stated with great clarity by Willes J. in Wolverhampton New Water Works Co. vs Hawkes ford(1) in the following passage : "There are three classes of cases in which a liability may be established founded upon statute.
One is, where there was a liability existing at common law and that li ability is affirmed by a statute which gives a special and peculiar form of remedy different from the remedy which existed at common law;there, unless the statute contains words which expressly or by necessary implication exclude the common law remedy, the party suing has his election to pursue either that or the statutory remedy.
The second class of cases is, where the statute gives the right to suemerely, but provides no particular form of remedy: there, the party can only proceed by action at common law.
But there is a third class, viz., 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 remedy provided by the statute must be followed, and it is not (1) ; , 356.
232 competent to the party to pursue the course applicable to cases of the second class.
The form given by the statute must be adopted and adhered to.
" The rule laid down in this passage was approved by the House of Lords in Neville vs London Express Newspaper Limit ed(1) and has been reaffirmed by the Privy Council in Attorney General of Trinidad and Tobago vs Gordon Grant & Co.(2) and Secretary of State vs Mask & Co.(a); and it has also been held to be equally applicable to enforcement of rights: see Hurdutrai vs Official Assignee of Calcutta(4).
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.
It was argued that since the Representation of the People Act was enacted subject to the provisions of the Constitution, it cannot bar the jurisdiction of the High Court to issue writs under article 226 of the Constitution.
This argument however is completely shut out by reading the Act along with article 329 (b).
It will be noticed that the language used in that article and in section 80 of the Act is almost identical, with this difference only that the article is preceded by the words "notwithstanding anything in this Constitution".
I think that those words are quite apt to exclude the jurisdiction of the High Court to deal with any matter which may arise while the elections are in progress.
It may be stated that section 107(1) of the Representation of People Act, 1949 (12 & 13 Geo.
6, c. 68) in England is drafted almost in the same language as article 329(b).
That section runs thus : "No parliamentary election and no return to Parliament shall be questioned except by a petition complaining of an undue election or undue return (hereinafter referred to as a parliamentary election petition) presented in accordance with this Part of this Act.
" (1) (3) (2) [1935] A.C. 532.
(4) , 349.
233 It appears that similar language was used in the earlier statutes, and it is noteworthy that it has never been held in England that the improper rejection of a nomination paper can be the subject of a writ of certiorari or mandamus.
On the other hand, it was conceded at the bar that the ques tion of improper rejection of a nomination paper has always been brought up in that country before the appropriate tribunal by means of an election petition after the conclu sion of the election.
It is true that there is no direct decision holding that the words used in the relevant provi sions exclude the jurisdiction of the High Court to issue appropriate prerogative writs at an intermediate stage of the election, but the total absence of any such decision can be accounted for only on the view that the provisions in question have been generally understood to have that effect.
Our attention was drawn to rule 13 of the rules appended to the Ballot Act of 1872 and a similar rule in the Parliamen tary Elections Rules of 1949, providing that the decision of the Returning Officer disallowing an objection to a nomina tion paper shall be final, but allowing the same shall be subject to reversal on a petition questioning the election or return.
These rules however do not affect the main argument.
I think it can be legitimately stated that if words similar to those used in article 329 (b) have been consistently treated in England as words apt to exclude the jurisdiction of the courts including the High Court, the same consequence must follow from the words used in article 329 (b) of the Constitution.
The words "notwithstanding anything in this Constitution" give to that article the same wide and binding effect as a statute passed by a sover eign legislature like the English Parliament.
It may be pointed out that article 329 (b) must be read as complimentary to clause (a) of that article.
Clause (a) bars the jurisdiction of the courts with regard to such law as may be made under articles 327 and 328 relating to the delimitation of constituencies or the allotment of seats to such constituencies.
It was conceded before us that article 329 (b) ousts the jurisdiction of the courts with regard to matters 234 arising between the commencement of the polling and the final selection.
The question which has to be asked is what conceivable reason the legislature could have had to leave only matters connected with nominations subject to the jurisdiction of the High Court under article 226 of the Constitution.
If Part XV of the Constitution is a code by itself, i. e., it creates rights and provides for their enforcement by a special tribunal to the exclusion of all courts including the High Court, there can be no reason for assuming that the Constitution left one small part of the election process to be made the subject matter of contest before the High Courts and thereby upset the time schedule of the elections The more reasonable view seems to be that article 329 covers all "electoral matters".
The conclusions which I have arrived at may be summed up briefly as follows : (1) Having regard to the important functions which the legislatures have to perform in democratic countries, it has always been recognized 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 the elec tion 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 commit ted while it is in progress and they belong to the category or class which, under the law by which elections are gov erned, 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 dis pute before any court while the election is in progress.
It will be useful at this stage to refer to the deci sion the Privy Council in Theberge vs Laudry(1).
The (1) 235 petitioner in that case having been declared duly elected a member to represent an electoral district in the Legislative Assembly of the Province of Quebec, his election was after wards, on petition, declared null and void by judgment of the Superior Court, under the Quebec Controverted Elections Act, 1875, and himself declared guilty of corrupt practices both personally and by his agents.
Thereupon, he applied for special leave to appeal to Her Majesty in Council, but it was refused on the ground that the fair construction of the Act of 1875 and the Act of 1872 which preceded it providing among other things that the judgment of the Superior Court "shall not be susceptible of appeal" was that it was the intention of the legislature to create a tribunal for the purpose of trying election petitions in a manner which should make its decision final for all purposes, and should not annex to it the incident of its judgment being reviewed by the Crown under its prerogative.
In delivering the judgment of the Privy Council, Lord Cairns observed as follows : "These two Acts of Parliament, the Acts of 1872 and 1875, are Acts peculiar in their character.
They are not Acts constituting or providing for the decision of mere ordinary civil rights; they are Acts creating an entirely new, and up to that time unknown, jurisdiction in a partic ular Court. for the purpose of taking out, with its own consent, of the Legislative Assembly, and vesting in that Court, that very peculiar jurisdiction which, up to that time, had existed in the Legislative Assembly of decid ing election petitions, and determining the: status of those who claimed to be members of the Legislative Assembly.
A jurisdiction of that kind is extremely special, and one of the obvious incidents or consequences of such a jurisdiction must be that the jurisdiction, by whomsoever it is to be exercised, should be exercised in a way that should as soon as possible become conclusive; and enable the constitution of the Legislative Assembly to be distinctly and speedily known.
" 236 After dealing with certain other matters, the Lord ChanCellor proceeded to make the following further observa tions : "Now, the subject matter, as has been said, of the legislation is extremely peculiar.
It concerns the rights and privileges of the electors and of the Legislative Assem bly to which they elect members.
Those rights and privi leges have always in every colony, following the example of the mother country, been jealously maintained and guarded by the Legislative Assembly.
Above all, they have been looked upon as rights and privileges which pertain to the Legisla tive Assembly, in complete independence of the Crown, so far as they properly exist.
And it would be a result somewhat surprising, and hardly in consonance with the general scheme of the legislation, if, with regard to rights and privileges of this kind, it were to be found that in the last resort the determination of them no longer belonged to the Legis lative Assembly, no longer belonged to the Superior Court which the Legislative Assembly had put in its place, but belonged to the Crown in Council, with the advice of the advisers of the Crown at home, to be determined without reference either to the judgment of the Legislative Assem bly, or of that Court which the Legislative Assembly had substituted in its place.
" The points which emerge from this decision may be stated as follows : (1) The right to vote or stand as a candidate for elec tion is not a civil right but is a creature of statute or special law and must be subject to the limitations emposed by it.
(2) Strictly speaking, it is the sole right of the Legislature to examine and determine all matters relating to the election of its own members, and if the legislature takes it out of its own hands and vests in a special tribu nal an entirely new and unknown jurisdiction, that special jurisdiction should be exercised in accordance with the law which creates it.
237 It should be mentioned here that the question as to what the powers of the High Court under articles 226 and 227 and of this Court under article 136 of the Constitution may be, is one that will have to be decided on a proper occasion.
It is necessary to refer at this stage to an argument advanced before us on behalf of the appellant which was based on the language of article 71 (1) of the Constitution.
That provision runs thus : "All doubts and disputes arising out of or in connection with the election of a President or Vice President shall be inquired into and decided by the Supreme Court whose deci sion shall be final.
" The argument was as follows.
There is a marked contrast between the language used in article 71 (1) and that of article 329 (b).
The difference in the phraseology employed in the two provisions suggests that they could not have been intended to have the same meaning and scope as regards matters to be brought up before the tribunals they respec tively deal with.
If the framers of the Constitution, who apparently knew how to express themselves, intended to include within the ambit of article 329 (b) all possible disputes connected with elections to legislatures, includ ing disputes as to nominations, they would have used similar words as are to be found in article 71 (1).
It is true that it is not necessary to use identical language in every provision, but one can conceive of various alternative ways of expression which would convey more clearly and properly what article 329 (b) is said to convey.
It seems to me that once it is admitted that the same idea can be expressed in different ways and the same phrase ology need not be employed in every provision, the argument loses much of its force.
But, however that may be, I think there is a good explanation as to why article 329 (b) was drafted as it stands.
A reference to the election rules made under the Govern ment of India Acts of 1919 and 1935 will show that the provisions in them on the subject were almost in the same language as article 329 (b).
The 21 238 corresponding rule made under the Government of India Act, 1919, was rule 31 of the electoral rules, and it runs as follows : "No election shall be called in question, except by an election petition presented in accordance with the provi sions of this Part.
" It should be noted that this rule occurs in Part VII, the heading of which is "The final decision of doubts and disputes as to the validity of an election".
These words throw some light on the function which the election tribunal was to perform, and they are the very words which the learned counsel for the appellant argued, ought to have been used to make the meaning clear.
The same scheme was followed in the election rules framed under the Government of India Act, 1935, which are contained in "The Government of India (Provincial Elections) (Corrupt Practices and Election Petitions) Order, 1936", dated the 3rd July, 1936.
In that Order, the rule corre sponding to rule 31 under the earlier Act, runs thus : "No election shall be called in question except by an election petition presented in accordance with the provi sions of this Part of the Order." This rule is to be found in Part III of the Order, the heading of which is "Decision of doubts and disputes as to validity of an election and disqualification for corrupt practices.
" The rules to which I have referred were apparently framed on the pattern of the corresponding provisions of the British Acts of 1868 and 1872, and they must have been intended to cover the same ground as the provisions in England have been understood to cover in that country for so many years.
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 provision in its present form and chose the language which had been consistently used in certain earlier legislative provisions and which had stood the test of time.
239 And now a word as to why negative language was used in article 829 (b).
It seems to me that there is an important difference between article 71 (1) and article 329 (b).
Article 71 (1) had to be in an affirmative form, because it confers special jurisdiction on the Supreme Court which that Court could not have exercised but for this article.
Arti cle 329 (b), on the other hand, was primarily intended to exclude or oust the jurisdiction of all courts in regard to electoral matters and to lay down the only mode in which an election could be challenged.
The negative form was there fore more appropriate, and, that being so, it is not sur prising that it was decided to follow the preexisting pat tern in which also the negative language had been adopted.
Before concluding, I should refer to an argument which was strenuously pressed by the learned counsel for the appellant and which has been reproduced by one of the learned Judges of the High Court in these words: "It was next contended that if nomination is part election, a dis pute as to the validity of nomination is a dispute relating to election and that can be called in question only in accordance with the provisions of article 329 (b) by the presentation of an election petition to the appropriate Tribunal and that the Returning Officer would have no juris diction to decide that matter and it was further argued that section 36 of Act XLIII of 1981 would be ultra vires inasmuch as it confers on the Returning Officer a jurisdic tion which, article 329 (b) confers on a Tribunal to be appointed in accordance with the article.
" This argument displays great dialectical ingenuity, but it has no bearing on the result of this appeal and I think it can be very shortly answered.
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 comply ing with the provisions of the Act and a great deal of 240 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 elec tion.
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 its 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 to be the only correct method.
We are informed that besides the Madras High Court, seven other State High Courts have held that they have no jurisdiction under article 226 of the Constitution to enter tain petitions regarding improper rejection of nomination papers.
This view is in my opinion correct and must be affirmed.
The appeal must therefore fail and is dismissed.
In view of the nature and importance of the points raised in this appeal, there should be no order to costs.
PATANJALI SASTRI C.J. I agree.
MEHR CHAND MAHAJAN J. I agree.
MUKHERJEA J. I agree.
DAS J. I agree.
CHANDRASEKHARA AIYAR J. I agree.
Appeal dismissed.
Agent for the 1st respondent: P.A. Mehta.
Agent for the Union of India and the State of Madhya Bharat: P.A. Mehta.
| IN-Abs | Article 329 (b) of the Constitution of India provides that "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.
" The Representation of the People Act, 1951, which made detailed provisions for election to the various Legislatures of the country also contains a provision (sec. 80) that no election shall be called in question except by an election petition presented in accordance with the provisions of the Act.
The appellant, who was a candidate for election to the Legislative Assembly of the State of Madras and whose nomi nation paper was rejected by the Returning Officer, applied to the High Court of Madras under article 226 of the Consti tution for a writ of certiorari to quash the order of the Returning Officer rejecting his nomination paper and to direct the Returning Officer to include his name in the list of valid nominations to be published: Held by the Full Court (PATANJALI SASTRI, C.J., FAZL ALl, MAHAJAN, MUKHERJEA, DAS and CHANDRASEKHARA AIYAR JJ.) that in view of the provisions of article 329 (b) of the Constitution and sec.
80 of the Representation of the People Act, 1951, the High Court had no jurisdiction to interfere with the order of the Returning Officer.
The word "election" has by long usage in connection with the process of selection of proper representatives in demo cratic institutions acquired both a wide and a narrow mean ing.
In the 219 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 and it is in this wide sense that the word is used in Part XV of the Constitution in which article 329 (b) occurs.
The scheme of Part XV of the Constitution and the Repre sentation of the People Act, 1951, 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 appropri ate manner before a special tribunal and should not be brought up at an intermediate stage before any court.
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 prescribe the manner in which and 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.
It follows by neces sary 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 contem plated, 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.
There fore, questioning the rejection of a nomination paper is "questioning the election" within the meaning of article ,329 (b) of the Constitution and sec.
80 of the Representa tion of the People Act, 1951.
Having regard to the important functions which the legislatures have to perform in democratic countries, it has always been recognized 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.
In conformity with this principle, the scheme of the election law in this country as well as in England is that no signif icance 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 affected to 220 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.
The right to vote or stand as a candidate for election is not a civil right but is a creature of statute or special law and must be subject to the limitations imposed by it.
Strictly speaking, it is the sole right of the Legislature to examine and determine all matters relating to the elec tion of its own members, and if the legislature takes it out of its own hands and vests in a special tribunal an entirely new and unknown jurisdiction, that special jurisdiction should be exercised in accordance with the law which creates it.
Where a right or liability is created by a statute which gives a special remedy for enforcing it, the remedy provided by that statute only must be availed of.
Wolverhampton New Water Works Co. vs Hawkesford [6 C.B. (N. section ) 336], Neville vs London Express Newspaper Limited [1910] A.C. 368), Attorney General of Trinidad and Tobago vs Gordon Grant & Co. ([1935] A.C. 532), Secretary of State vs Mask & Co. , Hurdutrai vs Offcial Assign ee of Calcutta , The berge vs Laudry referred to.
Judgment of the High Court of Madras affirmed.
|
n No. 128 of 1957.
Petition under Article 32 of the Constitution of India for enforcement of Fundamental Rights.
Gopal Singh, for the petitioner.
N. section Bindra and T. M. Sen, for the respondents.
April 7.
The Judgment of the Court was delivered by VENKATARAMA AIYAR J.
This is a petition under article 32 of the Constitution, and the question that is raised therein for our decision is as to the validity of certain provisions of the East Punjab General Sales Tax Act, 1948 (East Pb.
XLVI of 1948), hereinafter referred to as the Act, imposing a tax oil the supply of materials in construction works treating it as a sale.
It will be convenient at this stage to refer to the relevant provisions of the Act.
Section 2(c) defines contract " as meaning, " Any agreement for carrying out for cash or deferred payment or other valuable consideration(i) the construction, fitting out, improvement, or repair of any building, road, bridge or other immovable property; or (ii) the installation or repair of any machinery affixed to a building or other immovable property. . . ." "Dealer " is defined in section 2((d) as any person engaged in the business of selling or supplying goods.
Section 2(h) defines " sale " as meaning " any transfer 440 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. . . " Turnover " is defined in section 2(j) as including " the carrying out of any contract, less such portion as may be prescribed of such amount, representing the usual proportion of the cost of labour to the cost of materials used in carrying out such contract ".
Section 4(1) enacts that, ". . every dealer whose gross turnover during the year immediately preceding the commencement of this Act exceeded the taxable quantum shall be liable to pay tax under this Act on all sales effected after the coming into force of this Act.
" Section 5 provides that the tax shall be levied every year on the taxable turnover of a dealer at such rates as the Provincial Government may by notification direct.
Rule 28 prescribes the mode of computing the taxable consideration with reference to contracts as provided in sub cl.
(ii) of el.
(i) of section 2.
The petitioners are a firm of building contractors.
In December, 1956, they entered into a contract with the Military Engineering Services Department of the Government for the construction of certain buildings known as " Married accommodation " at Ambala Cantonment and received a sum of Rs. 32,000 on January 31, 1957, as advance.
On February 14, 1957, the assessing authority, Jullundur District issued a notice intimating the petitioners that as they had failed to apply for registration under section 7 of the Act assessment would be made under section 18, sub section
(2), for the periods commencing from April 1, 1955, onwards, and calling upon them to produce their account books and attend the hearing on February 16, 1957.
Thereupon, the petitioners filed the present petition under article 32 of the Constitution challenging the legality of the assessment proceedings, the main ground of attack being that the legislature of the Province of Punjab had under Entry 48 in List II of Sch.
VII to the Government of India Act, 1935, no power to impose tax on the supply of materials in construction works as there was no sale in fact or in law of those 441 materials, and that the provisions of the Act which sought to do it were ultra vires.
This question is now concluded by the decision of this Court in The State of Madras V. Gannon Dunkerley & Co. (Madras) Ltd. (1) wherein it has been held that the expression " sale of goods" in Entry 48 has the same import which it bears in the Indian , that in a building contract there is no sale of materials as such, and that accordingly the Provincial Legislature had no power to impose a tax thereon under Entry 48.
In this view, we have now to consider the contention advanced by Mr. Bindra for the respondents that the building contract entered into by the petitioners with the Government was not an agreement simpliciter for the construction of works, but that on its true construction, it comprised a distinct agreement for the sale of materials.
If that can be established, it is not disputed that the respondents would have 'a right to tax the transaction even apart from the impugned provisions.
The question is whether the contract of the petitioners with the Government for construction was one and indivisible, or whether it was a combination of an agreement for sale of materials and an agreement for work and labour.
The evidence placed before us leaves us in no doubt as to the true character of the contract.
The tenders which where called for and received were for executing works for a lump sum, and in his acceptance of the tender of the petitioners dated December 15, 1956, the Deputy Chief Engineer stated : " The above tender was accepted by me on behalf of the President of India for a lump sum of Rs. 9,74,961.
" How this amount is made up is given in Annexure E to the reply statement.
It will be seen therefrom that the petitioners were to construct nine blocks, and the amounts are worked out treating each of the blocks as one unit, and the figures are totalled up.
It is impossible on this evidence to hold that there was any agreement for sale of the materials as such by the petitioners to the Government.
(1) ; 56 442 For the respondents reliance was placed on the rules appearing in the printed General Conditions of Contracts issued by the Government.
Rule 33 which was particularly relied on provides: " All stores and materials brought to the Site shall become and remain the property of Government and shall not be removed off the Site without the prior written approval of the G. E.
But whenever the works are finally completed, the contractor shall at his own expense forthwith remove from the Site all surplus stores and materials originally supplied by him and upon such removal, the same shall retest in and become the property of the Contractor.
" It is argued that the true effect of this provision vesting the materials in the Government is that those materials must be taken to have been sold to it.
That this is not the true meaning of the rule will be clear when regard is had to other provisions in the rules.
Thus, the materials which are used in the construction must be approved by the authorities as of the right quality, and they could be condemned even after the construction is completed if they are not according to contract or of inferior quality, in which case the contractor has to remove them and rebuild with proper materials.
Terms such as these and those in r. 33 quoted above are usually inserted in building contracts with the object of ensuring that materials of the right sort are used in the construction and not with the intention of purchasing them.
If r. 33 is to be construed as operating by way of sale of materials to the Government when they are brought on the site, it must follow that the surplus materials remaining after the completion of the work must be held to have been resold by the Government to the contractor, and that is not contended for.
In Tripp vs Armitage (1), a builder who had been engaged to construct a hotel became insolvent, and dispute arose between the assignees in bankruptcy and the proprietors of the hotel as to the title to certain wooden sash frames which had been delivered by the insolvent on the premises of the hotel and had been (1) ; ; , 16O3.
443 approved by the clerk and returned to the insolvent for the purpose of being affixed.
The contention on behalf of the proprietors was that the goods having been approved by their surveyor, they must be held to have been appropriated to the contract and the property therein passed to them.
In negativing this contention, Parke B. observed: " It is said that the approbation of the surveyor is sufficient to constitute an acceptance by the defendants; but that approbation is not given eo animo at all; it is only to ascertain that they are such materials as are suitable for the purpose; and notwithstanding that approval, it is only when they have been put up, and fixed to the house, in performance of the larger contract, that they are to be paid for." In Reid vs Macbeth & Gray(1), the facts were similar.
The dispute related to certain plates which had been prepared by contractors to be fitted in a ship.
These plates had been passed by the surveyor and were marked with the number of the vessel and with marks showing the position which each plate was to occupy in the vessel.
The ship owners laid claim to these plates on the ground that by reason of the approval by their surveyor and by the markings the property therein must be held to have passed to them, and that accordingly the assignees in bankruptcy of the contractors could not claim them.
That contention war, negatived by the House of Lords, who hold that the facts relied on did not establish a contract of sale of the materials apart from the contract to construct the ship, and that the title to the materials did not as such pass to the shipowners.
The position is the same in the present case.
Rule 33 has not the effect of converting what is a lump sum contract for construction of buildings into a contract for the sale of materials used therein.
It must therefore be held following the decision in The State of Madras vs Gannon Dunkerley & Co. (Madras) Ltd. (2) that there has been no sale of the materials used by the petitioners in their constructions, and that no tax could be levied thereon.
(1) (2) ; 444 Counsel for the petitioners raised two other contentions, but they are unsubstantial and may be shortly disposed of.
One was that in the definition of " turnover " in section 2 (j), el.
(ii) which is what is applicable to the present case, there is no reference to sale of goods, and that, accordingly, even if Entry 48 in List II is to be interpreted in a wide sense, the provision as actually enacted does not, in fact, tax the supply of materials in works contracts, treating it as a sale.
But the charging section is section 4 (1), which makes it clear that the tax is on the gross turnover in respect of sales effected after the coming into force of the Act, and the obvious intention is to include the supply of materials in works contracts within the category of taxable turnover.
It was next contended that the definition of " dealer in section 2 (d) required that the person should be engaged in the business of selling or supplying goods, that the petitioners who were building contractors were not engaged in the business of selling or supplying goods but of constructing buildings, and that therefore they were not dealers within that definition, and that as under section 4 the tax could be imposed only on a dealer, the petitioners were not liable to be taxed.
But if the supply of materials in construction works can be regarded as a sale, then clearly building contractors are engaged in the sale of materials, and they would be within the definition of " dealers " under the Act.
There is no substance in this contention either.
The petitioners, however are entitled to succeed on the ground that the impugned provisions are not within the authority conferred by Entry 48, and a writ of prohibition should accordingly issue restraining the respondents from taking proceedings for assessment of tax in respect of materials supplied by the petitioners in construction contracts.
We direct the parties to bear their own costs, Petition allowed.
| IN-Abs | The petitioners who were building contractors in the State of Punjab were assessed to tax by the sales tax authorities on the supply of materials in construction works treating it as a sale, acting under the provisions of the East Punjab General Sales Tax Act, 1948.
The petitioners challenged the legality of the assessment proceedings on the grounds, inter alia, that the legislature of the Province of Punjab had, under Entry 48 in List II of Sch.
I 'll to the Government of India Act, 1935, no power to impose tax on the supply of materials in construction works as there was no sale in fact or in law of those materials, and that the provisions of the Act which sought to do it were ultra vires.
The assessing authorities contended that on a true construction of the building contract entered into by petitioners with the Government it comprised a distinct agreement for the sale of materials and particularly relied on r. 33 of printed General Conditions of Contracts issued by the Government : Held, that there was no sale as such of the materials used in the constructions by the petitioners and that no tax could be levied thereon.
439 Rule 33 which provides that the materials brought to the site shall become the property of the Government but that when the works are finally completed the surplus materials shall revert and become the property of the contractor, has for its object that materials of the right sort are used in the construction and has not the effect of converting what is a lump sum contract for construction of buildings into a contract for the sale of materials used therein.
State of Madras vs Gannnon Dunkerley & Co. (Madras) Lid.
, ; , followed.
Tripp vs Armitage, ; and Reid vs Macbeth
|
Civil Appeal No. 1868 of 1974.
From the Judgment and order dated 2.9.1974 of the Madr as High Court in Writ Petition No. 2729/1974.
F.S. Nanman, C.S. Vaidyanathan and K.R. Nambiar for t he Appellants.
T.S. Krishnamoorthy Iyer, A.V. Rangam and T.V. Ratn am for the Respondent.
section Balakrishnan (not present) for the Intervener.
The Judgment of the Court was delivered by 39 PATHAK, CJ.
The appellants in these two appeals a re manufacturers of Ayurvedic drugs and medicines, 'includi ng Arishtams and Asavas.
Arishtams and Asavas contain alcoho l, and it is said that the presence of alcohol is essential f or the effective and easy absorption of the medicine by t he human system and also because it acts as a preservative.
A ll the Ayurvedic preparations as well as Allopathic, Siddha a nd Unani medicines were originally subject to a multi poi nt levy of 31/2 % under the Tamil Nadu General Sales Tax Ac t, 1959.
By a notification dated 4 March, 1974, the State of Tamil Nadu included a large number of items in the Fir st Schedule to the aforesaid Act in order to make them subje ct to a single point levy.
While all other patent or propri e tary medicinal preparations belonging to the differe nt systems of medicines were taxed at the rate of 7% onl y, Arishtams prepared under the Ayurvedic system were ma de subject to a levy of 30%.
It seems that representations we re made to the State Government against the high rate of tax on Arishtams, and therefore a separate entry was introduced by Tamil Nadu Act No. 23 of 1974 in the First Schedule as it em 135 dealing specifically with Arishtams and Asavas.
Th ey were shown as attracting a rate of 30% while all oth er medicinal preparations were shown under item No. 95 a nd subjected to tax at 7%.
The appellants filed writ petitions in the High Court of Madras challenging the levy of 30% on Arishtams and Asava s, but on 2 September, 1974 the High Court dismissed the wr it petitions.
From the counter affidavit filed by the Government of Tamil Nadu in the writ petition, out of which one of t he present appeals arises, it appears that the higher levy of sales tax on Arishtams and Asavas was introduced by t he State Legislature to curb the abuse of medicinal prepar a tions for their alcoholic content by drink addicts and to eliminate the mushroom growth of Ayurvedic Pharmacies pr e paring sub standard Arishtams and Asavas for purposes oth er than medicinal use.
The appellants contend that Arishta ms and Asavas manufactured by them are essentially Ayurved ic medicines, and that in any event the object of controlli ng the consumption of liquor is amply served by several oth er existing statutes, including the Medicinal and Toilet Prep a rations (Excise Duty) Act, 1955, Drugs and Cosmetic Ac t, 1940, as amended in the year 1964, and Spirituous Prepar a tions (Inter State Trade and Commerce) Control Act, 1955.
It is said that there are over 130 Allopathic medicines co n taining alcohol which are potable as against only thr ee Ayurvedic medicines, and that therefore the levy of tax at 30% of Arishtams and Asavas alone while 40 other medicinal preparations are subjected to tax at 7% (n ow increased to 8%) results in an invidious discriminati on against the manufacturers of those Ayurvedic preparatio ns thus violating article 14 of the Constitution.
It is contend ed that the impugned rate of tax also offend Article 19(1)( g) of the Constitution.
The appellants in Civil Appeal No. 18 68 of 1974 have also taken the point that the high rate of t ax on Arishtams and Asavas has been imposed by the State of Tamil Nadu with the object of discouraging the import of these Ayurvedic medicines from the neighbouring State of Kerala, and consequently the measure is violative of Ar t. 301 as well.
While dismissing the writ petitions the High Cou rt observed that the imposition of the rate of 30% on the sa le of Arishtams and Asavas must be regarded principally as a measure for raising revenue, and it repelled the argume nt that the rate of tax was discriminatory or that Ar t. 19(1)(g) was infringed.
It rejected the plea of the appe l lants that article 301 was contravened and refused to acce pt that there was any ulterior object in imposing a high ra te of tax on those two commodities.
Now there is no doubt that Arishtams and Asavas a re Ayurvedic medicinal preparations.
The question is wheth er these two medicines attract different considerations fr om those applied to other medicinal preparations.
Reference is made by the State to their high content of alcohol, a nd that, it is said, attracts a class of customers who purcha se them for their alcoholic content rather than their medicin al value.
On that basis, it is urged, there is justificati on for a higher rate of tax.
We think that the appeals are entitled to succeed.
It em 95 mentions the rate of 7% (now 8%) as the tax to be levi ed at the point of first sale in the State.
Item 135 provides a rate of 30% in respect of Arishtams and Asavas at the poi nt of first sale.
We see no reason why Arishtams and Asav as should be treated differently from the general class of Ayurvedic medicines covered by Item 95.
It is open to t he Legislature, or the State Government if it is authorised in that behalf by the Legislature, to select different rates of tax for different commodities.
But where the commoditi es belong ' to the same class or category, there must be a rational basis for discriminating between one commodity a nd another for the purpose of imposing tax.
It is common ly known that considerations of economic policy constitute a basis for levying different rates of sales tax.
For i n stance, the object may be to encourage a certain trade or industry in the context of the State policy for econom ic growth, and a lower rate would be considered 41 justified in the case of such a commodity.
There may be several such considerations bearing directly on the choi ce of the rate of sales tax, and so long as there is go od reason for making the distinction from other commodities no complaint can be made.
What the actual rate should be is n ot a matter for the courts to determine generally, but where a distinction is made between commodities fairing in the sa me category a question arises at once before a Court wheth er there is justification for the discrimination.
In t he present case, we are not satisfied that the reason behi nd the rate of 30% on the turnover of Arishtams and Asav as constitutes good ground for taking those two preparatio ns out from the general class of medicinal preparations to which a lower rate has been applied.
In Adhyaksha Math ur Babu 's Sakti Oushadhalaya Dacca (P) Ltd. and others vs Uni on of India, this Court considered whether t he Ayurvedic medicinal preparations known as Mirtasanjiban i, Mritasanjibani Sudha and Mritasanjibanj Sura, prepared in accordance with an acknowledged Ayurvedic formula, could be brought to tax under the relevant State Excise Act wh en medicinal preparations were liable to excise duty under t he Medicinal and Toilet Preparations (Excise Duty) Act, whi ch was a Central Act.
The Court held that the three prepar a tions were medicinal preparations, and observed that t he mere circumstance that they contained a high percentage of alcohol and could be used as ordinary alcoholic beverag es could not justify their being treated differently from oth er medicinal preparations.
The Court said: "So if these preparations are medicinal preparations but a re also capable of being used as ordinary alcoholic beverage s, they will fail under the (Central) Act and will be liable to duty under item No. 1 of the Schedule at the rate of R section 17.50nP per gallon of the strength of London Proof spiri t.
On a consideration of the material that has been plac ed before us, therefore, the only conclusion to which we c an come is that these preparations are medicinal preparatio ns according to the standard Ayurvedic text books referred to already, though they are also capable of being used as ordinary alcoholic beverages.
They cannot however be tax ed under the various Excise Acts in force in the concern ed States in view of their being medicinal preparations whi ch are governed by the Act.
" We are of opinion that similar considerations should app ly to the appeals before us.
The two preparations, Arishta ms and Asavas, are medicinal preparations, and even though th ey contain a high alcohol 42 content, so long as they continue to be identified as medi c inal preparations they must be treated, for the purposes of the Sales Tax Law, in like manner as medicinal preparatio ns generally, including those containing a lower percentage of alcohol.
On this ground alone the appellants were entitl ed to succeed.
In the circumstances, we do not consider it necessary to enter upon the question whether there is substance in t he complaint of the appellants that there is a violation of article 301 of the Constitution.
In the result, the appeals must be allowed and t he appellants held entitled to a refund of the excess paid as sales tax on account of the turnover being treated und er Item 135 rather than under Item 95.
Learned counsel for t he appellants states that the appellants will inform all the ir customers, from whom the higher rate has been charged, th at the customers are entitled to a refund of the excess paid by them and that an application will be invited for such refu nd and that if any part of the excess remains unrefunded to t he customers the appellants undertake that such balance will be paid over to the Arya Vaidya Rama Varier Educational Found a tion of Ayurveda.
The appeals are allowed, the judgment and order of t he High Court on each writ petition are set aside and the Sal es Tax Authorities are directed to reassess the turnover of t he Arishtams and Asavas at the rate mentioned in Item No. 95 and to refund to the appellants the amount of tax paid in excess.
The appellants, in their turn, on obtaining su ch refund will within one month thereof, serve notice on t he customers from whom such excess has been recovered to obta in a refund from the appellants of such corresponding exces section In the event of any balance of the excess remaining unr e funded by the appellant to the customers upon the expiry of three months from such notice, the balance will be paid ov er by the appellants to the Arya Vaidya Rama Varier Education al Foundation of Ayurveda.
There is no order as to costs.
H.L.C. Appeals allowed.
| IN-Abs | Arishtams and Asavas are Ayurvedic preparations whi ch were originally subject to a uniform levy applicable to a ll medicinal preparations belonging to the different systems of medicine under the Tamil Nadu General Sales Tax Act, 195 9.
Firstly by a notification dated 4.3.1974, and later, by t he Tamil Nadu Act, No. 23 of 1974, the State Government singl ed out Arishtams and Asavas for a higher rate of levy of 3 0% while all other medicinal preparations were subjected to a levy of 7%, with a view to curb the abuse of Arishtams a nd Asavas for their alcoholic content by drink addicts and to eliminate the mushroom growth of Ayurvedic pharmacies pr e paring sub standard Arishtams and Asavas for purposes oth er than medicinal use.
The appellants filed writ petitio ns contending that Arishtams and Asavas manufactured by th em are essentially Ayurvedic medicines, that the object of controlling consumption of liquor is being served by sever al other existing statutes, that there are over 130 Allopath ic medicines containing alcohol which are potable, and th at therefore, the levy of tax at 30% on Arishtams and Asav as alone while other medicinal preparations are subjected to tax at 7% results in an invidious discrimination against t he manufacturers of those Ayurvedic preparations.
The Hi gh Court dismissed the petitions.
Allowing the appeals, HELD: The two preparations, Arishtams and Asavas, a re medicinal preparations, and even though they contain a hi gh alcohol content, so long as they continue to be identifi ed as medicinal preparations they must be treated, for t he purposes of the Sales Tax Law, in like manner as medicin al preparations generally, including those containing a low er percentage of alcohol.
The appellants are entitled to a refund of the excess paid as sales tax.
[41H; 42A, C] 38 There is no reason why Arishtams and Asavas should be treated differently from the general class of Ayurved ic medicines.
It is open to the Legislature, or the Sta te Government if it is authorised in that behalf by the Legi s lature, to select different rates of tax for differe nt commodities.
But where the commodities belong to the sa me class or category, there must be a rational basis for di s criminating between one commodity and another for the pu r pose of imposing tax.
It is commonly known that consider a tions of economic policy constitute a basis for levyi ng different rates of sales tax.
For instance, the object m ay be to encourage a certain trade or industry in the conte xt of the State policy for economic growth, and a lower ra te would be considered justified in the case of such a commod i ty.
There may be several such considerations bearing direc t ly on the choice of the rate of sales tax, and so long as there is good reason for making the distinction from oth er commodities no complaint can be made.
What the actual ra te should be is not a matter for the courts to determine gene r ally, but where a distinction is made between commoditi es failing in the same category a question arises at on ce before a Court whether there is justification for the di s crimination.
In the present case, we are not satisfied th at the reason behind the rate of 30% on the turnover of Aris h tams and Asavas constitutes good ground for taking those t wo preparations out from the general class of medicinal prep a rations to which a lower rate has been applied.
[40F H; 41A C] Adhyaksha Mathur Babu 's Sakti Oushadhalaya Dacca ( P) Ltd. and others vs Union of India, , reli ed on.
|
Civil Appeal No. 47 (N T) of 1975.
From the Judgment and Order dated 3.10.1974 of t he Gujarat High Court in I.T. Reference No. 30 of 1973.
Bishambar Lal for the Appellant.
V.S. Desai, B. Rao and Ms. A. Subhashini for the Responden t. M.B. Lal for the Intervener.
(N.P.) 88 The Judgment of the Court was delivered by PATHAK, C.J.
This appeal by certificate granted by t he High Court of Gujarat is directed against the judgment of the High Court on the following questions referred to it by the Appellate Tribunal: "1.
Whether, on the facts and in the circumstances of the case, the Tribunal was fight in holding that the asse s see cannot be denied the benefit of carry forward of deve l opment rebate? 2.
Whether, on the facts and in the circumstances of the case, the Tribunal was justified in directing that t he Income tax Officer should determine the development reba te and such development rebate should be allowed to be carri ed forward and set off when profits are available and if, in that year, the assessee fulfils the necessary requiremen ts for such allowance like creation of adequate reserve?" The assessee is a limited Company.
It has a textile mi ll at Cambay in the State of Gujarat.
For the assessment ye ar 1962 63, the previous year being the calendar year 1961, t he assessee claimed that a sum of Rs. 1,26,233 should be a l lowed as development rebate under section 33 of the Income t ax Act, 1961.
The Income tax Officer rejected the claim on t he ground that the assessee had not created a reserve as co n templated by sub section
(3) of section 34 of the Income tax Ac t, 1961.
The Appellate Assistant Commissioner of Income T ax dismissed the appeal filed by the assessee.
In second appe al the claim by the assessee found favour with the Income T ax Appellate Tribunal.
At the instance of the Revenue t he questions set forth earlier were referred to the High Cou rt for its opinion.
The High Court has answered the questio ns in favour of the Revenue and against the assessee.
It h as held that the assessee had failed to comply with the cond i tions of sub section
(3) of section 34 of the Act.
In this appeal by the assessee it is urged that the vi ew taken by the High Court is erroneous and that it is n ot necessary that a reserve should be created in the previo us year during which the machinery or plant was installed.
Sub section
(1) of section 33 provides that development rebate m ay be claimed as a deduction in respect of a new machinery or plant installed 89 after 31 March, 1954 which is owned by the assessee and is wholly used for the purposes of the business carried on by him, and that the allowance of the deduction is subject to the provisions of section 34.
(a) of sub section
(3) of section 34 provides that the deduction referred to in section 33 shall n ot be allowed unless an amount equal to 75 per cent of t he development rebate to be actually allowed is debited to t he profit and loss account of the relevant previous year a nd credited to a reserve account to be utilised by the assess ee during a period of eight years next following for the pu r poses of the business of the undertaking, other than f or distribution by way of dividends or profits or for remi t tance outside India as profits or for the creation of a ny asset outside India.
The Finance Act, 1966 added an Explan a tion to this clause.
The Explanation declared that t he deduction referred to in section 33 could not be denied by reas on only that the amount debited to the profit and loss accou nt of the relevant previous year and credited to the aforesa id reserve account exceeded the amount of the profit of su ch previous year (as arrived at without making the depos it aforesaid) in accordance with the profit and loss accoun t.
The Explanation was inserted with retrospective effect fr om the commencement of the Act.
Before the Explanation w as enacted a difference of opinion had existed between the Hi gh Courts on the question whether the statute required t he creation of a reserve in the previous year in which the n ew machinery or plant was installed, when the amount of t he profit of that previous year was either nil or insufficie nt for the purposes of enabling the creation of such reserv e.
It is not necessary to refer to these cases, for it see ms clear to us that the Explanation, which applied to t he assessment year under consideration before us, removes t he doubt altogether.
What is contemplated is the creation of a Reserve Fund in the relevant previous year irrespective of the result of the profit and loss account disclosed by t he books of the assessee.
Mere book entries will suffice f or creating such a Reserve Fund.
The debit entries and t he entries relating to the Reserve Fund have to be made befo re the profit and loss account is finally drawn up.
That is a condition for securing the benefit of development rebate a nd if that condition is not satisfied we fail to see how t he deduction on account of development rebate can be claimed at all.
Learned counsel for the assessee relies on West Laikdi hi Coal Co. Ltd., Calcutta vs Commissioner of Income tax, We st Bengal 11, and Commissioner of Income ta x, Delhi Central vs Modi Spinning & Weaving Mills Co. Ltd .
, Those were cases decided under the prov i sions of the Indian Income tax Act, 1922 and there was no Explanation such as we have before us.
Re 90 ference was made to the decision of this Court in Indi an Overseas Bank Ltd. vs Commissioner of Income tax Madra s, In that case, however, the question w as whether the creation of a reserve in compliance with section 17 of the Banking Companies Act constituted sufficient compl i ance with the requirements of proviso (b) to section 10(2) (vi b) of the Indian Income tax Act, 1922.
Reference has also be en made to Additional Commissioner of Income tax vs Vishnu I n dustrial Enterprise, We do not find it possible to agree with the view taken by the Allahabad Hi gh Court in that case that the development reserve need not be created in the relevant previous year during which the n ew machinery or plant is installed, and that a profit must ha ve been earned during the previous year to permit the creati on of a reserve fund.
We think that the Explanation is clea r, and that there can be no doubt that it envisages the cre a tion of a Reserve Fund notwithstanding that there is no profit or insufficient profit from which such reserve may be provided.
To contemplate otherwise would be to negate t he entire scheme incorporated in section 33 read with section 34 of t he Act.
For the same reason we are unable to affirm the vi ew taken by the Allahabad High Court in Commissioner of Income tax vs U.P. Hotel and Restaurants Ltd., [1984] 1 Our attention has been drawn by the learned couns el for the assessee to Dodballapur Spinning Mills Ltd. vs Commissioner of Income tax, Karnataka 2 and Anr., [1980] 1 where reference has been made to a circular issued by the Central Board of Direct Taxes dated 14th October, 19 65 and to a subsequent circular dated 30 January, 1976.
We ha ve carefully considered the matter and we do not think that t he circulars affect the true position in law.
On behalf of the assessee reliance was placed on Indi an Oil Corporation Ltd. vs section Rajagopalan, Income tax Office r, Companies Circle II (1) Bombay and others, 41 where the Bombay High Court has held that there was no obligation on the assessee to create a reserve in the ye ar of installation if there was no taxable income in the rel e vant year.
Some of the submissions addressed in that ca se may be set forth in detail.
A powerful argument was a d dressed by learned counsel for the assessee and it w as pointed out that the expression "shall be allowed" in clau se (a) of sub section
(1) of section 33 indicated that the developme nt rebate is to be assessed and thereupon it becomes allowabl e, and that sub section
(2) of section 33 which provides for the allo w ance of development rebate mentions that the sum "to be allowed" by way of development rebate for the assessme nt year shall be only such amount as shall be sufficient to reduce the total assessable income to nil and the amount of development rebate to the extent to which 91 it has not been allowed shall be carried forward to t he following assessment years for eight subsequent year section Reference was also made to the distinction between t he expressions "to be allowed" and "actually allowed" used in the relevant provisions.
It was also argued that the util i sation by the assessee of the development rebate reserve f or the purposes of the business of the undertaking contemplat ed the existence of an actual fund which could be utilised f or the purposes of the business, and that an illusory deb it entry in the profit and loss account and an illusory cred it entry in the development rebate reserve account were n ot contemplated.
The High Court accepted the submission a nd concluded that it was not mandatory that the necessary deb it and credit entries must be made in the assessment ye ar following the year of installation in which the developme nt rebate is determined under section 33.
Having considered t he matter at some length in the present case, it seems to us clear that in order to claim the deduction on account of development rebate under sub section
(1) of section 33 it is obligat o ry that the debit entries in the profit and loss account a nd the credit entry in a reserve account should be made in t he relevant previous year in which the machinery or plant is installed or first put to use.
The development rebate co n templated by sub section
(1) of section 33 cannot be allowed as a deduction unless a reserve account has been created in t he previous year in which the installation or first use occur section Any doubt in so reading the provisions because of a want or insufficiency of profit in such previous year has be en removed by the Explanation to clause (a) of sub section
(3) of section 34.
The significance of the words "actually allowed" in clause (a) of sub section
(3) of section 34 has been considered by t he High Court in the judgment under appeal, and we are in entire agreement with the view taken by the High Court in that ' regard.
A number of other cases have also been placed before us by learned counsel for the assessee, but as they deal wi th the point on the basis of considerations substantially t he same as have been referred to in the cases mentioned earl i er, we think it unnecessary to deal with them specifically .
Upon the aforesaid considerations we hold that the Hi gh Court is right in answering the questions in favour of t he Revenue and against the assessee.
In the result, the appeal is dismissed but there is no ord er as to costs.
H.L.C. Appeal di s missed.
| IN-Abs | Sub section
(1) of section 33 of the Income Tax Act, 1961 provid es that subject to the provisions of section 34 thereof developme nt rebate may be claimed as a deduction in respect of a n ew machinery or plant.
Clause (a) of sub section
(3) of section 34 stip u lates that the said deduction shall not be allowed unless an amount equal to 75 per cent of the development rebate is debited to the profit and loss account of the releva nt previous year and credited to a reserve account; and t he Explanation thereto provides that the deduction shall not be denied by reason only that the amount so credited to t he reserve account exceeded the amount of the profit of su ch previous year.
The appellant assessee which had a textile mill claim ed a sum as development rebate for the assessment year 1962 6 3.
The Income Tax Officer rejected the claim on the ground th at the assessee had not created a reserve as contemplated by sub section
(3) of section 34 and his order, on appeal, was upheld by the Assistant Commissioner.
In second appeal, the claim by the assessee found favour with the Appellate Tribunal; b ut on a reference made by it at the instance of the Revenu e, the High Court held that the assessee had failed to comp ly with the conditions of sub section
(3) of section 34.
The appella nt contended that the view taken by the High Court was erron e ous and that it was not necessary that a reserve should ha ve been created in the previous year.
Dismissing the appeal, HELD: In order to claim the deduction on account of development rebate under sub section
(1) of section 33 it is obligat o ry that the debit entries in the profit and loss account a nd the credit entry in a reserve account should be made in t he relevant previous year in which the 87 machinery or plant is installed or first put to use.
T he development rebate contemplated by sub section
(1) of section 33 cannot be allowed as a deduction unless a reserve accou nt has been created in the previous year in which the install a tion or first use occurs.
Any doubt in so reading the prov i sions because of a want or insufficiency of profit in su ch previous year has been removed by the Explanation to clau se (a) of sub section
(3) of section 34.
[91D E] What is contemplated is the creation of a Reserve Fu nd in the relevant previous year irrespective of the result of the profit and loss account disclosed by the books of t he assessee.
Mere book entries will suffice for creating such a Reserve Fund.
The debit entries and the entries relating to the Reserve Fund have to be made before the profit and lo ss account is finally drawn up.
That is a condition for secu r ing the benefit of development rebate.
[89E F] West Laikdihi Coal Co. Ltd., Calcutta vs Commissioner of Income tax, West Bengal 11, ; Commission er of Income tax, Delhi Central vs Modi Spinning & Weavi ng Mills Co. Ltd., and Indian Overseas Ba nk Ltd. vs Commissioner of Income tax, Madras, , distinguished.
Additional Commissioner of income tax vs Vishnu Indu s trial Enterprises, and Commissioner of Income tax vs U.P. Hotel and Restaurants Ltd., [1984] 1 , overruled.
Dodballapur Spinning Mills Ltd. vs Commissioner of Incometax, Karnataka 2 and Anr., a nd Indian Oil Corporation Ltd. vs section Rajagopalan, Income T ax Officer, Companies Circle H(I) Bombay and Others, , referred to.
|
ubt, the order of dete n tion contains fresh facts.
In addition, the detaining a u thority has taken into consideration the earlier grounds of detention which grounds had been nullified by the High Cou rt by issuing a prerogative writ of habeas corpus.
A copy of the earlier grounds of detention was also one of the doc u ments furnished to the detenu which confirms the fact th at the detaining authority has considered the earlier groun ds of detention alongwith other documents for drawing h is requisite subjective satisfaction for passing the detenti on order.
The order of detention is vitiated on that groun d, and is therefore liable to be set aside.
[58F. G; 59F G] & ORIGINAL JURISDICTION: Writ Petition (Criminal) No. 61 of 1989.
(Under Article 32 of the Constitution of India. ) V.V. Vaze, M.K. Pandit and P.H. Parekh for the Petitioner.
P.S. Poti, M.N. Shroff and Mrs. H. Wahi for the Respondent section The Judgment of the Court was delivered by 54 section RATNAVEL PANDIAN, J.
This petition under Article 32 of the Constitution of India is filed by the petitioner, t he detenu herein, challenging the legality and validity of t he order of detention dated 21.10.1988 passed by the detaini ng authority (the Commissioner of Police, Surat City) clampi ng upon the detenu the above said order of detention und er Sub section (2) of Section 3 of the Gujarat Prevention of Anti social Activities Act, 1985 (hereinafter referred to as the 'Act ') on the ground that he on consideration of t he materials placed before him was satisfied that it was nece s sary to make the said order with a view to preventing t he detenu from acting in any manner prejudicial to the maint e nance of public order in the area of Nanpura Machhiw ad falling under the jurisdiction of Athwa Lines Police St a tion, Surat City and directed the detenu to be detained in Sabarmati Central Prison, Ahmedabad under the conditio ns specified in the Gujarat Prevention of Anti Social Activ i ties Order, 1985.
In pursuance of the impugned order t he detenu has been detained in the aforesaid prison.
The second respondent, the State of Gujarat, approv ed the impugned order on 26.10.1988 and confirmed the same on 13.12 '.
The detenu submitted his representation dat ed 15.12.
1988 which was received by the 1st respondent on 19.12.
1988 on which date itself the same was rejected.
T he copy of the representation sent to the second respondent w as rejected on 21.12.1988.
It is stated in the grounds of detention that the dete nu was illegally keeping in possession the country liquor a nd openly selling the same at the comer of Nanpura, Machhiwa d, Masjid Wali Gali, Bhandariwad and conducting a den (Add a) and that he had been arrested in 1988 for offences under t he Bombay Prohibition Act in respect of which number of cas es were registered which cases are still pending trial as disclosed in Annexure I.
It is further stated that t he detenu had engaged 10 persons whose names are given in paragraph 2 of the grounds of detention, to accelerate h is bootlegging activities and those hired persons who we re conducting den (Adda)under the instructions and guidance of the detenu had been arrested in 1988 in 19 different cas es under the Bombay Prohibition Act from the detenu 's ad da during police raids of which 8 cases are pending trial a nd the remaining eleven are under investigation, the details of which are given in Annexure 11 attached to the grounds of detention.
On the above materials and the statements of witnesses placed before him, the detaining authority h ad satisfied himself that the abovementioned bootlegging acti v ities of the detenu in a large scale in an organised mann er were seriously detrimental to the public health and we re likely 55 to endanger public health and consequently passed th is impuged order of detention.
Hence this writ petition.
Mr. V.V. Vaze, learned counsel appearing on behalf of the petitioner, detenu raised several contentions assaili ng the legality and validity of the order of detention one of which being that the detaining authority for drawing h is requisite subjective satisfaction to clamp this order of detention upon the petitioner/detenu had taken into consi d eration the previous grounds of detention which was t he subject matter of Special Criminal Application No. 46 of 1987 before the High Court of Gujarat.
Since we are inclin ed to dispose of this Writ Petition on this ground alone we a re not traversing on other grounds.
Admitedly, the Commission er of Police, Surat City passed an Order of detention.
Und er Section 3(2) of the Act on 2.1.
1987 in No. PCB/ PASA/I/ 87 on the ground that between 1984 to 1986 there were 19 cas es filed against the detenu under the Bombay Prohibition Act of which 16 were pending in Court and three others under inve s tigation when this previous order was passed.
The petition er filed Special Criminal Application No. 46 of 1987 before t he High Court of Gujarat at Ahmedabad challenging the validi ty of the said order.
The High Court by its judgment dated 3.
8. 1987 quashed the earlier impugned order of detention a nd directed the release of the detenu forthwith.
A copy of t he High court order is annexed to the Writ Petition as Annexu re 'D '.
The detaining authority in this case had made a refe r ence about the previous order in the impugned grounds of detention which reads thus: "You are associated with bootlegging activity for long tim e, therefore, under order number dated 2.1.87 you were order ed to be detained under PASA and were kept in Baroda Centr al Jail.
But you filed a petition against this order of dete n tion in the High Court by Special Criminal Misc.
Applicati on No. 46/1987, After this petition was heard on 3.8.87, t he Hon 'ble High Court quashed the detention order and releas ed you from detention.
The proceedings taken against you ha ve had no effect on you and after you were released from t he detention, you have continued your activity.
" The detenu, presumably based on the above statement, h as stated in his writ petition that the present order of dete n tion is clamped upon him since the earlier order passed on 2.1. 1987 had been quashed and set aside.
The detaini ng authority in attempting to reply 56 to the allegations made in paragraph No. 6 of the Wr it Petition, wherein it is averred "The petitioner states th at in some of the cases, the petitioner is acquitted and in none of the cases the petitioner is convicted till today ", has made the following statement in paragraph 9 of h is counter: "It is submitted that the present detaining authority to ok into consideration the previous grounds of detention also to establish that the petitioner was engaged in bootleggi ng activities since long.
" Now on this above statement it has been streneous ly urged that since the detaining authority for drawing h is subjective satisfaction had taken into consideration all t he previous grounds of detention, namely, the earlier groun ds of detention passed on 2.1. 1987 which had been subsequent ly quashed by the High Court the present detention order is liable to be set aside.
According to learned counsel for t he petitioner, once the previous grounds of detention had be en quashed on its merit, then the detaining authority has no justification to take into consideration the earlier groun ds of detention for passing this present detention order whi ch should have been based only on the fresh grounds that we re available subsequent to the quashing of the previous dete n tion order.
In support of this statement several decisio ns were relied on about which we make reference presentl y.
Firstly, the attention of the Court was drawn to Ghul am Nambi Zaki vs State of Jammu and Kashmir, wherein the State contended that the existence of fre sh material is not a condition precedent for passing the seco nd order and that in any event, the second order can be ma de when the first order is withdrawn or revoked for technic al defect.
Hidayatullah, C.J. speaking for the bench repell ed that contention holding thus: "The matter is not res integra.
In a number of decisions of this Court to which reference will be made presently, th is point has been considered and it has been held that once an order of revocation is made, another order detaining t he same person can only be passed if some additional or fre sh material is in possession of the State Government on whi ch action can be based.
" Then referring to the decision of the Constitution Ben ch in Hadibandhu Das vs District Magistrate, Cuttack and Anot h er; , , the learned Chief Justice observed: 57 "In other words, the revocation or expiry of the previo us order cannot lead ipso facto to a revival of the detenti on by the passing of a fresh order, because a person who is entitled to his liberty can only be put in a second jeopar dy when there are additional or fresh facts against him." Ultimately, he concluded: "As pointed out in the All India Reporter case (Hadiband hu Das case) the inference is very compulsive that fresh fac ts must be found for new orders otherwise once the old dete n tion comes to an end either by the expiry of the period of detention or by the cancellation of the order of detentio n, a fresh detention cannot be ordered." In Har Jas Dev Singh vs State of Punjab & Ors., ; , this Court while examining a similar question wi th regard to validity of second detention order passed und er Section 14(2) of the Maintenance of Internal Security A ct (Act 26 of 1971) on identical grounds of the earlier ord er expressed its view: "In these circumstances after the date on which the ord er cease to be in force, unless fresh facts have arisen on t he basis of which the Central Government or State Government or an Officer, as the case may be, was satisfied that such an order should be made, the subsequent detention on the ve ry same grounds would be invalid." The learned counsel also cited for the same principle of law, the decision in Chotka Hembram vs State of West Beng al & Ors.; , Those decisions mentioned albeit are cases wherein t he first detention order ceased to be either by revocation or by expiry of the period of detention.
What would be t he legal implications and ultimate effect of quashing an ord er of detention by the High Court in exercise of its jurisdi c tion under Article 226 of the Constitution of India th is Court in Ibrahim Bachu Bafan vs State of Gujarat & Ors ., , made the following rule: " . .
When the High Court exercises jurisdiction und er Article 226 of the Constitution it does not make an order of revocation.
By issuing a high prerogative writ like habeas 58 corpus or certiorari it quashes the order impugned before it and by declaring the order to be void and striking down t he same it nullifies the order.
The ultimate effect of cance l lation of an order by revocation and quashing of the same in exercise of the high prerogative jurisdiction vested in t he High Court may be the same but the manner in which t he situation is obtained is patently different and while o ne process is covered by Section 11(1) of the Act, the other is not known to the statute and is exercised by an authori ty beyond the purview of sub section (1) of Section 11 of t he Act.
It is, therefore, our clear opinion that in a situati on where the order of detention has been quashed by the Hi gh Court, sub section (2) of Section 11 is not applicable a nd the detaining authority is not entitled to make anoth er order under Section 3 of the Act on the same grounds.
" It emerges from the above authoritative judicial pr o nouncements that even if the order of detention comes to an end either by revocation or by expiry of the period of detention there must be fresh facts of passing a subseque nt order.
A fortiori when a detention order is quashed by t he Court issuing a high prerorgative writ like habeas corpus or certiorari the grounds of the said order should not be tak en into consideration either as a whole or in part even alon g with the fresh grounds of detention for drawing the requ i site subjective satisfaction to pass a fresh order becau se once the Court strikes down an earlier order by issuing ru le it nullifies the entire order.
In the present case, no doubt, the order of detenti on contains fresh facts.
In addition to that the detaini ng authority has referred to the earlier detention order a nd the judgment of the High Court quashing it, presumably f or the purpose of showing that the detenu in spite of earli er detention order was continuing his bootlegging activitie section But what the detaining authority says clearly in paragraph 9 of his affidavit in reply is that he took into considerati on the previous grounds of detention also for his conclusi on that the detenu 'was engaged in bootlegging activities sin ce long '.
In other words the detaining authority has taken in to consideration the earlier grounds of detention which groun ds had been nullified by the High Court in Special Crimin al Application No. 46 of 1987 by issuing a prerogative writ of habeas corpus.
Under Section 15 of the Act, the expiry or revocation of an earlier detention order is not a bar for making a subs e quent detention 59 order under Section 3 against the same person.
The provi so annexed to that Section states that in a case where no fre sh facts have arisen after expiry or revocation of an earli er order made against such person the maximum period for whi ch such person may be detained in pursuance of the subseque nt detention order shall in no case extend beyond the period of 12 months from the date of detention under the earli er order.
Chinnappa Reddy, J. in Abdul Latif Abdul Wahab Shei kh vs B.K. Jha and Another, ; = 03 speaking for the bench of this Court while dealing wi th Section 15 of the Act observed: "It, therefore, becomes imperative to read down Section 15 of the Gujarat Prevention of Anti Social Activities Ac t, 1985 which provides for the making of successive orders of detention so as to bring it in conformity with Article 22( 4) of the Constitution.
If there is to be a collision betwe en Article 22(4) of the Constitution and Section 15 of the Ac t, Section 15 has to yield.
But by reading down the provisio n, the collision may be avoided and Section 15 may be su s tained." Mr. Poti has sought to explain the statement of t he detaining authority made in his counter saying that t he earlier proceeding was considered only to a limited purpo se of taking note of the detenu 's continued involvement of bootlegging activities; but the entire grounds of earli er detention as they were, were not considered.
We are unab le to accept this explanation because the detaining authorit y, in the counter, in clear terms had expressed that he consi d ered the earlier grounds of detention also.
Incidently, it was brought to our notice that a copy of the earlier groun ds of detention was also one of the documents furnished to t he detenu in the present case which confirms the fact that t he detaining authority has considered the earlier grounds of detention along with other documents for drawing his requ i site subjective satisfaction for passing this impugn ed order.
In other words, the earlier grounds of detenti on dated 2.1. 1987, quashed by the High Court was one of t he material documents considered by the detaining authority in drawing his subjective satisfaction.
Therefore, we hold th at this order of detention is vitiated on the ground that t he detaining authority has taken into consideration the groun ds of earlier detention order alongwith other materials f or passing this impugned order.
Hence, the order is liable to be set aside.
Accordingly, we quash the detention order on this ground and direct that the detenu be set at liber ty forthwith if his detention is not required for any oth er case.
R.S.S. Petition allowed.
| IN-Abs | With a view to preventing the petitioner detenu fr om acting in any manner prejudicial to the maintenance of public order, an order of detention was passed against h im by the Comissioner of Police, Surat City, under section 3( 2) of the Gujarat Prevention of Anti social Activities Ac t, 1985.
The grounds of detention referred to the detenu 's criminal activities connected with bootlegging on a lar ge scale and in an organised manner, and the several cas es registered and pending against him on that account.
T he detenu 's representations were dismissed by the 1st respon d ent and the State Government.
It was contended on behalf of the petitioner that t he Detaining Authority for drawing his requisite subjecti ve satisfaction had taken into consideration the previo us grounds of detention which were the subject matter of a Special Criminal Application before the Gujarat High Cour t, and the High Court had quashed the order of detention i m pugned in that case.
On the other hand, it was contended on behalf of the respondents that the earlier proceeding w as considered only to a limited purpose of taking note of t he detenu 's continued involvement in bootlegging activities.
Allowing the writ petition, and quashing the detention ord er it was HELD: (1) Even if the order of detention comes to an e nd either by revocation or by expiry of the period of detenti on there must be fresh facts for passing a subsequent orde r. [58D] Ghulam Nambi Zaki vs State of Jammu & Kashmir, ; Hadibandhu Das vs District Magistrate, Cuttack Anr.
; , ; HarJas Dev Singh vs State of Punja b; , and 53 Chotka Hembram vs State of West Bengal, 1, referred to.
(2) A fortiori when a detention order is quashed by t he Court issuing a high prerogative writ like habeas corpus or certiorari, the grounds of the said order should not be taken into consideration either as a whole or in part ev en alongwith the fresh grounds of detention for drawing t he requisite subjective satisfaction to pass a fresh ord er because once the Court strikes down an earlier order by issuing a rule it nullifies the entire order.
[58D E] Ibrahim Bachu Bafan vs State of Gujarat, , followed.
(3) It is imperative therefore to read down section 15 of the Act which provides for the making of successi ve orders of detention so as to bring it in conformity wi th Article 22(4) of the Constitution.
[59C] Abdul Latif Abdul Wahab Sheikh vs B.K. Jha & Anr .; , followed.
|
etition (Criminal) No. 5 37 of 1988.
(Under Article 32 of the Constitution of India.) Dr. Y.S. Chitale, M.K. Pandit, P.H. Parekh, J.H. Pare kh and M.N. Sompal for the Petitioner.
45 P.S. Poti, Mrs. H. Wahi and M.N. Shroff for the Respondent section The Judgment of the Court was delivered by section RATNAVEL PANDIAN, J.
This is a petition under Artic le 32 of the Constitution of India challenging the legality a nd validity of the order of detention dated 17.9.1988 passed by the detaining authority (the Commissioner of Police, Ahmed a bad City) clamping upon the petitioner (the detenu herei n) the impugned order of detention under Sub section (2) of Section 3 of the Gujarat Prevention of Anti Social Activ i ties Act, 1985 on the ground that he on the materials plac ed before him was satisfied that it was necessary to make th is order of detention with a view to preventing the detenu fr om acting in any manner prejudicial to the maintenance of public order in the area of Ahmedabad City and directed t he detenu to be detained in Sabarmati Central Prison.
In purs u ance of the said order, the detenu has been detained in t he aforesaid prison.
The Government approved the order of detention on 21.9.1988.
The detenu submitted his representation dat ed 22.9.1988 to the Ist respondent who by his order dat ed 30.9.1988 rejected the same.
Hence this Writ Petition.
Before adverting to the arguments advanced by Dr. Ch i tale, on behalf of the detenu; we would like to produce t he relevant portion of the grounds of detention which rea ds thus: " .
As such you are a dangerous person as defined in section 2(c) of the said Act, and known as dangerous perso n.
As you with the aid of your Associates create dangero us atmosphere in the said vicinity you disturb public peac e, maintenance and as such following offences were register ed against you with Police Records, and in which you we re arrested.
Plice Offence Section Decision No. Station Regd.
No. 1.
Sabarmati 140/81 324, 114 Compro IPC mised 16.2.82 2.
Sherkotda 411/82 332,323, P.T. 114 IPC 46 3.
Sherkotda 412/82 PIC 147, 148 P.T. 149,307 BP Act 135(1) 4.
Sherkotda 452/85 IPC 302, Not 109,3 proved 5.
Sabarmati 346/87 IPC 302, In the 109,34 Court While considering complaints, in the above cases, Identif i cation (Chehra Nissan) Register, and charge sheets co n tents carefully, it is found that you, with the aid of yo ur associates, in the said area, give threats to innoce nt people, and cause injuries to them by showing dangero us weapons that like Acid, Knife, sharp weapons.
As such y ou commit offences punishable for causing injuries to hum an body and which are punishable in Indian Pen al Code . . " Dr. Chitale, the learned counsel for the petition er took us through the grounds of detention and the oth er relevant records, particularly the copies of the statemen ts of witnesses on the basis of which the detaining authori ty has claimed to have drawn his subjective satisfaction f or passing this impugned order of detention and raised vario us contentions inter alia contending; (1) The material a nd vital fact, namely, the acquittal of the detenu in the cas es registered in Crime Nos.
411 and 412 of 1982 of Sherkot da Police Station as shown at Serial Nos. 2 and 3 in the tab le appended to grounds of detention which fact would ha ve influenced the minds of the detaining authority one way or the other on the question whether or not to make the dete n tion order, has not been placed before the detaining autho r ity and this non placing and the consequent non consider a tion of the said material likely to influence the minds of the detaining authority vitiates the subjective satisfacti on and invalidates the detention order; (2) Leave apart, t he non disclosure of the names of the witnesses on whose stat e ments the detaining authority placed reliance to draw h is subjective satisfaction, claiming privilege under Secti on 9(2) of the Act, the grounds of detention otherwise a re vague or deficient and lacking details with regards to t he names of the 'associates ', for the disclosure of which no privilege could be claimed and hence it was not possible f or the detenu in the absence of the names of the so call ed 'associates ' to make an effective representation against t he order of detention, the deprivation of which amounts to an infringement of the 47 constitutional safeguard provided under Article 22(5) of t he Constitution of India; (3) Though the authority has me n tioned in more than one place the words 'your associate s ' which fact evidently should have influenced the mind of t he detaining authority in making this impugned order, the nam es of the associates are nowhere disclosed which fact wou ld show either the authority did not know as to who the assoc i ates were or knowing the names of the associates, he h as refrained from furnishing it to the detenu thereby disabli ng the detenu to make his effective representation; and (4) T he materials placed before the detaining authority were hard ly sufficient to draw any conclusion that the alleged activ i ties of the detenu were detrimental to the ' ' maintenan ce of public order. ' ' A plethora of decisions were cited by Dr. Chitale.
T he learned counsel for the respondent, Mr. Poti vehement ly urged that the contentions urged by Dr. Chitale do not mer it consideration and the detaining authority in the prese nt case is justified in passing this order of detention.
M r. Poti also cited number of decisions in support of his su b missions.
We shall now examine these contentions in seriatim.
In the grounds of detention five cases register ed against the detenu in respect of which he had been arrest ed are taken into consideration by the detaining authority to draw his subjective satisfaction that the detenu was di s turbing the maintenance of public order.
Out of the fi ve cases, two cases mentioned under Serial Nos. 2 and 3 a re shown as 'P.T. ', that is pending trial.
In other words on 17.9.88 i.e. the date of passing the order of detention, t he detaining authority was of the opinion that the trials of both the cases were not over, though actually the detenu h ad been acquitted even on 26.8.1988 in the case relating to Crime No. 411 of 1982 and on 5.6.88 in the case relating to Crime No. 412/82.
Though the acquittal of both the cases a re admitted, the date of acquittal of Crime No. 411/82 is giv en as 6.7.88 in the counter.
In the Writ Petition two grou nd Nos. 10 and 11 are with reference to these cases.
They re ad as follows: "10.
The petitioner states that in the grounds of detenti on the detaining authority has mentioned erroneously that Ca se No. 411 of 1982 is pending.
In fact, the said Case w as decided by the Court on 26.8.1988 and the petitioner w as acquitted by the judgment dated 26.9.1988 delivered by t he Metropolitan Magistrate, Court No. 7, Ahmedabad.
When 48 grounds of detention were passed and when the detenti on order was passed in September, 1988, the detaining authori ty has taken a non existing fact into account that the sa id case was pending trial.
The detention is liable to be quashed on this ground also.
Likewise, the grounds of detention mention ed that Case No. 412 of 1982 is pending which is erroneous.
T he said case was decided on 5.6.1988 and the petitioner w as acquitted.
The detention is liable to be quashed for taki ng this non existing ground.
" These two grounds are answered by the detaining author i ty in paragraphs 12 and 13 of his affidavit in reply swo rn in December 1988 which read thus: "12.
With reference to the averments made in para 10 of t he petition, I say that the same are not true ' and deni ed hereby.
I say that the petitioner was acquitted in Crime N o. 411 of 1982 by the Metropolitan Magistrate, Court No. 7, Ahmedabad by an order dated 6.7.1988.
However, it is submi t ted that each activity of the petitioner is a separa te ground of detention against the petitioner and, therefor e, even if the petitioner is acquitted in the said Crimin al Case, the detention order is not vitiated on that count.
With reference to the averments made in para 11 of t he petitioner, I say that the same are not true and deni ed hereby.
I say that it is true that in the Criminal Case N o. 412/82 the petitioner was acquitted by the Sessions Cou rt No. 20, Ahmedabad on 5.6.1984.
However, as submitted here i nabove, each activity of the petitioner is a separate grou nd for detention of the petitioner, and, therefore, the fa ct that the petitioner was acquitted in Criminal Case No. 4 11 (Sec 412) of 1982 has no bearing on the detention order a nd the detention order cannot be said to be vitiated on th at count." Though as per Section 6 of the Act the grounds of dete n tion are severable and the order of detention shall not be deemed to be invalid or inoperative if one ground or some of the grounds are invalid, the question that arises for co n sideration is whether the detaining authority was real ly aware of the acquittal of the detenu in those two cases 49 mentioned under Serial Nos. 2 and 3 on the date of passi ng the impugned order.
It is surprising that the detaini ng authority who has specifically mentioned in the grounds of detention that the petitioner 's cases 2 and 3 were pendi ng trial on the date of passing the order of detention has co me forward with a sworn statement in reply, filed nearly thr ee months after signing the grounds of detention, that he kn ew that the accused had been acquitted in both the cases.
T he averments made in paragraphs 12 and 13 in the affidavit in reply are not clear at what point of time the detaini ng authority came to know of the acquittal of the detenu in both the cases.
At any rate, it is not his specific ca se that the fact of acquittal was placed before him for consi d eration at the time of passing the impugned order.
But wh at the authority repeatedly states is that "each activity of the petitioner is a separate ground of detention" and ad ds further that "the fact that the petitioner was acquitted in Criminal Case No. 411/82 and 412/82 is of no consequence ".
We are unable to comprehend the explanation given by t he detaining authority.
It has been admited by Mr. Poti th at the sponsoring authority initiated the proceedings a nd placed all the materials before the detaining authority on 14.9.1988 by which date the petitioner had already be en acquitted in the above said two cases.
Thus it is clear th at either the sponsoring authority was not aware of the acqui t tals of those two cases or even having been aware of t he acquittals had not placed that material before the detaini ng authority.
So at the time of signing the order of detentio n, the authority should have been ignorant of the acquittal section Evidently to get over the plea of the detenu in the wr it petition in this regard for the first time in the counte r, the detaining authority is giving a varying statement as if he knew about the acquittal of the detenu in both the case section As ruled by this Court in Shiv Ratan Makim vs Union of Ind ia & Ors., [1985] Supp.
(3) SCR 843 at page 848 "even if a criminal prosecution fails and an order of detention is th en made, it would not invalidate the order of detention" b e cause as pointed out by this Court in Subharta vs State of West Bengal, ; "the purpose of preventi ve detention being different from conviction and punishment a nd subjective satisfaction being necessary in the former whi le proof beyond reasonable doubt being necessary in t he latter", the order of detention would not be bad mere ly because the criminal prosecution has failed.
In the prese nt case, we would make stress, not on the question of acquitt al but on the question of non placing of the material and vit al fact of acquittal which if had been placed, would ha ve influenced the minds of the detaining authority one way or the other.
Similar questions arose in Sk.
Nizamuddin vs State of West Bengal; , in which the dete n tion order was passed under the provisions of Maintenance of 50 Internal Security Act.
In that case the ground of detenti on was rounded on a solitary incident of theft of alumini um wire alleged to have been committed by the detenu therei n.
In respect of that incident a criminal case was filed whi ch was ultimately dropped.
It appeared on 'record that t he history sheet of the detenu which was before the detainin g. authority did not make any reference to the criminal ca se launched against the petitioner, much less to the fact th at the prosecution had been dropped or the date when the pet i tioner was discharged from the case.
In connection with th is aspect this Court observed as follows: "We should have thought that the fact that a criminal ca se is pending against the person who is sought to be proceed ed against by way of preventive detention is a very materi al circumstance which ought to be placed before the Distri ct Magistrate.
That circumstance might quite possible have an impact on his decision whether or not to make an order of detention.
It is not altogether unlikely that the Distri ct Magistrate may in a given case take the view that since a criminal case is pending against the person sought to be detained, no order of detention should be made for t he present, but the criminal case should be allowed to run i ts full course and only if it fails to result in convictio n, then preventive detention should be resorted to.
It would be most unfair to the person sought to be detained not to disclose the pendency of a criminal case against him to t he District Magistrate.
" It is true that the detention order in that case was s et aside on other grounds but the observation extracted abo ve is quite significant.
The above observation was subsequent ly approved by this Court in Suresh Mahato vs The Distri ct Magistrate, Burdwan and Others, AIR 1975 SC 720 and in As ha Devi vs Additional Chief Secretary to the Government of Gujarat & Ant., ; In the latter case (i. e. Asha Devi), it has been pointed out: " . . if material or vital facts which would infl u ence the minds of the detaining authority one way of t he other on the question whether or not to make the detenti on order, are not placed before or are not considered by t he detaining authority it would vitiate its subjective sati s faction rendering the detention order illegal.
" 51 In Sita Ram Somani vs State of Rajasthan and Other s, certain documents which were claimed to ha ve been placed before the Screening Committee in the fir st instance were not placed before the detaining authority a nd consequently there was no occasion for the detaining autho r ity to apply its mind to the relevant material.
In t he circumstances of that case, a principal point was rais ed before this Court that there was no application of mind by the detaining authority to those vital materials which we re with held.
This Court, while answering that contenti on observed thus: "No one can dispute the right of the detaining authority to make an order of detention if on a consideration of t he relevant material, the detaining authority came to t he conclusion that it was necessary to detain t he appellant. 'But the question was whether the detaining a u thority applied its mind to relevant considerations.
If it did not, the appellant would be entitled to be released.
" From the above decisions it emerges that the requisi te subjective satisfaction.
the formation of which is a cond i tion precedent to passing of a detention order will g et vitiated if material or vital facts which would have beari ng on the issue and weighed the satisfaction of the detaini ng authority one way or the other and influenced his mind a re either withheld or suppressed by the sponsoring authority or ignored and not considered by the detaining authority befo re issuing the detention order.
It is clear to our mind that in the case on hand, at the time when the detaining authori ty passed the detention order this vital fact, namely, t he acquittals of the detenu in case Nos.
mentioned at seri al Nos. 2 and 3 have not been brought to his notice and on t he other hand they were withheld and the detaining authori ty was given to understand that the trial of those cases we re pending.
The explanation given by the learned counsel f or the respondents, as we have already pointed out, cannot be accepted for a moment.
The result is that the nonplacing of the material fact namely the acquittal of detenu in t he above said two cases resulting in non application of min ds of the detaining authority to the said fact has vitiated t he requisite subjective satisfaction, rendering the impugn ed detention order invalid.
Since we have now come to the conclusion that the ord er of detention is to be set aside on the first ground itsel f, we are not inclined to traverse on other grounds.
In t he premises, the impugned order is set aside and the Wr it Petition is allowed.
We direct that the detenu be set at liberty forthwith.
P.S.S. Petition allowed.
| IN-Abs | The petitioner was detained under an order dated 17 th September, 1988 made by the detaining authority under sub section (2) of section 3 of the Gujarat Prevention of Anti Social Activ i ties Act, 1985 with a view to prevent him from acting in a ny manner prejudicial to the maintenance of public order.
T he grounds of detention mentioned five offences register ed against him with police records, out of which the first o ne under section 324 IPC was stated to have been compromised, t he second under section 332 IPC and the third under sections 148 and 3 07 IPC respectively were stated to be pending trial, the four th under section 302 IPC was stated not proved, while the fif th under section 302 IPC was stated to be in the court.
The Government approved the said order on 21st Septe m ber, 1988.
The detenu submitted his representation dat ed 22nd September, 1988 to the first respondent who by h is order dated 30th September, 1988 rejected the same.
He thereupon, filed this petition under Article 32 of t he Constitution.
It was contended for the petitioner that he has be en acquitted even on 26th August, 1988 in the case shown at serial No. 2 in the Table appended to the grounds of dete n tion, and on 6th June, 1988 in the case shown at Serial N o. 3, that this material and vital fact of his acquittal in t he said cases had not been placed before the detaining author i ty and this non placing and the consequent non considerati on of the said material likely to influence the mind of t he detaining authority vitiates the subjective satisfaction a nd invalidates the detention order, that the names of his s o called associates were nowhere disclosed which fact wou ld show either the authority did not know as to who the se associates were or knowing their names has refrained fr om furnishing it to the detenu thereby disabling him to ma ke his effective representation, and 44 that the grounds of detention otherwise were vague or def i cient.
For the respondent it was contended that each activ i ty of the petitioner was a separate ground of detention a nd that the fact that the petitioner was acquitted in the sa id cases was of no consequence.
Allowing the writ petition, HELD: The requisite subjective satisfaction, the form a tion of which is a condition precedent to passing of a detention order, will get vitiated if material or vit al facts which would have bearing on the issue and weighed t he satisfaction of the detaining authority one way or the oth er and influenced his mind are either withheld or suppressed by the sponsoring authority or ignored and not considered by the detaining authority before issuing the detention orde r. [51D E] In the instant case, at the time when the detaini ng authority passed the detention order the vital fact of acquittal of the detenu in cases mentioned at serial Nos. 2 and 3 had not been brought to his notice and on the oth er hand it was withheld and the detaining authority was giv en to understand that the trial of those cases was pendin g.
This non placing of the material fact resulting in no n application of the mind of the detaining authority to t he said fact has vitiated the requisite subjective satisfa c tion, rendering the impugned detention order invalid.
T he same is, therefore, set aside.
The detenu be set at liber ty forthwith.
[51E, F, G, H] S.K. Nizamuddin vs State of West Bengal, ; ; Suresh Mahato vs The District Magistrate, Burdwan Ors., AIR 1975 SC 728; Asha Devi vs Additional Secretary to the Government of Gujarat & Anr., ; and Si ta Ram Somani vs State of Rajasthan & Ors., referred to.
Shiv Rattan Makim vs Union of India & Ors., [1985] Sup p. (3) SCR 843 and Subharta vs State of West Bengal , distinguished.
|
er to cancel the nOti ce convening the meeting and to direct the Secretary to issue a notice to that effect, the said power could be exercis ed only bona fide and for a purpose or purposes within t he scope of the said Act.
If the power was exercised mala fi de or for a collateral purpose, the exercise of the power wou ld certainly be bad.
[125E F] & CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1994 of 1989.
From the Judgment and Order dated 28.10.88 of the Guj a rat High Court in L.P.A. 236 of 1988.
G. Ramaswamy, Additional Solicitor General, P.H. Pare kh and M .K. Pandit for the Appellants.
Respondent Nos. 1 and 3 in person, Mukul Mudgal and G. Venkateshwara Rao for the Respondents.
The Judgment of the Court was delivered by KANIA, J.
Leave granted.
As a substantial point of law is involved in this cas e, we have granted special leave and the Appeal is being tak en up to hearing with the consent of the parties.
The Appeal is directed against the judgment of a Division Bench of t he Gujarat High Court, allowing the writ petition filed befor e The facts of the case relevant for the disposal of th is Appeal, briefly stated, are as follows.
Appellants Nos.
1 and 2 are persons elected in 1987 as Mayor and Deputy Mayor respectively of the Municipal Corp o ration of Bhavnagar, Respondent No. 5 herein (referred to in the judgment as "the Corporation").
Appellant No. 3 is t he Secretary of the said Corporation.
Respondents Nos. 1 and 2 are persons claiming to have 114 been elected as Mayor and Deputy Mayor of the Corporation at a meeting held on June 1, 1988, the validity of which is disputed before The Corporation came into existence in 1982.
The ele c tions to the Corporation were duly held in 1985 and 51 members were elected.
On June 30, 1987, appellants Nos. 1 and 2 were duly elected as Mayor and Deputy Mayor respe c tively of the Corporation for a period of one year.
On M ay 21, 1988, a notice was issued by appellants Nos. 1 and 2 to convene a meeting of the members of the Corporation at 5. 00 p.m. on June 1, 1988 to elect a Mayor and Deputy Mayor of the Corporation for the second term and for certain oth er business mentioned in the Agenda circulated.
On May 3 1, 1988, appellant No. 1 gave instructions by a letter to t he Deputy Secretary of the Corporation to postpone the meeti ng of the Corporation as appellant No. 1 had to go to Gandhin a gar for a certain urgent work of the Corporation.
It see ms clear from the record that the said instructions were giv en by appellant No. 1 after consulting 32 members of the Corp o ration, presumably those belonging to his own party.
Purs u ant to the said letter and the instructions contained ther e in appellant No. 3 issued a letter addressed to the membe rs of the Corporation that the meeting scheduled for June 1, 1988 had been postponed.
The said letter was circulated to all the members of the Corporation.
In spite of the sa id letter postponing the meeting, 19 members of the Corpor a tion, presumably belonging to the minority party or parti es assembled at the place indicated in the notice dated May 2 1, 1988 and elected respondents Nos. 1 and 2 as Mayor a nd Deputy Mayor of the Corporation respectively.
At the sa id meeting neither the Commissioner of the Corporation nor t he Secretary or Deputy Secretary was present and the minutes of the said meeting were not recorded by the Secretary of t he Corporation.
As appellants nos.
1 and 2 did not hand ov er the charge to respondents Nos. 1 and 2, the latter filed a writ petition, being Writ Petition No. 2772 of 1988 in t he Gujarat High Court for being declared as legally elect ed Mayor and Deputy Mayor of the Corporation respectively a nd for an order that charge of the said post should be hand ed over to them.
On June 9, 1988, the said writ petition w as dismissed by a learned Single Judge of the Gujarat Hi gh Court.
The learned Single Judge, who dismissed the said wr it petition, took the view that, as the Mayor in exercise of the powers conferred upon him under sub clause (c) of Clau se 1 of Chapter II of the Schedule (under Section 453) in t he Bombay Provincial Municipal Corporations Act, 1949 (herei n after referred to as "the said Act") can issue a notice f or convening the meeting, he is also entitled to the power to cancel or rescind the notice 115 under the provisions of Section 21 of the Bombay Gener al Clauses Act, 1904.
It was held that appellant No. 1, as t he Mayor, was exercising a statutory power vested in him a nd could, therefore, cancel the notice and postpone the meeti ng convened by him before the meeting was held.
It was point ed out by him that in the history of the Corporation meetin gs had been postponed by the Mayor in the same manner.
T he learned Single Judge further took the view that even assu m ing that appellant No. 1 had no right to postpone the mee t ing, even then the election of respondents Nos. 1 and 2 as Mayor and Deputy Mayor at the meeting held on June 1, 19 88 could not be held legal and valid as the majority of t he members of the Corporation had been deprived of the opport u nity of exercising their right to elect a Mayor and Depu ty Mayor by reason of the notice for postponing the meeting.
A Letters Patent Appeal was preferred by respondents Nos. 1 and 2 against the decision of the learned Single Judge to a Division Bench of the Gujarat High Court.
The Division Ben ch of the said High Court took the view that it was bound by the view taken by a Division Bench of this Court in Chandr a kant Khaire vs Dr. Shantaram Kale and others; , ; where it was observed as follows: "A properly convened meeting cannot be postponed.
The prop er course to adopt is to hold the meeting as originally inten d ed and then and there adjourn it to a more suitable date.
If this course be not adopted, members will be entitled to ignore the notice of postponement, and, if sufficient to form a quorum, hold the meeting as originally convened a nd validly transact the business thereat.
" The Division Bench pointed out that the number of membe rs present at the said meeting on June 1, 1988 was sufficie nt to constitute the quorum prescribed and hence, the meeti ng must be held to be valid and respondents Nos. 1 and 2 du ly elected as Mayor and Deputy Mayor respectively.
The Divisi on Bench took the view that even if the aforesaid observatio ns made by this Court constituted only an obiter dictum of th is Court and not the ratio of the case, they were neverthele ss binding as a precedent on the Division Bench.
The learn ed Judges constituting the Bench did note that the result a nd the conclusion arrived at by them would be a little sta r tling inasmuch as the party which is in the majority in t he Corporation would not be having a Mayor or Deputy Mayor fr om its own party but would have to suffer as Mayor and Depu ty Mayor persons belonging to the minority party but observ ed that such a result could not be helped because the majori ty of the councillors who had consented to the postponement of the said 116 meeting to be held on June 1, 1988 had acted illegally a nd had thereby invited the result.
It is this decision which is sought to be assailed before us.
It was contended by Mr. G. Ramaswamy, learned Addition al Solicitor General who appeared for the appellants, that t he Division Bench had committed an error in following t he observations made in Chandrakant Khaire 's case which we ha ve already set out above as that case could be distinguished on facts.
It was submitted by him that, on the other hand, t he question raised in this Appeal was practically covered, on the basis of analogy, by the ratio of the decision of th is Court in Mohd. Yunus Saleem vs Shiv Kumar Shastri and ot h ers; , which dealt with analogous provisio ns of the Representation of the People Act, 1951.
It was fu r ther submitted by him that in view of the provisions of Section 21 of the Bombay General Clauses Act, 1904, whi ch were applicable to the case, since appellant No. 1, Mayo r, had the power to convene the meeting of the members of t he Corporation, it must be held that he also had the impli ed power to cancel or postpone the meeting.
In order to appreciate these contentions, it is nece s sary to refer to certain provisions of the said Act.
The relevant clauses of Section 19 of the said Act runs as follows: "19.
Mayor and Deputy Mayor (1) The Corporation shall at its first meeti ng after general elections and at its first meeting in the sa me month in each succeeding year elect from amongst the cou n cillors one of its members to be the Mayor and another to be the Deputy Mayor.
(2) The Mayor and the Deputy Mayor shall ho ld office until a new Mayor and a new Deputy Mayor have be en elected under sub section (1) and, in a year in which gene r al elections have been held, shall do so notwithstandi ng that they have not been returned as councillors on t he results of the elections X X X X X" Chapter XXIX of the said Act which deals with the subjec ts of rules, 117 by laws, regulations and standing orders.
Section 453 in t he said Chapter provides that the rules as amended from time to time shall be deemed to be part of the said Act.
Chapter II of the Schedule (under section 453) of t he said Act deals with the proceedings of the Corporatio n, Transport Committee, Standing Committee, etc.
Sub claus es (a) to (c) of Clause 1 of the said Chapter are as follows: "1.
Provisions regulating Corporation proceedings.
(a) There shall be in each month at least o ne ordinary meeting of the Corporation which shall be held n ot later than the twentieth day of the month; (b) the first meeting of the Corporation aft er general elections shall be held as early as conveniently m ay be on a day and at a time and place to be fixed by t he Commissioner, and if not held on that day shall be held on some subsequent date to be fixed by the Commissioner; (c) the day, time and place of meeting shall in every other case be fixed by the Mayor or in the event of the office of Mayor being vacant, or of the death or resi g nation of the Mayor or of his ceasing to be a councillor, or of his being incapable of acting, by the Deputy Mayor, or failing both the Mayor and the Deputy Mayor, by the Chairm an of the Standing Committee.
" Sub clause (f) of Clause 1, briefly put, provides th at one third of the whole number of councillors constitutes t he quorum.
Sub clause (h) provides that at least seven cle ar days ' notice shall ordinarily be given of every meetin g, other than an adjourned meeting, but in cases of urgency a ny such meeting may be called on a shorter notice except f or certain other purposes with which we are not concerned her e. Section 21 of the Bombay General Clauses Act, 1904 ru ns as follows: "21.
Power to make to include power to add to, amend, va ry or rescind, orders, etc.
Where, by any Bombay Act, or Maharashtra Act, a 118 power to issue notifications, orders, rules or by laws is conferred, then that power includes a power, exercisable in the like manner and subject to the like sanction and cond i tions, if any, to add to, amend, vary or rescind any notif i cations, orders, rules or by laws, so issued.
" It is clear from the judgment of the Division Bench of the Gujarat High Court the correctness of which is cha l lenged before us that the Division Bench considered itse lf bound by the observations in Chandrakant Khaire 's case s et out by us earlier.
The facts of that case were that t he first meeting of the Municipal Corporation of Aurangab ad after election was held on May 6, 1988 at 2.00 p.m. as scheduled.
The Municipal Commissioner presided over the sa id meeting.
At the said meeting, not only the councillors b ut many outsiders were also present in the hall when the mee t ing was being held.
There were also a large number of su p porters of the rival parties, spectators and journalist section The Municipal Commissioner was surrounded by some 20 25 persons apart from the councillors belonging to the riv al parties, one group, comprising of the supporters of Sh iv Sena, insisted upon the meeting being adjourned for the d ay while the other group consisting of the supporters of t he Congress (I) party demanded that the meeting should be continued.
There was total confusion inside the hall.
T he Municipal Commissioner informed the Collector, who w as present in the hall, that he could not hold the meeting in the unruly and disorderly situation prevailing and co m plained that his repeated requests to the councillors to maintain peace, had no effect and they kept on shoutin g, raising slogans and fighting amongst themselves.
The Commi s sioner announced that the polling for the offices of Mayo r, Deputy Mayor and Members of the .Standing Committee wou ld commence from 2.30 p.m. onwards.
Some members belonging to Shiv Sena Party sat on the ballot boxes and others belongi ng to that party and its supporters surrounded the Municip al Commissioner demanding the meeting be adjourned to a subs e quent date.
Thereupon, the councillors belonging to a Party in Power, namely, Congress (I), started shouting at him that the meeting should be held later on that day.
Th is was followed by shouting of slogans, hurling of abuses a nd thumping of tables and even throwing of chairs.
It appea rs that the Superintendent of Police and the Collector ask ed the outsiders to clear out of the hall and requested t he councillors to take their places to enable the Municip al Commissioner to transact the business for the day a nd brought the situation under control.
The affidavit filed by the said officers, namely, the Superintendent of Police a nd the Collector, showed that the atmosphere then calmed do wn and the 119 order was restored and they left the hall.
It was thereaft er that the Municipal Commissioner announced on the mike th at the meeting would continue and the elections would be he ld at 4.30 p.m.
It was at this election, that respondents no section 1 and 2, namely, Dr. Shantaram Kale and Takiqui Hassan, we re declared elected as Mayor and Deputy Mayor respectivel y.
This election which was challenged in Court and it is in t he context of these facts that the observations set out earli er were made.
The contention of the appellant was that t he meeting was adjourned for the day or sine die by the Munic i pal Commissioner and hence the holding of the adjourn ed meeting later on the same day without fresh notice was b ad in law.
It was submitted by the learned Additional Solicit or General of India, counsel for the appellants, that t he Division Bench which delivered the impugned judgment, err ed in taking the view that it was bound by the observations s et out earlier by us in the judgment in Chandrakant Khaire 's case.
It was submitted by him that in that case the meeti ng of the Aurangabad Municipal Corporation had already co m menced and the question was as to whether the Municip al Commissioner could on his own adjourn the meeting for t he day or sine die or whether this could be done only by a resolution passed at the meeting.
It was submitted by h im that that was a case which dealt with the question of a d journment of a meeting which had commenced whereas in t he present case, a meeting which had been convened was ca n called and, later on, another meeting was fixed on a diffe r ent date.
The question in Chandrakant Khaire 's case w as relating to an adjournment of a meeting whereas in t he present case the question related to the cancellation of a notice convening the meeting.
It was urged by him that in view of the provisions of Section 21 of the Bombay Gener al Clauses Act and sub clause (c) of Clause 1 of the sa id Schedule set out earlier, the Mayor who had the power to convene the meeting must be held to have the implied pow er to cancel the meeting which was convened.
It was, on t he other hand, submitted by respondent No. 1, who appeared in person, that the decision in Chandrakant Khaire 's case is directly applicable to the case before us and in view of t he same, it must be held that the Mayor, namely, appellant N o. 1, had no power to cancel the notice convening the meeti ng and hence it must be held that the meeting at which t he supporters of respondent No. 1 which met and elected r e spondent No. 1 as aforesaid was validly held and the resol u tion appointing respondent No. 1 was validly passed.
As we have pointed out earlier in Chandrakant Khaire 's case, the meeting which was convened had already commenc ed and the conten 120 tion of the appellant was that in view of the riotous beh a viour of the councillors as well as the outsiders who h ad got into the meeting, the Commissioner had adjourned t he meeting sine die.
It was common ground that no resoluti on was passed at the meeting regarding its adjournment.
It w as in those circumstances that the aforesaid observations ha ve been made by the Division Bench of this Court which decid ed the case.
The Bench in that case was not really concern ed with a situation where a meeting had not commenced at a ll and the notice convening the meeting had been cancelled by the person authorised to issue the notice convening t he meeting.
In this connection, we may refer to the meaning of the term 'adjournment ' given in certain dictionaries.
It h as been observed in Stroud 's Judicial Dictionary, Fifth Ed i tion, Volume I at page 61 that the word 'adjournment ' mu st be construed with reference to the object of the contex t, and with reference to the object of the enquiry.
In We b ster 's Comprehensive Dictionary, International Edition, at page 18 the term 'adjournment ' has, inter alia, been defin ed as "(1) To put off to another day or place, as a meeting or session; postpone (2) To put off to the next session, as t he decision of a council (3) To postpone or suspend proceedin gs for a specified time.".
In Concise Oxford Dictionary, Six th Edition, the word 'adjournment ' has been defined, int er alia, as "(1) Put off, postpone; break off for later resum p tion".
The definitions of the aforesaid term 'adjournmen t ' in Chambers Twentieth Century Dictionary, Revised Editi on (1964) and Collins English Dictionary are more or le ss similar so the aforestated definition of the said term in Webster Comprehensive Dictionary, International Edition.
It appears to us that strictly speaking, unless the object of the context or inquiry otherwise warrants the term 'adjour n ment ' in connection with a meeting should be applied only to the case of a meeting which has already convened and whi ch is thereafter postponed and not to a case where a noti ce convening a meeting is cancelled and subsequently, a noti ce for holding the same meeting on a later date is issued, as in the case before us.
It seems that the passage in the judgment in Chandraka nt Khaire 's Case which has been strongly relied upon by t he respondent No. 1 has been taken substantially from t he observations at page 156 in Shackleton on the Law and Pra c tice of Meetings (Seventh Edition).
Shackleton has bas ed those observations on the decision of a single case, namel y, Smith vs Paringa Mines Ltd., [1906] 2 Ch.
In that cas e, a company had two directors and there was disagreement amo ng them regarding the appointment of an additional directo r.
The aggrieved director commenced an action and after this a notice was 121 issued postponing a general meeting already called but, in the belief that the attempted postponement was illegal, t he aggrieved director advertised the meeting in the press f or the same day as previously arranged.
On that day, he wi th certain other shareholders attended the meeting and at th at meeting resolutions were approved re electing himself as a director and refusing to re appoint the other director.
It was held that the resolutions were valid, for, in the a b sence of express authority in the articles, the directors of a company have no power to postpone a general meeting pro p erly convened.
It appears, therefore, that these observ a tions are based on a decision which dealt with the powers of the directors of a company which are derived from the art i cles of association of the company which essentially are in the nature of a compact or an agreement.
The only powe rs which the directors of a company have, are such as have be en conferred upon them by articles of association of the comp a ny.
The powers of the Mayor of the Corporation, on the oth er hand, are statutory in nature and they are derived from t he Bombay Municipal Corporation Act.
As set out by us earlie r, sub section (1) of Section 19 of the said Act provides f or the election of a Mayor of a Municipal Corporation.
T he Mayor has various powers conferred under the said Act.
Su b clause (c) of Clause 1 in Chapter II of the said Schedule in the Municipal Corporation Act provides that except for t he first meeting for a new Corporation which has been du ly elected, the time, day and place of meeting shall be fix ed by the Mayor.
The powers of the Mayor regarding the holdi ng of meetings of the Corporation, therefore, are not deriv ed from any compact as in the case of directors of a compa ny but are essentially statutory in nature.
We do not thin k, with respect, that, in these circumstances, it would be proper to apply the aforestated observatioins of Shacklet on to the present case.
Moreover, as we have already point ed out, the case before this Court in Chandrakant Khaire vs D r. Shantaram Kale and Ors., was not a case where a noti ce convening a meeting was cancelled and later a notice conve n ing another meeting was issued but it was a case where a meeting duly convened had commenced and it was alleged th at the Municipal Commissioner had adjourned it without the re being any resolution to that effect.
We are, therfore, of the view that the aforesaid observations in the decision of Chandrakant Khaire 's case are not applicable to the ca se before us.
We can derive some support to our view from a decisi on of this Court in Mohd. Yunus Saleem vs Shiv Kumar Shast ri and Ors.
In that case, the facts were that a parliamenta ry constituency from which election to Lok Sabha took place in 1971 consisted of five assembly constituencies.
The polli ng at two of these was scheduled to take place 122 on March 1 and at the other three on March 3, 1971.
T he polling at the first two constituencies took place as sche d uled but on March 2 there was a communal riot, as a resu lt of which the Election Commissioner postponed the poll at t he other three constituencies from March 3 to March 9.
T he polling took place in the said constituencies on the pos t poned date and the first respondent was declared electe d.
The appellant challenged the election in an election pet i tion.
It was contended by him, inter alia, that the Electi on Commissioner had no power to alter the date of the poll at the remaining constituencies.
The election petition w as dismissed by the High Court.
On appeal to this Court, th is Court took the view that Section 153 of the Representati on of the People Act, 1951 on which reliance had been placed by the High Court in taking the view that the Election Commi s sioner had power to postpone the poll was not applicab le because it dealt only with the question of extending ti me for completion of the election and not for altering the da te of the poll; Sections 57 and 58 of the Representation of t he People Act, 1951 could not be invoked by the Election Co m missioner for this purpose.
It was, however, held th at section 30 of the Representation of the People Act read wi th Section 21 of General Clauses Act gives necessary powers to the Election Commissioner to alter the date of the poll.
We may point out that we do not propose to set out the prov i sions of Section 30 of the Representation of the People A ct because it is not necessary to do so.
Suffice it to no te that the said section provides that the Election Commissio n er shall by notification in the official gazette appoi nt inter alia the date or dates on which a poll shall, if necessary, be taken and also the date before which t he election shall be completed.
Section 153 confers upon t he Election Commissioner the power to extend the time for t he completion of election.
Section 21 of the Central Gener al Clauses Act is in pari materia with Section 21 of the Bomb ay General Clauses Act which was applicable in the case befo re us and which we have already set out earlier.
It is tr ue that the ratio of this case is not directly applicable to the case before us.
However, it does appear to us that, on a parity of reasoning, it must be held that the Mayor had t he implied power to cancel a meeting or 'postpone a meeti ng which was duly convened before the said meeting commenc ed and to convene the same on a subsequent occasion.
It is needless to say that this power must be exercised by t he Mayor bona fide and not for a collateral purpose.
The pow er must again be exercised for a proper purpose.
If the May or is unable to show this, then the postponement of the meeti ng must be held to be bad.
But it is not possible to say th at the Mayor had no power to cancel a meeting duly convened a nd to direct that the same should be held on a later day pr o vided that the power was exercised 123 bona fide and for a justified purpose.
We may now refer to certain other decisions which a re cited before us.
Our attention was drawn by respondent No. 1 to the decision of a learned Single Judge of the Gujar at High Court in Babubhai Girdharbhai Patel vs Manibhai Asha b hai Patel & Others, [1975] 16 Gujarat Law Reporter, 566.
In that case, the facts were in pari materia with the fac ts before us.
It was held by the learned Single Judge of th at Court that on a plain reading of sub section (11) of Secti on 51 of the Gujarat Municipality Act it is clear that a mee t ing can be adjourned only provided a majority of the cou n cillors accord their consent to such adjournment.
It w as also held that it is not open to the President to cancel or adjourn the meeting if he personally considers it necessa ry or desirable to do so before the councillors assemble.
It was observed that the President of the Municipality does n ot have unrestricted power to cancel or adjourn a meeting at his humour or pleasure or caprice.
No assistance can be arrived at by respondent No. 1 from this judgment becau se that decision has been reversed in respect of the aforesta t ed conclusions by a Division Bench of the Gujarat High Cou rt in Letters Patent Appeal No. 183 of 1974 decided on Novemb er 20, 1974 by B.J. Divan, C.J., and T.U. Mehta, J., the jud g ment having been delivered by Divan, C.J.
In that case, it was held that it is obvious that the President of the muni c ipality in whom the power to call a meeting of the munic i pality had been vested by section 51(1) of the Gujar at Municipalities Act, 1963 must also be conferred the power to adjourn the meeting if, because of certain extraordina ry circumstances like civil commotion or act of God or a ny other unusual event, it becomes necessary to adjourn t he holding of the meeting.
The learned Judges constituting t he Division Bench held that they were unable to agree with t he view of the learned Single Judge to the effect that t he doctrine that he who has such power to convene a meeting h as also the power to adjourn the meeting, if the circumstanc es so demand, cannot be read into the provisions of the Gujar at Municipalites Act.
The learned Judges, however, agreed wi th the learned Single Judge that the President of the Munic i pality had no power to adjourn the meeting at his !will or caprice.
They also pointed out that unless unusual circu m stances beyond the control of the President of the Munic i pality prevail, he cannot utilise this power to adjourn a meeting which has once been notified.
Taking into accou nt all the facts and circumstances of the case, it was he ld that the adjournment of the meeting of the municipality by the President was not warranted in law and was, therefor e, invalid.
We may, however, point out that neither the learn ed Single Judge who delivered the judgment in Babubhai Gir d harbhai Patel vs 124 Manibhai Ashabhai Patel & Ors., nor the Division Benc h, which reversed this decision to the extent set out by us have taken into account the provisions of section 21 of t he Bombay General Clauses Act, which we have already referr ed to.
That section fortifies the view taken by the Divisi on Bench.
We may now refer to the decision of the Allahabad Hi gh Court in R.K. Jain vs Bar Council of U.P. & Ors., AIR (197 4) 61 Allahabad 211.
In that case, the Bar Council ofUPin exercise of its power under section 15(2) of theAdvocates Act, 1961, framed rules which regulate the manner and proc e dure of holding the election of the members to the B ar Council.
These rules are known as Bar Council of Utt ar Pradesh Election Rules, 1968.
Rule 4 lays down that t he election of members to the Bar Council shall be held at su ch place or places, on such date or dates, and during such ho ur or hours as the Council may appoint.
Rule 6 provides th at notice of the time and place of election shall be given by publication in the manner prescribed under the rules.
T he learned Single Judge (K.N. Singh, J., as he then was) w ho decided the case held that the principles laid down in section 21 of the General Clauses Act are fully applicab le in construing Rules 4 and 6 of the said Election Rule s, 1968.
On the facts of the case it was held that the B ar Council had the full jurisdiction to change the date of an election and to postpone the election or to fix dates f or holding the election afresh till the elections were comple t ed.
In our view, the learned Judges of the Gujarat Hi gh Court who delivered the judgment under consideration befo re us need not have considered themselves bound by the afor e said observations in Chandrakant Khaire 's case, as they ha ve done.
In the first place, these observations do not const i tute the ratio of the judgment in that case.
The question in that case was whether a meeting which was duly convened a nd had commenced could have been adjourned by the Municip al Commissioner and not whether a notice convening a meeti ng issued by the Municipal Corporation could be cancelled by him before the commencement of the meeting with a view to have the meeting held on a subsequent date.
We are of t he view that the Division Bench was not really called upon to consider the situation in such a case, as we have point ed out earlier.
Moreover, it appears that the Division Ben ch has not taken into account the provisions of section 21 of the Bombay General Clauses Act or the principles underlyi ng that section.
No argument was advanced before the Divisi on Bench on the basis of that section at all.
The attention of the Division Bench was not drawn to the judgment of th is Court in Mohd. Yunus Saleem 's case.
Had that 125 been done, we feel that the Division Bench which decided t he Chandrakant Khaire 's case, might not have made the afor e stated observations at all.
In our view, the principl es underlying section 21 of the Bombay General Clauses A ct would be clearly applicable in considering the scope of t he powers of the Mayor of a Municipal Corporation set out in Clause 1 of Chapter II of the said Schedule in the said A ct and in particular, in sub clause (c) of the said clause.
We may point out that the rules in the Schedule have be en framed under the statutory provisions of the said Act a nd section 453 of the said Act provides that the rules in t he schedule as amended from time to time shall be deemed to be part of that Act.
In our view, the power of the Mayor co n ferred under Clause 1 of Chapter II of the said Schedu le must be regarded as a statutory power as distinguished fr om the powers of directors of a company which are deriv ed strictly from the Articles of Association of the Compa ny which are contractual in nature.
There appears to be no reason to take the view that the principles underlyi ng section 21 of the Bombay General Clauses Act would not app ly to the said powers of the Mayor.
In our view, appellant N o. 1, the Mayor of respondent No. 5, Corporation, had the pow er to cancel the notice convening the meeting before the co m mencement of the meeting with a view to convene the meeti ng on a later date.
The question, however, whether he h as exercised the power within its true ambit is a differe nt question altogether.
In this regard, in our opinion, a l though the Mayor had the power to cancel the notice conve n ing the meeting and to direct the secretary to issue a notice to that effect, the said power could be exercis ed only bona fide and for a purpose or purposes within t he scope of the said Act.
If the power was exercised mala fi de or for a collateral purpose, the exercise of the power wou ld certainly be bad.
In the present case, there is considerab le factual controversy as to whether, even on the footing th at appellant No. 1 had the power to cancel the notice conveni ng the meeting, that power was exercised bona fide for a pu r pose within the scope of the said Act or whether it w as exercised for collateral or impermissible purposes.
We remand the matter to the Gujarat High Court for the determ i nation of that question.
In view of the urgency of t he matter, we would request the Gujarat High Court to dispo se of the writ petition latest by 30th April, 1989 as far as possible.
The interim order granted by this Court on Nove m ber 16, 1988 shall continue upto 5th May, 1989, subject to any orders which may be passed hereafter by the Gujarat Hi gh Court.
From that date, it will be for the parties to app ly for appropriate interim orders to the Gujarat High Cou rt till the case is finally disposed of by that Court.
126 The Appeal is allowed to the extent aforesaid.
Taki ng into account the facts and circumstances of the case, t he parties shall bear and pay their own costs.
R.P.D. Appeal allowed.
| IN-Abs | Appellants Nos. 1 and 2 were elected on June 30, 1987 as Mayor and Deputy Mayor respectively of the Municipal Corp o ration of Bhavnagar, Gujarat for a period of one year.
On May 21, 1988 a notice was issued by them for convening a meeting of the members of the Corporation on June 1, 1988 to elect a Mayor and Deputy Mayor and for certain other bus i ness mentioned in the Agenda circulated.
Subsequently, on May 31, 1988, appellant No. 1 gave instructions by a lett er to the Deputy Secretary of the Corporation to postpone t he meeting as he had to go to Gandhinagar for urgent work of the Corporation.
The said instructions were given by appe l lant No. 1 after consulting 32 members of the Corporatio n. Pursuant to the said letter and the instructions contain ed therein, appellant No. 3, the Secretary of the Corporatio n, issued a letter addressed to all the members of the Corpor a tion informing them that the meeting scheduled for June 1, 1988 had been postponed.
In spite of the aforesaid lett er postponing the meeting, 19 members of the Corporatio n, presumably belonging to the minority party or partie s; assembled at the place indicated in the notice dated May 2 1, 1988 and elected respondent Nos. 1 and 2 as Mayor and Depu ty Mayor.
Neither the Commissioner of the Corporation nor i ts Secretary or Deputy Secretary was present at the said mee t ing, and the minutes of that meeting were not recorded.
As the appellants Nos. 1 and 2 did not hand over t he charge to respondents Nos. 1 and 2, the latter filed a wr it petition in the High Court for being declared as legal ly elected Mayor and Deputy Mayor and for an order that char ge of the said posts should be handed over to them.
111 The Single Judge dismissed the Writ Petition taking t he view that as the Mayor in exercise of the powers conferr ed upon him under subclause (c) of clause (1) of Chapter II of the Schedule (under section 453) in the Bombay Provincial Munic i pal Corporations Act, 1949 can issue a notice for conveni ng the meeting, he is also entitled to the power to cancel or rescind the notice under the provisions of section 21 of t he Bombay General Clauses Act, 1904.
Division Bench of the High Court, however, allowed t he Letters Patent Appeal filed by respondents Nos. 1 and 2 taking the view that it was bound by the view taken by th is Court in Chandrakant Khaire vs Dr. Shantaram Kale and ot h ers; , where it was observed that a proper ly convened meeting could not be postponed.
The proper cour se to adopt is to hold the meeting as originally intended a nd then and there adjourn it to a more suitable date.
In the appeal by special leave filed by the appellan ts before this Court, it was contended on behalf of the appe l lants that the Division Bench had committed an error in following the observations made in Chandrakant Khaire 's ca se as that case could be distinguished on facts, that t he question raised in this appeal was practically covered on the basis of analogy, by the ratio of the decision of th is Court in Mohd. Yunus Saleem vs Shiv Kumar Shastri and ot h ers; , which dealt with analogous provisio ns of the Representation of the People Act, 1951 and that in view of the provisions of Section 21 of the Bombay Gener al Clauses Act, 1904, which were applicable to the case, sin ce appellant No. 1 had the power to convene the meeting of t he members of the Corporation, it must be held that he also h ad the implied power to cancel or postpone the meeting.
Respondent No. 1 contested the appeal and submitted th at the decision in Chandrakant Khaire 's case was direct ly applicable to the case and it must be held that the appe l lant No. 1 had no power to cancel the notice convening t he meeting and hence it must be held that the meeting at whi ch the supporters of respondent No. 1 which met and elect ed respondent No. 1 as Mayor was validly held and the resol u tion appointing respondent No. 1 was validly passed.
Partly allowing the appeal and remanding the matter ba ck to the High Court, this Court, HELD: (1) Unless the object of the context or inqui ry otherwise warrants the term 'adjournment ' in connection wi th a meeting should 112 be applied only to the case of a meeting which has alrea dy been convened and which is thereafter postponed and not to a case where a notice convening a meeting is cancelled a nd subsequentiy, a notice for holding the same meeting on a later date is issued, as in the instant case.
[120E F] (2) Mayor had the implied power to cancel a meeting or postpone a meeting which was duly convened before the sa id meeting commenced and to convene the same on a subseque nt occasion.
It is needless to say that this power must be exercised by the Mayor bona fide and not for a collater al purpose.
The power must again be exercised for a prop er purpose.
If the Mayor is unable to show this, then t he postponement of the meeting must he held to he bad.
But it is not possible to say that the Mayor had no power to canc el a meeting duly convened and to direct that the same shou ld he held on a later day provided that the power was exercis ed bona fide and for a justified purpose.
[122G H; 123A] Chandrakant Khaire vs Dr. Shantaram Kale and other s; , ; , distinguished.
(3) The principles underlying section 21 of the Bomb ay General Clauses Act would he clearly applicable in conside r ing the scope of the powers of the Mayor of a Municip al Corporation set out in Clause 1 of Chapter II of the sa id Schedule in the said Act and in particular, in sub clau se (c) of the said clause.
The rules in the Schedule have be en framed under the statutory provisions of the said Act a nd section 453 of the said Act provides that the rules in t he Schedule as amended from time to time shall he deemed to he part of that Act.
The power of the Mayor conferred und er clause 1 of Chapter II of the said Schedule must be regard ed as a statutory power as distinguished from the powers of directors of a company which are derived strictly from t he Articles of Association of the Company which are contractu al in natore.
[125A C] (4) There appears to be no reason to take the view th at the principles underlying section 21 of the Bombay Gener al Clauses Act would not apply to the said powers of the Mayo r. In the instant case, appellant No. 1, the Mayor of respon d ent No. 5, Corporation, had the power to cancel the noti ce convening the meeting before the commencement of the meeti ng with a view to convene a meeting on a later date.
[125D] Smith vs Paringa Mines Ltd., [1906] 2 Ch.
103, disti n guished.
Mohd. Yunus Saleem vs Shiv Kumar Shastri and Ors .; , , relied on.
113 Babubhai Girdharbhai Patel vs Manibhai Ashabhai Patel Others, [1975] 16 Gujarat Law Reporter, 566, referred to.
R.K. Jain vs Bar Council of U.P. & Ors., AIR (1974) 61 Allahabad 211, approved.
|
ivil Appeal No. 855 of 1978.
186 From the Judgment and Order dated 21.3.
1978 of the Rajasthan High Court in S.B. Civil Second Appeal No. 59 of 1978.
Tapas Ray, Sushil Kumar Jain, Sudhanshu Atrey and L.C. Agrawalas for the Appellant.
G.L. Sanghi, Parmod Dayal, A.D. Sangar, Ajay K. Jain and K.K. Jain for the Respondent.
The Judgment of the Court was delivered by NATARAJAN, J.
This appeal by special leave is by a tenant and is directed against the judgment of the High Court of Rajasthan in Civil Second Appeal No. 59 of 1978 confirming the judgment of the Appellate Court whereby the appellant was held liable to be evicted from the premises leased to him by the respondent on the ground of having parted with the possession of the premises.
C.M.P. No. 906 of 1973 has been filed by the respondent under Order 41 Rule 27 C.P.C. for certain documents being received as additional evidence.
In so far as the facts are concerned, there is no con troversy whatever.
In January 1963, the appellant took on lease from the respondent a building situate in Rasta Ka Gheewalan in the city of Jaipur.
In the Deed of Rent execut ed by the appellant, there was an express provision that he should not sublet the premises to anyone.
However, in March 1968, a social club known as the Lokpriya Social Club came to be opened in the premises and the members of the club began using the premises for playing cards, chopar, chess etc.
every evening till about midnight or even till 1 a.m.
The functioning of the club in the premises led to the respondent filing a suit against the appellant seeking his eviction on two grounds viz. (1) sub letting the premises contrary to the terms of the lease deed and (2) conversion of the user of the premises from residential to non residen tial purposes.
As it has been concurrently held by the first two courts that the premises had not been leased for resi dential purposes, no further advertance is called for to the second ground on which the eviction was sought for.
As regards the first ground, the appellant did not dispute but on the other hand admitted the factum of the Lokpriya Social Club being opened in the leased premises in March 1968 and the club functioning 187 in the premises since then.
He however contened that he had neither sublet for rent nor otherwise parted with the pos session of the premises to the club.
His case was that he continued to have possession of the premises for doing business in gold jewellery and cloth on commission basis in a small portion of the building but being the founder of the club, he had provided the club a room to have its office and a hall for the club members to assemble and play games such as cards, chess, chopar etc.
In the trial of the suit, the respondent examined him self and an Assistant in the office of the Registrar of Companies as witnesses on his side.
The appellant examined himself and three other witnesses on his side to substanti ate his contentions.
The Trial Court held that the respondent had failed to prove that the appellant had sublet the premises to the Lokpriya Social Club for rent and that the evidence only warranted an inference that the appellant had allowed the club to use the premises as a licencee and as such, the appellant was not liable to be evicted.
The Appellate Court, while concurring with the Trial Court that the evidence did not establish any subletting of the premises for rent, nevertheless held that there were adequate materials to hold that the appellant had parted with the possession of the premises in favour of the club and such parting of posses sion would amount to subletting within the meaning of the Act and as such the appellant was liable to be evicted.
Consequently, the Appellate Court passed a decree for evic tion against the appellant.
The Second Appeal to the High Court by the appellant did not meet with success and hence he has approached this Court by way of appeal by special leave.
Since the first ground on which eviction was sought for was the subletting of the premises to the Lokpriya Social Club, the question whether the appellant was receiving any rent or not from the club had loomed large in the proceed ings before the Trial Court and the Appellate Court.
The appellant 's categoric stand that he was not receiving any rent from the Club and his permitting the club to use the premises was not for any monetary return could not be dis lodged by the respondent by specific materials.
However, after the appellant had filed this appeal, the respondent has been able to obtain copies of the Managing Committee 's reports, balance sheets and auditor 's reports of the club for the years 1968 to 1976.
It is relevant to mention here that the club has been registered as a limited company under the Indian .
As a registered company, it had to prepare audited balance 188 sheets every year and present the same together with the Auditor 's Report to the members of the club and have the same approved.
The respondent seeks permission of the Court to have the Managing Committee 's reports, the Auditor 's Reports and the balance sheets filed as additional evidence in the appeal and for that purpose he has filed CMP No. 906/79 under Order 41 Rule 27 C.P.C.
The learned counsel for the appellant vehemently opposed the filing of additional documents by the respondent as additional evidence on the ground these documents ought to have been filed before the trial court or the Appellate Court and hence they cannot be filed now.
It was also contended that if additional docu ments are received in evidence at this stage, the appellant will have no opportunity to adduce contraevidence.
We will take up the question whether CMP No. 906/79 should be al lowed or not for consideration later.
We will first examine whether even without these documents the order of eviction passed by the Appellate Court and confirmed by the High Court can be sustained or not.
It may be recalled that the decree for eviction against the appellant has been passed on the ground that though subletting of the premises for rent has not been proved, yet the appellant must be held to have parted with possession of a portion of the premises to the club and such parting with possession would attract Section 13(1)(e) of the Rajasthan Premises (Control of Rent & Eviction) Act, 1950 (for short the Act).
On a reading of sub clause(e) of Section 13(1), it is seen that a tenant will render himself liable for evic tion if he has "assigned, sublet or otherwise parted with the possession of, the whole or any part of the premises without the permission of landlord." Consequently even if a tenant parts with possession of the whole or any part of the premises without assigning or subletting the premises, he would still be liable to be evicted from the premises under the Act.
If from this perspective, the user of the premises by the club is examined, it can certainly be held that the appellant had parted with the possession of the premises as envisaged in clause (e) of sub section 1 of Section 13.
This conclusion is warranted by several factors.
Admittedly, when the club began to function in the leased premises, a name board carrying the name of the Club came to be exhibited in the premises.
It is also admitted that the members of the club assemble at the premises everyday and play cards and other indoor games from evening till about midnight.
Though the appellant would say that the club members cannot have access to the premises unless he or in his absence his brother or son opens the premises, there is no evidence to show that the appellant had at any time exercised his right to exclusive 189 possession and kept the premises locked and denied the members of the club entry to the premises.
That apart there is a significant fact which has escaped the notice of the Appellate Court and the High Court viz that the club has its registered office at the leased premises.
Section 146 of the Indian enjoins every company to have a regis tered office to which all communications and notices may be addressed.
Once a company has a registered office it is bound to comply with several provisions of the , viz. (a) the register of members is to be kept there (Section 163; (b) the right of inspection has to take place there (Section 163); (c) the register of directions, etc., is also to be kept there (Section 303): (d) the account books are to be maintained there unless the directors decide otherwise (Section 20): (e) the register of mortgages and charges and copies of registered documents are also to be kept there (Section 143); and the right of inspection of them is to be exercised there (Section 144).
(f) service of documents should be effected there.
These requirements of the Act have to be complied with by the club by virtue of its registered office being situated in the leased premises.
The appellant cannot prevent the club from performing its statutory duties so long as the club has its registered office in the premises.
Hence this factor also warrants the view that the appellant had parted with possession of the major portion of the premises to the club.
In such circum stances we see no merit in the contention of the appellant that the user of a portion of the premises by the club is only of a permissive nature and that there was no parting with possession of the premises to the club.
The Appellate Court and the High Court were therefore, right in holding that the user of the premises by the club would amount to the appellant having parted with possession of a portion of the premises" as contemplated under Section 13(1)(e) of the Act.
Learned counsel for the appellant referred us to Smt.
Rajbir Kaur & Anr.
vs M/s. section Chokesiri & Co., JT and argued that even if the appellant had conferred rights of exclusive possession to the club over a portion of the leased premises, the club would not be a sub lessee but only a licencee of the appellant.
We are unable to accept this argument because of various factors.
In the first place, in Smt.
Rajbir Kaur, (supra) it was clearly found that in the documents which had been brought about between the parties.
the occupants were inducted into possession only as licencees and not as lessees.
Secondly, the case arose under the East Punjab Rent Restriction Act in which Section 13 refers only to a tenant transferring his right under the lease or subletting the entire building or any portion thereof whereas in Section 13(1)(e) of the Rajasthan Premises (Control 190 of Rent and Eviction) Act with which we are concerned, there is reference to a tenant assigning, subletting or otherwise parting with the possession of the whole or any part of the premises without the permission of the landlord.
In such circumstances, the judgment in Smt.
Rajbir Kaur & Anr., (supra) cannot be of any avail to the appellant.
Coming now to C.M.P. No. 906/79 filed by the respondent for receiving certain documents as additional evidence, we have already stated that these documents consist of the reports of the Managing Committee, the balance sheets and the auditor 's reports for the years 1968 to 1976.
Though there are as many as 25 documents filed along with the application they really constitute 8 sets of documents pertaining to the period 1963 to 1976 except for the year 1969.
The purpose of filing these documents is to show that in each of the years in question it has been stated in the auditor 's report that the rent of the club premises has not been determined and provided for as the matter is under litigation.
Mr. Sanghi, learned counsel for the respondent submitted that the explanation given in the auditor 's re ports for provision not having been made in the balance sheet for payment of rent by the club was not because the club had been allowed free user of the premises without payment of rent but because there was litigation regarding the user of the premises by the club.
The further argument was that the auditor 's report clearly showed that the club was bound to pay rent to the appellant for the user of the premises but such payment was being deferred in view of the pendency of the eviction suit between the respondent and the appellant.
Mr. Sanghi stated that there cannot be any objec tion to the additional documents being received in evidence because they were reports and balance sheets submitted by the club, of which the appellant is a member, to the Regis trar of Companies and hence there is no question of the appellant being taken by surprise by the contents of the documents.
On the other hand, the learned counsel for the appellant vehemently contended that the respondent is not entitled under law to file documents by way of additional evidence at this belated stage of matters because the docu ments were in existence even when the parties went to trial before the Trial Court and as such the respondent should have acted diligently and either summoned for the documents from the office of the Registrar of Companies or obtained copies of them and filed them in Court during the trial or atleast when the matter was before the first Appellate Court.
On a consideration of the matter we think the objections raised 191 by the appellant 's counsel for the filing of additional evidence by the respondent in the appeal proceedings before us merits acceptance.
It is true that the documents sought to be filed by way of additional evidence are indisputably the audited balance sheets and reports submitted by the club but even so the fact remains that all the documents could have been obtained and filed by the respondent before the Trial Court itself since the judgment had been rendered by the Trial Court only on 22.2.
Even if the respondent was not able to file the documents before the Trial Court, he could have filed the documents before the Appellate Court and sought its permission to file them as additional evi dence.
Even before the High Court there was no attempt in this behalf.
No satisfactory explanation has been offered by the respondent for having failed to produce the documents before the Courts below or the High Court.
In such circum stances, we see no justification to allow C.M.P. No. 906/79 and permit the respondent to file the documents in question as additional evidence in the proceedings.
Accordingly C.M.P. No. 906/79 is dismissed.
In spite of the dismissal of C.M.P. No. 906/79, since we have sustained the view taken by the first Appellate Court and the High Court that the appellant had parted with pos session of a major portion of the leased premises in favour of the Lokpriya Social Club and such parting with possession would attract the operation of Section 13( 1 )(e) of the Act, we find no merit in the appeal and accordingly it will stand dismissed.
The appellant is, however, given three months time from today to vacate and deliver vacant posses sion of the premises to the respondent subject to his filing an undertaking in the usual terms within a period of four weeks from today.
There will be no order as to costs.
R.S.S. Appeal & Petition dismissed.
| IN-Abs | The appellant/tenant took on lease a building from the respondent.
In the Deed of Rent there was an express provi sion that the tenant should not sublet the premises to anyone.
However, shortly thereafter a social club came to be opened in the premises, where members played cards, chess etc.
every evening till about midnight.
The respondent thereupon filed.
a suit against the tenant seeking his eviction inter alia on the ground of sub letting the prem ises contrary to the terms of the lease deed.
The tenant admitted the factum of the opening of the club but contended that he had neither sublet the premises for rent nor other wise parted with its possession to the club.
The Trial Court held that the respondent had failed to prove that the appellant had sublet the premises to the Club for rent, and that the evidence only warranted an inference that the appellant had allowed the club to use the premises as a licencee and as such, the appellant was not liable to be evicted.
The Appellate Court held that the evidence did not establish any subletting of the premises for rent, but nevertheless there were adequate materials to hold that the appellant had parted with the possession of the premises in favour of the club and such parting of possession would amount to subletting within the meaning of section 13(1)(e) of the Rajasthan Premises (Control of Rent & Eviction) Act, 1950 and as such the appellant was liable to be evicted.
Consequently, the Appellate Court passed a decree for evic tion.
The High Court dismissed the second appeal of the appellant.
After the filing of the appeal in this Court the re spondent filed a civil miscellaneous petition seeking per mission to produce certain documents in the nature of the Auditor 's reports and the Managing Committee 's reports of the club as additional evidence to establish that 185 there existed a stipulation for the payment of rent by the club to the appellant, and the club was bound to pay rent to the appellant for the user of the premises, but such payment was being deferred in view of the pendency of the eviction suit between the respondent and the appellant.
Dismissing the appeal and the civil miscellaneous peti tion, the Court, HELD: (1) On a reading of sub clause (e) of Section 13(1) it is seen that a tenant will render himself liable for eviction if he has "assigned, sublet or otherwise parted with the possession of, the whole or any part of the prem ises without the permission of landlord.
" Consequently, even if a tenant parts with possession of the whole or any part of the premises without assigning or subletting the prem ises, he would still be liable to be evicted from the prem ises under the Act.
If from this perspective the user of the premises by the club is examined, it can certainly be held that the appellant had parted with the possession of the premises as envisaged in clause (e) of sub section (1) of section 13.
[188E G] (2) There is no evidence to show that the appellant had at any time exercised his right to exclusive possession and kept the premises locked and denied the members of the club entry to the premises.
[188H; 189A] (3) Section 146 of the Companies Act enjoins every company to have a registered office and certain requirements of the Companies Act have to be complied with by the club by virtue of its registered office being situated in the leased premises.
The appellant cannot prevent the club from per forming its statutory duties so long as the club has its registered office in the premises.
[189B, D] Smt.
Rajbir Kaur vs M/s. section Chokesiri & Co., JT 1988(3) SC 593, distinguished.
(4) The additional documents could have been obtained and filed before the Trial Court, the Appellate Court or the High Court and no satisfactory explanation has been offered for having failed to do so.
Hence there is no justification to allow the civil miscellaneous petition.
[191 C]
|
: Civil Appeal No. 3373 of 1979.
From the Judgment and Decree dated 24.1.
1979 of t he Karnataka High Court in Regular Second Appeal Nos. 522 a nd 591 of 1973.
R.B. Datar for the Appellants.
S.S. Javali and Ranjit Kumar for the Respondents.
The Judgment of the Court was delivered by K.N. SAIKIA, J.
This defendants ' appeal by special lea ve is from the judgment of the High Court of Karnataka dat ed 24.1.
1979 in regular Second Appeal Nos 522/1973 and 59 1/1973 which arose out of the following facts.
Mallappa Kulkarni had two sons Veerappa and Gurapp a. Veerappa is survived by his son Lingappa.
Gurappa, a railw ay employee, married Channavva (first wife) on 16.2.
1928 b ut finding her issueless and sending her to her parent 's vi l lage, he married in 1935 his second wife Chinnavva who bo re him two daughters Shakuntalabai and Annapoornavva.
Channav va (first wife) however used to pay occasional visits to Gura p pa.
Chinnavva (second wife) died in 1943 whereafter Gurap pa is said to have married Nilavva.
Gurappa retired in 1961 a nd settled permanently at Hubli constructing the suit house a nd himself occupied a part and let out the other part on ren t.
After the death of Gurappa on 29.11.1976 his issueless fir st wife Channavva demanded 1/3 share in his moveable and i m moveable properties, but finding it difficult to acquire h er share sold her right to 1/3 share to 73 Lingappa son of late Veerappa on 29.3.
1967 for Rs.5,00 0.
The other heirs having rejected Lingappa 's request f or partition he instituted O.S. No. 387/1968 in the Court of Additional Munsif, Hubli impleading Channavva, Shakuntal a bai, Annapoornavva and Nilavva (describing her as havi ng illegal connection with deceased Gurappa) as first, secon d, third and fourth defendants, respectively, for partition of 1/3 share in the suit house and the moveable properties, a nd for possession thereof.
The first defendant supported t he case of the plaintiff; the other defendants contested t he suit and averred that the fourth defendant was lawful ly married wife of Gurappa.
On the pleadings the followi ng issues, inter alia, were settled: "1.
Whether the plaintiff proves the execution of the sa le deed by defendant No. 1? 2.
Whether the 1st defendant proves that she had valid tit le to the suit property and the alienation by her in favour of the plaintiff is valid and legal? 3.
Whether the plaintiff has derived any valid title by virtue of the sale deed in his favour? 4.
Whether the defendant No. 4 proves that she is legal ly wedded wife of the deceased Gurappa?" On 13.1.1971 the trial Court passed a preliminary decr ee for partition of 1/3 share of Gurappa 's properties in t he hands of defendants 2 to 4 by metes and bounds.
The secon d, third and fourth defendants appealed to the Civil Judge at Hubli impleading the plaintiff and the first defendant as respondents in regular Appeal No. 31/1971 and the learn ed Civil Judge by his judgment dated 21.2.
1973 confirmed t he decree only modifying it to the extent of 1/6 share inste ad of 1/3 share holding the fourth defendant to be legal ly married wife of Gurappa.
The second, third and fourth d e fendants appealed therefrom in R.S.A. 591/1973 and t he plaintiff appealed in R.S.A. 522/1973.
The High Court by t he impugned judgment dated 24.1.
1979 allowed the plaintiff 's appeal R.S.A. No. 522 restoring the decree of the tri al Court for 1/3 share and dismissed R.S.A. 591/1973 holdi ng that the fourth defendant was not legally married wife of Gurappa.
Hence this appeal by defendants two and three.
Mr. R.B. Datar, the learned counsel for the appellant s, stating that the case hinges on the question of validity of fourth defendant 's 74 marriage, submits that the High Court while holding that t he fourth defendant was not legally married wife of Gurap pa overlooked vital evidence on record in proof of her custo m ary Udiki marriage with Gurappa who himself declared her as his wife wherefore she earned family pension after h er husband 's (Gurappa 's) death.
Mr. S.S. Javali the learn ed counsel for the respondents submits that there was no suff i cient evidence to establish the custom of Udiki marriage a nd at any rate no custom to support the dissolution of marria ge of the fourth defendant with her previous husband Guruli n gappa was pleaded or proved.
Mr. Datar replied that t he custom of Udiki marriage itself implied the dissolution of the earlier 'marriage of the woman and there was sufficie nt evidence in support of the custom of dissolution of t he previous marriage and thereafter the Udiki marriage of t he fourth defendant with Gurappa.
The questions, therefore, are whether sufficient pro of of custom of Udiki marriage was adduced by the fourth d e fendant; and whether Udiki marriage itself implied t he dissolution of the earlier marriage, and if not, wheth er separate custom of dissolution of her earlier marriage w as pleaded and proved.
These were the questions in issue No. 4.
From the records we find that the custom of Udiki ma r riage was pleaded by the fourth defendant, in her writt en statement, stating that after the death of Chinnavva (seco nd wife) in the year 1943 Gurappa married her (fourth defen d ant) after she divorced her first husband Gurulingappa by mutual consent and the marriage was in Udiki form at Mir aj in accordance with their caste custom and that thereaft er she continued to live with Gurappa as his wife till h is death in the year 1966.
She further stated that there was a custom of Udiki form of marriage in Panchamsale sub sect of Lingayat community to which she belonged and that there w as a custom for dissolution of marriage in her sub sect.
S he also described the formalities of Udiki form of marria ge that a saree and a blouse were handed to her by the brid e groom Gurappa and the Mangalsutra was given by Gurappa aft er uttering Mantrums.
The saree was worn by her and the Manga l sutra was tied round her neck.
Considering the above in t he context of issue No. 4 we entertain no doubt that the cust om of Udiki marriage was pleaded.
It also appears that t he custom of dissolution of marriage prevalent amongst t he caste was also compositely pleaded to the above extent.
We have to see whether the above custom or customs were prov ed by evidence.
It would be logical first to take the question of custom of dissolu 75 tion.
In the written statement filed by the second defenda nt it was stated that after Chinnavva 's death in 1943 Gurap pa married the fourth defendant who divorced her first husba nd Gurulingappa by mutual consent.
We have, therefore, to s ee whether the custom of Udiki marriage itself implied su ch prior dissolution.
The relevant texts and instances reli ed on may be referred to for this purpose.
In Virasangappa vs Rudrappa & Anr., [1885] I.L.R. 8 Madras 440 the questions were whether Kusava, daughter of Rudrava, who married Rudrappa was legitimate being born in lawful wedlock according to the custom of Lingayats a nd whether the said marriage was legalised by the custom to which the parties belonged, it was found that Rudrava was 18 years earlier married to another person when she was 12 or 13 years old and out of Rudrava 's next marriage with Rudra p pa in Udiki form Kusava was born.
The defendant contend ed that the second marriage of a wife forsaken by the fir st husband was allowed amongst the Lingayats; that such a marriage was known as 'Serai Udiki ' (giving a cloth) as distinct from 'Lagna ' or 'Dhara ', the first marriage; a nd that Rudrappa married Rudrava in the Serai Udiki form; a nd that the plaintiff and all the members of the family and t he caste recognised that marriage and Kusava was, therefor e, legitimate and entitled to inherit.
In that case eviden ce was produced to show that several marriages took place in Serail Udiki form which was accepted by the society and t he children were considered legitimate.
It was held that t he parties were Sudras, and the Lingayat owed its origin to Vasava who held that caste distinctions were unworthy of acceptance and who repudiated Brahamanical observances.
It was observed that the sect was particularly represented in Mysore, to a certain extent in Wynad, also in ceded distri ct in Coimbatore and the South Canara in Bombay Presidency a nd that instances had been before the Court in which the rema r riage of widows amongst that sect had been supported.
It w as found that Rudrava was deserted by her husband who had nev er consummated his martage and expressed himself ready to return and live with Rudrava only on the condition th at certain property was secured to him by deed.
When th is request was not acceded to, he took no further interest in Rudrava and left her without information about him and d id not prevent her from forming a new connection.
It was al so in evidence that Rudrava was treated as a lawfully wedd ed wife both by the appellant and by the other members of t he family and there was proof to show that children of ma r riages contracted by wives deserted by their husbands we re not regarded as inferior in any respect to the parties to the suit and were received in the Maths of the sect a nd initiated as the children born of a first 76 marriage.
The court also observed that in matters of th is kind heresay evidence like tradition may be received a nd direct evidence of such marriages was not always possib le and one of the ways in which they might be proved was fr om the manner of their living and from the way in which th ey were treated by the neighbouts.
Kusava was accordingly he ld legitimate.
In Mayne 's Treatise on Hindu Law and Usage 11th Edn.
at page 175 it is said: "When we examine the usages of the aboriginal races, or of those who have not come under Brahamanical influence, we find a system prevailing exactly like that described by Narada.
Among the Jat population of the Punjab, not only a widow, but a wife who has been deserted or put away by h er husband, may marry again, and will have all the fights of a lawful wife.
The same rule exists among the Lingayats of South Kanara.
In Western India, the second marnage of a wi fe or widow (called Pat by the Maharattas, and Natra in Guj a rat) is allowed among all the lower castes.
The cases in which a wife may remarry are stated by Mr. Steele as bein g, if the husband prove impotent, or the parties continual ly quarrel; if the marriage was irregularly concluded; if by mutual consent the husband breaks his wife 's neck ornamen t, and gives her a chorchittee (writing of divorcement), or if he has been absent and unheard of for twelve years.
Shou ld he afterwards return, she may live with either party at h er own option, the person deserted being reimbursed his ma r riage expenses.
A widow 's pat is considered more honourab le than a wife ' but children by pat are equally legitimate wi th those by a first marnage.
The right of divorce and seco nd marriage has been repeatedly affirmed by the Bombay Courts .
" In Encyclopaedia of Religion and Ethics edited by Jam es Hastings Vol.
we find that the Lingayats are a religious community in India, numbering nearly three mi l lions at the.
census of 19 11, of whom more than half a re found in the southern districts of the Bombay Presidency.
In the Bombay districts of Belgaum and Bijapur one third of t he population is Lingayat, and in the adjacent district of Dharwar they constitute nearly 50 per cent of the tota l. Beyond the limits of the Bombay Presidency, Lingayats a re numerous in the Mysore and Hyderabad States.
They also fo rm an important element 77 in the population of the north west corner of the Madr as Presidency.
According to that Encyclopaedia the Lingayats are Dr a vidian, that is to say, they belong to a stock that w as established in India before the arrival of the Aryans.
Of the Brahamanic triad Brahma, Vishnu and Siva they acknow l edge only the god Siva, whose emblem, the linga, they be ar on their persons.
All wearers of the linga were proclaim ed equal in the eyes of God.
The traditional Lingayat teach er is Basava.
The denial of the supremacy of the Brahman s, coupled with the assertion of the essential equality of a ll men, constituted a vital departure from the doctrines of orthodox Hinduism.
Other important innovations were: t he prohibition of child marriage; the removal of all restri c tion on widows remarrying.
The Lingayats according to t he Encyclopaedia appear to consist of three groups of s ub divisions (1) Panchamsalis with full astavarna rites ( 2) NonPanchamsalis with astavarna rites (3) Non Panchamsal is without astavarana rites.
The astavarna or eightfold sacr a ment is a principal Lingayat ceremony.
While describing t he Lingayats marriage ceremony it goes on to say that the tyi ng of the tali is the binding portion of the ceremony.
Befo re the tali is given to the bridegroom, it is passed round t he assembly to be touched by all and blessed.
As soon as t he bridegroom ties it on the bride, all those present thr ow over the pair a shower of rice.
The bridegroom places so me curemill seed and jagri, or unrefined sugar, on the bride 's head, and the bride does the same to the bridegroom.
The remarriage of widows was one of the points on whi ch Basava insisted, and was probably one of the biggest bon es of contention with the Brahmans.
Widow remarriage is allow ed at the present day, but the authorities at Ujjini see fit to disregard it.
They say that among jangams it is prohibit ed and that among the other classes of Lingayats it is t he growth of custom.
It also says: "Among Lingayats wid ow remarriage is common, and divorce is permissible.
The ord i nary law of Hindus is followed in regard to t he inheritance.
" The Gazetteer of Bombay State, Dharwar District, 19 59 contains a description of Lingayats marriage and the ma r riage rules.
At page 138 it says: "The Lingayats do n ot allow the children of brothers to intermarry, nor may si s ter 's children.
Marriage with a mother 's sister 's daught er is also prohibited.
A man may marry his sister 's daughte r, but if the sister be a younger sister such marriage is looked on with disfavour.
Widow marriage is allowed at t he present day, except amongst Jangamas.
Divorce is permiss i ble.
The chief feature of the 78 actual marriage ceremony is the tying on of the mangalsut ra (bride 's luck neck thread), is performed by the bridegro om under the Jangama 's discretion.
The ceremony begins by t he mathapad bowing to the mangalsutra, and proclaiming that it is about to be tied to the bride 's neck.
The bridegroom la ys his right hand on the bride 's fight hand, the mathapati la ys the lucky thread on the boy 's hand.
The teacher gives t he order to tye on the lucky thread and the bridegroom ties it on the girl 's neck.
" In the Castes and Tribes of Southern India by Edg ar Thurston, first published in 1909 reprinted in 1975, it is said that the marriage of widows was one of the points on which Basava insisted and that the practice is widely fo l lowed and that divorce is permitted on proof of misconduc t.
The husband can exercise his right to divorce his wife by proving before a Panchayat the alleged misconduct.
The wi fe can only claim to divorce her husband when he has be en outcasted.
Wives who have been divorced cannot remarry.
T he above answers are given on the authority of the Ujjini mut t.
It goes on to say: "There appears to be considerable dive r gence of opinion in other quarters.
By some it is positive ly asserted that divorce is not permitted under any circu m stances; that the husband and wife may separate on t he ground of incompatibility of temper or for misconduct; a nd that in these circumstances the husband is at liberty to marry again, while the wife is not.
Others say that divor ce is permitted, and that both parties are at liberty to rema r ry." In connection with the Lingayats of South Canara, it is recorded, in the Indian Law Reports that "second marriage of a wife forsaken by the first husband is allowed.
Such ma r riage is known as serai udiki (giving a cloth); as disti n guished from lagna or dhara, the first marriage." In Hindu Law by S.V. Gupte 3rd Edn.
II, page 619 we read that divorce was not allowed by general Hindu law, it was in some cases permitted by customs.
Such custom, howe v er, prevailed only amongst the lower classes, especially in the Bombay Presidency.
Customs to be recognised by the Cou rt must be valid.
Though Hindu law did not contemplate divorc e, still in those districts, where it was recognised as an established custom, it had the force of law.
In Sankarling am vs Subban, [1894] 17 Madras 479 divorce by consent was he ld valid as a matter of custom of the Pakhali caste of Ahmed a bad observing that there was nothing immoral in a cas te custom by which divorce and remarriage were permitted by mutual agreement.
There was no invalidity in a custom by which married couple on account of disagreement between th em by consent could divorce and were 79 divorced by parties approaching the headman and other rel a tions, paying certain amount and taking away tali or t he sacred thread from round the wife 's neck and giving it ba ck to the husband.
It was only when the divorce was enforc ed against the wishes of his wife that the custom permitt ed divorce would be illegal.
1n Pakhali Jina Magan vs B ai Jethi, I.L.R. it was held that a custom of divorce with mutual consent of husband and wife stated to exist among the Hindus of Pakhali caste of Ahmedabad was n ot repugnant to Hindu Law.
When it was contended that t he institution of divorce was itself opposed to the concept of Hindu law and that there was no decision of any Court in India which held a custom of divorce as valid as it w as observed that would be going too far and that it was o b served in Tagore Law Lectures, 1908, on Customs and Custo m ary Law in British India, "divorce is not contemplated by the Hindu Law but it is not repugnant to its principles, a nd if there be a well established custom in its support, it m ay override the general provisions of that law.
" It was furth er observed that there had been many cases in our Courts ar t sing out of divorce in the lower castes.
1n all those cas es even where it was held that the divorce had not been prope r ly granted, it had been taken for granted that the custom of divorce can validly exist in a particular community, esp e cially if it is a sudra community, but that divorce grant ed cannot be forced by the caste against an Unwilling person.
In Shivalingiah vs Chowdamma, A.I.R. 1956 Mys 17 it h as been held that when a woman lives for a number of years in close association with a man and bears children who a re acknowledged by the man as born to him, relations and pe r sons of the village treat them as such, there is a presum p tion of legitimacy, as vice and immorality are not usual ly attributed to such association between a man and a woman.
In Rahi vs Govinda Valad Teja, Bom 97 t he legitimacy of 'Pat ' or 'Pata ' or 'Natra ' marriages among t he Marathas of Bombay Presidency was accepted.
Relying on Hin du law of Strange and the statement of Mr. Steele who in h is Law and Custom of Hindoo castes, which has been accepted as authority by the Courts, said that in that Presidency thou gh forbidden in the present age (Kaliyug) to twiceborn caste s, it was not forbidden to sudras and that Manu appeared to have limited the prohibition to the twiceborn classes.
Th is has been referred to by Sir Gooroodas Bannerjee in h is Tagore Law Lectures on Hindu Law of Marriage and Stridhan a, lecture VI.
Devala expressly permitted re marriage of a ll classes.
Narada also said: "Nashte mrite prabrajite klaibe cha patite patau; Pan 80 chaswapatsu narinang patih anyo bidhiate.
" In cases of first husband having perished, or di ed naturally or gone abroad, or if he is impotent, or have lo st his caste, in these five calamities a woman may take anoth er husband.
In Kautilya 's Arthasastra (See R Shamasastry, 2nd Ed. p. 189) which has been claimed to have been a work during t he period 32 1 296 B.C., anterior, therefore, to Manu a nd Yajnavalkya, said: "If a husband either is of bad characte r, or is long gone abroad or has become a traitor to his kin g, or is likely to endanger the life of his wife, or has fall en from his caste, or has lost virility, he may be abandoned by his wife." He further writes: "A woman hating her husba nd cannot dissolve her marriage with him against his will.
N or can a man dissolve his marriage with his wife against h er will.
But from mutual enmity, divorce may be obtain ed (parasparam dveshanmokshah).
If a man, apprehending dang er from his wife, desires divorce (mokshamichchhet), he sha ll return to her whatever she was given (on the occasion of h er marriage).
If a woman, under the apprehension of danger fr om her husband, desires divorce, she shall forfeit her claim to her property; marriages contracted in accordance with t he customs of the first four kinds of marriages cannot be dissolved.
" There is no doubt that the principle that once a marriage always a marriage was a subsequent development.
Ancient Hindu Law also said: Tasmindesha ya acarah paramparyakramagatah; Varnanam santa i ralanam sa sadachara uchyate.
Practice that obtains from generation to generation amo ng the pure and mixed classes is called sadachara.
The next question is whether the custom of Udiki ma r riage would be a valid custom under law.
In Edward vs Je n kins, the characteristics of a val id custom are stated.
They are, that it must be of immemori al existence, it must be reasonable, it must, be certain and it must be continuous.
Every custom must have to be in exis t ence preceding memory of man and if the proof was carri ed back as far as living memory would go, it should be presum ed that the right claimed had existed from time of legal mem o ry.
This was reiterated in Mohammed Ibrahim vs Shaik Ibr a him, AIR 1922 P.C. 59.
In Ramalakshmi Ammal vs Sivanant ha Perumal Sethurayar, 14 M.I.A. 81 570, it was held that it was the essence of special usag es modifying the ordinary law, (in that case of successio n) that they should be ancient and invariable; it is furth er essential that they should be established to be so, by cle ar and unambiguous evidence and that it is only by means of such findings that the Courts can be assured of their exis t ence and that they possess the conditions of antiquity a nd continuity and certainty on which alone their legal title to recognition depends.
Custom must be proved and the burden of proof is on the person who asserts it.
The Privy Council in Raja Rajendra Narain vs Kum ar Gangananda & Ors., AIR 1925 PC 213, held that after t he existence of a custom for some years has been proved by direct evidence, it can only, as a rule, be shown to be immemorial by hearsay evidence and it is for this reas on that such an evidence is allowable as an explanation to t he general rule.
In D.C. Bara Banki vs Receiver of the Esta te of Choudhry & Ors., AIR 1928 PC 202, it has been held th at breach of a custom in a particular instance need not destr oy it for all times.
In Effuah Amissah vs Effuah Krabah, A IR , it was held that material customs must be proved in the first instance by calling witnesses acquaint ed with them until a particular custom has by frequent proof in the Court becomes so notorious that the Courts take judici al notice of it.
A custom cannot be extended by logical pro c ess.
In Saraswati vs Jagadambal, ; , it h as been held that oral evidence as to instances which can be proved by documentary evidence cannot be fairly relied up on to establish custom when no satisfactory explanation f or withholding the best evidence is given.
Custom cannot be extended by analogy and it cannot be established by a prio ri method.
Uzagar Singh vs Mst.
Jeo, ; , la id down that the ordinary rule is that a custom, general or otherwise, has to be proved under Section 57 of the Eviden ce Act.
However, nothing need be proved of which the Courts c an take judicial notice.
When a custom has been judicial ly recognised by the Court then it passes into the law of t he land as proof of it becomes unnecessary under Section 57( 1) of the Evidence Act.
"In regard to marriage", says S ir Gooroodas Banerjee, "the ordinary Hindu Law does not, a nd cannot, form the common rule for all sects alike.
" Examining the written statements and the evidence a d duced in this case we find that the fourth defendant Neela va as DW 7 deposed: "Prior to my marriage with late Gurappa, it was said that during my childhood I had married.
The pri or husband 's name was one Gurulingappa.
When I was aged abo ut 16 or 17 years, my marriage with Gurulingappa was dissolve d.
The dissolution of the marriage took 82 place in the house of my elder brother Parappa Sallapur at Hubli.
In the presence of one N.M. Patil, S.R. Hiremath, t he then Chief Officer, my eider sister and her husband and my mother 's brother 's son one Rachappa, my prior husband Gur u lingappa, the dissolution took place.
When I was aged abo ut 23 or 24 years, my marriage with the late Gurappa took pla ce at Miraj.
" The marriage which took place at Miraj was in Udiki form.
There was a custom of Udiki form of marriage in Panchamasale subject of Lingayat community.
I belong to Panchamamasale subject.
There is also a custom for dissol u tion of marriage in our section.
The dissolution of my marriage with Gurulingappa was effected by my declaration in the presence of elders, that I did not require Gurulingap pa as my husband and by similar declaration by Gurulingap pa that he did not require me as his wife.
That declaration w as followed by our mutual expression of liberty to marry anot h er spouse.
That was approved by the elders present then.
" In cross examination on behalf of the plaintiff she sai d: "Since my marriage with Gurulingappa had been performed wh en I was too young and since I did not desire to continue as his wife, a situation arose for the dissolution of t he marriage.
There was no other reason for the dissolutio n. About 13 years after my marriage with Gurulingappa, t he marriage was dissolved." "I was not residing in my husband 's house ever since my marriage with Gurulingappa but I w as residing in my parent 's house.
" She also deposed that to h er knowledge her 's was the only case where there was dissol u tion in their family from the time of their ancestors.
H er mother was married in usual form and not in Udiki form.
N or her brothers or sisters got a dissolution of their ma r riages.
She also did not know if there were instances of dissolution of marriages among the relations of Gurulinga p pa.
She denied the suggestion that there was no dissoluti on of the marriage and that she continued to be the wife of Gurulingappa.
DW 8 Parappa, eider brother of the four th defendant testified about her re marriage with Gurapp a.
According to him there was a custom in the Lingayat commun i ty for dissolution of the marriage and he could give o ut certain instances of Udiki form of marriage in their famil y, relations and friends.
In his own family his eider sister 's marriage was gone through in Udiki form.
His wife 's eid er sister was also married in Udiki form.
He did not give t he names of the persons having entered into Udiki form of marriage at that time but said that there were thousands of instances.
The dissolution of the marriage of fourth defen d ant took place in his Railway Quarters at Hubli.
Outsider s, namely, Shri S.R. Hiremath, N.M. Patil were present.
Amo ng his relations, his eider sister, his cousin, Gurulingapp a, his sister and the fourth defendant were present.
He h ad written a letter to S.R. Hiremath requesting him 83 to come over there.
He requested the other persons also to come there.
It was about 7.30 or 8.00 P.M. when the dissol u tion took place.
The fourth defendant expressed that she h ad been married during her childhood and she was not going to continue with Shri Gurulingappa.
Gurulingappa also express ed that in view of the big disparity in age between himself a nd the fourth defendant and in view of the fact that she h ad expressed her intention for dissolution, he had no objecti on for dissolution.
Thereafter, Hiremath, Patil and his rel a tions also consented for the dissolution of the marriag e. Parappa 's mother removed the Tali from the neck of t he fourth defendant and handed over the same to Gurulingapp a. Gurulingappa, thereafter, went away telling that he was at liberty to marry again; and he later had married again.
He clearly stated that as per the custom of the caste, the re was nothing more to be done for the dissolution.
This wi t ness further deposed that in 1943, the Udiki marriage of t he fourth defendant took place at Miraj.
At the time of r e marriage she was aged about 19 or 20 years.
Parappa contac t ed Gurappa for the re marriage.
Gurappa brought his fath er with him and the re marriage was fixed.
He got his eid er sister and his brother in law from Bijapur.
His moth er Rachappa and his wife were present at the time of re ma r riage in addition to those who came from Bijapur.
Gurap pa and Jamakhandi were already there.
A priest was officiati ng the re marriage.
The lady who had already undergone Udi ki marriage was requested to present the clothes to the brid e groom and gold was brought by Gurappa and that was hand ed over to the priest who in turn gave it to the bride.
Prese n tation of saris and blouses was made by Udiki form of ma r riage.
Mangalsutra had been brought and it was given to t he priest who enchanted some Mantrum and, thereafter, it w as given to Gurappa who in turn tied it round the neck of t he fourth defendant.
The above said function of tying Mangals u tra took place in God 's room.
Then the married couple o f fered their pranams to God.
Thereafter, the priest tied t he ends of the clothes of bride and bridegroom who thereafte r, prostrated before the elders to receive their blessings.
It appears that this witness was thoroughly cross examined b ut could not be dislodged.
DW 9 Gangadhara deposed that he knew as to Gurap pa having been married in Udiki form and that the fourth d e fendant Neelava was his Udiki wife.
He was present at t he marriage.
He gives vivid description of the ceremony inclu d ing the persons who were present.
He testified that t he priest enchanted mantrum and thereafter handed over t he Guladali to Gurappa and, as directed by the priest to t ie Guladali around the neck of his wife, Gurappa tied t he Guladali.
Mr. Datar says Guladali meant Tali.
The clothi ng was presented by each 84 party to the other.
As per the direction of the priest t he bride made pranams to the elders present there.
This witne ss too was thoroughly cross examined but could not be shak en from his testimony.
DW 10 Neelakantappa Patil corroborated DWs.8 and 9 in material particulars.
DW 11 Rachappa testified to the diss o lution of the fourth defendants marriage with Gurulingap pa in vivid details.
DW 12 Gurulingappa himself testified th at his marriage with the fourth defendant was dissolved, th us fully corroborating the other witnesses.
He clearly depos ed that the fourth defendant 's mother removed the Tali from h er neck and gave it to him and he took it, went home and subs e quently married again.
Mr. Datar states on behalf of the second & third defen d ants that Neelava is dead and that while she was alive s he was addressed as younger mother by the children.
It is n ot denied that till her death she enjoyed the family pension as widow of Gurappa to the knowledge of the plaintiff.
There is no evidence to show that she was not accepted as wife of Gurappa by the members of the community though in the plai nt she was described as having had illegal connections wi th Gurappa.
The learned counsel for the respondents submits that a ll the witnesses were near relations and hence could not be believed.
We do not agree.
All elders were not relatives a nd their corroborated testimony could not be discarded.
T he second and third defendants in their written statemen ts asserted that Neelava was legally married wife of Gurapp a.
The High Court ignored these vital pieces of evidence whi ch the learned Civil Judge rightly considered.
From the above evidence on record, appreciated in t he light of the case law on the subject and the authoritati ve texts as discussed above relating to the custom of dissol u tion and Udiki form of marriage prevalent among the Linga y ats who are a religious sect following teachings of Basav a, we entertain no doubt that there has been ancient and unbr o ken customs of dissolution of marriage and of serai Udi ki marriage among the Pnachamasale Lingayats which was alrea dy judicially noticed by the Courts, and that the marriage of the fourth defendant with Gurulingappa was proved to ha ve been customarily dissolved and that she was subsequent ly legally married with Gurappa in the valid customary form of Udiki marriage, whereafter, she lived with Gurappa as hu s band and wife until Gurappa died, and that thereafter s he enjoyed the family pension by dint of her being nominated as 85 wife by Gurappa to the knowledge of all concerned.
She w as accepted by the community as wife of Gurappa even after h is death.
There is, therefore, no scope for declaring t he marriage illegal posthumously.
The result is that this appeal is allowed, the judgme nt of the High Court is set aside and the judgment and decr ee of the Civil Judge are restored, without any order as to costs.
Y.L. Appe al allowed.
| IN-Abs | This is defendants ' appeal arising out of a suit for part i tion.
One Mallappa Kulkarni had two sons: Veerappa and Gura p pa.
Verrappa is survived by his son Lingappa.
Gurappa, w ho was in the service of Railways married Channavva (fir st wife) on 16.2.28 but since she remained issueless, he rema r ried in 1955 Chinnavva (second wife).
From this marriage t wo daughters were born viz. Shakuntlabai arid Annapoornav a. Consequent upon the death of his second wife Gurappa is sa id to have married Nilavva accroding to customary Udiki ma r riage.
After retirement Gurappa settled permanently at Hub li where he had house, property etc.
After the death of Gura p pa, his first wife Channavva claimed l/3rd share in t he property.
Having failed to get the same, she sold her 1/3 rd share to Lingappa.
Lingappa also could not procure the 1/3 rd share from defendants by mutual negotiation.
Thereupon he filed a suit for partition claiming his 1/3rd share in t he immovable properties left by Gurappa.
In the suit he i m pleaded Channavva (first wife) as Defendant No. 1 and t he children from 2nd wife as Defendant Nos. 2 & 3 and Nilla va was impleaded as Defendant No. 4, who was described as having illegal connections with the deceased Gurappa.
The Additional Munsiff, Hubli who tried the suit pass ed a preliminary decree for partition of l/3rd share of Gura p pa 's properties in the hands of the defendants 2 to 4 by metes and bounds.
Defendants 2 to 4 contested that Defenda nt No. 4 was lawfully married wife of Gurappa.
Defendants 2 to 4 appealed to the Civil Judge at Hub li impleading the plaintiff and Defendant No. 1 as respodent section The Civil Judge 71 modified the decree and granted I/6th share holding the 4 th defendant to be legally married wife of Gurappa.
Bei ng dissatisfied by the said order, the plaintiff as also D e fendants 2 & 3 filed appeals in the High Court.
The Hi gh Court by the impugned judgment allowed the plaintiff 's appeal and restored the decree of the trial Court for l/3 rd share and dismissed the defendant 's appeal.
The High Cou rt held that the 4th defendant was not legally married wife of deceased Gurappa.
Hence this appeal by Defendants 2 & 3 by special leave.
The question that was agitated before this Court wa s: Whether proof of custom of Udiki marriage was adduced by t he fourth defendant; and whether Udiki marriage itself impli ed the dissolution of earlier marriage and if not, wheth er separate custom of dissolution of the earlier marriage w as pleaded and proved.
Allowing the appeal, this Court, HELD: Custom must be proved and the burden of proof is on the person who asserts it.
A custom cannot be extended by logical process.
Customs cannot be extended by analogy a nd it cannot be established by a priori method.
[8lB. E] Nothing need be proved of which the Courts can ta ke judicial notice.
When a custom has been judicially reco g nised by the Court then it passes into the law of the la nd as proof of it becomes unnecessary under section 57(1) of the Evidence Act.
[81 F] From the evidence on record, appreciated in the light of the case law on the subject and the authoritative tex ts relating to the custom of dissolution and Udiki form of marriage prevalent among the Lingayats who are a religio us sect following teachings of Basava, the Court entertains no doubt that there has been ancient and unbroken customs of dissolution of marriage and of Serai Udiki marriage amo ng the Panchamasal Lingayats which was judicially noticed by the Courts, and that the marriage in the instant case, of the fourth defendant with Gurulingappa was proved to ha ve been customarily dissolved and that she was subsequent ly legally married with Gurappa in the valid customary form of Udiki marriage, whereafter, she lived with Gurappa as hu s band and wife until Gurappa died, and that, thereafter, s he enjoyed the family pension by dint of her being nominated as wife of Gurappa to the knowledge of all concerned.
She w as accepted by the community as wife of Gurappa even after h is death.
There is, therefore, no scope for declaring t he marriage illegal posthumously.
[84F H; 85A] 72 Virasangappa vs Rudrappa & Anr., Madr as 440; Pakhali Jina Magan vs Bai Jethi, I.L.R. 5; Sankarlingam vs Subban, [1894] 17 Madras 479; Shivalingi ah vs Chowdamma, A.I.R. 1956 Mys. 17; Rahi vs Govinda Val ad Teja, Bom. 97; Edward vs Jenkins, [189 6] ; Mohammed Ibrahim vs Shaik Ibrahim, AIR 19 ; Ramalakshmi Ammal vs Sivanantha Perumal Sethuraya r, 14 M.I.A. 570; Raja Rajendra Narain vs Kumar Gangananda Ors., AIR 1925 PC 213; D.C. Bara Banki vs Receiver of t he Estate of Choudhry & Ors., AIR 1928 PC 202; Effuah Amiss ah vs Effuah Krabah, AIR 1936 P.C. 147; Saraswati vs Jagada m bal; , and Uzagar Singh vs Mst.
Jeo, AIR 19 59 SC 1041, referred to.
|
Special Leave Petition (Civil) No. 7883 of 1985.
From the Judgment and Order dated 24.5.1985 of the Bombay High Court in Appeal No. 461 of 1985.
M.C. Bhandare, G.S. Chatterjee and Ms. C.K. Sucharita for the Petitioners.
B. Datta, G. Ramaswamy, Additional Solicitor Generals, A.S. Bhasme, Praveen Kumar, R.P. Srivastava, Mrs. Sushma Suri, U.J. Makhija, B.S. Bhasania, Mrs. A.K. Verma, and Turn Bangs for the Respondents.
The Judgment of the Court was delivered by KANIA, J.
Heard Counsel.
This is a Petition under Article 136 of the Constitution for special leave to appeal against a judgment and order of a Division Bench of the Bombay High Court dated May 24, 1985.
Original Petitioner No. 1 who is dead was a hutment dweller and Petitioner No. 2 is a Union representing hutment dwellers having their hutments in lands belonging to the Bombay Port Trust.
Respondents Nos. 1 to 3 to the petition are the Chairman of the Bombay Port Trust, Union of India and the State of Maharashtra respectively.
Some of the hutments in the Bombay Port Trust lands were cleared by the Bombay Port Trust in the first part of May 1985 and these hutments were demolished.
The Petitioners filed a Writ Petition No. 992 of 1985 on the Original Side of the Bombay High Court inter alia for restraining the Bombay Port Trust from carrying out any further demolition of hutments and asking for several other reliefs.
A learned Single Judge of the Bombay High Court in his judgment and order dated May 15, 1985 disposing of the petition pointed out that the Petitioners ' Counsel was unable to point out any legal 176 fight in the petitioners.
The property admittedly belongs to the Bombay Port Trust and the provisions of the Bombay Rents, Hotels and Lodging House Rates (Control) Act, 1947 are not applicable to the said property.
The learned Judge further pointed out that although the petitioners claimed that there was some policy of the State Government for providing alternative accommodation before the hutments on public lands were demolished, no statement of any such policy was brought to the attention of the Court and the learned Counsel for the State denied that there was any such policy for the Bombay Port Trust lands.
The learned Judge dismissed the writ petition but directed that status quo should be maintained till and inclusive of 30th May, 1985 on certain conditions.
The Petitioners preferred an appeal against the said order which was dismissed by a Division Bench of the Bombay High Court by the order sought to be impugned before us.
Certain interim orders were passed in the said Petition from time to time with which we are not concerned.
By an order dated January 27, 1986 a Division Bench of this Court comprising Bhagwati, C.J. and Oza, J. observed that as far as they gathered, about 406 families were involved in the operation relating to the removal of unauthorised hutments on the lands of Bombay Port Trust.
They also observed that it was fair and just that some alternative land sites be provided to those who have been continuously in occupation since at least two years prior to a cut off date, fixed by them as January 1, 1981 should be provided with alternative sites before being thrown out of the said land and directed that those hutment dwellers who have been in occupation of the Bombay Port Trust lands along with their families for the said period, shall not be thrown out unless and until, as a condition precedent, alternative sites are provided to them for occupation.
The Division Bench appointed a Commis sion for the purposes of inquiring and determining as to which of the persons whose names and addresses were given in the affidavit filed on behalf of the petitioners were in occupation of hutments in the Bombay Port Trust lands for at least two years prior to January 1, 1981.
A plain reading of the said order makes it clear that the State Government was directed to provide alternative sites only to those hutment dwellers who were ultimately found entitled to protection as being in occupation for the period set out earlier i.e. two years prior to the cut off date.
The Commission appointed by this Court submitted its Report on November 4, 1986.
The Commission pointed out that out of 411 families mentioned in the affidavit filed on behalf of the Petitioners, the Com mission could make an inquiry in regard to 302 hutment 177 dwellers.
59 of them had already left for Govandi a place in Bombay where alternative sites were presumably allotted to them and the Commission held that these persons were not staying on the Bombay Port Trust lands.
The Report makes it clear that inquiry could not be made with certain persons mentioned in the affidavit as they were not available for inquiry despite the fact that the Commission visited the sites at least six times and spent considerable time there.
Out of the persons concerned, the Commission found that, on the evidence, only 50 hutment dwellers with their families could satisfy the Commission that they were living on the site for a period of two years prior to the cut off date, namely, 1.1.1981.
The other hutment dwellers were unable to satisfy the Commission with their evidence.
The commission er, however, stated that it was possible that some of these persons, who had been unable to establish their residence for the aforesaid period, might have been unable to do so because of their poverty, lack of literacy and want of documentary proof.
It is after that making of this Report that the matter has come up before us.
As far as we can see, in view of the aforesaid order of this Court, the main task before us is to implement that order.
It was contended by Mr. Bhandare, learned Counsel for the Petitioners that although the cut off date was fixed as 1.1.1981, we should extended the cut off date in view of the time which has gone by.
He further contended that there was a policy of the State of Maharashtra not to evict unautho rised occupants on the public lands except after providing them alternative accommodation.
We are unable to accept the submissions of Mr. Bhandare.
Once the cut off date has been fixed by this Court by the aforesaid order, there is no basis for extending the cut off date merely because time has gone by since that order because that would render the entire task given to the Commission futile.
Moreover, doing so would run counter to the intention of this Court in making the aforesaid order which was to protect only those hutment dwellers who had been in occupation for at least two years prior to 1.1.1981.
Although the policy of the Govern ment of the State of Maharashtra was referred to, no policy statement was pointed out to us and the learned Counsel for the State of Maharashtra made it clear that no such policy would be applicable to the Bombay Port Trust lands.
In view of this, we are unable to take into account any alleged policy of the State.
Moreover, the Port Trust land cannot be regarded as public land as being in the occupation of the Government, either the Central Government or the State Government.
Under the circumstances, we direct that the said 50 hutment 178 dwellers along with their families who had been identified by the Commission as having occupied the said hutments for two years or more prior to the cut off date, namely, 1.1.1981, shall not be removed from their hutments and their hutments shall not be demolished except after provision of alternative sites for them.
As already directed by the earlier order, the duty of carrying out this task is imposed on the State of Maharashtra but, even if either the Central Government or the Port Trust is able to give alternative sites to these hutment dwellers, the Port Trust will be at liberty to remove these hutments.
We realise that the problem of hutment dwellers is a human problem and the removal of hutments is bound to cause an untold hardship and misery to the occupants.
However, on that consideration, we cannot prevent Bombay Port Trust, from putting its land to its own use.
It is not possible for this Court to say that whether there would be a greater injury to public interest by the removal of the unauthorised hutment dwellers or by preventing the Port Trust from put ting its own land to a proper use.
In order to obviate the hardship referred to earlier, although to a limited extent, we direct that even the hutments on the said lands which are not entitled to protection, will not be demolished for a period of six months from the date of signing of this order.
We only hope and trust that it will be possible for the State Government or the Central Government or even the Bombay Port Trust to make some provision for providing alternative sites at least to some of these hutment dwell ers, if not all.
However, we make it clear that the provi sion of such alternative sites is not made a condition precedent to the removal of the hutment dwellers or the hutments in question other than those who are entitled to protection on the basis set out earlier.
The Special Leave Petition is disposed of by this order.
There will be no order as to costs.
T.N.A. Petition disposed of.
| IN-Abs | In May 1985, some of the hutments in the Bombay Port Trust lands were cleared by the Port Trust and these hut ments were demolished.
The petitioners filed a writ petition in the Bombay High Court for restraining the Bombay Port Trust from carrying out any further demolition of the hut ments.
The writ petition was dismissed by a Single Judge of the High court.
An appeal preferred against the order of the Single Judge was dismissed by a Division Bench.
Hence the appeal by special leave to this Court.
By an interim order dated 27th January 1986 a Division Bench of this Court fixed a cut off date as January 1, 1981 for the purpose of granting relief in the form of providing alternative sites to the hutment dwellers and directed that those hutment dwellers who have been continuously in occupa tion for at least two years prior to January 1, 1981 shall not be thrown out unless and until, alternative sites are provided to them for occupation.
A Commission was also appointed to identify the persons who were eligible for alternative sites in terms of the aforesaid interim order.
In its report submitted on 4th November 1986, the Commission pointed out that only 50 hutment dwellers could satisfy the Commission that they were living on the site for a period of two years prior to the cut off date.
The other hutment dwellers were unable to do so.
174 It was contended on behalf of the petitioners that (i) in view of the time which has gone by, cut off date fixed by this Court should be extended, and (ii) the policy of the State of Maharashtra was not to evict unauthorised occupants on public lands except after providing them alternative accommodation.
Disposing of the special leave petition, it was, HELD: 1.
The problem of hutment dwellers is a human problem and the removal of hutments is bound to cause an untold hardship and misery to the occupants.
However, on that consideration, the Bombay Port Trust cannot be prevent ed from putting its land to its own use.
[178C] 2.
Once the cut off date has been fixed by this Court, there is no basis for extending the cut off date merely because time has gone by since that would render the entire task given to the Commission futile.
Moreover, doing so would run counter to the intention of this Court in making the aforesaid order which was to protect only those hutment dwellers who had been in occupation for at least two years prior to 1.1.1981.
In view of the fact that no policy state ment of the Government of the State of Maharashtra was pointed out it cannot be taken into account.
Moreover, the Port Trust land cannot be regarded as public land in occupa tion of the Government, either the Central Government or the State Government.
[177E H] 2.1.
Under the circumstances, directed that the said 50 hutment dwellers along with their families who had been identified by the Commission as having occupied the said hutments for two years or more prior to the cut off date, namely, 1.1.1981, shall not, be removed from their hutments and their hutments shall not be demolished except after provision of alternative sites for them.
The Port Trust will be at liberty to remove these hutments after giving alterna tive sites to these hutment dwellers.
[177H; 178A B] 3.
It is not possible for this Court to say whether there would be a greater injury to public interest by the removal of the unauthorised hutment dwellers or by prevent ing the Port Trust from putting its own land to a proper use.
[178C D] 4.
The State Government or the Central Government or even the Bombay Port Trust may make some provision for providing alternative sites at least to some of these hut ment dwellers.
However, 175 the provision of such alternative sites is not made a condi tion precedent to the removal of the hutment dwellers or the hutments in question other than those who are entitled to protection on the basis set out earlier.
|
ivil Appeal Nos. 88 to 93 to 1974.
From the Judgment and Order dated 10.1.
1973 of t he Bombay High Court in Appeal Nos. 102 to 107 of 1966.
Dr. V. Gauri Shankar and Ms. A. Subhashini for the Appe l lants.
Nemo for the Respondents.
The Judgment of the Court was delivered by 133 PATHAK, CJ.
These appeals by special leave raise t he question whether the High Court is right in holding that t he proviso to sub section
(1) of section 25 of the Wealth Tax Act cann ot be invoked by the Revenue on the facts of this case.
The respondent is assessed in the status of an individ u al under the Wealth Tax Act, 1957, and these appeals rela te to the assessment years 1958 59, 1959 60, and 1960 61 f or which the corresponding valuation dates are 31 March, 195 8, 31 March, 1959 and 31 March, 1960 respectively.
The respondent is a share holder in Walchand and Compa ny Private Limited.
On each of the three valuation dates s he held 140 shares in the Company.
For the purpose of asses s ment under the Wealth Tax Act, the respondent adopted t he valuation of the shares at their break up values with pa id up capital and reserves as there was no market quotation f or those shares.
When making the assessment Orders for each of the three assessment years, the Wealth Tax Officer reject ed the valuation of the shares as claimed by the responden t, and estimated their value on the basis of capitalisation of profits at six per cent for the assessment year 1960 61 a nd on the basis of the break up value with certain modific a tions for the assessment years 1958 59 and 1959 60.
T he respondent appealed to the Appellate Assistant Commission er of Wealth Tax, and the Appellate Assistant Commission er determined the value of the shares on the basis of capital i sation of the investment income at six per cent and oth er income at twelve and half per cent.
He allowed the appea ls of the respondent in part by separate orders dated 10 Nove m ber, 1961.
The Commissioner of Wealth Tax preferred appea ls to the Appellate Tribunal on the question relating to valu a tion of the shares.
The Appellate Tribunal passed a consolidated order on 23 July, 1963, dismissing the appeals for the three asses s ment years.
It observed that the valuation of the shares of the company on the relevant valuation dates determined by two valuers on arbitration in the case of another assess ee should be taken as the valuation in the case of the assess ee also.
The value of the shares, the Appellate Tribunal sai d, worked out to an amount much less than the valuation dete r mined by the Appellate Assistant Commissioner, and ther e fore, the question of enhancing the value determined by t he Appellate Assistant Commissioner did not arise.
The Appe l late Tribunal did not reduce the values determined by t he Appellate Assistant Commissioner as no appeals had be en filed by the respondent.
Meanwhile, however, during the 134 pendency of the appeals before the Appellate Tribunal, t he respondent preferred revision applications on 29 June, 19 62 under subsection (1) of section 25 to the Commissioner of Wealth Tax in respect of the aforesaid assessment years a nd contended that the valuation of the shares adopted by t he Appellate Assistant Commissioner was unreasonable and exce s sive and should be duly modified.
The Commissioner made an order dated 12 August, 1964 rejecting the revision applic a tions on the ground that they were incompetent in view of cl.
(b) of the proviso to sub section
(1) of section 25 of the Ac t.
Against that order the respondent filed a writ petition in the High Court of Bombay and contended that the Commission er had erred in dismissing the revision applications as inco m petent.
On 10 11 October, 1966 a learned Single Judge of t he High Court allowed the writ petition holding the revisi on applications to be competent, and accordingly directed t he Commissioner to entertain and dispose of the revision appl i cations in accordance with law.
The Commissioner appealed to a Division Bench of the High Court and the appeal was di s missed on 10 January, 1973.
The relevant provisions of section 25 of the Wealth Tax A ct read as follows: "Powers of Commissioner to revise orders of subordina te authorities.
The Commissioner may either of his own moti on or on application made by an assessee in this behalf, ca ll for the record of any proceeding under this Act in which an order has been passed by any authority subordinate to hi m, and may make such inquiry, or cause such inquiry to be mad e, and, subject to the provisions of this Act, pass such ord er thereon, not being an order prejudicial to the assessee, as the Commissioner thinks fit; Provided that the Commissioner shall not revise a ny order under this sub section in any case (a) where an appeal against the order lies to t he Appellate Assistant Commissioner or to the Appellate Trib u nal, the time within which such appeal can be made has n ot expired or in the case of an appeal to the Appellate Trib u nal the assessee has not waived his right of appeal; (b) where the order is the subject of an appe al before the Appellate Assistant Commissioner or the Appella te Tribunal.
135 The High Court has taken the view that cl, (b) of the prov i so to sub section
(1) of section 25 of the Act operates as a bar to a revision application by an assessee before the Commission er only where the assessee has also filed an appeal before t he Appellate Tribuanl.
According to the High Court, the b ar does not come into operation against an assessee where t he appeal before the Appellate Tribunal has been filed by t he Revenue.
It seems to us that the view taken by the Hi gh Court cannot be sustained.
Where an appeal is filed befo re the Appellate Tribunal against an order of the Appella te Assistant Commissioner, the impugned order merges in t he order of the Appellate Tribunal when the appeal is dispos ed of on merits.
If meanwhile a revision application has be en filed before the Commisioner against the same order of t he Appellate Assistant Commissioner, it will not be open 10 t he Commissioner to pass any order in revision against the ord er of the Appellate Assistant Commissioner as the latter wi ll have merged with the order of the Appellate Tribunal.
It is immaterial that the appeal and the revision application ha ve not been filed by the same party.
This would be plainly so as in the present case, the subject matter of the appe al before the Appellate Tribunal is the same as that of t he revision application before the Commissioner.
Here, t he subject matter of the appeal before the Appellate Tribun al was the valuation of the shares held by the respondent.
So it was also in the revision application before the Commi s sioner.
In the circumstances, we are unable to agree with t he reasoning adopted by.
the High Court.
The High Court h as proceeded on the view that it was open to the Commission er to dispose of the revision applications filed by the r e spondents.
The High Court, it seems to us, omitted to co n sider that the appeals filed before the Tribunal had be en disposed of, and the impugned order of the Appellate Assis t ant Commissioner must be taken to have merged in the ord er of the Appellate Tribunal.
The revision applications, in short, had become infructuous.
What the respondent should have done, on coming to kn ow of the filing of the appeal by the Revenue before the Appe l late Tribunal, was to have withdrawn the revision petitio ns filed before the Commissioner and filed her own appea ls before the Appellate Tribunal with an application for cond o nation of delay under sub section
(3) of section 24, in case t he period of limitation had expired, and accordingly both t he sets of appeals would have been disposed of by the Appella te Tribunal.
In case the respondent came to know of the fili ng of the appeals by the Revenue before the Appellate Tribun al and had not yet applied in revision to the Commissioner s he should not have filed the revision 136 applications but should have preferred her own appea ls before the Appellate Tribunal.
It must be noted that t he Appellate Tribunal is a superior body to the Commissione r, as will be clear from sub section
(1) of section 26 which provid es that an appeal will lie to the Appellate Tribunal from an order under sub section
(2) of section 25 of the Commissioner.
The re would have been no difficulty in the Appellate Tribun al considering the appeals of both parties and passing suitab le orders in regard to the valuation of the shares.
There is no difficulty now in dealing with such a situation in view of sub section
(2A) of section 24.
In the case of the other respondents, there is a simil ar history of proceedings with similar orders passed therei n, and this judgment will be considered as disposing of t he appeals filed here in those cases also.
In the result, the appeals are allowed and the impugn ed orders of the Division Bench and the Single Judge on t he writ petitions are set aside and the writ petitions a re dismissed.
In the circumstances of the case there is no order as to costs.
H.L.C. Appeals allowed.
| IN-Abs | Sub section
(1) of section 25 of the Wealth Tax Act, 1957 inves t ing the Commissioner with the power to revise an ord er passed by any authority subordinate to him stipulates in c l. (b) of the proviso thereto that the power of revision sha ll not extend to an order which is the subject of an appe al before the Appellate Assistant Commissioner or the Appella te Tribunal.
The respondent, a share holder in a company, adopte d, for the purpose of assessment under the Act, valuation of shares at their breakup values with paid up capital a nd reserves which was rejected by the Wealth Tax Officer w ho estimated their value on the basis of capitalisation of profits for the assessment year 1960 61 and on the basis of the break up value with certain modifications for the a s sessment years 1958 59 and 1959 60.
The respondent 's appea ls were partly allowed by the Appellate Assistant Commission er against which the Commissioner of Wealth Tax preferr ed appeals to the Appellate Tribunal.
The Appellate Tribun al dismissed the appeals.
During the pendency of the appea ls before the Tribunal, the respondent preferred revisi on applications to the Commissioner of Wealth Tax and contend ed that the valuation of the shares adopted by the Appella te Assistant Commissioner was unreasonable and excessive a nd should be duly modified.
The Commissioner rejected t he applications on the ground that they were incompetent in view of cl.
(b) of the proviso to sub section
(1) of section 2 5.
Against that order the respondent filed a writ petiti on which was allowed by a Single Judge of the High court hol d ing that the revision applications were competent since t he aforesaid provision would not operate as a bar against an assessee in a case where the appeal before the Appella te Tribunal is filed by the Revenue.
An appeal filed again st his order was 132 dismissed by a Division Bench of the High Court.
Allowing the appeal, HELD: Where an appeal is filed before the Appella te Tribunal against an order of the Appellate Assistant Commi s sioner, the impugned order merges in the order of the Appe l late Tribunal when the appeal is disposed of on merits.
If meanwhile a revision application has been filed before t he Commissioner against the same order of the Appellate Assis t ant Commissioner, it will not be open to the Commissioner to pass any order in revision against the order of the Appe l late Assistant Commissioner as the latter will have merg ed with the order of the Appellate Tribunal.
It is immateri al that the appeal and the revision application have not be en filed by the same party.
This would be plainly so as in t he present case, the subject matter of the appeal before t he Appellate Tribunal is the same as that of the revisi on application before the Commissioner.
[135B D] In this case the High Court omitted to consider that t he appeals filed before the Tribunal had been disposed of, a nd the impugned order of the Appellate Assistant Commission er had merged in the order of the Appellate Tribunal renderi ng the revision applications infructuous.
What the responde nt should have done was to file her own appeals before t he Appellate Tribunal.
It must be noted that the Appella te Tribunal is a superior body to the Commissioner, as is cle ar from sub section
(1) of section 26 which provides that an appeal sha ll lie to the Appellate Tribunal from an order under sub section
( 2) of section 25 of the Commissioner.
There would have been no difficulty in the Appellate Tribunal considering the appea ls of both parties and passing suitable orders in regard to t he valuation of the shares.
[135F G; 136A B]
|
58, 83, 84, 103, 117, 126, 127, 128, 248, 144 & 145 of 1956 & 129 of 1957.
Petitions under Article 32 of the Constitution of India for enforcement of Fundamental Rights.
H. J. Umrigar, N. H. Hingorani and A. G. Ratnaparkhi, for the petitioners in all the petitions except Petition No. 103 of 1956.
The impugned Acts infringe the fundamental rights under article 19(1)(g) of the petitioners who are butchers, tanners, gut merchants, curers and cattle dealers to carry on their respective trades.
Where, as in the present case, the enactment on the face of it violates a fundamental right the burden lies on those who support it to show that it falls within the purview of cl.
(6) of article 19.
Saghir, Ahmed vs The State of U.P., ([1955] 1 S.C.R. 707 at 726); 632 Chiranjitlal Chowdhuri vs The Union of India, ([1950] S.C.R. 869 at 891 892).
The impugned Acts put a total ban on the trade and business of the petitioners who kill only cattle.
Total prohibition of a trade which is not immoral or obnoxious can never be reasonable restriction within the meaning of el.
(6) of article 19.
Chintaman Rao vs The State of Madhya Pradesh, ([1950] S.C.R. 759 at 765); R.M. Sheshadri vs The District Magistrate ( ; at 689, 690); Cooverjee B. Bharucha vs The Excise Commis sioner, ( ; ; Rashid Ahmed.
The Municipal Board, Kairana, ([1950] S.C.R. 566).
Total ban on the slaughter of cattle is not in the interests of the general public.
Animal husbandry will suffer by a total ban.
There is shortage of fodder and pasture in the country and the useless and uneconomic cattle will deprive the useful cattle of these things.
Setting up of Gosadans for the uneconomic cattle will be a tremendous waste of public money.
[Counsel referred to various official reports in this connection.] The impugned Acts create an odious discrimination between butchers and persons dealing solely in cows, bulls, etc., and those dealing in sheep and goats, and offend article 14.
These Acts which single out the petitioners ' community which kills only cows, bulls, etc., are hostile and discriminatory legislation.
Ye Cong Eng vs Trinidad, ; at 1071); Fowler vs Rhode Island, ; ; Lane vs Wilson; , at 1287); Ligget Co. vs Baldrige, ; The impugned Acts also contravene article 25 as they prohibit the Mussalmans from performing the religious practice of the community to sacrifice the cow on the occasion of Bakr Id. Ratilal Panachand Gandhi vs The State of Bombay, ([1954] S.C.R. 1055 at 1063).
The directive principles of State policy set out in article 48 can never override fundamental rights.
The State of Madras vs Sm.
Champakam Dorairajan, ([1951]) S.C.R. 525 at 530); Saghir Ahmed 's Case, ( [1955] ) 1 S.C.R. 707 at 727).
The impugned Acts traverse, beyond the directive principles in article 48.
633 The Bihar and the Madhya Pradesh Acts which affect inter State trade in cattle and beef offend article 301 and are void as the assent of the President was riot taken before enacting them.
Frank Anthony and K. L. Mehta, for the petitioners in Petition No. 103 of 1956.
Section 9 of the U. P. Prevention of Cow Slaughter Act makes the slaughtering of cattle a cognisable and non bailable offence.
This and other provisions of the Act are ex facie restrictions on the right of the petitioners to carry on their trade.
The onus is on the respondents to show that the restrictions are reasonable restrictions in the interests of the general public.
Chintaman Rao vs The State of Madhya Pradesh, ([1950] section C. R. 759 at 763); Seghir Ahmed vs The State of U. P., ([1955] 1 section C. It.
707 at 726).
The legislation is colourable and mala fide and is inspired by religious motives.
State of Madras vs V. G. Rao, ([1952] section C. R. 597).
Article 48 in so far as its imposes blanket ban on cow would have to yield to article 19 (1) (g).
The restrictions in the Act amount to total prohibition and extinction of the trade of beef butchers.
Saghir Ahmed 's case; Dwarka Prasad Laxmi Narain vs The State of U. P., ( ; , Fairmout Creamery Co. vs Minnesota, ; it 897).
The impugned Act offends article 14 as it discriminates against the beef butchers.
These butchers have a legal right to slaughter cow for food or sacrifice.
Naubahar Singh vs Qadir Bux, (A. 1.
R. 1930 All. 753); Shahbazkhan vs Umrao Puri, (I. L. R. 30 All. 181); Emperor vs
Muhammad Yakub, (I. L. R. 32 All.
C. K. Daphtary, Solicitor General of India, with Mahabir Prasad, Advocate General of Bihar and section P. Varma (respondent in Petitions Nos. 58, 83 and 84 of 1956), and with R. H. Dhebar, for the State of Bombay (respondent in Petition No. 117 of 1956).
The legislature has thought fit that slaughter of cattle should be stopped in the inter states of animal husbandry and public policy.
It is not for the Court to say that such a policy should not have been adopted.
Both on the question of policy at id the extent of the restrictions 634 the Court should interfere only if it is convinced that in no view of the matter could the restrictions be reasonable.
There are two conflicting opinions on this controversial matter, i. e., whether there should be total ban or only partial ban.
In such a case the opinion of the legislators must prevail and the Court should not interfere where there is controversy as to facts.
State of Madras vs V. G. Rao, ([1952] section C. R. 597 at 606); The State of Bihar vs Maharajadhiraja Sir Kameshwar Singh, ([1952] section C. R. 889 at 941); Arumugham vs State of Madras, (I. L. R. [1953] Mad. 937).
Unless it can be said that the restrictions have no bearing on the object sought to be achieved the legislation must be upheld.
Article 37 enjoins the State to apply the directive principles of State policy in Part IV of the Constitution in making law.
, The legislation is in accordance with the direction given in article 48.
The object of the legislation is not to control any trade or industry but to improve the breed of cattle and to organise animal husbandry and agriculture.
Unless the legislation directly hits trade or business it does not infringe article 19 (1) (g).
A. K. Gopalan vs The State, ( ; at 101); Ram Singh vs The State of Delhi, ( [1951] section C. R. 451 at 455 457); R. section Ram Jawaya Kapur vs The State of Punjab, ([1955] 2 KS.
C. R. 225); State of Bombay vs R. M. D. Chamar baugwala, ( A. I. R. at 721).
B.Sen and R. H. Dhebar, for the State of Bombay (respondent in Petitions Nos.
126 to 128 and 248 of 1956), and for the State of Madhya Pradesh (respondent in Petition No. 144 of 1956).
M.Adhicary, Advocate General for the, State of Madhya Pradesh and I. N. Shroff, for the State of Madhya Pradesh (respondent in Petition No. 145 of 1956), adopted the arguments of C. K. Daphtary.
H. N. Sanyal, Additional Solicitor General of India, G.C. Mathur and C. P. Lal, for the State of U. P. (respondent in Petitions Nos. 103 of 1956 and 129 of 1957).
The provisions of the U. P. Act have a reasonable relation to the purpose in view i. e. the directive 635 in article 48 and consequently the Act cannot be said to offend article 19 (1) (g).
Chintaman Rao vs The State of Madhya Pradesh, ([1950] section C. R. 759 at 763).
According to the facts and figures given in the Gosamvardhan Enquiry Committee 's Report the cattle population was actually decreasing and total ban on slaughter was necessary to protect and preserve the cattle.
The State of U. P. had made ample provisions for looking after the decrepit cattle, and such cattle also was not uneconomic as it yielded hides and manure.
The U. P. Act which prohibits the slaughter of cattle but not that of buffaloes does not offend article 14 as the discrimination is based upon proper classification.
The buffalo does not require any protection.
The female buffalo is in no danger as its yield of milk is very high.
The he buffalo is not very useful for draught purposes and there is no need to protect it.
Besides, the buffalo population is steadily increasing.
The U. P. Act does not violate article 25.
Article 25 of our Constitution is similar to article 8 of the Irish Constitution.
There is no religious compulsion on the Mussalmans to sacrifice a cow on Bakr Id Day.
Thakurdas Bhargava, as amicus curiae.
The directive principles of State policy in Part IV of the Constitution are superior to fundamental rights and the enactments which are in pursuance of the directions given by article 48 are valid and constitutional even though they may infringe the fundamental rights of the petitioners.
The total ban on cow slaughter in the impugned Acts is justified and is in the interests of the general public.
The facts and figures given in the official reports are inaccurate, and there is no real shortage of fodder or pasture land.
There is shortage of milk in the country and it is essential to protect the cow.
The bullock takes the largest share in meeting the power requirement for our agricultural production.
Cow dung manure contributes about rupees 63 crores per year to our national income.
H.J. Umrigar, in reply.
Frank Anthony, also replied.
636 1958.
April 23.
The Judgment of the Court was delivered by DAS C. J.
These 12 petitions under article 32 of our ,Constitution raise the question of the constitutional validity of three several legislative enactments banning the slaughter of certain animals passed by the States of Bihar, Uttar Pradesh and Madhya Pradesh respectively.
The controversy concerning the slaughter of cows has been raging in this country for a number of years and in the past it generated considerable illwill amongst the two major communities resulting even in riots and civil commotion in some places.
We are, however, happy to note that the rival contentions of the parties to these proceedings have been urged before us without importing into them the heat of communal passion and in a rational and objective way, as a matter involving constitutional issues should be.
Some of these petitions come from Bihar, some from U. P. and the rest from Madhya Pradesh, but as they raise common questions of law, it will be convenient to deal with and dispose of them together by one common judgment.
Petitions Nos.
58 of 1956, 83 of 1956 and 84 of 1956 challenge the validity of the Bihar Preservation and Improvement of Animals Act, 1955 (Bihar 11 of 1956), hereinafter referred to as the Bihar Act.
In Petition No. 58 of 1956 there are 5 petitioners, all of whom are Muslims belonging to the Quraishi community which is said to be numerous and an important section of Muslims of this country.
The members of the community are said to be mainly engaged in the butchers ' trade and its subsidiary undertakings such as the sale of hides, tannery, glue making, gut making and blooddehydrating, while some of them are also engaged in the sale and purchase of cattle and in their distribution over the various areas in the State of Bihar as well as in the other States of the Union of India.
Petitioners Nos. 1 and 2 are butchers and meat vendors who, according to the petition, only slaughter cattle and not sheep or goats and are called " Kasais " in contradistinction to the " 'Chicks " who slaughter 637 only sheep and goats.
After slaughtering the cattle these petitioners sell the hides to tanners or bide merchants who are also members of their community and the intestines are sold to gut merchants.
It is said that there are approximately 500 other Kasais in Patna alone apart from 2 lacs of other Kasais all over the State of Bihar.
The correctness of these figures is not admitted by the respondent State but we do not doubt that the number of Kasais is considerable.
Petitioner No. 3 is the owner of a tanning factory and Petitioner No. 4 is a gut merchant, while Petitioner No. 5 is the General Secretary of Bihar State Jamiatul Quraish.
In petition No. 83 there are 180 petitioners residing at different places in the State of Bihar who are all Muslims whose occupation is that of Kasais or cattle dealers or exporters of hides.
In Petition No. 84 there are 170 petitioners all residents of Patna District who are also Muslims belonging to the Quraishi community and who carry on business as Kasais or dealers of cattle.
All the petitioners in these three petitions are citizens of India.
The Bill, which was eventually passed as the Bihar Act, was published in the Bihar Gazette on April 20, 1953.
The scheme of the Bill, as originally drafted, was, it is said, to put a total ban only on the slaughter of cows and calves of cows below three years of age.
The Bill was sent to a Select Committee and its scope appears to have been considerably enlarged, as will be seen presently.
The Bill, as eventually passed by the Bihar Legislature, received the assent of the Governor on December 8, 1.955, and was published in the Official Gazette on January 11, 1956.
Section 1 of the Act came into force immediately upon such publication, but before any notification was issued under sub section
(3) of section 1 bringing the rest of the Act or any part of it into force in the State or any part of it, the present petitions were filed in this Court challenging the consti tutional validity of the Act.
On applications for an interim order restraining the State of Bihar from issuing a notification under section 1(3) of the Act bringing the Act into operation having been made in these petitions, the respondent State, by and through the learned 638 Solicitor General of India, gave an undertaking not to issue such notification until the disposal of these petitions and, in the premises, no order was considered necessary to be made on those applications.
Petition No. 103 of 1956 has been filed by two petitioners, who are both Muslims residing in Uttar Pradesh and carrying on business in that State, the first one as a hide merchant and the second as a butcher.
Petitioners in Petition No. 129 are eight in number all of whom are Muslims residing and carrying on business in Uttar Pradesh either as gut merchants or cattle dealers, or Kasais or beef vendors or bone dealers or hide merchants or cultivators.
All the petitioners in these two applications are citizens of India.
By these two petitions the petitioners challenge the validity of the Uttar Pradesh Prevention of Cow Slaughter Act, 1955 (LT. P. 1 of 1956), hereinafter referred to as the U. P. Act and pray for a writ in the nature of mandamus directing the respondent State of Uttar Pradesh not to take any steps in pursuance of the U. P. Act or to interfere with the fundamental rights of the petitioners.
Petitions Nos. 117 of 1956, 126 of 1956, 127 of 1956, 128 of 1956, 248 of 1956, 144 of 1956 and 145 of 1956 have been filed by 6, 95, 541, 58, 37, 976 and 395 petitioners respectively, all of whom are Muslims belonging to the Quraishi Community and are mainly engaged in the butchers ' trade and its subsidiary undertaking such as the supply of hides, tannery, glue making, gutmaking and blood dehydrating.
Most of them reside at different places which, at the dates of the filing of these petitions were parts of the State of Madhya Pradesh, but which or parts of which have, in the course of the recent re organisation of the States, been transferred to and amalgamated with the State of Bombay.
In consequence of such re organisation of the States the State of Bombay has had to be substituted for the respondent State of Madhya Pradesh in the first five petitions and to be added in the sixth petition, for a part of the district in which the petitioners resided had been so transferred, while the State of Madhya Pradesh continues to be the respondent in the seventh 639 petition.
By these petitions the petitioners %II of whom are citizens Of India, challenge the validity of the C. P. and Berar Animal Preservation Act, 1949 (C. P. and Berar Lll of 1949), as subsequently amended.
In order to appreciate the arguments advanced for and against the constitutional validity of the three impugned Acts it will be necessary to refer to the relevant provisions of the Constitution under or pursuant to which they have been made.
Reference must first be made to article 48 which will be found in Chapter IV of the Constitution which enshrines what are called the directive principles of )State policy.
Under article 37 these directive principles are not enforceable by any court of law but are nevertheless fundamental in the governance of the country and are to be applied by the State in making laws.
Article 48 runs thus: Organisation 48.
The State shall endeavour of agriculture and to organise agriculture 'and animal husbandry.
animal husbandry oil modern and scientific lines and shall, in parti cular, take steps for preserving and improving the breeds, and prohibiting the slaughter, of cows and calves and other milch and draught cattle.
" The principal purpose of this article, according to learned counsel for the petitioners, is to direct the ,State to endeavour to organise agriculture and animal husbandry on modern and scientific lines and the rest of the provisions of that article are ancillary to this principal purpose.
They contend that the States are required to take steps for preserving and improving the breeds and for prohibiting the slaughter of the animals specified therein only with a view to implement that principal purpose, that is to say, only as parts of the general scheme for organising our agriculture and animal husbandry on modern and scientific lines.
Learned counsel for the petitioners refer to the marginal note to article 48 in support of their contention on this part of the case.
They also rely on entry 15 640 in List II of the Seventh Schedule to the Constitution.
That entry reads: " Preservation, protection and improvement of stock and prevention of animal diseases; veterinary training and practice.
" There is no separate legislative head for prohibition of slaughter of animals and that fact, they claim, lends support to their conclusion that the prohibition of the slaughter of animals specified in the last part of article 48 is only ancillary to the principal directions for preservation, protection and improvement of stock, which is what is meant by organising agriculture and animal husbandry.
Learned counsel for the respondents and Pandit Thakurdas Bhargava, who appears as amicus cutriae, on the other hand, maintain that the article contains three distinct and separate directions, each of which should, they urge, be implemented independently and as a separate charge.
It is not necessary for us, on this occasion, to express a final opinion on this question.
Suffice it to say that there is no conflict between the different parts of this article and indeed the two last directives for preserving and improving the breeds and for the prohibition of slaughter of certain specified animals represent, as is indicated by the words " in particular ", two special aspects of the preceding general directive for organising agriculture and animal husbandry on modern and scientific lines.
Whether the last two directives are ancillary to the first as contended for by learned counsel for the peti tioners or are separate and independent items of directives as claimed by counsel on the other side, the directive for taking steps for preventing the slaughter of the animals is quite explicit and positive and contemplates a ban on the slaughter of the several categories of animals specified therein, namely, cows and calves and other cattle which answer the description of milch or draught cattle.
The protection recommended by this part of the directive is, in our opinion, confined only to cows and calves and to those animals which are presently or potentially capable of yielding milk or of doing work as draught cattle but does not, from the very nature of the purpose for which it is obviously recommended, extend to cattle which at 641 one time were milch or draught cattle but which have ceased to be such.
It is pursuant to these directive principles and in exercise of the powers conferred by articles 245 and 246 of the Constitution read with entry 15 in List 11 of the Seventh Schedule thereto that the, Legislatures of Bihar, Uttar Pradesh and Madhya, Pradesh have respectively enacted the statutes which are challenged as unconstitutional.
In order properly, to appreciate the meaning and scope of the impugned Acts it has to be borne in mind that each one of those Acts is a law with respect to " preservation, protection and improvement of stock ", and their constitutional validity will have to be judged in that context and against that background.
Keeping this consideration in view, we proceed now to examine the relevant provisions of the three Acts.
The title of the Bihar Act is " An Act to provide for the preservation and improvement of certain animals in the State of Bihar." Sub section (3) of section 1 provides that that section shall come into force at once and the remaining provisions of the Act or any of them shall come into force on such date as the State Government may, by notification, appoint and that different dates may be appointed for different provisions and for different areas.
Section 2 is the definition section and the following definitions are to be noted: (a) " Animal " means (i)bull, bullock, cow, heifer, buffalo, calf, sheep, goat and any other ruminating animal; (ii) poultry; and (iii) elephant, horse, camel, ass, mule, dog, swine and such other domesticated animals as may be specified in this behalf by the State Government by notification in the Official Gazette; (b). . . . . . . . . . (c) " bull " means an uncastrated male above the age of three years belonging to the species of bovine cattle ; (d) " bullock " means a castrated male above the age of three years belonging to the species specified in clause (e)" calf " means a female or a castrated or 642 uncastrated male, of the age of three years and below belonging to the species specified in clause (c); (f). . . . . . . . . . (g) " cow " means a female above the age of three years belonging to the species specified in clause (e) ; Section 3, which is the principal section for the purposes of the Bihar Petitions, runs as follows: " 3.
Prohibition of slaughter of cow, calf, bull or bullock.
Notwithstanding anything contained in any law for the time being in force or in any usage or custom to the contrary, no person shall slaughter a cow, the calf of a cow, a bull or a bullock; Provided that the State Government may, by general or special order and subject to such conditions as it may think fit to impose, allow the slaughter of any such animal for any medicinal or research purposes.
" Section 4 provides for penalties for contravention or attempted contravention or abetment of contravention of any of the provisions of section 3.
The remaining provision; in the following three chapters are not material for our present purpose.
It will be noticed that the words " bull ", " bullock ", " calf " and " cow" have been defined in cls.
(c), (d), (e) and (g) of section 2 as belonging to the species of bovine cattle.
The expression " species of bovine cattle " is wide enough to in elude and does in ordinary parlance include buffaloes,(male, or female adults or calves).
Therefore, the corresponding categories of buffaloes, namely, buffalo bulls, buffalo bullocks, buffalo calves and she buffaloes must be taken as included in the four defined categories of the species of bovine cattle and as such within the prohibition embodied in section 3 of the Act.
It is to be, noted, however, that the allegations in the petitions and the affidavits in opposition proceed on the assumption that buffaloes (male or female adults or calves) were not within the protection of the section and, indeed, when the attention of learned counsel for the petitioners was drawn to the reference to the " species of bovine cattle " in each of the four definitions, they 643 still made an attempt to support the latter view by suggesting that if buffaloes were to be included within the words defined in cls.
(c), (d), (e) and (g), then there was no necessity for specifying it separately in the definition of " animal " in el.
This argument does not appear to us to be sound at all, for, then, on a parity of reasoning it was wholly unnecessary to specify heifer " in the definition of " animal ".
If heifer is not to be included in the definition of cow " because heifer " is separately enumerated in 'the definition of animal " then an astounding result will follow, namely, that the operative part of section 3 will not prohibit the slaughter of " heifer " at all a result which obviously could not possibly have been intended.
The obvious reason for the enumeration of the different categories of animals in the definition of " animal " must have been to provide a word of wide import so that all those sections where the wider word " animal " is used may apply to the different kinds of animals included within that term.
If the intention of the Bihar legislature was to exclude buffaloes (male or female adults or calves) from the protection of section 3 then it must be said that it has failed to fulfil its intention.
The U. P. Act is intituled " An Act to prohibit the slaughter of COW and its progeny in Uttar Pradesh.
" The preamble to the Act recites the expediency " to prohibit and prevent the slaughter of cow and its progeny in Uttar Pradesh".
Although the 17.
P. Act has been made under entry 15 in List 11 and presumably pursuant to the directives contained in article 48 nowhere in the Act is there any express reference whatever to the " preservation, protection or improvement of stock.
" Section 2 defines " beef " as meaning the flesh of cow but does not include the flesh of cow contained in sealed containers and imported as such in Uttar Pradesh.
Clause (b) is very important, for it defines " cow " as including a bull, bullock, heifer, or calf.
Section 3, which is the operative section runs thus: 3.
Notwithstanding anything contained in any 82 644 other law for the time being in force or any usage or custom to the contrary, no person shall slaughter or cause to be slaughtered or offer or cause to be offered for slaughter any cow in any place in Uttar Pradesh." Two exceptions are made by section 4 in respect of cows suffering from contagious or infectious disease or which is subjected to experimentation in the interest of medical or public health research.
Section 5 prohibits the sale or transport of beef or beef products in any form except for medicinal purposes and subject to ' the provisions of the exception therein mentioned.
Section 6, on which counsel for the State relies, provides for the establishment, by the State Government or by any local authority wherever so directed by the State Government, of institutions as may be necessary for taking care of uneconomic cows.
Under section 7 the State Government may levy such charges or fees, as may be prescribed for keeping uneconomic cows in the institutions.
Section 8 provides for punishment for contravention of the provisions of sections 3, 4 and 5.
Section 9 makes the offences created by the Act cognisable and non bailable.
Section 10 gives power to the State Government to make rules for the purpose of carrying into effect the provisions of the Act.
It should be noted that the U. P. Act protects the " cow ", which, according to the definition, includes only bulls, bullocks, heifer and calves.
There is no reference to the species of bovine cattle and, therefore, the buffaloes (male or female adults or calves) are completely outside the protection of this Act.
The C. P. and Berar Act of 1949 was originally intituled " An Act to provide for preservation of certain animals by controlling the slaughter thereof," and the preamble recited that it was " expedient to provide for the preservation of certain animals by controlling the slaughter thereof." ,Animal " was defined in section 2 as meaning an animal specified in the schedule.
The schedule specified the following categories of animals, namely, (1) bulls, (2) bullocks, (3) cows, (4) calves, (5) male and female buffaloes and (6) buffalo calves.
Section 4 originally prohibited the slaughter 645 of an " animal " without certificate.
There was then no total ban on the slaughter of any animal as defined.
,In 1951, the C. P. and Berar Animal Preservation Act, 1949, was amended by the Madhya Pradesh Act XXIII of 1951.
By this amending Act the words, " by prohibiting or " were added to the long title and the preamble before the word " controlling " and a new clause was added to section 2 as el.
(i) (a) defining " cow " as including a female calf of a cow and sub section
1 of section 4 was amended so as to read as follows: "(1) Notwithstanding anything contained in any other law for the. time being in force or in any usage to the contrary, no person (a) shall slaughter a cow; or (b) shall slaughter any other animal unless he has obtained in respect of such other animal a certificate in writing signed by the executive authority and the veterinary officer for the area in which the animal is to be slaughtered that the animal is fit for slaughter." Thus a total ban was imposed on the slaughter of cows and female calf of a cow and the male calf of a cow, bull, bullock, buffalo (male or female adult or calf) could be slaughtered on obtaining a certificate.
The Act was further amended in 1956 by Act X of 1956 substituting for the amended definition of " cow " introduced by the amending Act of 1951 as cl.
(1)(a) of section 2 of the C. P. and Berar Animal Preservation Act, 1949, a new definition of " cow " as including a male or female calf of a cow, bull, bullock or heifer and a new schedule specifying only (1) cows, (2) male and female buffaloes and (3) buffalo calves was substituted for the original schedule to the Act.
Shortly put the position in Madhya Pradesh has been this: while under the C. P. and Berar Animal Preservation Act, 1949, as it originally stood, the slaughter of all categories of animals mentioned in the original schedule were only controlled by the requirement of a certificate from the appropriate authority before the actual slaughter, by the amending Act XXIII of 1951, a total ban was imposed on the slaughter of " cows " which was then defined as including only a female calf of a 646 cow and the slaughter of all other categories of animals coming within the original schedule was controlled and finally after the amending Act X of 1956, there is now a total ban on the slaughter of " cows " which by the new definition includes a male or female calf of a cow, bull, bullock or heifer so that the male and female buffaloes and buffalo calves (male and female) can still be slaughtered but on certificate issued by the proper authorities mentioned in the Act.
The Madhya Pradesh Act X of 1956, amending the C. P. and Berar Animal peservation Act, 1949, received the assent of the Governor on May 18, 1956.
The C. P. and Berar Animal Preservation Act, 1949, as amended up to 1956, is hereinafter referred to as the Madhya Pradesh Act. ' To sum up, under the Bihar Act there is in the State of Bihar a total ban on slaughter of all categories of animals of the species of bovine cattle.
In Uttar Pradesh there is, under the If.
P. Act, a total ban on the slaughter of cows and her progeny which include bulls, bullocks, heifer or calves.
The buffaloes (male or female adults or calves) are completely outside the protection of the Act.
In the present Madhya Pradesh and the districts which formerly formed part of Madhya Pradesh but have since been transferred to the State of Bombay and where the Madhya Pradesh law including the Madhya Pradesh Act still applies, there is a total ban on the slaughter of cow, male or female calves of a cow, bulls, bullocks, or heifers and the slaughter of buffaloes (male or female adults or calves) are controlled in that their slaughter is permitted under certificate granted by the proper authorities mentioned in the Act.
No exception has been made in any of these three Acts permitting slaughter of cattle even for bona fide religious purposes such as has been made, say, in the Bombay Animal Preservation Act, 1948 (Bom.
LXXXI of 1948).
As already stated the petitioners, who are citizens of India, and Muslims by religion, mostly belong to the Quraishi community and are generally engaged in the butchers ' trade and its subsidiary undertakings such as supply of hides, tannery, glue making, gut making 647 and blood de hydrating, Those, who carry on the butchers trade, are mostly.
Kasais who, the petitioners say kill only cattle but not ship or goat which are slaughtered by other persons known as Chicks.
Learned counsel appearing for the petitioners challenge the, constitutional validity of the Acts respectively applicable to them on three grounds, namely, that they offend the fundamental rights guaranteed to them by articles 14 ' 19(1)(g) and 25.
Learned counsel appearing for the respondent States, of course, seek to support their respective enactments by controverting the reasons advanced by learned counsel for the petitioners.
Bharat Go Sevak Samaj, All India AntiCow Slaughter Movement Committee, Sarvadeshik Arya pratinidhi Sabha and M. P. Gorakshan Sangh put in petitions for leave to intervene in these proceedings.
Under Order XLI, rule 2, of ' the Supreme Court Rules intervention is permitted only to the Attorney General of India or the Advocates General for the States.
There is no other express provision for permitting a third party to intervene in the proceedings before this Court.
In practice, however, this Court, in exercise of its inherent powers, allows a third party to intervene when such third party is a party to some proceedings in this Court or in the High Courts where the same, or similar questions are in issue, for the decision of this Court will conclude the case of that party.
In the present case, however, the peti tioners for intervention are not parties to any proceedings and we did not think it right to permit them formally to intervene in these proceedings; but in view of the importance of the questions involved in these proceedings we have heard Pandit Thakurdas Bhargava, who was instructed by one of these petitioners for intervention, as amicus curiae.
We are deeply indebted to all learned counsel appealing for the parties and to Pandit Thakurdas Bhargava for the valuable assistance they have given us.
Before we actually take tip and deal with the alleged infraction of the petitioners ' fundamental rights, it is necessary to dispose of a preliminary question raised by Pandit Thakurdas Bhargava.
It will be recalled 648 that the impugned Acts were made by the States in discharge of the obligations laid on them by article 48 to endeavour to organise agriculture and animal husbandry and in particular to take steps for preserving and improving the breeds and prohibiting the slaughter of certain specified animals.
These directive principles, it is true, are not enforceable by any court of law but nevertheless they are fundamental in the governance of the country and it is the duty of the State to give effect to them.
These laws having thus been made in discharge of that fundamental obligation imposed on the State, the fundamental rights conferred on the citizens and others by Chapter III of the Constitution must be regarded as subordinate to these laws.
The directive principles, says learned counsel, are equally, if not more, fundamental and must prevail.
We are unable to accept this argunent as sound.
Article 13(2) expressly says that the State shall not make any law which takes away or abridges the rights conferred by Chapter III of our Constitution which enshrines the fundamental rights.
The directive principles cannot over ride this categorical restriction imposed on the legislative power of the State.
A harmonious interpretation has to be placed upon the Constitution and so interpreted it means that the State should certainly implement the directive principles but it must do so in such a way that its laws do not take away or abridge the fundamental rights, for otherwise the protecting provisions of Chapter III will be " a mere rope of sand ".
As this Court has said in the State of Madras vs Smt.
Champakam Dorairajan (1) , "The directive principles of State policy have to conform to and run as subsidiary to the Chapter on Fundamental Rights".
Coming now to the arguments as to the violation of 4 the petitioners ' fundamental rights, it will be convenient to take up first the complaint founded on article 25(1).
That article runs as follows: " Subject to public order, morality and health and to the other provisions of this Part, all persons are equally entitled to freedom of conscience and the right freely to profess, practise and propagate religion".
(1) ; 531 649 After referring to the provisions of el.
(2) which lays down certain exceptions which are not material for our present purpose this Court has, in Ratilal Panachand Gandhi vs The State of Bombay (1) explained the meaning and scope of this article thus: " Thus, subject to the restrictions which this article imposes, every person has a fundamental right under our Constitution not merely to entertain such religious belief as may be approved of by his judgment or conscience but to exhibit hisbelief and ideas in such overt acts as are enjoinedor sanctioned by his religion and further to propagatehis religious views for the edification of others.
Itis immaterial also whether the propagation is made by a person in his individual capacity or on behalf of any church or institution.
The free exercise of religion by which is meant the performance of outward acts in pursuance of relgious belief, is, as stated above, subject to State regulation imposed to secure order, public health and morals of the people.
" What then, we inquire, are the materials placed before us to substantiate the claim that the sacrifice of a cow is enjoined or sanctioned by Islam ? The materials before us are extremely meagre and it is surprising that on a matter of this description the allegations in the petition should be so vague.
In the Bihar Petition No. 58 of 1956 are set out the following bald allegations: That the petitioners further respectfully submit that the said impugned section also violates the fundamental rights of the petitioners guaranteed tinder Article 25 of the Constitution in as much as on the occasion of their Bakr Id Day, it is the religious practice of the petitioners ' community to sacrifice a cow on the said occasion.
The poor members of the community usually sacrifice one cow for every 7 members whereas it would require one sheep or one goat for each member which would entail considerably more expense.
As a result of the total ban imposed by the impugned section the petitioners would not even be allowed to make the said sacrifice which is a practice (1) [1954] S.C.R. 1055, 1062 1063.
650 and custom in their religion, enjoined upon them by 'the Holy Quran, and practised by all Muslims from time immemorial and recognised as such in India.
" The allegations in the other petitions are similar.
,These are met by an equally bald denial in para.
21 of the affidavit in opposition.
No affidavit has been filed by any person specially competent to expound the relevant tenets of Islam. 'No reference 'is made in the petition to any particular Surah of the Holy Quran which, in terms, requires the sacrifice of a cow.
All that was placed before us during the argument were Surah XXII, Verses 28 and 33, and Surah XXII,.
What the Holy book enjoins is that people should pray unto the Lord and make sacrifice.
We have no affidavit before us by any Maulana explaining the implications of those Verses or throwing any light on this problem.
We, however, find it laid down in Hamilton 's translation of Hedaya Book XLIII at p. 592 that it is the duty of every free Mussulman, arrived at the age of maturity, to offer a sacrifice on the Yd Kirban, or festival of the sacrifice, provided he be then possessed of Nisab and be not a traveller.
The sacrifice established for one person is a goat and that for seven a cow or a camel.
It is therefore, optional for a Muslim to sacrifice a goat for one person or a cow or a camel for seven persons.
It does not appear to be obligatory that a person must sacrifice a cow.
The very fact of an option seems to run counter to the notion of an obligatory duty.
It is, however, pointed out that a person with six other members of his family may afford to sacrifice a cow but may not be able to afford to sacrifice seven goats.
So there may be an economic compulsion although there is no religious compulsion.
It is also pointed out that from time immemorial the Indian Mussalmans have been sacrificing cows and this practice, if not enjoined, is certainly sanctioned by, their religion and it amounts to their practice of religion protected by article 25.
While the petitioners claim that the sacrifice of a cow is essential, the State denies the obligatory nature of the religious practice.
The fact, emphasised by the respondents, cannot be 651 disputed, namely, that many Mussalmans do not sacrifice a cow on the Bakr Id Day.
It is part of the known history of India that the Moghul Emperor Babar saw the wisdom of prohibiting the slaughter of cows as and by way of religious sacrifice and directed his son Humayun to follow this example.
Similarly Emperors Akbar, Jehangir, and Ahmad Shah, it is said, prohibited cow slaughter.
Nawab Hyder Ali of Mysore made cow slaughter an offence punishable with the cutting of the hands of the offenders.
Three of the member of the Gosamvardhan Enquiry Committee set up by the Uttar Pradesh Government in 1953 were Muslims and concurred in the unanimous recommendation for total ban on slaughter of cows.
We have, however, no material on the record before us which will enable us to say, in the face of the foregoing facts, that the sacrifice of a cow on that day is an obligatory overt act for a Mussalman to exhibit his religious belief and idea.
In the premises, it is not possible for us to uphold this claim of the petitioners.
The next complaint is against the denial of the equal protection of the law.
It is thus formulated: The petitioners are Muslims by religion and butchers (Kasais) by occupation and they carry on the trade of selling beef.
The impugned Acts prejudicially affect only the Muslim Kasais who kill cattle but not others who kill goats and sheep and who sell goats ' meat and mutton.
It is, therefore, clear that only the Muslim Kasais, who slaughter only cattle but not sheep or goats, have been singled out for hostile and discriminatory treatment.
Their further grievance is that the U. P. Act makes a distinction even between butchers who kill cattle and butchers who kill buffaloes and the Madhya Pradesh Act also makes a like discrimination in that slaughter of buffaloes is permitted, although under certificate, while slaughter of cows, bulls, bullocks and calves are totally prohibited.
In the premises the petitioners contend that the law which permits such discrimination must be struck down as violative of the salutary provisions of article 14 of the Constitution.
83 652 The meaning, scope and effect of article 14, which is the equal protection clause in our Constitution, has been explained by this Court in a series of decisions in cases beginning with Chiranjitlal Choudhury vs The Union of India (1) and ending with the recent case of Ram Krishna Dalmia and others vs Sri Justice section R.Tendolkar (2).
It is now well established that while article 14 forbids class legislation it does not forbid reasonable classification for the purposes of legislation and that in order to pass the test of permissible classi fication two conditions must be fulfilled, namely, (i) the classification must be founded on an intelligible differentia which distinguishes persons or things that are grouped together from others left out of the group and (ii) such differentia must have a rational relation to the object sought to be achieved by the statute in question.
The classification, it has been held, may be founded on different bases, namely, geographical, or according to objects or occupations or the like and what is necessary is that there must be a nexus between the basis of ' classification and the object of the Act under consideration.
The pronouncements of this Court further establish, amongst other things, that there is always a presumption in favour of the constitutionality of an enactment and that the burden is upon him, who attacks it, to show that there has been a clear violation of the constitutional principles.
The courts, it is accepted, must presume that the legislature understands and correctly appreciates the needs of its own people, that its laws are directed to problems made manifest by experience and that its discriminations are based on adequate grounds.
It must be borne in mind that the legislature is free to recognise degrees of harm and may confine its restrictions to those cases where the need is deemed to be the clearest and finally that in order to sustain the presumption of constitutionality the Court may take into consideration matters of common knowledge, matters of common report, the history of the times and may assume every state of facts which can be conceived existing at the time of legislation.
We, therefore, proceed to examine (1) ; (2) ; 653 the impugned Acts in the light of the principles thus enunciated by this Court.
The impugned Acts, it may be recalled, have been made by the States in discharge of the obligations imposed on them by article 48.
In order to implement the directive principles the respective Legislatures enacted the impugned Acts in exercise of the powers conferred on them by article 246 read with entry 15 in List II of the Seventh Schedule.
It is, therefore, quite clear that the objects sought to be achieved by the impugned Acts are the preservation, protection and improvement of livestocks.
Cows, bulls, bullocks and calves of cows are no doubt the most important cattle for the agricultural economy of this country.
Female buffaloes yield a large quantity of milk and are, therefore, well looked after and do not need as much protection as cows yielding a small quantity of milk require.
As draught cattle male buffaloes are not half as useful as bullocks.
Sheep and goat give very little milk compared to the cows and the female buffaloes and have practically no utility as draught animals.
These different categories of animals being susceptible of classification into separate groups on the basis of their usefulness to society, the butchers who kill each category may also be placed in distinct classes according to the effect produced on society by the carrying on of their respective occupations.
Indeed the butchers, who kill cattle, according to the allegations of the petitioners themselves in their respective petitions, form a well defined class based on their occupation.
That classification is based on an intelligible differentia which places them in a well defined class and distinguishes them from those who kill goats and sheep and this differentia has a close connection with the object sought to be achieved by the impugned Act, namely, the preservation, protection and improvement of our livestock.
The attainment of these objectives may well necessitate that the slaughterers of cattle should be dealt with more stringently than the slaughterers of, say, goats and sheep.
The impugned Acts, therefore, have adopted a classification on sound and intelligible basis and can quite clearly stand the test laid down in 654 the decisions of this Court.
Whatever objections there may be against the validity of the impugned Acts the denial of equal protection of the laws does not, prima facie, appear to us to be one of them.
In any case, bearing in mind the presumption of constitutionality attaching to all enactments founded on the recognition by the court of the fact that the legislature correctly appreciates the needs of its own people there appears to be no escape from the conclusion that the petitioners have not discharged the onus that was on them and the challenge under article 14 cannot, therefore, prevail.
Learned counsel for the petitioners then take their final stand on article 19(1)(g).
Immediately learned counsel for the respondents counter the charge by saying that article 19(1)(g) can hit only the law which purports to directly violate its provisions.
The impugned Acts, we are reminded, have been made in implementation of the directive principles laid down in article 48 and are laws with respect to matters set forth in entry 15 of List II and it is emphasised that the sole purpose of these enactments is to secure the preservation, protection and improvement of stock and that its real aim is not to take away or abridge the rights guaranteed by article 19(1)(g).
If at all, these enactments may only indirectly and incidentally affect those, rights but that circumstance cannot alter their real nature and purpose.
Reliance is placed in support of this contention on the following observations of Kania C. J. in A. K. Gopalan vs The State (1).
" If there is a legislation directly attempting to control a citizen 's freedom of speech or expression, or his right to assemble peaceably and without aims, etc., the question whether that legislation is saved by the relevant saving clause of article ' 19 will arise.
If, however, the legislation is not directly in respect of any of these subjects, but as a result of the operation of other legislation, for instance, for punitive or preventive detention, his right under any of these sub clauses is abridged, the question of the application of article 19 does not arise.
The true approach is only to consider the directness of the legislation and not what will (1) ; , 101.
655 be the result of the detention otherwise valid, on the mode of the detenue 's life.
" This part of the argument advanced on behalf of the respondents is further sought to be reinforced by the fact that the above observations of Kania C. J. had subsequently been adopted by this Court in Ram Singh vs
The State of Delhi (1).
Those observations of Kania C. J. should, in our opinion, be read in the context of the facts of those cases.
It should be remembered that both these cases arose out of orders made under the .
Article 22, which is to be found in Chapter III of the Constitution, recognises the necessity for preventive detention, however odious it may be.
The purpose of the Act under which the detention orders had been made in those cases, was to prevent the persons concerned from acting in any manner prejudicial to one or other of the three impor tant matters specified therein.
The effect of the execution of the orders was to deprive those persons of their liberty according to procedure established by law.
Preventive detention, like punitive detention, having taken away the personal liberty of those persons they could not claim the rights under article 19(1)(a) to (e) and (g) for those were the rights of free men.
It was, therefore, considered that the primary and direct object of the , being, inter alia, to secure the security of the State and maintenance of law and order, its impact on the fundamental rights was indirect and, therefore, the Act could not be challenged for breach of the fundamental rights under article 19(1).
The position in the cases now before us is quite different.
The last part of the directive principles embodied in article 48 require the State to take steps for prohibiting the slaughter of the specified animals and this directive can only be carried out by prohibiting the petitioners and other butchers (Kasais) from.
slaugh tering them.
There can be no mistake about the directness of these legislations vis a vis the petitioners and other butchers and the effect of these legislations on their rights is direct and instantaneous as soon as they are brought into force.
The title of the U. P. Act (1) [1951]1 S.C.R. 451, 456 457.
656 does not even attempt to conceal the directness of its impact on the butchers of Uttar Pradesh.
The argument of learned counsel for the respondents on this point cannot be accepted and the question of the alleged violation of article 19(1)(g) has to be dealt with on merits.
The complaint of the petitioners under article 19 (1) (g) is that the impugned Acts, if enforced, will compel them at once to close down their business and will, in effect, amount to a complete denial of their right to carry oil their occupation, trade or business in spite of the mandatory provisions of article 19(1)(g).
The objection is elaborated thus: The livelihood of a butcher of cattle depends on the existence of many factors.
First he has to purchase the cattle which he will slaughter.
The statistics will show that a large number of cattle are slaughtered for food every year.
According to Table 11 on p. 24 of the Report on the Marketing of Cattle in India 18,93,000 heads of cattle and 6,09,000 buffaloes were slaughtered in the year 1948.
Taking that 7 goats are the equivalent in flesh of cow or buffalo these butchers who slaughter 25,02,000 bovine cattle will have to find 7 times that number of goats or sheep, that is to say, they will have to have 1,75,14,000 extra goats and sheep per year.
This it is said, is not available in India.
Then the butchers will have to find buyers for this enormous quantity of goats ' meat or mutton the price of which, according to the figures given at p.12 of the Expert Committee '. , Report, is very much higher than that of beef.
Poorer people may afford to buy beef occasionally but goat , ' meat or mutton will be beyond their reach and consequently there will not be a market for sale of the meat of so many goats and sheep and the butchers will have to reduce the number of goats and sheep for purposes of slaughter and that will reduce their income to a negligible figure.
Further, what will they do with the skins of so many goats, and sheep ? They will not have ready sale in the market as hides of cows and buffaloes have, for the latter are used in the manufacture of boots, shoes, suit cases, belts and other leather goods while the skins of goats and sheep will be useless 657 for such purpose.
The same considerations will apply to the guts.
There is, therefore, no escape, say learned counsel for the petitioners from the inevitable conclusion that a total ban on the slaughter of all animals belonging to the species of bovine cattle will bring about a total prohibition of the business and occupation of the butchers (Kasais).
Clause (6) of article 19, no doubt, protects the operation of the existing laws in so far as they impose and do not prevent the State from making any law imposing, in the interest of the general public, reasonable restrictions on the exercise of the right conferred by article 19(1)(g).
But restrictions, they say, cannot extend to total prohibition and reference is made to the observations to be found in some of the decisions of this Court.
The contention is that the State may regulate but cannot annihilate a business which a citizen has a right to carry on.
The rival contention is thus formulated: The dictionary meaning of the word " butcher " is " slaughterer of animals for food, dealer in meat".
It is one of the three well known occupations included in the homely phrase, " the butcher, the baker, the candlestick maker".
The expression " butcher ", as popularly understood now, has no reference to any particular animal.
The term is now applicable to any person who slaughters any animal for food.
Taken in this larger sense, the facts alleged in the petitions do not, according to learned counsel for the respondents, indicate that any of the impugned Acts has the effect of completely stopping the petitioners ' businesses.
They seek to illustrate their point thus: Take the case of piece goods merchants.
Some may deal in country made piece goods and others may import and sell piece goods manufactured, say, in England or Japan.
Some may deal in dhotis and saris and others may confine their activities to the purchase and sale of long cloth or other varieties of piece goods.
They are, however, all piece goods merchants.
Suppose in the interest of our indigenous textile industry and to protect the best interests of the general public it becomes necessary to stop the import of foreign cloth altogether.
Such stoppage will not prevent any cloth 658 merchant from carrying on his trade or business as cloth merchant, for he can still deal in cloth and piecegoods manufactured in India.
Will any piece goods merchant, whose business was only to import foreign piece goods for sale in India, be heard to complain that the stoppage of import of foreign cloth has completely prevented him from carrying on business as a piece goods merchant and, therefore, such stoppage of import of foreign cloth being more than a mere restriction violates his fundamental right under article 19(1)(g) ? Where, they ask, will the argument lead us ? Suppose that the import of one particular variety of piece goods, say saris, is stopped but import of dhotis and all other varieties of piece goods are allowed.
On a reasoning at par with that urged in the last case should not a dealer who imports only that variety of piece goods the import of which has been stopped be entitled to say that his business has been completely stopped ? Suppose the State in the interest of Khadi and cottage industries imposes a ban on the manufacture or sale of cloth of a very fine count, will a merchant who deals only in fine cloth be entitled to say that as he deals only in fine cloth, the ban has completely prohibited the carrying on of his business ? The truth of the matter, they submit, is that the ban on the import of foreign cloth or on the manufacture of cloth of very fine count is only a restriction imposed on the piece goods business, for the ban affects one or more of the segments of that business but leaves the other segments untouched.
There is, therefore, only some restriction imposed on piece goods merchants in that they cannot deal in certain kinds of piece goods, but they are not wholly prevented from carrying on piece goods business.
The position, they say, is the same in the case of butchers (Kasais).
The butchers ' business, they point out, has several segments and a ban on one segment may be complete prohibition of the activities of that segment, for restriction is complete as far as it extends, but in the larger context of the butchers ' business such a ban, they submit, operates only as a restriction.
Far less, it is said can a dealer in hides, complain that the ban 659 imposed on the slaughter of cattle and buffaloes prevent him from, carrying on his, business as a hide merchant, for he call still carry on his business in ,fallen hides.
Indeed the statistics collected in the Report of Marketing of Hides in India, Second Edition, p.9, show that the percentage of fallen hides to the total cattle population is 8.8 whereas the percentage of slaughtered hides to the total cattle population is 1.4.
same argument has been advanced regarding gut merchants and other dealers in subsidiary things.
It is not necessary for us to dilate upon or to express any opinion on the rival contentions as abstract pro.
positions .
The matter has to be dealt with objectively.
What do the Acts actually provide ? In Uttar Pradesh the petitioners can freely slaughter buffaloes (male or female adults or calves) and sell their meat for food.
It is also open to them to slaughter goats and sheep and sell the meat.
Therefore, so far as the butchers of Uttar Pradesh are concerned, there A,, obviously no total prohibition of their occupation but only some restrictions have been imposed on them in respect of one part of their occupation, namely, the slaughter of cows, bulls, bullocks, and calves of cows.
In Madhya Pradesh the Act, it is true, totally forbids the slaughter of cows including bulls, bullocks and cows but permits the slaughter of buffaloes (male or female adults or calves) under certain conditions.
Therefore, in Madhya [Pradesh also there is no law totally prohibiting the carrying on of the business of a butcher.
In Bihar there is, no doubt, a total ban against the slaughter of all animals belonging to the, species of bovine cattle which includes buffaloes (male or female adults or calves) but it is still possible for the butchers of Bihar to slaughter goats and sheep and sell goats ' meat and mutton for food.
As will be seen hereafter the total ban on the slaughter of bulls, bullocks, buffaloes (male or female adults or calves) irrespective of their age or usefulness is, in our view, not a reasonable restriction imposed on, the butchers (Kasais) in the interest of the general public and that being, therefore, void, no question can arise, even in 660 Bihar, of any total prohibition of the rights of butchers to carry on their occupation or business.
In this view of the matter we need express no final opinion on the vexed question as to whether restrictions permissible under cl.
(6) of article 19 may extend to total prohibition.
That question was left open by this court in Saghir Ahmed vs The State O. U. P. and others (1) and in The State of Bombay vs R. M. D. Chamarbaugwala (2) and in the view we have taken on the facts and construction of the several Acts under consideration, does not call for an answer in disposing of these petitions.
The question that calls for an answer from us is whether these restrictions are reasonable in the interests of the general public.
Clause (6) of article 19 protects a law which imposes in the interest of the general public reasonable restrictions on the exercise of the right conferred by sub cl.
(g) of cl.
(1) of article 19.
Quite obviously it is left to the court, in case of dispute, to determine the reasonableness of the restrictions imposed by the law.
In determining that question the court, we conceive, cannot proceed on a general notion of what is reasonable in the abstract or even on a consideration of what is reasonable from the point of view of the person or persons on whom the restrictions are imposed.
The right conferred by sub cl.
(g) is expressed in general language and if there had been no qualifying provision like el.
(6), the right so conferred would have been an absolute one.
To the person who has this right any restriction will be irksome and may well be regarded by him as unreasonable.
But the question cannot be decided on that basis.
What the court has to do is to consider whether the restrictions imposed are reasonable in the interests of the general public.
In the State of Madras vs V. 0.
Row (3) this court has laid down the test of reasonableness in the following terms: " It is important in this context to bear in mind that the test of reasonableness, wherever prescribed, should be applied to each individual statute impugned , (1) ; , 724.
(2) ; (3) ; , 607. 661 and no abstract standard, or general pattern, of reason ableness can be laid down as applicable to all cases.
The nature of the right alleged to have been infringed, the underlying purpose of the restrictions imposed, the extent and urgency of the evil sought to be remedied thereby, the disproportion of the imposition, the prevailing conditions at the time, should all enter into the judicial verdict.
In evaluating such elusive factors and forming their own conception of what is reasonable, in all the circumstances of a given case, it is inevitable that the social philosophy and the scale of values of the judges participating in the decision should play an important part, and the limit to their interference with legislative judgment in such cases can only be dictated by their sense of responsibility and self restraint and the sobering reflection that the Constitution is meant not only for people of their way of thinking but for all, and that the majority of the elected representatives of the people have, in authorising the imposition of the restrictions, considered them to be reasonable." These observations have been adopted by this Court in later cases, e. g., The State of West Bengal vs Subodh Gopal Bose (1) and Ebrahim Vazir Mavat vs The State of Bombay (2).
In this connection it will also be well to remember the observation of Mahajan J. in The State of Bihar vs Maharajadhiraj Sir Kameshwar Singh of Dharbangha (3), namely, that " the legislature is the best judge of what is good for the community, by whose suffrage it comes into existence. .
This should be the proper approach for the court but the ultimate responsibility for determining the validity of the law must rest with the court and the court must not shirk that solemn duty cast on it by the Constitution.
We have, therefore, to approach the problem now before us in the light of the principles laid down by this Court.
The avowed object of each of the impugned Acts is to ensure the preservation, protection, and improvement of the cow and her progeny.
This solicitude (1) (1954] S.C.R. 587, 627.
(2) ; , 949 950, (3) , 041. 662 arises out of the appreciation of the usefulness of cattle in a predominantly agricultural society.
Early Aryans recognised its importance as one of the most indispensable adjuncts of agriculture.
It would appear that in Vedic times animal flesh formed the staple food of the people.
This is attributable to the fact that the climate in that distant past was extremely cold and the Vedic Aryans had been a pastoral people before they settled down as agriculturists.
In Rg.
Vedic times goats, sheep, cows, buffaloes and even horses were slaughtered for food and for religious sacrifice and their flesh used to be offered to the Gods.
Agni is called the " eater of ox or cow " in Rg.
Veda (VIII.
43, 11).
The staying of a great ox (Mahoksa) or a " great Goat " (Mahaja) for the entertainment of a distinguished guest has been enjoined in the Satapatha Brahmana (111.
4. 1 2).
Yagnavalkya also expresses similar view (Vaj 1. 109).
An interesting account of those early days will be found in Rg.
Vedic Culture by Dr. A. C. Das, Ch. 5, pp.
203 5, and in the History of Dharmasastras (Vol.
II , Part II) by P. V. Kane at pp.
772 773.
Though the custom of slaughtering of cows and bulls prevailed during the Vedic period, nevertheless, even in the Rg.
Vedic times there seems to have grown up a revulsion of feeling against the custom.
The cow gradually came to acquire a special Sanctity and was called " Aghnya " (not to be slain).
There was a school of thinkers amongst the Rsis, who set their face against the custom of killing such useful animals as the cow and the bull.
High praise was bestowed on the cow as will appear from the following verses from Rg.
Veda, Book VI, Hymn XXVIII (Cows) attributed to the authorship of Sage Bhardvaja: " 1.
The kine have come and brought good fortune; lot them rest in the cow pen and be happy near US.
Here let them stay prolific, many coloured, and yield through many morns their milk for Indra.
O cows, ye fatten e 'en the worn and wasted, and make the unlovely beautiful to look on.
Prosper my house, ye with auspicious voices, your power is glorified in our assemblies.
663 7.
Crop goodly pasturages and be prolific; drink pure sweet water at good drinking places.
Never be thief or sinful man your master, and may the dart of Rudra still avoid you.
(Translation by Ralph Griffith).
Verse 29 of Hymn 1 in Book X.of Atharva Veda forbids cow slaughter in the following words: " 29.
The slaughter of an innocent, O Kritya, is an awful deed, Slay not cow, horse, or man of ours.
" Hymn 10 in the same Book is a rapturous glorification of the cow: " 30.
The cow is Heaven, the cow is Earth, the cow is Vishnu, Lord of life, The Sadhyas and the Vasus have drunk the outpourings of the cow.
Both Gods and mortal men depend for life and being on the cow.
She hath become this universe; all that the sun ,surveys is she.
" P.V. Kane argue,, that in the times of ' the Rg.
Veda only barren cows,if at all, were killed for sacrifice or meat and cows yielding milk were held to be not fit for being killed.
It is only in this way, according to him, that one can explain and reconcile the apparent conflict between the custom of killing COWS for food and the high praise bestowed oil the cow in Rg.
Vedic times.
It would appear that the protest raised against the slaughter of cows greatly increased in volume till the custom was totally abolished in a later age.
The change of climate perhaps also make the use of beef food unnecessary and even injurious to health.
Gradually cows became indicative of the wealth of the owner.
The Neolithic Aryans not having been acquainted with metals, there were no coins in current use in the earlier stages of their civilisation, but as they were eminently a pastoral people almost every family possessed a sufficient number of cattle and 'some of them exchanged them for the necessaries of their life,.
The value of cattle (Pasu)was, therefore, very great with the early Rg.
Vedic Aryans.
The ancient Romans also used the word pecus or pecu (pasu) in the sense of wealth or money.
The English words, 664 " Pecuniary " and " impecunious ", are derived from the Latin root pecus or pecu, originally meaning cattle.
The possession of cattle in those days denoted wealth and a man was considered rich or poor according to the large or small number of cattle that he owned.
In the Ramayana King Janaka 's wealth was described by reference to the large number of herds that he owned.
It appears that the cow was gradually raised to the status of divinity.
Kautilya 's Arthasastra has a special chapter (Ch.
XXIX) dealing with the "superintendent of cows" and the duties of the owner of cows are also referred to in Ch.
XI of Hindu Law in its sources by Ganga Nath Jha.
There can be no gainsaying the fact that the Hindus in general hold the cow in great reverence and the idea of the, slaughter of cows for food is repugnant to their notions and this sentiment has in the past even led to communal riots.
It is also a fact that after the recent partition of the country this agitation against the slaughter of cows has been further intensified.
While we agree that the constitutional question before us cannot be decided on grounds of mere sentiment, however passion ate it may be, we, nevertheless, think that it has to be taken into consideration, though only as one of many elements, in arriving at a judicial verdict as to the reasonableness of the restrictions.
Cattle in India, it is said, has a treble role to play, namely, (i) to produce milk for food, (ii) bulls for draught and (iii) manure for agriculture.
It is necessary to advert to the arguments advanced under each head.
According to the 1951 census there were 15,60,00,000 heads of cattle and 4,00,00,000 of buffaloes making a total of 19,60,00,000 or roughly 20,00,00,000 of animals belonging to the species of bovine cattle.
In India there are 123 heads of cattle including buffaloes per square mile and 43 heads to every 100 persons.
Out of the total cattle population of 15,60,00,000 and buffalo population of 4,00,00,000 there were in Bihar 1,52,97,000 cattle and 33,16,000 buffaloes, in Madhya Pradesh 1,48,58,000 heads of cattle and 26,00,000 buffaloes and in Uttar Pradesh 2,35,13,000 heads of cattle and 92,50,000 buffaloes.
665 The total distribution of cattle and buffaloes, according to age, sex and work, was as follows: Males Cattle Buffaloes Breeding bulls 6,52,0003,06,000 Working bullocks 5,88,18,00060,36,000 Bulls and bullocks over three years not in use for breed ing and work, i. e., useless.
27,35,0004,66,000 Young stock under once year.
97,63,000 28,70,000 Young stock one to three years of age.
1,22,57,000 23,84,000 Total 8,42,25,000 1,20,02,000 Females Breeding cows, i.e., cows, over 3 years kept for breeding or milk production.
4,67,23,000 2,10,08,000 Cows over 3 years used for work.
23,17,000 5,34,000 Cows over 3 years not in use for work or breeding purposes, i. e., useless.
12,02,0003,15,000 Young stock over 1 year.
93,05,00042,02,000 Young stock 1 to 3 years of age.
1,25,44,00052,83,000 Total 7,20,91,000 3,13,42,000 Grand total 15,63,16,000 4,33,44,000 As stated in the Report on the Marketing of Cattle in India issued by the Directorate of Marketing and Inspection, Ministry of Food and Agriculture, Government of India, 1956, the proportion of males in cattle is a little more than half of the total cattle population whilst in the case of buffaloes, females predominate and are about 3/4 of the total.
For agricultural purposes male cattle are generally preferred for their comparative lightness and active nature.
Of the total 39,57,000 unserviceable heads of cattle in India there were 5,35,000 in Bihar, 1,55,000 in Madhya Pradesh and 1,84,000 in Uttar Pradesh.
Of the total 7,81,000 666 unserviceable buffaloes there were 1,20,000 in Bihar, 15,000 in Madhya Pradesh and 28,000 in Uttar Pradesh.
Although, according to the census figures given above, our cattle wealth is, in number, the highest in the world the milk production is perhaps the lowest.
According to the figures given in the Second Five Year Plan, at the beginning of the First Five Year Plan the milk output was over 1,80,00,000 ton,;.
The average yield of milk per cow in India was 413 pounds which is about the lowest of any country in the world as against 8,000 pounds in the Netherlands, 7,000 pounds in Australia, 6,000 pounds in Sweden and 5,000 pounds in the U.S.A. Out of the total yield she buffaloes give 54% while cows give only 42%.
Buffalo milk is richer in fat, 6 to 7% as compared to 4.5% of fat in the cow 's milk,.
But cows milk is richer in other important content.
,, and is more easily digestible.
The average per capita consumption of milk and milk products was worked out by the First Five Year Plan at 5.5 ounces, i.e., about 2.5 chhataks or 1/6 of a seer per day, though 10 ounces are recommended by nutrition experts.
In the Facts and Figures about Bihar published in 1955 by the Department of Public Relations, the average annual.
milk yield is stated to be 620 lbs.
per cow and 1,526 lbs.
per buffalo.
It is recognised in Human Nutrition vis a vis Animal Nutrition in India, a Memorandum prepared by the Nutrition Advisory Committee of the Indian Council of Medical Research and the Animal Committee of the Indian Council of Agricultural Research that the performance of Indian much animals, particularly of cows, is extremely poor and that from a more economic point of view there does not seem to be any justification for maintaining animals yielding 2 pounds of milk or less per day and perhaps these animals would better be eliminated.
But, as the Memorandum also says, one should realise, before such a drastic action is taken, the consequences that may follow from the adoption of this policy, for if the animals giving 2 pounds or less of milk are condemned as unsuitable it will mean elimination of more than 90% of the present day much cows and loss of about 70,00,000 tons out of 97,00,000 tons of annual 667 gross production of milk from this group, besides a large number of bullocks that they will bear.
According to the table of the human food requirement recommended by the Nutrition Advisory Committee of the Indian Council of Medical Research 10 ounces of milk per adult unit per day is necessary to make tip a balanced diet.
The total human population, according to 1951 census, was 35,68,00,000 which, at the current rate of increase, was estimated to have reached the figure of 37,76,00,000 in 1956.
Treating children below 10 years of age as 0.83 of adult value, the total adult unit is calculated at 31,30,00,000.
At the rate of 10 ounces of milk per adult per day we Would require 3,23,00,000 tons of milk per annum.
It is clear, therefore, that in India, where a large section of tile population consists of vegetarians, there is a huge shortage in the supply of milk.
Cows and other milch cattle, therefore, are of very great value to this country.
If milk yielding capacity were the only consideration the comparatively smaller number of female buffaloes which produce 54% of the total milk supply of our country would obviously have deserved a far greater preference over the cows in our estimation.
But, as pointed out by Pandit Thakurdas Bhargava, there is another important consideration which is perhaps more important from the standpoint of human food supply.
It is the bullock that takes the largest share in meeting the power requirements for our agricultural production.
Based perhaps on age old experience Indian agriculturists habitually prefer a cow bullock to a buffalo bullock.
As a result of the evolutionary process of trial and error, we find in this country about 10 cow bullocks for every buffalo bullock as is shown by the 1951 census figures set out above.
If this relative distribution is considered unavoidable for our crop production, we may expect no change in the existing ratio in the population of the two species unless a revolution can be brought about in our methods and practice of land cultivation.
According to the Report on the Marketing of Cattle in India, 1956, p. 22, animals are utilised in India under four heads:(1) used for cultivating6,54,22,000 (2) used 85 668 for carting in urban areas 11,80,000 (3) used as pack animals 67,705 and (4) used in oil crushers, etc.4,30,000, making up the total of 6,70,99,705.
As against this we have, according to the 1951 census figures set out above, 5,88,18,000 working bullocks and 60,36,000 working he buffaloes, aggregating to 6,48,54,000.
There is therefore a shortage of 22,45,705 bullocks including buffaloes which presumably represent the dry cows and female buffaloes put to agricultural labour, as shown in the Second Five Year Plan at pp.
281 282.
It is true that tractors have begun to be used but they are still of a negligible number and for many years to come the country will have to depend upon animal power for her agricultural operations in order to grow enough food for meeting the demands of the fast growing human population.
In Uttar Pradesh, according to the 1951 census, there were 2,35,12,839 heads of cattle and 92,50,488 buffaloes, making a total of 3,27,63,327.
The total area of Uttar Pradesh was 7,22,78,809 acres out of which 4,92,30,120 acres were under cultivation.
If a pair of bullocks can be taken on an average to cover 10 acres the total area under cultivation will require 98,46,000 bullocks.
The 1951 census figures show 1,15,00,000 of bullocks which are slightly in excess of the number of bullocks required for the purposes of cultivation only.
Indeed both in Uttar Pradesh and in Bihar, according to the First Five Year Plan, p. 247, there was a surplus of about 40,00,000 of bullocks while in the Punjab and Pepsu the number available was just adequate to meet the demands.
If, however, account is taken of the other purposes for which bullocks may be used, namely, for carting or as pack animals or for working oil crushers or drawing water from the wells for irrigation purposes, the total available animal power will fall short of the requirements.
In addition to that we have to keep in view the necessity for further expansion of the cultivated area to meet the food requirements of the fast growing population, and in that case the deficit will go up still further.
In Bihar, according to the Facts and Figures, 1956, the total number of animal population of the bovine species were: 669 Cattle Cows and oxen (adults) 1,15,64,310 Cows and oxen (young stock) 37,33,166 Buffaloes (adult) 23,78,293 Buffaloes (young stock) 9,37,582 The number of working cattle andbuffaloes works out to one for every 6 acres of net area under cultivation.
It follows, therefore, that our working animals are perhaps just about sufficient to supply the power to keep our agricultural operations up to the necessary standard, but the demand for food is growing and more lands will have to be brought under cultivation and we shall require a far large number of these animals.
There are in India, 6,50,000 breeding bulls and 3,10,000 breeding buffaloes.
There are 4,63,40,000 breeding cows and 2,09,90,000 breeding buffaloes.
According to the First Five Year Plan, 1).
274, approximately 750 farm bred bulls of known pedigree are distributed annually by the Government in different States for developing and improving the draught as well as the milch breeds.
Besides there are some approved bulls belonging to private owners.
But the existing number of private bulls meets less than 0.
15% of the total requirements of the country.
According to the Report on the Marketing of Cattle in India, p. 9, service bulls number approximately 6,52,000 or about 0.4% of the total cattle in the country.
In the absence of an arrangement to castrate or remove the inferior bulls before a pedigree bull is located in an area, the progeny of the pedigree bulls have access to scrub, which nullifies the efficiency achieved in the first generation.
It is, therefore, clear that the breeding bulls (cattle and buffaloes) are insufficient to meet the requirements.
It is true that the practice of artificial insemination has been introduced in some centres but for many years to come Indian animal husbandry will have to depend on the ordinary breeding bulls.
We are in short supply of them.
The third utility of these animals (cattle and buffaloes) is the dung.
The First Five Year Plan at p. 255 670 records that 80,00,00,000 tons of dung are available per annum.
50% of this is used as fuel by cultivators and the other 50% is used as manure.
If suitable supplies of fuel could be made available to the cultivators then the entire quantity of dung could be used for manure.
It is doubtful, however, if the cultivators would be in a position to pay for the fuel and utilise the entirety of the dung for manure.
Cattle urine is also useful for the nitrogen, phosphates and potash contents in it.
In terms of money the dung and the urine will account for a large portion of the agricultural income in India.
Indeed Pandit Thakurdas Bhargava appearing as amnicus curiae has claimed Rs. 63,00,00,000 per year as the contribution of the dung of these animals to the national income.
The discussion in the foregoing paragraphs clearly establishes the usefulness of the cow and her progeny.
They sustain the health of the nation by giving them the life giving milk which is so essential an item in a scientifically balanced diet.
The working bullocks are indispensable for our agriculture, for they supply power more than any other animal.
Good breeding bulls are necessary to improve the breed so that the quality and stamina of the future cows and working bullocks may increase and the production of food and milk may improve and be in abundance.
The dung of the animal is cheaper than the artificial manures and is extremely useful.
In short, the backbone of Indian agriculture is in a manner of speaking the cow and her progeny.
Indeed Lord Linlithgow has truly said " The cow and the working bullock have on their patient back the whole structure of Indian agriculture. " (Report on the Marketing of Cattle in India, p. 20).
If, therefore, we are to attain sufficiency in the production of food, if we are to maintain the nation 's health, the efficiency and breed of our Cattle population must be considerably improved.
To attain the above objectives we must devote greater attention to the preservation, protection and improvement of the stock and organise our agriculture and animal husbandry on modern and scientific lines.
We have, therefore, to examine the provisions of the impugned Acts and 671 ascertain whether they help in achieving the said objectives, or are calculated to hinder that process.
In that context all the considerations above alluded to must enter the judicial verdict and if the impugned Acts further the aforesaid purpose then only can the restrictions imposed by the impugned Acts be said to be reasonable in the interest of the general public.
We turn now to the other side of the picture.
In examining the conspectus of the problem the Court cannot overlook the fact, emphasised in the petition, that the petitioners and a very large number of similarly situated persons, even if their number does not come up to the figure mentioned in the petition, are butchers (Kasais) by occupation and make an income of about Rs. 150 to Rs. 200 per month and that they will be seriously affected, if not completely thrown out of occupation, by the impugned Acts.
It is true, for reasons hereinbefore stated, that they cannot complain that they have been completely deprived of their occupation or business but the enactments, if valid, will compel them to make fresh arrangements for the supply of animals which are permitted to be slaughtered for food.
Theoretically it may not be impossible for them to do so, but in practice it is more than likely to cause considerable inconvenience to them and may even involve extra expenses for them.
The hide merchants, who, they say in the petition, have made their arrangements for the supply to them of hides of slaughtered animals up to 95 % of their requirements, may find it difficult to make fresh arrangements for procuring fallen hides.
The same observations may be made about the gut merchants.
The immediate effect of the operation of these Acts is to cause a serious dislocation of the petitioners ' business without any compensatory benefit.
In Saghir Ahmad vs The State of U. P. (1), at p. 727 this Court observed, with respect to the persons engaged in running buses for carrying passengers: " One thing, however, in our opinion, has a decided hearing on the question of reasonableness and that is the immediate effect which the legislation is likely to (1)[1955] 1 S.C.R. 707,724.
672 produce.
Hundreds of citizens are earning their livelihood by carrying on this business on various routes within the State of Uttar Pradesh.
Although they carry on the business only with the aid of permits, which are granted to them by the authorities under the Motor Vehicles Act, no compensation has been allowed to them under the Statute.
" Similar inconvenience may easily be supposed to have befallen the petitioners and others of their class and the immediate and possibly adverse impact of the impugned Acts on their occupation or business must, therefore, be taken into account as one Of the important factors in judging the reasonableness or otherwise of the said Acts.
There is also no getting away from the fact that beef or buffalo meat is an item of food for a large section of the people in India and in particular of the State of Bihar and Uttar Pradesh.
Table 11 at p. 24 of the Report on the Marketing of Cattle in India shows that in the year 1948 the annual demand for cattle and buffaloes for purposes of food was: 1.8,93,000 heads of cattle and 6,09,000 buffaloes.
These figures indicate that beef and buffalo flesh are used for food by a large section of the people in India.
It is wellknown that poorer sections of Muslims, Christians and members of the Scheduled Castes and Tribes consume beef and buffalo flesh.
There is also a limited demand for beef by the foreign population.
Buffaloes yield comparatively coarse and tough meat of inferior quality and consequently the demand for beef is greater than that for buffalo flesh.
Further the price of the buffalo flesh is 20 to 40% less than that of beef.
The prices of beef and buffalo meat are much cheaper than that of mutton or goat 's meat and consequently beef and buffalo flesh come within the reach of the poorer people perhaps for a day or two in the week.
According to the figures given in the Report of the Expert Committee at 1).
12, in 1938 in Bombay the prices were Rs. 0 3 9 per pound of beef, Rs. 0 2 0 per pound of buffalo flesh and Rs. 0 5 6 for mutton and goats ' flesh.
In 1950 these prices went up respectively to Rs. 0 12 0, Rs. 0 11 0 and Rs. 1 3 0.
673 The comparatively low prices of beef, and buffalo flesh, which are nearly half of that of mutton or goats ' flesh, is the main reason for their demand.
Habit is perhaps secondary.
Learned counsel for some of: the petitioners cited the case of the boys and girls residing in boarding houses attached to the Anglo Indian schools where the only meat which the boarding school authorities can afford to supply as part of the diet of the growing children is beef and that only on a day or two in the week.
The Acts, if enforced, will prevent them.
from having even this little bit of nourishment and amenity.
It is true that after the partition of the country the Muslim population has decreased and further that some Muslims may not habitually take beef or buffalo flesh, but even so a large section of the poorer people belonging to the Muslim, Christian and Scheduled Castes communities do consume beef and buffalo flesh.
And this is not merely a matter of amenity or luxury but is at any rate partially ', a matter of necessity.
Table VII set out at p. 32 of the Memorandum on Human Nutrition vis a vis Animal Nutrition in India recommends one ounce of meat daily whereas the available quantity is much less and the attainable quantity under the new plan may be 1/3 ounce or a little more.
Poorer people, therefore, who can hardly afford fruit or milk or ghee are likely to suffer from malnutrition, if they are deprived of even one out ice of beef or buffalo flesh which may sometimes be within their reach.
This aspect of the matter must also be taken into account in assessing the reasonableness of the provisions of the impugned Acts.
The number of cattle and buffaloes not fit for breeding or working has already been set out.
Further particulars in detail are available from Appendices II and III to the Report on the Marketing of Cattle in India.
The figures given there show that according to the 1951 census the total number of unserviceable male cattle was 27,35,000 and that of female cattle was 12,02,000.
Out of these there were in Bihar 2,93,000 male and2,42,000 female, in Madhya Pradesh 1,24,000 male and31,000 female and in Uttar Pradesh 674 1,63,000 male and 21,000 female.
The unserviceable buffaloes in the whole of India, according to 1951 census, were 7,81,000 out of which 4,66,000 were males and 3,15,000 were females.
Out of the total there were in Bihar 61,000 male buffaloes and 59,000 female, buffaloes, in Madhya Pradesh 10,000 male and 5,000 female, in Uttar Pradesh 16,000 male and 12,000 female.
According, to the First Five Year Plan, p. 273, the overall estimates made by the Cattle Utilisation Committee show that about 10 % of the cattle population in India or roughly 1,14,00,000 adults were unserviceable or unproductive.
The Report of the Cattle Preservation and Development Committee also put the figure of old, decrepit and unproductive cattle at 10% of the total population.
Pandit Thakurdas Bhargava does not accept the correctness of these figures.
It is difficult to find one 's way out of the labyrinth of figures and it will be futile for us to attempt to come to a figure of unserviceable agricultural animals which may even be approximately correct.
For our purpose it will suffice to say that there is a fairly large number of cattle and buffaloes which are not of any use for breeding or working purposes.
The position may be accepted as correctly summed up at p. 274 of the First Five Year Plan where it is stated, inter alia, that there is a deficiency of good milch cows and working bullocks and that there exists a surplus of useless or inefficient animals.
The presence of a large number of useless and inefficient cattle in the midst of the good ones affect our agricultural economy in two ways.
In the first place and this is the crux of the matter this surplus stock is pressing upon the scanty fodder and feed resources of the country and is an obstacle to making good the deficit,.
As pointed out by the expert Committee Report at p. 59 the greatest handicap in improving our cattle wealth is the lack of resources in feeding them.
Any effort to improve cattle will fail unless they are properly fed.
The table set out on that very page of that Report records a deficiency of 6,00,00,000 tons, i. e., 33% in straw or Kadbi 10,40,00,000 tons, i.e., 13% in green fodder and 2,65,20,000 tons, i. e., 675 70% in concentrates (i. e., oil cakes, bran, oil seeds, maize ' barley and gram, etc.).
It is pointed out that the figures shown against green fodder are not the quantities which are presently available but! which can be made available if forest ' resources are fully, tapped.
According to this Report even if the forest resources are fully utilised there will still be a deficiency of 13% in the supply.
The actual availability of this item is limited by the fact that green fodder is, only available during the monsoon months and much of this is wasted by the lack of country wide arrangements for its conservation.
The estimated requirements and the present supply of food stuffs for animals is also given in Table V at p. 23 of the Memorandum on Human Nutrition vis a vis Animal Nutrition in India which tallies with and is more or less about the same as those given in the Report of the Expert Committee above referred to.
Table V also shows a deficiency of 6,00,00,000 tons of straw or Kadbi 1,78,00,000 tons of green fodder.
The shortage of concentrates, i. e., oil cakes, maize, barley, gram, cotton seed and bran vary between 8,50,000 to 71,17,000 tons.
According to the estimate given in the First Five Year Plan at p. 273 the quantity of fodder available is about 75% of requirements while available concentrates of feeds would suffice only for about 28 % of 1 the cattle.
The, figures given at p. 24 of the report of the Gosamvardhan Enquiry Committee set up by, the Uttar Pradesh Government are interesting.
The total cattle: and buffalo population in, Uttar Pradesh is estimated at 3,27,63,327.
The scientific food requirements of this total population, according to, the Western standard, are: first set out.
Then begins a: process of scaling down, for the above scale is, considered to be somewhat lavish for our low sized village cattle.
The Indian standard, according to this report, will, require much less and the figures, according to Indian standards, are next set out.
Evidently these, figures also, show a, very big gap between, requirements and the available, quantities.
So the report says that event, this may, be reduced and what is significantly 86 676 described as the " critical limit " is then set out.
It is not quite intelligible why an Indian cow should not require even an Indian standard of ration.
Be that as it may, even for the " critical limit " the quantity available is far too short.
The gap between the critical limit and what is available is respectively 1,80,00,000 tons of dry matter, 15,00,000 tons of protein and 28,61,70,00,000 therms.
It is conceded that the requirements of mixed population of 3,27,63,327 heads of animals may be taken as representing 2,71,30,000 adult units and with the present available supply of straw, green feed and concentrates these adult units cannot be fully fed even on the critical limit standard.
The available supply can support only 1,59,20,000 adult units leaving 1, 1 2, 1 0,000 units unfed.
It is recognised by this Report that with an increase in cattle population and better prophylactic treatment against contagious diseases, the trend of population will be towards an increase and the deficiency in nutrition will become still more pronounced.
The remedy suggested is that attention be paid urgently towards the production of more fodder from cultivated land and utilisation of all marginal and sub marginal land for augmenting food and fodder sources.
With a large population of animals in which the majority is not yielding adequate and prompt returns to the owners, the animals are naturally allowed to fenad for themselves and to subsist on whatever the agriculturist is able to provide from his scanty sources for the maintenance of his stock.
Naturally, therefore, the problem of substantial precentage of uneconomical cattle has cropped up along with that of stray, wild, old, diseased and uneconomical animals.
These old and useless animals roaming about at pleasure in search of food are a nuisance and a source of danger in the countryside.
They grow wild and become a menace to the crop production.
As pointed out by the Report of the Expert Committee, the danger was actually seen by the members of that Committee in Pepsu where, it is significant to note, the slaughter is banned completely.
677 The presence of a large number of old and useless animals also has a bad effect on the quality of the breed.
There is a tendency for this population to multiply and bring into being progeny of a very inferior kind which is bound to adversely affect the production of milk or bullock power.
It is absolutely necessary that this surplus cattle should be separated from the good and robust animals and a total ban on slaughter of cattle and buffaloes will contribute towards worsening the present condition.
The Cattle Preservation and Development Committee set up by the Government of India in 1948 at p. 47 of its Report recommended, as a panacea for the evil menace of useless cattle, a scheme for the establishment of cattle concentration camp for the old and useless cattle.
It is this scheme which subsequently came to be known by the name of Gosadans.
At pp.
48 and 49 are set out the estimates of cost of establishing and running a camp to house 2,000 cattle.
The non recurring cost on land, cattle sheds, staff and servants ' quarters is shown at Rs. 32,000 and the recurring cost, namely, salary of manager, stock man, chaukidars.
and others on the establishment together with allowances is shown at Rs. 13,000 per year and it is hoped that a sum of Rs. 5,000 will be derived from the sale of hides, manure, etc.
According to the Report of the Expert Committee each Gosadhan housing 2,000 heads of cattle would have to have 4,000 acres of land which would permit of a rotational and controlled grazing practice and provision has to be made for the surplus grass during the rainy season to be preserved for the scarcity months.
There should be thatched sheds for protection of the cattle against weather and wild animals and fodder is to be cultivated on a small part of the 4,000 acres.
By the end of 1954, when the Report of the Expert Committee came to be made, the cost had gone up from what they were in 1948 when the Cattle Preservation and Development Committee Report had been made.
The estimated cost, according to the Report of the Expert Committee, of establishing and running of a Gosadan for 2,000 heads of cattle is shown as: nonrecurring 678 Rs. 50,000, and recurring Rs. 25,000 per year.
On this basis the recurring cost alone will work out at Rs. 12.50 per head of cattle per annum for preserving useless cattle.
The figures given in the Gosamvardhan Enquiry Committee 's Report are interesting.
Taking the total number of cattle,% in Uttar Pradesh not used for breeding or work at 1,83,276 in 1951, the State will require 91 Gosadans each with a housing capacity for 2,000 heads of cattle.
Even taking one acre per animal instead of two acres per animal as recommended by the Expert Committee Report, 91 Gosadan,s will require nearly 2,00,000 acres of land.
The cost of 91 Gosadans will be non recurring Rs. 45,50,000 and recurring Rs. 22,75,000 per annum.
It appears from the revised model for Gosadans for 500: heads of cattle to be run by the State Governments set out in Appendix II to the Proceedings of the Fifth Annual General Meeting of the Central Council of Gosamvardhan held at Now Delhi on February 21, 1957, that the non recurring cost will be Rs. 39,000 and the recurring running cost will be Rs. 12,000.
It is estimated that there will be an income of Rs. 2,500 from the sale of hides, etc.
Allowing this, the net annual recurring cost will be Rs. 9,500 for 500 heads of cattle which works out at Rs. 19 per head of cattle per annum.
As regards Gosadans to be run by private institutions it is said in the same Appendix II that those institutions will be given a subsidy of Rs. 18 per head per annum out of which 75% would %,be contributed by the Centre and the remaining 25% by the State.
Thus for the preservation of the useless cattle the country will pay Rs. 19 or Rs. 18 per head of such useless cattle per annum, whereas our total national expenditure on education (Central and States including local bodies) in 1955 1956 was only Rs. 4 9 per capita as against Rs. 104.6 per capita in the United Kingdom and Rs. 223.7 per capita in the United States of America and our target for 1957 1958 works out at Rs. 5 per capita per annum.
It will be noticed that in none of the schemes is even a pice provided for fodder.
The idea evidently is that the cattle will be left there to fend for themselves on whatever grass or 679 other green feed they can get by grazing.
If one remembers that though green fodder may be available in the monsoon months, there will be a dearth, of them in the dry months, one will at once see that the segregating of the cattle in the concentration camp will only be to leave them to a fate of slow death.
The very idea that these animals should eke out their livelihood by grazing and that Gosadans should be located in out of the way places, appeared to the authors of the Memorandum on Human Nutrition vis a vis Animal Nutrition at p. 47, to belie the humanitarian considerations on the basis of which the scheme was conceived.
Theory apart, the Gosadan scheme has 'been tried and the result is not at all encouraging.
The First Five Year Plan, obviously as an experimental measure, provided for the establishment of 160 Gosadans each housing 2,000 heads of cattle, at a cost of about Rs. 97,00,000.
The Planning Commission recognised that these measures would touch only the fringe of the problem and the success of the movement would depend on the amount of public support, especially from charitable institutions that it received.
The sheer weight of the figures of expenses compelled the Gosamvardhan Enquiry Committee to recognise that if the unwanted and uneconomic cows and their progeny have to be effectively saved from slaughter, the responsibility had to be shared by the individual, the community and so on, for it would be utterly impracticable to expect that the burden of collection of such animals from villages and transporting them to the Gosadans would be within the exclusive means and competence of the State.
That Committee certainly expected the State to share a particular portion of the expenditure which legitimately fell in its sphere of responsibility, but the Committee felt, and said so in so many words, that by far the most substantial portion of the responsibility should rest on the owners and the community itself for it was but equitable to expect that if the cow had to be really saved from slaughter the cost on this account should be equitably borne by the people and the State.
This 680 part of the Report of the Gosamvardhan Enquiry Committee reads like wishful thinking and amounts to only hoping for the best.
When the conscience of the individual or the community did not prevent the Hindu owner from selling his dry cow to the butcher for a paltry sum of Rs. 30 to Rs. 40 per head, when the Hindu sentiment for the divinity and sanctity attributed to the cow has to be propped up by legislative compulsion, when according to its own Report at p. 41 the Dharmada and Brit collected by the Hindu busi nessmen on each commercial transaction ostensibly for the benefit of the cow is not made available in full and finally when Goshalas have had to be closed down for want of funds and public support, when the country cannot spend more than Rs. 5 per capita per annum on the education of the people, it seems to be somewhat illogical and extravagant, bordering on incongruity, to frame a scheme for establishment of Gosadans for preserving useless cattle at a cost of Rs. 19 or Rs. 18 per head per annum and which will, for its success, admittedly have to depend on the same elusive and illusory public support or 75% subsidy from the Central Government.
What has been the result of the experiment? According to the Report of the Expert Committee since the First Five Year Plan only 17 Gosadans had been started in Bihar, Uttar Pradesh, Pepsu, Coorg, Bhopal, Kutch, Vindhya Pradesh, Tripura and Saurashtra put together.
Not even one of these 17 establishments is fully stocked.
There are only about 5,293 animals in these 17 Gosadans instead of 34,000.
According to the Gosamvardhan Enquiry Committee 's Report, only two Gosadans had been established up to the date of that Report in Uttar Pradesh.
The Second Five Year Plan (p. 283) shows that out of the 160 Gosadans for which provision had been made in the First Five Year Plan, only 22 Gosadans had been established.
According to the Facts and Figures about Bihar, 1955, p. 88, three Gosadans had been established at Berwadih, Nirmali and Monghyr where there were about 700 uneconomic animals at that time instead of 6,000 which should have been there as per the estimated capacity for each Gosadan.
681 What, in the view of the several committees, is the conclusion ? According to the Memorandum on Human Nutrition Vis a vis Animal Nutrition in India, p. 4, the present scheme of establishing Gosadans for segregating old and useless animals can serve only a limited, purpose and if extended countrywide, it is likely to hinder rather than help the problem of disposing of, the surplus animals.
At p. 47 the authors of this Memorandum appear to have felt that in advocating, the adoption of Gosadan Scheme on a countrywide, basis, sufficient consideration had not been given to its practical aspects.
It is pointed out that according to the present estimate the total number of useless animals is four times the number the Second Five Year Plan had estimated and that consequently, having regard to the huge size of our cattle population the existing number of the useless section would remain unchanged for many years to come and that a sum of Rs. 3,04,00,000 will be required only for pounding such animals.
The Expert Committee 's Report is quite definite and emphatic.
Paragraph 133 of that Report at P. 62 clearly expresses the opinion that Gosadans do not offer a solution to the problem.
To house and maintain all these animals, thousands of Gosadans on lakhs of acres of land would be needed.
In addition to the huge nonrecurring expenses, a very high recurring annual expenditure would have to be incurred.
, In view of this and in view of the indifferent response from the States in setting up Gosadans, the Expert Committee came to the conclusion that the Gosadan scheme was not likely to offer any solution for the problem of useless cattle and that it would be far more desirable to utilise the limited resources of the country to increase the efficiency of the useful cattle.
The Report of the Cattle Preservation and Development Committee did not recommend the immediate total ban on the slaughter of all cattle.
They recommended the establishment of concentration camps, later on euphemistically called Gosadans, and though total ban was the ultimate objective, it did not, for the moment, prohibit the slaughter of animals over the age of 14 years and of animals of any age 682 permanently unfit for work or breeding owing, to age or, deformity.
In para.
134 of the Expert Committee 's Report at, p. 63 it, is stated clearly that the total ban on the slaughter of all cattle would not be in the best interests of the country as it is merely a negative and not a positive approach to the problem.
They consider that a constructive approach to the problem will be, to see that no useful animal is slaughtered and that the country 'section resources are fully harnessed to produce better and more efficient cattle.
Neither the First Five Year Plan nor the Second Five Year Plan accepted the idea of a total ban on the slaughter of cattle.
Indeed, according to the Second Five Year Plan, a total ban will help the tendency for the number of surplus cattle to increase and, in their view, a total ban on the slaughter of all cows, calves and other milch and draught cattle will defeat the very object of the directive principles embodied in article 48 of the Constitution.
We find from para.
6 on p. 283 of the Second Five Year Plan that the Gosadan scheme did not make any, real or satisfactory progress and that altogether 22 Gosadans housing only 8,000 cattle had been established by the States up to the date of that document and even then many of the States had encountered difficulty in, securing the areas of land needed for their; operations.
The Planning Commission considered that it would be impossible to establish enough of these Gosadans and they reached the conclusion that in defining the scope.
of the ban on the slaughter of cattle the States should take a, realistic view of the fodder resources available in the country.
and the extent to which they can get the.
co operation of voluntary organisations to bear the main responsibility for, maintaining unserviceable, and unproductive cattle with a measure of assistance from the Goverment land general support from; the people.
, As already stated, ' the, Memorandum on Human Nutrition vis a vis, Animal.
Nutrition at p. 4 expressed the view that the Gosadan scheme can, serve only a limited purpose and, if extended countrywide was likely, to hinder, rather than help the problem of disposing of the, surplus animals, appart From the huge initial cost.
A, large, concentration of 683 useless animals within a restricted area, the authors of that Memorandum feared, might lead to considerable soil erosion due to overgrazing and there might be every possibility of contagious and parasitic diseases spreading from these animals to the surrounding area.
It is only the Gosamvardan Enquiry Committee which had recommended an immediate total ban on the slaughter of all cattle, irrespective of age or sex.
It should, however, be noted that even that Committee did not recommend such a total ban as a measure independent of all other considerations.
Its recommendation in this behalf was linked up with and was a part of a scheme which depended, for its success, on a variety of imponderable matters, like public enthusiasm and support for the establishment and maintenance of Gosadans in a high state of working, efficiency, the capacity of the State to bring more lands under cultivation, reclamation of the jungle lands and the like.
It may be noted also that although in some of the States total ban has been imposed on the slaughter of cattle, many of the States have not con sidered it necessary to impose such a blanket ban.
Thus the Assam Cattle Protection Act, 1950, the Bombay Animal Preservation Act, 1948, the West Bengal Animal Slaughter Control Act, 1950, the Hyderabad Slaughter of Animal Act, 1950, the Travancore Cochin Notification permit slaughter of cattle and buffaloes over specified years of age.
Even the Madhya Pradesh Act, as criminally enacted, did not place a total ban on the slaughter of all cattle.
In earlier times there being enough of pastures and smaller human and cattle population and restricted needs, it was possible to rear large and valuable herds and organise a system of balanced economy as far as agricultural development was concerned.
Thus, while the country was producing enough grain for the requirement of the human population there was an adequate area available for plentiful grazing of animals, which, supplemented by fodder available from agricultural production, assisted in developing the types of quality animals required for the needs of the 87 384 times and the area in question (Report of the Gosamvardhan Enquiry Committee).
The position has considerably changed since then.
There has been a large increase in human population and famines and epidemics having been largely brought under control, there has been an increase in the animal population also.
Already there is a competition between man and the animal for the available land.
The growing human population needs more food for which more land is required.
The refugee problem has yet to be solved and sufficient land has to be found for settling the refugees therein.
With organised facilities for artificial fertilisers and the introduction of scientific methods of cultivation agricultural production is expected to increase and the problem of food for human consumption may be capable of a satisfactory solution.
But as regards the cattle feed the gap between the requirement and the available quantities is so wide that there is little possibility, in any foresee able future, of the country producing enough to feed them adequately.
To summarise: The country is in short supply of milch cattle, breeding bulls and working bullocks.
If the nation is to maintain itself in health and nourishment and get adequate food, our cattle must be improved.
In order to achieve this objective our cattle population fit for breeding and work must be properly fed and whatever cattle food is now at our disposal and whatever more we can produce must be made available to the useful cattle which are in presenti or will in futuro be capable of yielding milk or doing work.
The maintenance of useless cattle involves a wasteful drain on the nation 's cattle feed.
To maintain them is to deprive the useful cattle of the much needed nourishment.
The presence of so many useless animals tends to deteriorate the breed.
Total ban on the slaughter of cattle, useful or otherwise, is calculated to bring about a serious dislocation, though not a complete stoppage, of the business of a considerable section of the people who are by occupation butchers (Kasais), hide merchants and so on.
Such a ban will also deprive a large section of the people of what may 685 be their staple food.
At any rate, they will have to forego the little protein food which may be within their means to take once or twice in the week.
Preservation of useless cattle by establishment of Gosadans is not, for reasons already indicated, a practical proposition.
Preservation of these useless animals by sending them to concentration camps to fend for themselves is to leave them to a process of slow death and does no good to them.
On the contrary, it hurts the best interests of the nation in that the useless cattle deprive the useful ones of a good part of the cattle food, deteriorate the breed and eventually affect the production of milk and breeding bulls and working bullocks, besides involving an enormous expense which could be better utilised for more urgent national needs.
We are not unmindful of the fact that beef and buffalo flesh from calves under one year of age.
heifers and young castrated stock yielding meat of a superior quality fetch comparatively higher prices in the market and, therefore, the tendency of the butchers naturally is to slaughter young calves.
This circumstance clearly warns us that calves, heifers and young castrated stock (cattle and buffalo) which will in future supply us milk and power for purposes of agriculture require protection.
We also do not fail to bear in mind that for very good and cogent reasons cows also require protection.
Cows give us milk and her progeny for future service.
Unfortunately, however, the average milk yield of a cow, as already stated, is very much less than that of a she buffalo.
As the Gosamvardhan Enquiry Committee 's Report points out, despite all the veneration professed for the cow, when it comes to the question of feeding, the she buffalo always receives favoured treatment and the cow has to be satisfied with whatever remains after feeding the she buffaloes, bullocks, and calves in order of priority.
The growth of cities and heavy demand for milk in the urban areas have contributed to the slaughter of good stock.
For want of space no freshly calved animal can be brought in without getting rid of one that had gone dry.
Salvage facilities not being available or, if available, 686 being uneconomical, the professional gowalas, who are mostly, if not wholly, Hindus, find it uneconomical to maintain the cow after she goes dry and consequently sell her to the butcher for slaughter at Rs. 30 to Rs. 50 per head, irrespective of her age and potential productivity, and import a fresh cow.
The veneration professed for the sanctity attached to the cow does not prevent them from doing so.
In big towns the municipal regulations are stringent and slaughter is permitted only of unserviceable and unproductive animals.
Instances are not uncommon, however, that to get an animal passed for slaughter, the teeth or the rings round the horns of the animal are tampered with and sometimes a cow is even maimed in order that she may be passed by the veterinary inspector as fit for slaughter.
Cows, which are rejected by the inspector, are taken out of the limits of the cities and slaughtered in the rural areas.
As slaughter is not confined to registered slaughter houses, the number of useful animals which are slaughtered cannot be given accurately.
It is estimated in the Report of the Expert Committee at p. 2 that at least 50,000 high yielding cows and she buffaloes from cities of Bombay, Calcutta and Madras alone are sent annually for permature slaughter and are lost to the country.
The causes of slaughter of useful cattle are enumerated at pp. 2, 3, and 9 of that Report, namely, lack of space in the cities and suburban areas, long dry period, want of arrangement for breeding bulls at the proper time, the anxiety to get as much milk out of the cow as possible, the high cost of maintenance of cows in the cities and the difficulties in the matter of obtaining adequate fodder.
For these reasons many animals are sent to the slaughter houses through sheer economic pressure and are replaced by fresh animals imported from breeding areas.
The danger of such premature slaughter is greater for the cow, for being an animal with a scanty yield of milk it does not pay the owner to maintain her through the long dry period and hence there is an inducement for adopting even cruel practices to get her passed by the inspectors.
But a dry she buffalo is well worth preserving and maintaining 687 in expectation of rich return at the next lactation.
Besides, buffaloes for slaughter will not fetch as good a price as cows would do.
Likewise there will not be much inducement to the agriculturist or other owner to part with the breeding bulls or working bullocks (cattle and.
buffalo) as long as they are serviceable.
For their sheer usefulness and their high market value as breeding or working animals the breeding bulls and working bullocks, as long as they are fit, are, to the agriculturists, worth more than the price of their flesh in gold.
There can hardly be any inducement for maiming valuable animals which, as breeding bulls or working animals, can at any time fetch from the agriculturists a price higher than what the maimed ones will fetch from the butchers.
The breeding bulls and working bullocks (cattle and buffaloes) do not, therefore, require as much protection as cows and calves do.
The next question is as to what should be the scope of the ban on the slaughter of animals.
One view is that the slaughter of all animals (cattle and buffaloes) of all categories should be regulated by the State and that animals below a specified age or not suffering from some natural deformity should not be allowed to be slaughtered.
Drastic and stringent regulations have been imposed by municipal laws and have been tried but experience shows that they are not sufficient at least to protect the cow.
It has been found to be extremely difficult to enforce the regulations for inadequacy of staff and veterinary inspectors, little or no check on the veterinary inspectors who succumb to the pressure or inducements of the butchers and pass animals not really useless as and for useless and aged animals.
A large percentage of the animals not fit for slaughter are slaughtered surreptitiously outside the municipal limits.
For reasons of economy rapacious gowalas or callous agriculturists find it uneconomical to maintain the dry cow and even resort to cruel practices and maim the cow in order to get her passed for slaughter.
As already stated, the she buffalo and the breeding bulls and working bullocks (both cattle and buffaloes) for their value, present and 688 future, do not ruin the same amount of danger as a dry cow does.
Regulation of slaughter of animals above a specified age may not be quite adequate protection for the cow but may be quite sufficient for the breeding bulls and working bullocks and the she buffaloes.
These considerations induce us to make an exception even in favour of the old and decrepit cows.
The counsel for the petitioners, be it said to their credit, did not contend otherwise.
After giving our most careful and anxious consideration to the pros and cons of the problem as indicated and discussed above and keeping in view the presumption in favour of the validity of the legislation and without any the least disrespect to the opinions of the legislatures concerned we feel that in discharging the ultimate responsibility cast on us by the Constitution we must approach and analyse the problem in an objective and realistic manner and then make our pronouncement on the reasonableness of the restrictions imposed by the impugned enactments.
So approaching and analysing the problem, we have reached the conclusion (i) that a total ban on the slaughter of cows of all ages and calves of cows and calves of she buffaloes, male and female, is quite reasonable and valid and is in consonance with the directive principles laid down in article 48, (ii) that a total ban on the slaughter of she buffaloes or breeding bulls or working bullocks (cattle as well as buffaloes) as long as they are as milch or draught cattle is also reasonable and valid and (iii) that a total ban on the slaughter of she buffaloes, bulls and bullocks (cattle or buffalo) after they cease to be capable of yielding milk or of breeding or working as draught animals cannot be supported as reasonable in the interest of the general public.
We now proceed to test each of the impugned Acts in the light of the aforesaid conclusions we have arrived at The Bihar Act, in so far as it prohibits the slaughter of cows of all ages and calves of cows and calves of buffaloes, male and female, is valid.
The Bihar Act makes no distinction between she buffaloes, bulls and bullocks (cattle and buffaloes) which are useful as milch or breeding or draught animals and those which are not and indiscriminately prohibits slaughter of she buffaloes, bulls and bullocks (cattle and buffalo) irrespective of their age or usefulness.
In our view the ban on slaughter of she buffaloes, breeding bulls and working bullocks (cattle.
and buffalo) which are useful is reasonable but of those which are not useful is not valid.
The question as to when a she buffalo, breeding bull or working bullock (cattle and buffalo) ceases to be useful and becomes useless and unserviceable is a matter for legislative determination.
There is no provision in the Bihar Act in that behalf.
Nor has our attention been drawn to any rule which may throw any light on the point.
It is, therefore, not possible to apply the doctrine of severability and uphold the ban on the slaughter of she buffaloes, breeding bulls and working bullocks (cattle and buffalo) which are useful as milch or breeding or working animals and strike down the ban on the slaughter of those which are useless.
The entire provision banning the slaughter of she buffaloes, breeding bulls, and working bullocks (cattle and buffalo) has, therefore, to be struck down.
The result is that we uphold and declare that the Bihar Act in so far as it prohibits the slaughter of cows of all ages and calves of cows and calves of buffaloes, male and female, is constitutionally valid and we hold that, in so far as it totally prohibits the slaughter of she buffaloes, breeding bulls and working bullocks (cattle and buffalo), without prescribing any test or requirement as to their age or usefulness, it infringes the rights of the petitioners under article 19 (1) (g) and is to that extent void.
As regards the U. P. Act we uphold and declare, for reasons already stated, that it is constitutionally valid in so far as it prohibits the slaughter of cows of all ages and calves of cows, male and female, but we hold that in so far as it purports to totally prohibit the slaughter of breeding bulls and working bullocks without prescribing any test or requirement as to their age or usefulness, it offends against article 19 (1) (g) and is to that extent void.
690 As regards the Madhya Pradesh Act we likewise declare that it is constitutionally valid in so far as it prohibits the slaughter of cows of all ages and calves of cows, male and female, but that it is void in so far as it totally prohibits the slaughter of breeding bulls and working bullocks without prescribing any test or requirement as to their age or usefulness.
We also hold that the Act is valid in so far as it regulates the slaughter of other animals under certificates granted by the authorities mentioned therein.
In the premises we direct the respondent States not to enforce their respective Acts in so far as they have just been declared void by us.
The parties will bear and pay their own costs of these applications.
Petitions partly allowed.
| IN-Abs | The Bihar Preservation and Improvement of Animals Act ,955, put a total ban on the slaughter of all categories of animal,, of the species of bovine cattle.
The U. P. Prevention of Cow Slaughter Act, 1955, put a total ban on the slaughter of cows and her progeny which included bulls, bullocks, heifers and calves.
The C. P. and Berar Animal Preservation Act, 1949, placed a total ban on the slaughter of cows, male or female calves of cow, bulls, bullocks, and heifers and the slaughter of buffaloes (male or female, adults or calves) was permitted only under a certificate granted by the proper authorities.
No exception was made in any of these Acts permitting slaughter of cattle even for bona fide religious purposes.
These three Acts were enacted in pursuance of the directive principles of State policy contained in article 48 Of the Constitution.
The petitioners, who were engaged in the butcher 's trade and its subsidiary undertakings, challenged the constitutional validity of the three Acts on the grounds that they infringed their funda mental rights guaranteed under articles 14, 19(1)(g) and 25 of the Constitution.
The respondents contended that the impugned Acts were constitutional and valid as they were made in consonance with the directive principles of Art 48 which were superior to the fundamental rights and that the impugned Acts did not offend article 14, 19(1)(g) or 25 Held, (i) that a total ban on the slaughter of cows of all ages and calves of cows and of she buffaloes, male and female, was quite reasonable and valid; (ii)that a total ban on the slaughter of she buffaloes or breeding bulls or working bullocks (cattle as well as buffaloes), as long as they were capable of being used as milch or draught cattle, was also reasonable and valid; and (iii) that a total ban on the slaughter of she buffaloes, bulls 630 and bullocks (cattle or buffalo) after they ceased to be capable of yielding milk or of breeding or working as draught animals was not in the interests of the general public and was invalid.
The directive in article 48 for taking steps for preventing the slaughter of animals is quite explicit and positive and contemplates a ban on the slaughter of the several categories of animals specified therein, namely, cows and calves and other cattle which answer the description of milch or draught cattle.
The protection is confined only to cows and calves and to those animals which are presently or potentially capable of yielding milk or of doing work as draught cattle but does not extend to cattle which at one time were milch or draught cattle but which have ceased to be such.
The directive principles of State policy set out in Part IV of the Constitution have to conform to and run as subsidiary to the fundamental rights in Part 111.
State of Madras vs Smt.
Champakam Dorairajan, [1951] S.C.R. 525, followed.
The ban on the slaughter of cows even on the slaughter day did not violate the fundamental rights of the petitioners under article 25 as it had not been established that the sacrifice of a cow on that day was an obligatory overt act for a Mussalman to exhibit his religious belief and idea.
Ratilal Panachand Gandhi vs The State of Bombay, [1954] S.C.R. 1055, applied.
The impugned Acts which affected only the butchers who slaughtered cattle and not the butchers who slaughtered sheep or goats, did not offend article 14 Of the Constitution.
The different categories of animals being susceptible of classification into separate groups on the basis of their usefulness to society, the butchers who kill each category may also be placed in distinct classes according to the effect produced on society by the carrying on of their respective occupations.
This classification is based on an intelligible differentia which places the petitioners in a well defined class and distinguishes them from those who slaughter sheep or goats and this differentia has a close connection with the object sought to be achieved by the im pugned Acts, namely, the preservation, protection and improvement of livestock.
In determining the question of the.
reasonableness of restrictions imposed on the fundamental rights conferred by article 19(1)(g) the Court cannot proceed on a general notion of what is reasonable in the abstract or even on the consideration of what is reasonable from the point of view of the person or persons on whom the restrictions are imposed.
What the Court has to do is to consider whether the restrictions imposed are reasonable in the interests of the general public.
The test of reasonableness has been laid down in State of Madras vs I. G. Row, [1952] S.C.R. 597 at 602.
It should also be remembered that the legislature 631 is the best judge of what is good for the community.
Though a constitutional question cannot be decided on the grounds of the sentiment of a section of the people, it has to be taken into consideration, though only as one of the elements, in arriving at a judicial verdict as to the reasonableness of the restrictions.
The effect of the impugned Acts on the fundamental rights of the petitioners under article 19(1)(g) is direct and instantaneous as soon as the Acts are brought into force, and it has to be determined whether they can be justified under cl.
(6) of article 19 The country is in short supply of milch cattle, breeding bulls and working bullocks, and a total ban on the slaughter of these which are essential to the national economy for the supply of milk, agricultural working power and manure is a reasonable restriction in the interests of the general public.
But a total ban on the slaughter of useless cattle, which involves a wasteful drain on the nation 's cattle feed which is itself in short supply and which would deprive the useful cattle of much needed nourishment, cannot be justified as being in the interests of the general public.
Under O. XLI r. 2, Of file Supreme Court Rules intervention is permitted only to the Attorney General of India or the Advocates General for the States.
There is no other provision for permitting a third party to intervene in the proceedings before the Supreme Court.
In practice, however, the Supreme Court, in exercise of its inherent powers, allows a third party to intervene when such third party is a party to some proceedings in the Supreme Court or in the High Courts where the same or similar questions are in issue, for the decision of the Supreme Court will conclude the case of that party.
|
vil Appeal Nos.
1905 06 (NT) of 1974 and 3414 of 1984.
From the Judgment and Order dated 24.7.73 and 7.9.81 of the Bombay High Court in I.T.R. No. 19 of 1967, 66 of 1964 and 27 of 1972 respectively.
B. Datta, Additional Solicitor General, M.B. Rao and Ms. A. Subhashini for the Appellant.
Soli J. Sorabji, Harish Salve, Mrs. A.K. Verma and Jeel Peres for the Respondents.
The Judgment of the Court was delivered by PATHAK, CJ.
The assessee is a Hindu Undivided Family deriving income from interest on securities, dividends, property and dealing in shares.
In 1941 the assessee pur chased a share of the Shorrock Spinning and Manufacturing Co. Ltd., hereinafter referred to as 181 "the Shorrock Co.", of the face value of Rs. 1,000 for Rs.3,307.
Later this share was split into 10 shares of Rs. 100 each, and from time to time a total of 80 shares of the face value of Rs. 100 each was issued to the assessee by way of bonus shares.
In consequence, on 31 December, 1959 the assessee owned 90 shares in the Shorrock Co. of the face value of Rs. 100 each.
There is another company called the New Shorrock Spin ning and Manufacturing Co. Ltd. to which reference may be made as "the New Shorrock Co.".
It was decided to amalgamate the Shorrock Co. with the New Shorrock Co., and upon peti tions filed under section 39 1 and section 394 of the the Gujarat High Court made an order dated 23 Septem ber, 1960 directing meetings of the share holders of both the companies.
The meetings were held on 27 October, 1960 and the scheme of amalgamation was approved.
On 25 November, 1960 the High Court sanctioned the scheme of amalgamation and declared that the scheme would be binding on members of both the Companies.
Under the scheme of amalgamation, the undertaking and all the property rights and powers as well as all liabili ties and duties of the Shorrock Co. were to stand trans ferred and vest with effect from 1 January, 1960 in the New Shorrock Co. The scheme of amalgamation provided further for an increase in the share capital of the New Shorrock Co. and it permitted the creation of 14,625 new ordinary shares of the face value of Rs. 125 each of the transferee company.
The newly created shares were to rank pari passu with the existing shares of the transferee company in all respects.
Under the scheme the New Shorrock Co., as the transferee company, was directed to allot to members of the Shorrock Co., the transferor company, one share in the transferee company for every two shares of the transferor company held by them.
The order of the Court directed that the Shorrock Co. should file a certified copy of the order with the Registrar of Companies within 14 days for registration, and on such certified copy being delivered the transferor compa ny would stand dissolved and the Registrar of Companies was to place all documents relating to the transferor company on the file relating to the transferee company and the folios relating to the two companies were to be consolidated ac cordingly.
During the assessment proceedings for the assessment year 1961 62, the previous year being the financial year ended 31 March, 1961, the Income Tax Officer, although apprised of the fact of the scheme of amalgamation and of the acquisition by the assessee of 45 shares of the 182 New Shorrock Co. omitted to consider the applicability of section 12B of the Indian Income Tax Act, 1922.
On 21 January, 1964 the Commissioner of Income tax issued a notice under section 33B of the Act to the assessee stating that the receipt of 45 shares of the New Shorrock Co. "in exchange" of his original holding of 90 shares in the Shorrock Co. in December 1960 had resulted in an assessable profit, and this aspect had been overlooked by the Income Tax Officer when making the regular assessment, and, therefore, he proposed a revision of the assessment.
After heating the assessee, the Commis sioner of Income Tax passed an order dated 29 January, 1964 directing the Income Tax Officer to revise the assessment and to include an amount of Rs.49,350 representing the capital gain resulting from the transaction of the acquisi tion of 45 shares of New Shorrock Co. in place of the 90 shares held in Shorrock Co. On appeal by the assessee before the Income Tax Appellate Tribunal, the Appellate Tribunal held that the transaction represented neither an exchange nor a relinquishment and, therefore, section 12B of the Act was not attracted.
At the instance of the Revenue the Appel late Tribunal referred the following questions to the High Court for its opinion: "1.
Whether on the facts and in the circumstances of the case, the sum of Rs.49,350 could be assessed in the hands of the assessee as capital gains as having ac crued to the assessee by exchange or relin quishment as provided for under section 12B of the Act? 2.
If the answer to the above question is in the affirmative, whether the said sum of Rs.49,350 was assessable in the year 1961 62?" Before the High Court the Revenue did not contend that the transaction constituted a sale or a transfer, and the parties confined themselves to the point whether the trans action represented an exchange or a relinquishment for the purposes of section 12B. The High Court took the view that no exchange can be said to have taken place on the allotment of the 45 shares of the New Shorrock Co. under the scheme of amalgamation.
Nor, in the opinion of the High Court, did it constitute a relinquishment.
In the result, the High Court answered both questions in favour of the assessee and against the Revenue.
The relevant portion of section 12B of the Act provides: 183 section 12B(1) Capital gains.
The tax shall be payable by an assessee under the head "Capital gains" in respect of any profits or gains arising from the sale, exchange, relinquish ment or transfer of a capital asset effected after the 31st day of March, 1956, and such profits and gains shall be deemed to be income of the previous year in which the sale, ex change, relinquishment or transfer took place.
The sole question is whether the receipt of the 45 shares of the New Shorrock Co. upon amalgamation by reason of the share holding of 90 shares of the Shorrock Co. can be described as an "exchange" or a "relinquishment" within the meaning of section 12B of the Act.
It seems plain to us that no exchange is involved in the transaction.
An exchange in volves the transfer of property by one person to another and reciprocally the transfer of property by that other to the first person.
There must be a mutual transfer of ownership of one thing for the ownership of another.
In the present case, the assessee cannot be said to have transferred any property to any one.
When he was allotted the shares of the New Shorrock Co. he was entitled to such allotment because of his holding the 90 shares of Shorrock Co. The holding of the 90 shares in the Shorrock Co. was merely a qualifying condition entitling the assessee to the allotment of the 45 shares of the New Shorrock Co. The dissolution of the Shor rock Co. deprived the holding of the 90 shares of that company of all value.
On the question whether there was any relinquishment, the decision must again be against the Revenue.
A relin quishment takes place when the owner withdraws himself from the property and abandons his rights thereto.
It presumes that the property continues to exist after the relinquish ment.
Upon amalgamation, the shares of the Shorrock Co., as has been mentioned earlier, lost all value as that company stood dissolved.
There is no relinquishment.
The connected cases raise similar questions, and are dealt with accordingly.
In the result, we agree with the view taken by the High Court, and dismiss these appeals with costs.
H.L.C. Appeals dis missed.
| IN-Abs | Sub section
(1) of section 12B of the Indian Income Tax Act, 1922 provides that tax shall be payable by an assessee under the head "Capital gains" in respect of any profits or gains arising from the sale, exchange, relinquishment or transfer of a capital asset.
The respondent assessee who owned 90 shares in the Shorrock Co. which stood dissolved under a scheme of amalga mation with another company known as New Shorrock Co., which was sanctioned by the High Court, was aborted 45 shares of the New Shorrock Co. in terms of the provisions of the said scheme.
During the assessment proceedings for the assessment year 1961 62, the Income Tax Officer omitted to consider the applicability of section 12B 10 the case of the assessee.
Later on, the Commissioner issued a notice under section 33B to the assessee stating that the receipt of 45 shares of the New Shorrock Co. "in exchange" of his original holding of 90 shares in the Shorrock Co. had resulted in an assessable profit, and passed an order directing the Income Tax Officer to revise the assessment and to include an amount of Rs.49,350 representing the capital gain resulting from the transaction.
On appeal by the assessee the Appellate Tribu nal held that the transaction represented neither an ex change nor a relinquishment and, therefore, section 12B of the Act was not attracted.
However, at the instance of the Revenue the Tribunal referred the question to the High Court which answered it in favour of the assessee.
Dismissing the appeals, 180 HELD: The sole question is whether the receipt of the 45 shares of the New Shorrock Co. upon amalgamation by reason of the share holding of 90 shares of the Shorrock Co. can be described as an "exchange" or a "relinquishment" within the meaning of section 12B.
It seems plain to us that no exchange is involved in the transaction.
An exchange involves the trans fer of property by one person to another and reciprocally the transfer of property by that other to the first person.
There must be a mutual transfer of ownership of one thing for the ownership of another.
In the present case, the assessee cannot be said to have transferred any property to any one.
When he was allotted the shares of the New Shorrock Co. he was entitled to such allotment because of his holding the 90 shares of Shorrock Co. The holding of the 90 shares in the Shorrock Co. was merely a qualifying condition enti tling the assessee to the allotment of the 45 shares of the New Shorrock Co. The dissolution of the Shorrock Co. de prived the holding of the 90 shares of that company of all value.
[183B E] On the question whether there was any relinquishment, the decision must again be against the Revenue.
A relin quishment takes place when the owner withdraws himself from the property and abandons his rights thereto.
It presumes that the property continues to exist after the relinquish ment.
Upon amalgamation, the shares of the Shorrock Co. lost all value as that company stood dissolved.
[183E F]
|
vil Appeal No. 2 104 of 1989.
WITH C.M.P. No. 26956 of 1988.
From the Judgment and Order dated 22.4.1988 of the Punjab and Haryana High Court in C.R. No. 2875 of 1979.
Ashok K. Sen and G.K. Bansal for the Appellant.
S.M. Ashri and C.S. Ashri for the Respondents.
The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J.
Special leave granted.
This appeal is from the judgment and order of the High Court of Punjab and Haryana dated 22nd April, 1988.
The dispute was between the two brothers.
Both the parties appointed one Shri Ajit Singh as the Arbitrator on 7th March, 1974 for settlement of the dispute about 2 1/2 Killas of land situated near Chandni Bagh, Panipat in the State of Haryana.
The said land stood in the name of the appellant.
According to the respondent, Ram Lal, it was benami in the name of the appellant.
That was the dispute.
The arbitrator gave his award on 22nd May, 1974 and moved an application on 23rd September, 1974 before the Court of Sub Judge IInd Class, Panipat, for making the award the rule of the Court.
The application was registered in the said Court and notice was issued to the appellant herein on 7th November, 1974.
Objections were filed by the appellant taking various grounds.
It was contended that the appellant had informed the sole arbitrator through registered notice and by a telegraphic notice that he had no faith in the said arbitra tor and had thus repudiated his authority to proceed with the arbitration proceedings.
It was also contended that the award was lop sided, perverse, and totally unjust and against all cannons of justice and fair play.
It was alleged that the arbitrator had acted in a partisan manner.
He never heard the claim of the appellant and never 254 called upon him to substantiate his claim and had acted as an agent of the respondent.
It was, therefore, prayed by the appellant that the award be set aside.
It may be mentioned that no point was raised that the award was bad and unforce able because it was not properly stamped nor any plea was taken that the award was an unregistered one as such could not be made the rule of the court.
Several issues were framed.
No issue was, however, framed on the ground that the award was bad because it was not properly stamped or that it was not registered.
The appellant, who was respondent No. 2 in the said proceedings before the learned Trial Judge, gave his version about the repudiation of the authority.
The learned Trial Judge had, however, held that the appellant had failed to prove that he had repudiated the authority of the arbitrator to enter upon the arbitration through registered notice or otherwise before the arbitrator announced his award.
It was further held that the award of the arbitrator was not liable to be set aside on the grounds taken.
The objections were treated as objections under section 33 of the and it was filed within the limitation period.
In that view of the matter, the learned Sub Judge IInd Class, Panipat by his order dated 28th July, 1977 dismissed the objections under Section 14 of the and made the said award the rule of the court.
Aggrieved thereby, the appellant went up in first appeal before the Additional District Judge, Karnal.
The learned Additional District Judge, while dealing with the conten tions of the appellant, held that the application was prop erly filed.
A point was taken before the first Appellate Court that the award was on an unstamped paper and as such could not be made the rule of the court.
The learned District Judge held that the award has not been properly stamped and as such could not be made the rule of the court.
It was also contended before the learned District Judge that the award was unregistered and as such it could not be made the rule of the court as it affected immovable property of more than Rs. 100.
The learned Dis trict Judge after analysing the provisions of section 17 of the (hereinafter referred as to 'the Act ') came to the conclusion that the award declared right in immovable property and since it was unregistered, it could not be made the rule of the court.
The learned Dis trict Judge, however, also came to the conclusion that the authority of the arbitrator had been repudiated.
This ground no longer survives.
In the aforesaid view of the matter, the learned District Judge allowed the appeal on the ground that the 255 award was unregistered and unstamped and as such could not be made the rule of the court and set aside the order of the learned Trial Judge.
There was a second appeal to the High Court.
The High Court upheld the award.
The High Court noted that the neces sary stamp was purchased on 8th August, 1974 before the award was filed on the 9th September, 1974.
And that being so, it could not be argued successfully that the award was unstamped.
In that view of the matter, the High Court held that the learned District Judge was in error in allowing the stamp objection to be taken.
As regards the registration, it was held by the High Court that the award did not create any right as such in immovable property; it only admitted the already existing rights between the parties and hence it did not require any registration.
In that view of the matter, the High Court was of the opinion that the first appellate Court was wrong.
The High Court was further of the view that no right was created in favour of Shri Ram Lal, the respondent herein when he was declared the owner.
Both Lachhman Das, the appellant and Ram Lal, the respondent, had claimed their ownership and, ac cording to the High Court, they had the existing rights.
The award only made, according to the High Court, it clear that the ownership would vest in one of the brothers, Ram Lal.
In the aforesaid view of the matter, the High Court was of the view that it did not require registration.
The High Court allowed the appeal and directed the restoration of the order of the learned trial court and the award be made the rule of the court.
Aggrieved thereby, the appellant has come up to this Court.
The question is Was the High Court right in the view it took? Mr. A.K. Sen, learned counsel for the appellant contend ed that the High Court was clearly in error in the facts and circumstances of this case to have made this award the rule of the court and to have looked upon this award which at all relevant and material time was unregistered.
It may be mentioned that when this matter came up before this Court on the 5th December, 1988, the matter was adjourned for two months and it was recorded "In the meantime, the parties may take steps".
Thereafter, it appears that the award was filed for registration on 19th December, 1988 before the Sub Registrar, Panipat and was registered actually on 3rd Febru ary, 1989.
Mr. Sen, contended that the registration of the award subsequently made in the manner indicated hereinbefore did not validate it retrospectively in 256 view of the relevant provisions of the Act.
The award being an unregistered one could not have been looked into by the High Court.
Mr. Sen tried to urge before us that the award was got registered by misrepresentation of the order of this Court dated 5th December, 1988.
This Court did not, on 5th December, 1988, direct that the registration could be made.
All that this Court observed was that the parties might take steps.
It may be mentioned that on or about 18th December, 1988, it appears at page 75 of the present paper book that an application was made for registration of award which was said to have been applied by Shri Ajit Singh, S/o Shri Beer Singh.
In the said letter, it was mentioned that Mr. justice J.V. Gupta of the Hon 'ble High Court of Punjab and Haryana had held in favour of the said writer and it was further stated that on the 5th December, 1988, this Court dismissed the case of Lachhman Singh, the appellant herein, copy whereof was enclosed.
The award was filed for registration on 18th December, 1988.
The statements contained in the letter were incorrect and misleading inasmuch as this Court did not dismiss the case of the appellant on 5th December, 1988.
On the other hand, this Court, as mentioned hereinbe fore on the 5th December, 1988, merely observed that the appellant would be at liberty to do what was needful.
Mr. Ashri, learned counsel for the respondent, submitted that the registration was done in view of provisions of sections 23 and 25 of the Act.
Mr. Sen, on the other hand, submitted before us that this was wholly irregular to have obtained registration by misleading the Sub Registrar and this was of no effect.
Furthermore, in any event, according to Mr. Sen, the registration having been beyond the period of four months as enjoined by the relevant provisions was wholly bad.
The first question that requires consideration in the instant case is whether the Court could have looked into the award for the purpose of pronouncing judgment upon the award.
In order to deal with this question, it is necessary to refer to Section 17 of the Act.
Section 17 deals with documents of which registration is compulsory.
Section 17 of the said Act mentions the documents which must be regis tered.
Section 17(1)(e), inter alia, provides: "non testamentary instruments transferring or assigning any decree or order of a Court or any order of a Court or any award when such decree or order or award purports or operates to create, declare, assign, limit or extin guish, whether in present or in future, any right, title or interest, 257 whether in present or in future, any right, title or interest,, whether vested or contin gent, of the value of one hundred rupees and upwards, to or in immovable property." Section 23 of the said Act provides as under: "Subject to the provisions contained in sec tions 24, 25 and 26, no document other than will shall be accepted for registration unless presented for that purpose to the proper officer within four months from the date of its execution: Provided that a copy of a decree or order may be presented within four months from the day on which the decree or order was made, or, where it is appealable, within four months from the day on which it becomes final." Section 25 of the said Act provides as under: "If, owing to urgent necessity or unavoidable accident, any document executed, or copy of a decree or order made, in India is not present ed for registration till after the expiration of the time hereinbefore presented in that be half, the Registrar, in cases where the delay in presentation does not exceed four months, may direct that, on payment of a fine not exceeding ten times the amount of the proper registration fee, such document shall be accepted for registration." Section 49 of the said Act provides as under: "No document required by section 17 or by any provision of the , to be registered shall (a) affect any immovable property comprised therein, or (b) confer any power to adopt, or (c) be received as evidence of any transac tion affecting such property or conferring such power, unless it has been registered." 258 The proviso to this section deals with a suit for specific performance with which we are not concerned.
Shri Ashri contended that the document in question was one which did not require registration.
He submitted that the High Court was right in the view it took.
He further submitted that the property in dispute was in the joint name of the appellant and the respondent.
The dispute was whether the half of the property held by the appellant was benami for the respondent or a declaration to that effect could be made by the arbitrator.
Mr. Ashri further submitted that it was the case of the appellant that he was the owner of the property in question.
The award in question recites that Shri Ajit Singh had been appointed as arbitrator by an agreement dated 7th March, 1974 by both the parties.
The award further recites that he was appointed arbitrator to adjudicate through arbitration "their disputes regarding property against each other".
The arbitrator thereafter recites the steps taken and the proceedings before him.
It was further stated that the appellant did not orally reply to the contentions of the respondent nor did he submit his claims in writing.
In these circumstances, the award was bad.
The award stated, inter alia, "Land of Tibbi comprising of rect.
No. 13 Kila No. 23 (3 11), 26(1 11), 16(5 15), 17(5 14), 25(4 4), 23/27 and 26/1 situated in Mauz Ugra Kheri, near Chandni Bagh, which is in the joint name of Shri Ram Lal, Party No. 1 and Shri Lachhman Dass, Party No. 2.
The half ownership of Shri Lachhman Dass shall be now owned by Shri Ram Lal in addition to his 1/2 share owned by him in these lands.
" The award gave certain other directions.
Regarding other claims, it was held that lands were allotted in the names of both the brothers and in that context Rs. 16,000 were spent by the respondent from his own sources.
The arbitrator stated that he admitted these expenses at Rs. 10,000 and awarded that an amount of Rs.5,000 equal to 1/2 share should be paid by the appellant to the respondent.
The other claims were also decided by the award with which it is not neces sary to deal in the present appeal.
The question is does this award purport or operate to create, declare or assign, limit or extinguish any right, title or interest in immova ble property? Shri Ashri submitted that as his client was the real owner and as respondent No. 1 was mere benamdar, and the arbitrator merely declared the true position and the award did not as such create, declare or assign any fight, title or interest in any immovable property by the aforesaid clause in the award.
259 The Division Bench of the Madras High Court in Ramaswamy Ayyar & Anr.
vs Thirupathi Naik, ILR XXVII Madras p. 43 has observed that the criterion for purposes of registration under the Registration Act, 1877 (III of 1877), which was in the same term as the provision of the present Act, was what was expressed on the face of the document, not what inci dents might be annexed by custom to a grant of the kind.
Therefore, we have to see not what the document intends to convey really, but what it purports to convey.
In other words, it is necessary.
to examine not so much what it intends to do but what it purports to do.
The real purpose of registration is to secure that every person dealing with the property, where such document re quires registration, may rely with confidence upon state ments contained in the register as a full and complete account of all transactions by which title may be affected.
Section 17 of the said Act being a disabling section, must be construed strictly.
Therefore, unless a document is clearly brought within the provisions of the section, its non registration would be no bar to its being admitted in evidence.
On a proper construction of the award, it does appear to us that the award did create, declare or assign a right, title and interest in the immovable property.
The award declares that 1/2 share of the ownership of Shri Lachhman Dass shall "be now owned by Shri Ram Lal, the respondent in addition to his 1/2 share owned in those lands".
Therefore, the said award declares the right of Ram Lal to the said share of the said property mentioned in that clause.
It is not in dispute that the said property is immovable property and it is not merely a declaration of the pre existing right but creation of new right of the parties.
It is significant to bear in mind that the section enjoins registration wher ever the award "purports or operates to create, declare, assign, limit or extinguish" whether in present or in future any right, title or interest of the value of Rs. 100 or upwards in immovable property.
Shri Ashri tried to submit that while reading the award reasonably and fairly, it must be construed that there was no creation or declaration of any new right in the immovable property.
What was done was only, according to Shri Ashri, a declaration of existing right, that is to say, Ram Lal 's full ownership of the property in question.
The section, however, enjoins registration in respect of any document, which purports not which intends to create a right in immov able property or declare a right in immovable property.
It is not a question of declaration of an existing right.
It is by this award that a new right was 260 being created in favour of Ram Lal, the respondent herein.
In that view of the matter, in our opinion, it cannot be contended that the award did not require registration.
This question was considered by this Court in Satish Kumar & Ors.
vs Surinder Kumar & Ors.
, There an arbi trator appointed by the appellants and the respondents partitioned their immovable property exceeding the value of Rs. 100.
The arbitrator applied under section 14 of the to the Court for making the award a rule of the Court.
On the question whether the award was admissible in evidence as it was not registered it was held that the award required registration.
It was further held by Justice Sikri, as the Chief Justice then was, and Justice Bachawat that all claims which were the subject matter of a reference to arbitration merged in the award which was pronounced in the proceedings before the arbitrator and after an award had been pronounced, the rights and liabili ties of the parties in respect of the said claims could be determined only on the basis of the said award.
After an award was pronounced, no action could be started on the original claim which had been the subject matter of the reference.
The position under the registration Act is in no way different from what it was before the Act came into force.
Therefore, the conferment of exclusive jurisdiction on a court under the did not make an award any less binding than it was under the provisions of the Second Schedule of the Code of Civil Procedure.
It was further held that the filing of an unregistered award under section 49 of the Act was not prohibited.
What was prohibit ed was that it could not be taken into evidence so as to affect immovable property falling under section 17 of the Act.
It was further reiterated that it could not be said that the registration did not in any manner add to its efficacy or give it added competence.
If an award affected immovable property above the value of Rs. 100, its registration would not rid of the disability created by section 49 of the Act.
The award in question was not a mere waste paper but had some legal effect and it plainly purported to affect or affected property within the meaning of section 17(1)(b) of the Act.
Justice Hegde gave a separate but concurring judgment.
He observed that it was one thing to say that a right was not created, it was an entirely different thing to say that the right created could not be enforced without further steps.
An award did create rights in that property but those rights could not be enforced until the award was made a decree of the Court.
For the purpose of section 17(1)(b) of the Act, all that had to be seen was whether the award in question pur ported or operated to create or declare, assign, limit or extinguish whether in present or future any right, title or interest whether vested or contingent of the value of one hundred rupees and upwards to or in immovable property.
261 It was incorrect to state that an award which could not be enforced was not an award and the same did not create any right in the property which was the subject matter of the award.
An award whether registered or unregistered, accord ing to Justice Hegde, does create rights but those rights could not be enforced until the award is made the decree of the court.
The learned Judge made it clear that for the purpose of section 17(1)(b) of the Act, all that had to be seen was whether the award in question purported or operated to create or declare, assign, limit or extinguish whether in present or future any right, title or interest whether vested or contingent of the value of Rs. 100 and upwards in the immovable property.
If it does, it is compulsorily registerable.
A document might validly create rights but those rights might not be enforced for various reasons.
The Court found that the award in that case created right in immovable property and it required registration.
This Court in Ratan Lal Sharma vs Purshottam Harit, ; had to consider the question of registra tion and the effect of non registration of an award.
The appellant and the respondent therein had set up a partner ship business in the year 1962.
The parties, however, there after fell out.
At the time the disputes arose, the running business had a factory and various movable and immovable properties.
On August 22, 1963, by agreement in writing, the parties referred "the disputes of our concern" to the arbi tration of two persons and gave "the arbirators full author ity to decide their dispute".
The arbitrators gave their award on September 10, 1963.
The award made an exclusive allotment of the partnership assets, including the factory, and liabilities to the appellant.
He was "absolutely enti tled to the same" in consideration of a sum of Rs. 17,000 plus half the amount of the realisable debts of the business to the respondent and of the appellants renouncement of the right to share in amounts already received by the respond ent.
The award, stipulated that the appellant should not run the factory unless he had paid the awarded consideration to the respondent.
The arbitrators filed the award in the High Court on November 8, 1963.
On September 10, 1964, the re spondent filed an application for determining the validity of the agreement and for setting aside the award.
On May 27, 1966, a learned Single Judge of the High Court dismissed the application as time barred.
But he declined the request of the appellant to proceed to pronounce judgment according to the award because in his view; (i) the award was void for uncertainty and (ii) the award, which created rights in favour of the appellant over immovable property worth over Rs. 100 required registration and was unregistered.
From this part of the order, the 262 appellant filed an appeal which was dismissed as not main tainable by the Division Bench of the High Court.
The appel lant preferred an appeal by special leave to this Court against the decision of the Single Judge declining to pro nounce judgment in accordance with the award.
He also filed a special leave petition against the judgment of the Divi sion Bench.
In the appeal before this Court, the appellant contended that the award was not void for uncertainty and that the award sought to assign the respondent 's share in the partnership to the appellant and so did not require registration and that under sec.
17 of the , the Court was bound to pronounce judgment in accordance with the award after it had dismissed the respondent 's applica tion for setting it aside.
It was held that the share of a partner in the assets of the partnership, which had also immovable properties, was movable property and the assign ment of the share did not require registration under section 17 of the Act.
But the award in the instant case, this Court observed, did not seek to assign the share of the respondent to the appellant, either in express words or by necessary implication.
The award expressly makes an exclusive allot ment of the partnership assets including the factory and liabilities to the appellant.
It went further and made him "absolutely entitled to the same", in consideration of a sum of Rs. 17,000 plus half of the amount of Rs. 1924.88 P. to the respondent and the appellant 's renouncement of the right to share in the amounts already received by the respondent.
In express words the award purported to create rights in immovable property worth above Rs. 100 in favour of the appellant.
It would require accordingly registration under section 17 of the Act.
As the award was unregistered, the court could not look into it.
The award being inadmissible in evidence for want of registration the Court could not pro nounce judgment in accordance with it.
Section 17 of the presupposes an award which could be validly looked into by the Court.
The appellant could not success fully invoke section 17.
The award is an inseparable tangle of several clauses and cannot be enforced as to the part not dealing with immovable property.
In the instant case also, it appears to us that the award affects immovable property over Rs. I00 and as such was required to be registered.
Shri Ashn, however, contended that the fact that the award was unregistered had not been taken before the learned trial judge.
Indeed, this was not urged within 30 days and the time for filing of application for setting aside an award under section 30 of the Arbitra tion Act, was 30 days and as such this not having been taken, the appellant was not entitled to take this point at a later stage.
1t is.
true that in the application for making the award a rule of the court before 263 the learned trial judge this point had not been taken.
Section 33 of the provides that: "Any party to an arbitration agreement or of any person claiming under him desiring to challenge the existence or validity of an arbitration agreement or an award or to have the effect of either determined shall apply to the Court and the Court shall decide the question on affidavits.
" It has been held by the majority of three learned Judges in a full Bench decision of the Calcutta High Court in the case of Saha & Co. vs Ishar Singh Kirpal Singh, AIR 1956 Cal. 321 that under the Indian , there was no distinction between an application for setting aside of an award and an application for adjudgment of the award as a nullity and all applications must be under section 30 within the time stipulated for that application.
The existence of an award and validity of the reference both have to be chal lenged in the same manner.
But the next question that arises, is, whether an unregistered award can be set aside or not.
It was submitted by Mr. Ashri that the award was otherwise invalid, under section 30(c) of the .
It is, however, not necessary for the present purpose to decide this question.
It is sufficient to emphasise that an award affecting immovable property of the value of more than Rs. 100 cannot be looked into by the Court for pronouncement upon the award on the application under section 14 of the Arbi tration Act unless the award is registered.
section 14 enjoins that when an award of an arbitrator has been filed, the Court should give notice to the parties and thereupon the court shall pronounce judgment upon the award and made it a rule of the court.
But in order to do so, the court must be competent to look into the award.
section 49 of the Act enjoins that the award cannot be received as evidence of any trans action affecting immovable property or confering power to adopt, unless it is registered.
In that view of the matter, no judgment upon the award could have been pronounced upon the unregistered award.
Mr. Ashri, however, relied on a decision of the learned Single Judge of the Calcutta High Court, in which one of us (Sabyasachi Mukharji, J) had occasion to deal with the question whether an application for determination of the validity of an award could be entertained after the lapse of 30 days time.
It was held that an application challenging an award on the ground of non registration must be by procedure under section 30 of the and the party not apply ing with in the time under section 30 was estopped from agitating the 264 question subsequently.
The relevant case law was discussed and it was held that where an adjudication was necessary as to whether registration was required or not and it was emphasised that in the instant case also an adjudication was necessary because the High Court had held that registration was not necessary, while the appellant is contending and as we are inclined to agree that registration was necessary, in such a case, it must be done by means of an application within 30 days.
It is true that where an application is made for determining the validity and effect of an award in such a case, as was the case in the application made to the Calcutta High Court for determination and admissibility of the award and for a declaration that the award was void, it is necessary that the application should be made within 30 days.
But that problem does not arise here because here under section 14 of the , a judgment is sought in favour of the award.
In order to pronounce that judgment, the award has to be looked into.
The court cannot do it when the award affects the immovable property or purports to affect the immovable property of the value of more than Rs. 100 and it is not registered and as such it cannot be looked into.
In that view of the matter, we are of the opinion that the High Court was in error in the order under appeal.
It may be appropriate in this connection to refer to the observations of Justice Vivian Bose, in the Gangaprashad vs Mt. Banaspati, AIR 1933 Nagpur 132.
In that decision Justice Bose speaking for the Nagpur High Court observed at page 134 of the report, that it was argued before him that even though it was not possible for the plaintiff to challenge the fact that there was a reference to arbitration, and an award, and that there was no misconduct, etc., he could still question its validity on the ground that it had not been registered.
But this question was barred by the rule of constructive res judicata.
He referred to Mulla that if an application was made to the court to file an unregistered award which requires registration, then the court must reject it.
It followed that this was one of the grounds which could be urged against the filing of an award.
If it was not urged, and the award was filed, then that question was as much barred in a subsequent suit as the others.
In this case, however, this point that the award is not registered and as such it could not be filed, though not taken subsequently in argument before the trial Judge, it was urged before the First Appellate Court and it was held in favour of the present respondent.
This is an appeal by special leave in subsequent decision from that decision where the filing of the award is being challenged on the ground that it 265 is unregistered.
Therefore, in our opinion, though it may not be possible to take the point that the award is bad because it is unregistered as such it could not be taken into consideration in a proceeding under section 30 or 33 of the , but can be taken in the proceedings under section 14 of the when the award is sought to be filed in the court and the court is called upon to pass a decree in accordance with the award.
As the court, as mentioned hereinbefore, could not look into the award, there is no question of the court passing a decree in accordance with the award and that point can also be taken when the award is sought to be enforced as the rule of the court.
Mr. Ashri, however, contended that the award had been subsequently registered and unless the registration was set aside the award did not suffer from any defect.
We have, however, to examine whether the High Court was fight in accepting the award and in pronouncing the judgment in terms of the award.
At the relevant time, the award was not regis tered.
If that is the position, then the subsequent regis tration of the award whether in confirmity with sections 23 and 25 of the Act or whether in breach or in violation of the same is not relevant.
It is not necessary in the view that we have taken to go into the question whether the appellant was right in getting this document registered in the manner it has been done by making certain representation, which was not correct, to the Sub Registrar.
Learned Counsel for the respondent drew our attention to certain observations of this court in Raj Kumar Dey and Others vs Tarapada Dey and Others, ; where registration was permitted by the Court after the lapse of four months as enjoined by section 23 of the Act.
But the facts and the circumstances and the grounds upon which registra tion was permitted, were entirely different from the present case.
In the premises, the observations made in the said decision are not relevant or germane for the present contro versy.
In the aforesaid view of the matter, the decision of the High Court cannot be sustained.
The appeal is, therefore, allowed.
The judgment and/or order of the High Court are set aside.
But in the facts and circumstances of the case, the parties will pay and bear their own costs.
R.P.D. Appeal allowed.
| IN-Abs | By an agreement dated 7 March, 1974, both the appellant and the respondent Ram Lal appointed an arbitrator to adju dicate through arbitration their disputes about a plot of land.
The arbitrator gave his award on 22 May 1974 stating, inter alia, that the land in dispute was in the joint name of the appellant and respondent Ram Lal, and that the half ownership of the appellant shall now be owned by Shri Ram Lal in addition to his 1/2 share owned by him in those lands.
The arbitrator filed an application before Sub Judge, II Class for making the award the rule of the Court.
The appel lant filed objections under section 33 of the , to set aside the award on various grounds but no point was raised that the award was unenforceable because it was not properly stamped and not registered.
The trial court dismissed all the objections taken under section 14 of the and made the award the rule of the Court.
The District Judge, in the appeal filed by the appel lant, came to the conclusion that the award declared a right in immovable property and since it was unregistered and unstamped it could not be made the rule of the Court.
The High Court, however, allowed the appeal filed by the res 251 pondent on the ground that the award did not create any right in immovable property, and that it only admitted the already existing rights between the parties and hence it did not require any registration.
The appellant appealed by special leave to this Court.
During the pendency of the said appeal the award was submitted for registration on 19 December, 1988 and was registered on 3 February, 1989.
On behalf of appellant it was argued that the High Court was wrong in looking into an unregistered award, and that its subsequent registration was obtained by misrepresenta tion and misleading the authorities did not validate it retrospectively and that the registration having been beyond the period of four months was wholly bad.
On behalf of the respondent the appeal was contested by contending that the award did not require registration as it did not create, declare or assign any new right in the immovable property, but that it merely declared the existing right of ownership of the respondent, that the appellant was barred from taking the plea of its being unregistered at a later stage as it had not been taken by him before the trial court.
It was further submitted that the appellant was estopped from agitating the question after the lapse of 30 days as is statutorily required under section 30 of the Arbitra tion Act.
Allowing the appeal, this Court, HELD: (1) The real purpose of registration is to secure that every person dealing with the property, where such document requires registration, may rely with confidence upon statements contained in the register as a full and complete account of all transactions by which title may be affected.
Section 17 of the said Act being a disabling section, must be construed strictly.
Therefore, unless a document is clearly brought within the provisions of the section, its non registration would be no bar to its being admitted in evidence.
[259C D] Ramaswamy Ayyar & Anr.
vs Thirupathi Naik, ILR XXVII Madras p. 43, affirmed.
(2) On a proper construction of the award, it does appear that the award did create, declare or assign a right, title and interest in the immovable property.
The award declares that 1/2 share of the ownership 252 of Shri Lachhman Dass shall "be now owned by Shri Ram Lal, the respondent in addition to his 1/2 share owned in these lands.
" Therefore,the said award declares the right of Ram Lal to the said share of the said property mentioned in that clause.
It is not in dispute that the said property is immovable property and it is not merely a declaration of the pre existing right but creation of new right of the parties.
The award in the instant case affects immovable property over Rs. I00 and as such was required to be registered.
[259D F; 262G] (3) The filing of an unregistered award under section 49 of the Act was not prohibited.
What was prohibited was that it could not be taken into evidence so as to affect immovable property failing under section 17 of the Act.
[260E] (4) An award affecting immovable property of the value of more than Rs. I00 cannot be looked into by the Court for pronouncement upon the award, on the application under section 14 of the unless the award is registered.
Section 14 enjoins that when an award of an arbitrator has been filed, the Court should give notice to the parties and thereupon the court shall pronounce judgment upon the award and make it a rule of the Court.
But in order to do so, the court must be competent to look into the award.
Section 49 of the act enjoins that the award cannot be received as evidence of any transaction affecting immovable property or conferring power to adopt, unless it is registered.
In that view of the matter, no judgment upon the award could have been pronounced upon the unregistered award.
[263E F] Satish Kumar & Ors.
vs Surinder Kumar & Ors., and Ratan Lal Sharma vs Purshottam Harit, ; , relied upon.
(5) In the instant case, though it may not be possible to take the point that the.
award is bad because it is unregistered as such, it could not be taken into considera tion in a proceeding under section 30 or 33 of the , but it can be taken in the proceedings under section 14 of the when the award is sought to be .filed in the Court and the Court is called upon to pass a decree in accordance with the award.
As the court could not look into the award, there is no question of the court passing a decree in accordance with the award and that point can also be taken when the award is sought to be enforced as the rule of the Court.
Further, at the relevant time the award was not registered.
If that is the position, then the subse 253 quent registration of the award whether in conformity with sections 23 and 25 of the Act or whether in breach or in violation of the same is not relevant.
[265A D] Gangaprashad vs Mt. Banaspati, AIR 1933 Nagpur 132, referred to.
|
: Civil Appeal No. 708 of 1988.
From the Judgment and Order dated 20.2.
1987 of t he Bombay High Court in S.A. No. 282 of 1985.
Mrs. Shyamla Pappu, K.K. Rai and Mrs. Indira Sawhney f or the Appellant.
G.L. Sanghi and A.K. Sanghi for the Respondent.
The Judgment of the Court was delivered by OZA, J.
This appeal after leave has been filed by the appe l lant 140 wife arising out of a decree under Section 12(1)(d) of t he Hindu Marriage Act (hereinafter referred to as the 'Act '), a decree declaring the marriage a nullity.
The respondent husband instituted a petition on 7 th March, 1984 for a declaration that the marriage of t he respondent with the appellant wife was a nullity under su b section (1) sub clause (d) of section 12 of the Act on t he ground that appellant, the wife at the time of marriage wi th the respondent was pregnant by some one other than t he respondent.
The appellant wife contested the allegations a nd ultimately the IIIrd Joint Civil Judge, Senior Divisi on Nagput granted a decree in favour of the respondent by h is judgment dated 3rd May, 1985 declaring the marriage to be a nullity.
The appellant wife filed a regular civil appeal No. 4 36 of 1985 on 19.7.1985 before the IInd Additional Distri ct Judge, Nagput.
Before this appeal could be filed, the r e spondent husband married one Miss Sarita daughter of Laxma n rao Modak on 27.6.1985, and in the appeal filed by t he appellant, the respondent raised a preliminary objecti on contending that after passing of the judgment and decr ee dated 3.5.1985 by the trial court he has married Sari ta daughter of Laxmanrao Modak on 27.6.1985.
It was furth er alleged in the application that this marriage was solemnis ed on 27.6.1985 when there was no impediment against the r e spondent husband which could come in his way for contracti ng this marriage as the parties were relegated to the positi on as if they were not married and therefore this marria ge performed on 27.6.1985 of respondent with Sarita was leg al and valid and the consequence of this is that the appe al filed by the appellant was not tenable having been render ed infructuous.
The IInd Additional District Judge, Nagpur vi de his order dated 17.8.1985 allowed the objection of t he respondent and dismissed the appeal as infructuous with a direction to the parties to bear their own respective cost section Against this the appellant preferred a second appe al before the High Court.
The High Court by its judgment dat ed 20.2.1987 dismissed the appeal holding that as the appe al was filed by the appellant after the re marriage of t he respondent it has become infructuous.
The learned Judge al so dismissed the application for maintenance pendent elite a nd aggrieved by this judgment of the High Court after obtaini ng leave this appeal is filed in this Court.
It was contended by learned counsel for the appella nt that the language of Sec.
15 clearly goes to show that it refers to a marriage 141 which has been dissolved and it also talks of fight of appeal against the decree.
In view of this language used in Sec.
15 it is not possible to distinguish between a decr ee of nullity under Section 11 or 12 and decree of divor ce under Section 13.
It was contended that the word 'divorc e ' has been used in this provision in a broader sense indica t ing that where the marriage is dissolved or the relationsh ip is brought to an end by decree of court whether it is by declaring the marriage invalid or dissolving it by a decr ee but result is the same and it was contended that it is because of this that in this Act there is neither any sp e cific definition provided for the term 'divorce ' or a decr ee of divorce.
It was also contended that when language of Section 15 refers to a fight of appeal will have to look to the provision providing for an appeal and Sec.
28 of the A ct which provides for appeals against all decrees made by t he court in proceedings under this Act.
It was therefore co n tended that the interpretation put by the lower court on t he basis of judgments of some of the High Courts that Sec.
15 will not apply to a decree under Sec.
12 but would on ly apply when there is a decree under Sec.
13 does not appe ar to be the correct view and on this basis it was contended by learned counsel for the appellant that the courts below we re wrong in coming to the conclusion that the appeal had beco me infructuous because the respondent has married a seco nd time.
Learned counsel also referred to meaning of the wo rd 'divorce ' in Webster 's Third New International Dictiona ry and Shorter Oxford English Dictionary.
Learned counsel in support of her contentions referred to the two decisions of this Court in Chandra Mohini Srivastava vs Avinash Pras ad Srivastava & another; , and Tejinder Kaur vs Gurmit Singh, AIR 1988 SC 839 Although on the basis of the se decisions what was contended was that the provisions of t he Act have to be interpreted broadly.
Learned counsel al so placed reliance on the decision in Vathsala vs N. Manohara n, AIR 1969 Madras 405.
Learned counsel however, conceded th at there are decisions in Mohanmurari vs Smt.
Kusumkumari, A IR 1965 M.P. 194;.
Jamboo Prasad Jain vs Smt.
Malti Prabha a nd Anr., AIR 1979 Allahabad 260 and Pramod Sharma vs Sm t. Radha, AIR 1976 Punjab 355 where the question of Section 15 in relation to a decree under Sec.
12 has been specifical ly considered and decided against the appellant, but learn ed counsel contended that the scope and language of Sec. 15 coupled with the language of Sec.
28 has not been consider ed by any one of these courts.
Learned counsel for the respon d ent on the other hand contended that the language of Sec. 15 refers to "marriage dissolved by decree for divorce" where as in the present case, the mar 142 riage was not dissolved by decree of divorce.
The marria ge was declared as nullity under Sections 11 and 12 of the Ac t. Sections 11 and 12 of the Act, according to the learn ed counsel, talk of annulment of marriage "by decree of null i ty" and it was contended that it is because of this that t he various High Courts have taken a view that Sec. 15 will n ot apply to cases where a marriage is annulled by a decree of nullity in accordance with Sections 11 or 12 of the Ac t. Learned counsel however frankly conceded that so far as Se c. 28 is concerned, the language is so wide that an appeal wi ll lie even against a decree under Section 11 or 12 and if an appeal lies under Sec.
28 even against the order or a decr ee passed under Sections 11 or 12, the phrase 'if there is su ch a right of appeal, the time for filing has expired witho ut an appeal having been presented ' are to be given its mea n ing, it would be clear that Sec. 15 also will apply to decrees by which the marriage is either dissolved or a n nulled i.e. decrees which are passed under Sec.
12 or und er Sec. 13.
Learned counsel in face of this raised anoth er contention pertaining to the application of the Limitati on Act which we will examine later.
In order to understand the meaning of Sec. 15 of the A ct it would be better if we first notice that the words 'decr ee for divorce ' or 'decree for nullity ' has not been defined in any one of the provisions of this Act.
12 clause (1) of the Act reads: "Any marriage solemnized, whether before or after the co m mencement of this Act, shall be voidable and may be annull ed by a decree of nullity on any of the following groun ds namely, Similarly Sec.
13 clause (1) of the Act reads: (1) Any marriage solemnized, whether before or after t he commencement of this Act may, on a petition presented by either the husband or wife, be dissolved by a decree of divorce on the ground that the other party, 143 It is no doubt true that these two sections have differe nt phraseology.
In section 12 it is said that the marriage be annulled by a decree of nullity whereas in Section 13, t he phraseology used is "dissolved by decree of divorce" but in substance the meaning of the two may be different under t he circumstances and on the facts of each case but the leg al meaning or the effect is that by intervention of the cou rt the relationship between two spouses has been severed eith er in accordance with the provisions of Section 12 or in a c cordance with the provisions of Section 13.
Probably it is because of this reason that the phrase 'decree of nullit y ' and 'decree of divorce ' have not been defined.
28 of the Act reads: "28.
Appeal from decrees and orders (1) All decrees made by the court in any proceeding under this Act shall, subject to the provisions of sub section (3), be applicable as decre es of the court made in the exercise of its original civ il jurisdiction, and every such appeal shall lie to the Cou rt to which appeals ordinarily lie from the decisions of t he court given in the exercise of its original civil jurisdi c tion.
(2) Orders made by the Court in any proceeding under th is Act, under Section 25 or Section 26 shall, subject to t he provisions of sub section (3), be appealable if they are n ot interim orders, and every such appeal shall lie to the cou rt to which appeals ordinarily lie from the decision of t he Court given in exercise of its original civil jurisdiction ; (3) There shall be no appeal under this section on t he subject of costs only.
(4) Every appeal under this section shall be preferr ed within a period of thirty days from the date of the decr ee or order. ' ' Under this provision all decrees made by the Court in a ny proceeding under this Act are appealable.
Apparently a ny proceeding under this Act will refer to a proceeding inst i tuted under Section 13 or a proceeding instituted und er Sections 11 or 12 as Sections 11 or 12 talks of 'decree f or nullity ' and Section 13 talks of 'decree for divorce ' but in order to provide an appeal against all decrees Section 28 has used a very wide terminology which include decrees und er Sections 11, 12 and 13 and so far as this is concerned it could hardly be contested as the language of Section 28 itself is so clear.
It is in this context that we 144 analyse the language of Section 15.
It reads: "Divorced persons when may marry again When a marriage h as been dissolved by a decree of divorce and either there is no fight of appeal against the decree or, if there is such a fight of appeal, the time for appealing has expired witho ut an appeal having been presented or an appeal has been pr e sented but has been dismissed, it shall be lawful for eith er party to the marriage to marry again.
" Before we examine the phraseology 'dissolved by decree of divorce ' it would be worthwhile to examine the remaini ng part of this provision, especially 'if there is such a fig ht of appeal, the time for appealing has expired without an appeal having been presented or an appeal has been present ed but has been dismissed '.
If we give narrow meaning to t he term 'dissolved by decree of divorce ' as contended by t he learned counsel for the respondent, it will mean that if it is a decree under Sec. 13 then either party to the procee d ing have to wait till the period of appeal has expired or if the appeal is filed within limitation till the appeal is disposed of and before that it will not be lawful for eith er party to the marriage to marry again.
The phrase 'eith er party to the marriage ' if is co related with the first pa rt of the Section, marriage which has been dissolved by decr ee of divorce will indicate that what was provided in th is Section was that when a relationship of marriage is di s solved by decree of court and either no appeal is filed or if filed, is dismissed then either party to the marria ge which has been dissolved by the process of law by a decr ee are free to marry again.
The only words on the basis of which the narrow meaning has been given to this Section by some of the High Courts is on the basis of the Words 'decr ee of divorce ', it could not be doubted that where the marria ge is dissolved under Sections 11, 12 or 13 by grant of a decree of nullity or divorce, the relationship is dissolv ed or in any way is brought to an end and it would be signif i cant that if the language of Section 15 is interpreted in the light of Section 28 which provides for appeal and co n fers a right of appeal on either party to proceedings whi ch culminate into a decree bringing an end to the relationsh ip of marriage then we will have to infer that the Legislatu re so far as decrees under Section 13 are concerned wanted t he right of appeal to survive but in decrees under Section 11 or 12 the Legislature wanted the right of appeal to be subject to the will of the other party.
As it is appare nt that if what is contended by the learned counsel for t he respondent and held by some of the High Courts is accept ed that Sec.
15 will not apply to cases when a decree is pass ed under Sec.
11 or 12 it will mean that as 145 soon as a decree is passed the party aggrieved may appe al but the other.
party by remarriage would make the appe al infructuous and therefore the right of appeal of one of t he parties to the decree under Sec.
28 will be subject to t he act of the other party in cases where decree is passed und er Sections 11 or 12 but if it were so, the Legislature wou ld have provided a separate provision for appeal when there is a decree under Section 13 and a different provision f or appeal when there is a decree under Sections 11 or 12 as t he right of appeal against a decree under Sec.
11 or 12 cou ld only be a limited right subject to the desire of the oth er party.
The Legislature in its wisdom has enacted Sec. 28 conferring a right of appeal which is unqualified, unr e strictive and not depending on the mercy or desire of a party against all decrees in any proceeding under this A ct which will include a decree under Sections 11, 12 or 13 a nd therefore the only interpretation which could be put on t he language of Sec.
15 should be which will be consistent wi th Section 28.
This phrase 'marriage has been dissolved by decree of divorce ' will only mean where the relationship of marriage has been brought to an end by the process of cou rt by a decree.
It is plain that the word 'divorce ' or 'decree of d i vorce ' have not been defined in this Act.
The meaning of t he word 'divorce ' indicated in Shorter Oxford English Dictio n ary reads: "Divorce 1.
Legal dissolution of marriage by a court or other competent body, or according to forms locally reco g nized.
Complete separation; disunion of things close ly united ME.
That which causes divorce 1607.
" Similarly the meaning of the word 'divorce ' as indicated in Webster 's Third New International Dictionary reads: "Divorce 1: a legal dissolution in whole or in part of a marriage relation by a court or other body having compete nt authority.
In Vathsala 's case the Court had occasion to consider t he effect of an application for setting aside an exparte decr ee which was granted under Sec. 12 and it was contended th at while the application by the husband for setting aside t he exparte decree was pending the wife contracted remarriag e. Will not remarriage have the effect of making the applic a tion to set aside exparte decree infructuous? More or less a similar question is in the present case where it has be en held that by marrying the second time the respondent ma de the appeal filed by the 146 appellant infructuous, and the learned Judge placing rel i ance on the observations made in Chandra Mohini 's case hel d: "That is the principle of Smt.
Chandra Mohini vs Avina sh Prasad; , The principle laid down in th at decision has general application.
The Supreme Court point ed out that on dissolution of marriage, a spouse can lawful ly marry only when there is no right of appeal against t he decree dissolving the marriage or if there is a right of appeal, the time for filing of an appeal has expired or t he appeal presented has been dismissed.
" The question about an appeal to the Supreme Court has als o been considered in a recent decision of this Court in T e jinder Kaur 's case wherein the observations made in Chand ra Mohini 's case have been quoted and it is held that: "In view of this, it was incumbent on the respondent to ha ve enquired about the fate of the appeal.
At any rate, the Hi gh Court having dismissed the appeal on 16th July, 1986 t he petitioner could have presented a special leave petiti on within ninety days therefrom under article 133(c) of the Lim i tation Act, 1963 i.e. till 14th September, 1986.
Till th at period was over, it was not lawful for either party to mar ry again as provided by section 15.
It was incumbent on the respon d ent, as observed in Lila Gupta 's case (ILR 1969) 1 All. 9 2) to have apprised himself as to whether the appeal in t he High Court was still pending; and if not, whether the peri od for filing a special leave petition to this Court had e x pired.
We must accordingly overrule the views expressed in Chandra Mohini 's; , and Lila Gupta, cases (I LR 1969(1) All 92).
We wish to add that in the subseque nt decision in Lila Gupta the Court while dealing with t he effect of deletion of the proviso observed: The net result is that now since the amendme nt parties whose marriage is dissolved by a decree of divor ce can contract marriage soon thereafter provided of course t he period of appeal has expired.
The Court adverted to the word of caution administered by Wanchoo, J. in Chandra Mohini 's case and reiterated: 147 "Even though it may not have been unlawful for t he husband to have marriage immediately after the High Court 's decree for no appeal as of right lies from the decree of t he High Court to this Court, still it was for the respondent to make sure whether an application for special leave had be en filed in this Court and he could not, by marrying immediat e ly after the High Court 's decree, deprive the wife of t he chance of presenting a special leave petition to this Cour t.
If a person does so, he takes a risk and could not ask t he Court to revoke the special leave on that ground," It is no doubt true that in these two decisions, this Cou rt was considering the impact of an appeal against a decr ee under Section 13 itself and not a decree under Section 11 or 12 but as indicated earlier if the impact of the phraseolo gy 'fight of appeal ' occurring in Sec.
15 is to be examined in the light of language of Sec. 28 as discussed earlier the re will be no difference in respect of the fight of appe al whether the decree is under Sections 11, 12 or 13.
The decisions of the High Court on which reliance is placed by courts below and the learned counsel for t he respondent are: i) Mohanmurari ii) Jam boo Prasad Jain, a nd Pramod Sharrna.
In none of these decisions the impact of t he fight of appeal occurring in Sec. 15 in view of the langua ge of Section 28 where the right of appeal is conferred, h as been considered.
In our opinion, therefore the view taken by the High Court is not correct.
What Section 15 means when it uses the phrase 'has been dissolved by decree of divorce '? It only means where the relationship of marriage has be en brought to an end by intervention of court by a decree, th is decree will include a decree under Sections 11, 12 or 13 a nd therefore the view taken by all the courts below is n ot sustainable.
The contention of the learned counsel for t he appellant has to be accepted so far as this question is concerned.
Learned counsel for the respondent contended that as Section 28 sub clause (4) of the Act provides for the lim i tation for preferring an appeal in view of Sec.
29 clau se (3).
Provisions of will not apply and if th ey do not apply as the trial court disposed of 'the matter by a decree dated 3.5.1985 the period of limitation for appe al could only be upto 3.6.1985 as the period for obtaini ng copies as contemplated under Section 12 clause (2) of t he will not be applicable and therefore even if it is held that under Sec.
15 the respondent had to wa it till the period of limitation for appeal expires 148 as he entered into a marriage on 27.6.1985 it was clear ly after the period of limitation has expired and therefo re this marriage apparently made the appeal filed by the appe l lant infructuous.
It is not in dispute that if the peri od for obtaining copy of the judgment and decree is computed as contemplated in Section 12 clause (2) of the Limitation Ac t, the appeal filed by the appellant before the first appella te court was within the time and if Section 12 clause 2 is he ld applicable then this marriage which the respondent perform ed on 27.6.1985 could not be said to be a marriage which he w as entitled to perform in view of language of Section 15 a nd therefore it could not be said that this marriage render ed the appeal filed by the appellant infructuous.
Learn ed counsel for the respondent mainly placed reliance on t he language of Sec.
29 clause 3 of the where as learned counsel appearing for the appellant contended th at Sec.
29 clause 3 talks of suit or proceedings and therefo re the phrase 'proceedings ' used in clause 3 of Sec.
29 cou ld only refer to suits or other original proceedings and it will not apply to appeals as is very clear from the defin i tion of 'suit ' as defined in Section 2(L) of the Limitati on Act.
It was therefore contended that the provisions of t he will be applicable to appeals under Sec.
28 of the Act.
Learned counsel for the appellant placed rel i ance on the decisions in Chander Dev Chadha vs Smt.
Ra ni Bala, AIR 1979 Delhi 22; Smt.
Sipra Dey vs Ajit Kumar De y, AIR 1988 Calcutta 28 and Kanti bai vs Karnal Singh Thaku r, AIR 1978 M.P. 245.
Section 2(L) of the defines the 'suit '.
It reads: "suit" does not include an appeal or an application".
It clearly enacts that suit does not include an appeal or an application.
Sec. 29 of the reads: "29.
Savings (1) Nothing in this Act shall affect Section 25 of the .
(2) Where any special or local law prescribes for any sui t, appeal or application a period of limitation different fr om the period prescribed by the Schedule, the provisions of Section 3 shall apply as if such period were the peri od prescribed by the Schedule and for the purpose of determi n ing any period of limitation prescribed for any suit, appe al or application by any special or local law, the provisio ns contained in Sections 4 to 24 (inclusive) shall apply on ly insofar as, and to the extent to which, they are not 149 expressly excluded by such special or local law.
(3) Save as otherwise provided in any law for the time bei ng in force with respect to marriage and divorce, nothing in this Act shall apply to any suit or other proceeding und er any such law.
(4) Sections 25 and 26 and the definition of 'easement ' in Section 2 shall not apply to cases arising in the territ o ries to which the Indian Easement Act, 1882, may for t he time being extend.
" Clause (2) of this Section provides that where the limit a tion provided by the special or local law is different fr om the period prescribed by the Schedule, the provisions of Section 3 will apply.
In the Hindu Marriage Act, the peri od of appeal is prescribed.
In the schedule under the Limit a tion Act, there is no provision providing for an appe al under the Hindu Marriage Act.
Thus the limitation prescrib ed under the Hindu Marriage Act is different and is not pr e scribed in the Schedule.
Thus the provisions of Section 3 shall apply and therefore it is clear that to an appeal or application the provisions contained in Sections 4 to 24 shall apply, so far and to the extent to which they are n ot expressly excluded by the special or local law and clau se (3) of this Section provides that the provisions of this A ct shall not apply to any suit or other proceedings under a ny marriage law.
It is therefore clear that so far as clau se (3) is concerned, the impact of it will be that the prov i sions of the will not apply so far as a su it or an original proceeding under the Act is concerned b ut clause (3) will not govern an appeal.
The Schedule in the do not provide for an appeal, under the Hindu Marriage Act but it is only provid ed in clause (4) of Sec.
28 of the Hindu Marriage Act.
Thus t he limitation provided in clause (4) of Sec.
28 is differe nt from the Schedule of the .
Accordingly to clause (2) of Sec. 29, provisions contained in Sections 4 to 24 will be applicable unless they are not expressly exclu d ed.
It is clear that the provisions of the Act do not e x clude operation of provisions of Sections 4 to 24 of t he and therefore it could not be said that the se provisions will not be applicable.
It is therefore cle ar that to an appeal under Section 28 of the Hindu Marria ge Act, provisions contained in Section 12 clause (2) will be applicable, therefore the time required for obtaining copi es of the judgment will have to be excluded for computing t he period of limita 150 tion for appeal.
A Division Bench of Delhi High Court in Chandra Dev Chadha 's case held as under: "The Hindu Marriage Act is a special law.
That this "speci al law" prescribes" for an appeal a period of limitation is also evident.
The period of limitation is 30 days.
It is a period different from that prescribed in the First Schedu le to the .
But when we turn to the Fir st Schedule we find there is no provision in the First Schedu le for an appeal against the decree or order passed under t he Hindu Marriage Act.
Now it has been held that the test of a "prescription of a period of limitation different from t he period prescribed by the First Schedule" as laid down in section 29(2), is satisfied even in a ca se where a difference between the special law and Limitati on Act arose by omissions to provide for a limitation to a particular proceeding under the , see, Cana ra Bank, Bombay vs Warden Insurance Co. Ltd. Bombay, AIR 19 (supra) approved by the Supreme Court in Vidyachar an Shukla vs Khubchand, ; (1102).
Once the test is satisfied the provisions of Ss, 3, 4 to 24, would at once apply to t he special law.
The result is that the court hearing the appe al from the decree or order passed under the Hindu Marriage A ct would under section 3 of the have power to dismi ss the appeal if made after the period of limitation of 30 da ys prescribed thereof by the special law.
Similarly under section 5 for sufficient cause it will have the power to condo ne delay.
Likewise under section 12(2) the time spent in obtaining a certified copy of the decree or order appealed from will be excluded.
If it is so, section 12(2) of the is attracted, and the appellants in all the three appeals wi ll be entitled to exclude the time taken by them for obtaini ng certified copy of the decree and order.
The appeals ar e, therefore, within time.
" Similar is the view taken by the Calcutta High Court in Sm t. Sipra Dey 's case and also the M.P. High Court in Kantibai 's case.
It is therefore clear that the contention advanced by the learned counsel for the respondent on the basis of t he also is of no substance.
151 Consequently the appeal is allowed.
The judgment pass ed by the High Court as well as by the first appellate court is set aside.
We remand the matter back to the first appella te court as that court had disposed of the appeal treating it to have been rendered infructuous.
We therefore direct th at the learned lind Additional District Judge, Nagpur befo re whom the appeal was filed, will hear the appeal on meri ts and dispose it of in accordance with law.
A suggestion was made by the counsel for the appella nt about some tests and willingness of the appellant for ge t ting those tests performed which could be used as addition al evidence in respect of the paternity of the child born to the appellant which has been made a ground for declarati on of marriage as nullity.
Without expressing any opinion, it would be appropriate for the lower appellate court to co n sider the matter if parties approach about additional ev i dence.
The appallant shall be entitled to costs of th is appeal.
Costs quantified at Rs.2500.
R.S.S. Appeal allowed.
| IN-Abs | A decree in favour of the respondent husband was grant ed by the Trial Court declaring his marriage with the appella nt to be a nullity under section 12(1)(d) of the Hindu Marria ge Act, 1956 on the ground that the wife at the time of ma r riage was pregnant by some one other than the respondent.
In the appeal filed by the appellant, the respondent raised a preliminary objection contending that the appeal was n ot tenable and had been rendered infructuous because he h ad re married before the filing of the appeal.
The Appella te Court allowed the preliminary objection and dismissed t he appeal, and the High Court dismissed the second appeal.
Before this Court it was contended on behalf of t he appellant that (i) the word 'divorce ' has been used in section 15 in a broader sense and, in view of the langua ge used in that section, it is not possible to distingui sh between a decree of nullity under section 11 or 12 a nd decree of divorce under section 13; (ii) the interpretati on put by the lower courts, on the basis of judgments of so me of the High Courts, that section 15 will not apply to a decree under section 12 but would only apply when there is a decree under section 13, does not appear to be correct as the scope and language of section 15 coupled with the la n guage of section 28, had not been considered by any one of these courts; and (iii) even if it is held that section 15 applies to a decree under section 12, the respondent h ad re married after the period of limitation had expired, as the provisions of the will not apply in vi ew of the section 29(3) of that Act, and therefore the period 138 for obtaining copies of the judgment excluded under secti on 12 clause will not be available to the appellant.
Allowing the appeal, it was, HELD: (1) It is no doubt true that section 12 and se c tion 13 have different phraseology.
In section 12 it is sa id that the "marriage may be annulled by a decree of nullit y" whereas in section 13, the phraseology used is "dissolved by a decree of divorce".
Though in substance the meaning of t he two may be different under the circumstances and on t he facts of each case, but the legal meaning or the effect, is that by intervention of the court the relationship betwe en two spouses has been severed either in accordance with t he provisions of section 12 or in accordance with the prov i sions of section 13.
Probably it is because of this reas on that the phrase 'decree of nullity ' and 'decree of divorc e ' have not been defined.
[143A B] (2) Under the provisions of section 28 all decrees ma de by the Court in any proceeding under this Act are appea l able.
In order to provide an appeal against all decre es section 28 has used a very wide terminology which includ es decrees under sections 11, 12 and 13, and so far as this is concerned it could hardly be contested as the language of section 28 itself is so clear.
[143G H] (3) If it is accepted that section 15 will not apply to cases when a decree is passed under section 11 or 12, it will mean that as soon as a decree is passed the par ty aggrieved may appeal but the other party by remarriage wou ld make the appeal infructuous and therefore the right of appeal of one of the parties to the decree under section 28 will be subject to the act of the other party in cases whe re decree is passed under section 11 or 12.
But if it were s o, the Legislature would have provided a separate provision f or appeal when there is a decree under section 13 and a diffe r ent provision for appeal when there is a decree under se c tion 11 or 12 as the right of appeal against a decree und er section 11 or 12 could only be a limited right subject to the desire of the other party.
[144H; 145A B] (4) The Legislature in its wisdom had enacted section 28 conferring a right of appeal which is unqualified, unr e strictive and not depending on the mercy or desire of a party against all decrees in any proceeding under the Ac t.
Hence, the only interpretation which could be put on t he language of section 15 should be that which will be consis t ent with section 28.
Therefore, the phrase 'marriage h as been dissolved 139 by a decree of divorce ' in section 15 will only mean whe re the relationship of marriage has been brought to an end by the process of court by a decree, which will include a decree under section 11, 12 or 13.
The view taken by t he courts below is accordingly not sustainable.
[145C D; 147F ] Chandra Mohini Srivastava vs Avinash Prasad Srivastava Anr.; , ; Tejinder Kaur vs Gurmit Singh, A IR ; Vathsala vs N. Manoharan, AIR (1969) Madr as 405, referred to.
Mohanmurari vs Srnt.
Kusumkumari, AIR (1965) M.P. 19 4; Jamboo Prasad Jain vs Smt.
Malti Prabha, AIR 1979 Allahab ad 260; Pramod Sharma vs Smt.
Radha, AIR (1976) Punjab 35 5, overruled.
(5) So far as clause (3) of Section 29 of the Limitati on Act is concerned, the impact of it will be that the prov i sions of the will not apply so far as a su it or an original proceeding under the Hindu Marriage Act is concerned, but clause (3) will not govern an appeal.
[149E ] (6) To an appeal under section 28 of the Hindu Marria ge Act, provisions contained in section 12 clause (2) of t he will be applicable, and therefore, the ti me required for obtaining copies of the judgment will have to be excluded for computing the period of limitation f or appeal.
[149G H] Chander Dev Chadha vs Smt.
Rani Bala, AIR (1979) Del hi 22; Smt.
Sipra Dey vs Ajit Kumar Dey, AIR (1988) Cal 28 a nd Kantibai vs Kamal Singh Thakur, AIR (1978) M.P. 245, r e ferred to.
|
ivil Appeal Nos. 410 and 520(N) of 1973.
From the Judgment and Decree dated 21/22/23.11.1972 of the Gujarat High Court in First Appeal Nos. 454 and 455 of 1970.
B.K. Mehta, D.N. Misra, J.B. Dadachanji & Co. and N.J. Modi, for the Appellants.
236 S.K. Dholakia, P.H. Parekh, J.H. Parekh, Ms. Sunita Sharma, Krishan Kumar, Vimal Dave and H.J. Javeri, for the Respondents.
The Judgment of the Court was delivered by SHARMA, J.
These appeals are directed against the deci sion of the Gujarat High Court in an appeal arising out of a suit for partition instituted by the respondent No. 1, Vadilal Bapalal Modi (since deceased).
The father of the plaintiff Vadilal was Bapalal who had 5 sons the plaintiff, Ramanlal, Gulabchand, Kantilal and Jayantilal; and a daughter Champaben.
Gulabchand was impleaded as the first defendant in the suit and on his death his heirs and legal representatives have been substi tuted.
Kantilal and Champaben are defendants No. 2 and 3 respectively.
Ramanlal predeceased Bapalal and his wife and son are defendants No. 4 and 5.
Jayantilal also died earlier and his wife Smt.
Chandrakantaben, defendant No. 6 is the appellant in Civil Appeal No. 418 of 1973.
Their children are defendants No. 7 to 12.
CiviI Appeal No. 520 of 1973 has been preferred by the 7th defendant, Narendra.
The suit by VadilaI was instituted in 1960, claiming share in the considerably large properties detailed in the Schedule to the plaint, but the present appeals are not related to any other item excepting the property described as a chawl admeasuring 7 acres and 2 gunthas of land with 115 rooms and huts, situated in the Naroda locality in Ahmedabad under Lot No. 8 of the plaint which has been referred to by the counsel for the parties before us as the chawl or the Naroda chawl.
According to the case of the defendants No. 6 to 12, this property exclusively belongs to defendant No. 6 and is not liable to partition.
The other defendants contested the claim of the plaintiff with respect to some other items, but so far the disputed chawl is con cerned, they supported the plaintiffs ' case that it belonged to the joint family and is liable to partition.
The land of Lot No. 8 was acquired by Bapalal in 1932 for a sum of Rs.9,450 and the rooms were constructed thereon in about 1934.
It has been held by the High Court, and the finding has not been challenged before us, that Bapalal acquired the property and built the chawl with the aid of ancestral joint funds, and the property, therefore, belonged to the family.
According to the case of the defendants 237 No. 6 to 12, Bapalal orally gifted the property to his daughter in law Chandrakanta the 6th defendant, in March, 1946 and made a statement before the Revenue authorities on the basis of which her name was mutated, and she was put in possession thereof.
Admittedly 114 rooms in the Naroda chawl had been let out to tenants, and one room was retained for the caretaker.
According to Chandrakanta 's case, although she came in peaceful possession, the management which in cluded realisation of rent was in the hands of Gulabchand (defendant No. 1).
It appears that in 1952 some dispute arose and Chandrakanta assumed direct charge of the Naroda chawl and has remained in possession thereafter.
Thus she has been in exclusive possession of the disputed chawl since 1946, and acquired good title therein by adverse possession before the suit was filed in 1960.
The learned Judge, City Civil Court, Ahmedabad, who tried the suit, held that BapalaI and his sons constituted a joint Hindu family and the business carried on by Bapalal was for the benefit of the family and the income from the business was thrown in the common pool and all the proper ties including the disputed chawl were treated as belonging to the family.
Proceeding further it has been found that the case of the defendant No. 6 about the gift, the mutation of her name, and her exclusive possession from 1946 till the date of the suit was correct.
She was accordingly held to have acquired a title by adverse possession.
The suit, therefore, was dismissed with respect to the disputed chawl.
For the purpose of the present appeal it is not essential to mention the findings of the trial court relating to the other items of the suit property.
The plaintiff appealed before the Gujarat High Court.
Some of the defendants also filed two separate appeals against the judgment of the trial court dealing with other items of property with which we are not concerned.
The appeals were heard and disposed of to gether by a common judgment in November 1972.
The High Court reversed the finding of adverse possession in regard to the disputed chawl and granted a decree for partition.
It was held that the defendant No. 6 remained in exclusive posses sion of the property only since 1952 and the period was thus short of the time required for prescription of title.
Deal ing with the relief for rendition of accounts, the Court held that since the rents of the chawl from 1952 were col lected by Jayantilal, Chandrakanta 's husband and after his death by her son Narendra (defendant No. 7), Chandrakanta was liable to render accounts till the death of her husband and she along with defendant No. 7 would be jointly liable for the period thereafter.
The present appeals are directed against this judgment.
238 5.
According to the case of the defendant No. 6, her husband, Jayantilal, used to indulge in speculative business and he was, therefore, not considered a dependable person.
To ensure economic stability of Chandrakanta and her chil dren, her father in law, Bapalal decided to make a gift of the Naroda chawl to her.
Both Bapalal and Chandrakanta appeared before the Talati of Naroda on 5.3.1946 and made statements.
The original statement of Bapalal recorded by the Talati and signed by Bapalal was produced and marked as Ext.
268 in the trial court and similarly the statement of Chandrakanta as Ext.
Bapalal has stated in Ext.
268 that Chandrakanta had loyally served him and, therefore, he was making the gift.
A prayer was made for substitution of her name in the revenue records.
A similar prayer was made by the lady in Ext.
The extract from the Record of Rights is Ext.
247 which mentions Bapalal as the occupant of the Naroda chawl.
The entry was made in May 1933.
This entry appears to have been placed within brackets and a second entry inserted mentioning Chandrakanta 'wife of Jayantilal Bapalal '.
Mr. B.K. Mehta, the learned counsel for the appel lant has strongly relied upon the revenue entry as proof of her title.
Reference was made to the decision in Gangabai and others vs Fakirgowda Somaypagowda Desai and others, A.I.R. 1930 Privy Council 93; and Desai Navinkant Kesarlal vs Prabhat Kabhai, 9 Gujarat Law Reporter 694.
It was point ed out by the learned counsel that in the Privy Council case also the revenue records, which were under consideration, were prepared under the Bombay Land Revenue Code, that is the same Code under which Ext.
247 was prepared and it was observed in the judgment that the revenue entry furnished presumptive evidence of title.
The Gujarat case also indi cated that a presumption as to the rights in the concerned property arose in favour of the person whose name was en tered.
We are not very much impressed by this part of argu ment of the learned counsel as it cannot be denied that title to Naroda chawl could not have passed to the defendant No. 6 by virtue of the entry Ext.
The value of the chawl even in 1946 was large and no registered instrument of transfer was executed.
Besides Ext.
247 describes Bapalal and thereafter Chandrakanta as Kabjedar, that is, occupant.
In these circumstances the presumption which can be raised in favour of Chandrakanta from this entry is with respect to her possession and possession only.
There is a serious dispute between the parties as to the actual physical possession of the chawl during the period 1946 to 1952 and we will have to consider the evi dence on this aspect in some detail.
In 1952 there was direct confrontation between Chandrakanta and the defendant No. 1, Gulabchand.
On 14.4.1952 a public notice was 239 published in a local daily named 'Sandesh ' vide Ext.
254 wherein Gulabchand informed and called upon the tenants in the chawl to pay the rent to him within 3 days against receipts to be issued, failing which legal steps would be taken against them.
On the very next day 'Sandesh ' carried another public notice Ext.
255 issued by Chandrakanta as serting her title and exclusive possession and repudiating the claim of Gulabchand.
The tenants were warned that Gulab chand or any other person on his behalf had no right or authority to dispute her claim.
On the same day, i.e., on 15.4.1952 another public notice was published in 'Sandesh ' at the instance of Gulabchand reiterating his claim and asserting that his father Bapalal (who was then alive) was the owner.
It appears that no further action was taken by any of the parties.
The evidence on the record shows that Bapalal had withdrawn himself from wordly affairs and was staying in Vrindavan near Mathura.
The evidence led by Chandrakanta of her exclusive possession from 1952 through her husband and son till the date of the suit was accepted as reliable by the High Court.
Thus there is concurrent finding of both the two courts below accepting her exclusive possession from 1952 onwards.
The learned counsel for the plaintiff has, therefore, rightly not challenged before us this finding which we are independently also satisfied is a correct one.
The actual position of the chawl from 1946 to 1952 becomes crucial, as Chandrakanta is bound to fail if she is not successful in proving her adverse possession for this period.
As has been stated earlier, the suit was filed in 1960 and her possession since 1952 cannot be treated long enough for a prescriptive title to accrue.
The parties have, therefore, taken great pains to prove before us their rival cases as to the possession of the chawl from 1946 to 1952.
The defendant No. 1 was admittedly managing the properties belonging to the family.
Out of 115 rooms in Naroda chawl only 114 were let out to tenants and one room was retained in which, according to the case of Chandrakan ta, a caretaker known as Gangia Pathan, engaged by Bapalal, was staying.
After collecting the rent from the tenants the Pathan used to hand over the money to the defendant No. 1.
After the gift, it was decided that the same arrangement would continue but the defendant No. 1 would be managing the property on her behalf and after receipt of the rent he would deliver the same to her.
She claims that this arrange ment was acted upon.
Admittedly the total rent collection from the chawl was not large and after deducting the ex penses including the maintenance and repair costs and the salary of the Jamadar (caretaker) the money left was not a considerable sum.
240 According to the evidence of Chandrakanta the Pathan left the service and his whereabouts are not known and another Jamadar with the name of Maganji came in his place.
He looked after the chawl till 1950.
Thereafter he was substi tuted by Nathu Singh.
Maganji 's present whereabouts are also not known.
In 1952 Gulabchand made a claim to the chawl repudiating the ownership of Chandrakanta and he was, there fore, removed.
The appellant has relied on a large number of rent receipts filed by her and her learned counsel laid great stress on five of them which have been marked as Exts.
240 to 243 and 250 issued in December 1947, January 1948, June 1948 April 1949 and July 1947 respectively.
It is signifi cant to note that the defendant No. 1 was in charge of the collection of the rent upto 1952 according to the case of all the parties.
The parties contesting the claim of the appellant contend that he was so doing on behalf of the entire family and not on behalf of Chandrakanta as claimed by her.
The defendant No. 1, however, did not choose to enter the witness box nor did he produce any document which could have supported his case.
The counter foil receipts were in his possession and neither they were filed by the defendant No. 1 nor the plaintiff called for the same.
Defendant No. 6 was able to examine two of the tenants Vajesingh (D.W. 1) and Nathaji (D.W. 2).
They filed a large number of receipts issued to them evidencing payment of rent.
The list of documents filed by them are printed on pages 394 to 395 of the paper book and have been marked as Exts. 237 and 239.
12 receipts in the list Ext.
237 are for the period 1.6.1946 to 30.5.1949 and 7 of the list Ext.
239 are from 1.1.1947 to 30.9.1949.
They support the case of Chandrakanta inasmuch as on the top of these receipts are printed the following words: " CHAWL OF BAI CHANDRAKANTA THE WIFE OF MODI JAYANTILAL BAPALAL" Out of them the receipts Exts.
240 to 243 were admittedly issued when the defendant No. 1 was incharge of collection of rent and it is not denied that they were issued at his instance during the crucial period.
The other receipt Ext.
250 was issued for the period 1.6.1947 to 1.7.1947 under the signature of the plaintiff Vadilal and this also similarly carried the description of the chawl as belonging to Chan drakanta.
No explanation is forthcoming on behalf of either the defendant No. 1 or the plaintiff as to how they were issuing receipts of the above description.
241 11.
From the evidence it appears that although defendant No. 1 was in charge of the management of the chawl during 1946 to 1952, the actual collection from the individual tenants was made by the Jamadar (caretaker) who generally signed the receipts and handed over the collected amount to the defendant No. 1.
The tenant Nathaji (D.W. 2) has said that Maganji Jamadar used to prepare the receipts.
It has been argued before us on behalf of the plaintiff that the receipts were filed after the examination of the plaintiff was over and so he could not explain the same, specially the one receipt issued under his signature.
It is significant to note that the cases of the plaintiff, the defendant No. 1 and the other defendants excepting defendants 6 to 12 are common so far the Naroda chawl was concerned and the turn of these defendants leading evidence at the trial of the suit came later.
The evidence of Chandrakanta was closed on 29.9.1964 and the witnesses for the defendant No. 1 were examined on 20.10.1964.
Besides, the plaintiff could have re examined himself if he had any explanation to offer.
The cross examination of D.W. 2 on his behalf also indicates that no suggestion to the witness by way of explanation was made.
In his evidence plaintiff stated that he was also collecting the rent from the different tenants in chawl at the instance of defendant No. 1 and he used to hand over the collections to him.
He admitted the fact that there were counter foils which ramained with the defendant No. 1.
The High Court while examining this aspect accepted and relied on Ext.
250 signed by the plaintiff, but failed to appreci ate the significance of the description of the Naroda chawl on the receipt as the property of the defendant No. 6.
Similar is the position of the defendant No. 1 who did not come to the witness box at all.
Chandrakanta examined her self as D.W. 3 and supported her case.
Although there are some minor discrepancies in her deposition, the same is consistent with the documents and the circumstances in the case and appears to be reliable.
While reversing the finding of the trial court that Chandrakanta was in exclusive possession of the chawl not only from 1952 onwards but even earlier since 1946, the High Court was mainly impressed by three items of the evidence, namely, i)certain account books claimed to be the books at the joint family, ii) several IncomeTax returns filed by the defendant No. 1, and iii) a document of agreement, Ext.
So far the Income Tax papers are concerned, they are of the period after 1952 and it has already been stated earlier that the High Court has agreed with the trial court that since 1952 the defendant No. 6 was in adverse possession of the chawl.
In view of this finding, with which we fully agree, the Income Tax documents do not 242 have any impact, except showing that the author of these returns was falsely including income therein which did not accrue to the family.
So far the account books and the deed of agreement are concerned, it will be necessary or appreci ating their true nature and impact on this case, to consider some more facts.
The account books were produced by the defendant No. 1 within a list of documents, Ext. 123.
The defendant No. 1, however, did not lead any evidence with respect to the same when his turn at the trial came.
As mentioned earlier, he personally avoided the witness box, but examined some wit nesses who did not attempt either to prove the books or speak about their authenticity.
The books were admitted in evidence and marked as exhibits on the statement of the plaintiff which he made in cross examination.
Some of the books were shown to him and he admitted that they were in his hand writing, but immediately added; "I have written them as per the instructions of defendant No. 1 and as directed by him.
They are maintained from month to month.
" The income from the Naroda chawl which was admittedly very small as compared to the vastness and the present value of the property, was included in the account books.
According to the case of the respondent the books are authentic, and disclosed the true state of affairs.
There was considerable discussion at the bar before us as well as before the High Court as is apparent from the judgment under appeal, relat ing to the law of evidence dealing with account books.
Reliance was placed on Sec.
34 of the which provides that entries in books of account regularly kept in the course of business are relevant whenever they refer to a matter into which the Court has to enquire.
It has been contended on behalf of the respondents that since the plaintiff stated that the books were being maintained from month to month the requirement of law was satisfied.
Mr. Mehta, the learned counsel for the appellant argued that apart from the formal proof of the execution of the docu ment, the party relying thereon was under a duty to lead evidence in support of the correctness of the entries in the books which is completely lacking here.
Besides, it was pointed out that the relevant books are merely joint khata bahis of Samvat 2005 to 2006 equivalent to 1948 to 1949 without the support of primary evidence of the cash books.
, ,The other relevant documents which are admittedly in pos session of the defendant No. 1 have not been produced, including the account books of other years during the cru cial 243 period, the Income tax returns and assessment orders for the period 1946 to 1952 and the counter foil rent receipts.
It is apparent from the evidence that nobody takes the responsibility of supporting the correctness of the entries in the account books.
When they were produced in Court the plaintiff filed his objection as per his purshis, Ext. 172 (page 368 of the paper book).
Many of the documents produced by the defendant No. 1 were accepted, but the account books which were serial nos.
123 75 to 123 97 of the list Ext.
123 were in express terms not admitted.
The plain tiff said that they might be exhibited, but subject to his objection.
The defendant No. 6 also filed her objection as per the purshis Ext.
The plaintiff did not make any statement supporting the books in his examination in chief and only in reply to the question of the cross examining lawyer of the defendant No. 1, he stated as mentioned earli er.
It is significant to note that by saying that he had written as per the instructions of the defendant No. 1 he made it clear that he could not vouchsafe for their reli ability.
In spite of this situation, the defendant No. 1 could not sommon courage to support them either personally or through any witness.
No reason has been suggested at all on his behalf as to why he did not produce the other impor tant documents in his possession which would have supported the account books and the joint case of the parties resist ing the appellants ' claim.
In view of all these circum stances we have no hesitation in rejecting the account books as not reliable.
So far Ext.
167 is concerned, the High Court has relied upon it as the Naroda chawl has been treated by the document as belonging to the joint family.
It was executed on 24.10.1954 by the plaintiff and his three brothers but not by Jayantilal, the husband of defendant No. 6, although he is also shown as a party thereto.
The brothers appear to have settled their dispute with respect to different items of property and the disputed Naroda chawl is shown as the seventh item in the list of properties.
Although the four brothers personally signed the document, so far Jayantilal 's branch was concerned the signature of Narendra, defendant No. 7, who was a minor then, was taken.
Reliance has been placed on the attestation of Bapalal, the father of the executants.
Two days earlier, i.e., on 22.10.1954, he had executed a release deed, Ext.
222 giving up his right in the family properties for a sum of money named therein.
He was already staying in Vrindavan for sometime past and proposed to spend the rest of his life there.
The release deed, however, did not contain any list of properties and the document, therefore, is not of any help to either side.
SOl far the 244 agreement Ext.
167 is concerned, it has not been stated by anybody that Bapalal went through its contents or that somebody read the same to him before he attested it.
There is no presumption that an attesting witness of a document must be assumed to be aware of its contents.
What is signif icant, however, is that it was executed in 1954 when the defendant No. 6 was in adverse possession to the exclusion of the defendant No. 1 and the other members of the family, and Jayantilal did not join the document and his brothers chose to get the signature of his minor son.
This is con sistent with their dishonest attempt to include the income from the chawl in the Income Tax returns of the period after 1952, when the defendant No. 6 undoubtedly was in exclusive possession.
As has been stated earlier, in 1952 there was a direct confrontation between them on the one hand and the defendant No. 6 on the other, when public notices were published in 'Sandesh '.
If their case about their earlier possession had been true they would have produced their Income Tax returns and the assessment orders of that period, i.e. 1946 to 1952.
The family was possessed of vast proper ties and was paying Income Tax.
The entire circumstances lead to the irresistible conclusion that after the defendant No. 1 was removed by the defendant No. 6 from the management of the disputed Naroda chawl he and the other members of the family started creating evidence in support of their false claim.
We do not in the circumstances place any reliance on this deed of agreement.
So far the oral evidence in the case is concerned, the plaintiff, Vadilal examined himself as a witness, but was not supported by any other member of the family, al though his brothers, Gulabchand and Kantilal, defendants 1 and 2 respectively, were alive when the case was heard in the trial court.
Even his nephew, Rajnikant, defendant No. 5, son of deceased Ramanlal did not prefer to come to the witness box.
The husband of the defendant No. 6, Jayantilal had died in 1956, i.e., about 3 4 years before the institu tion of the suit.
Chandrakanta examined herself in support of her case and was cross examined at considerable length.
Her son, Narendra defendant No. 7, who was minor in 1954 when Ext.
167 was executed, was also examined as a witness.
After the death of his father, Jayantilal in 1956, he start ed collecting the rent of the chawl, and as stated earlier both the courts have concurrently held in favour of the exclusive possession of the defendant No. 6 from 1952 on wards.
The plaintiff, however, claimed that the chawl was in the possession of the family even later than 1952.
We have been taken through his evidence and the evidence of Chandra kanta in extenso by the learned counsel for the parties, who made long comments thereon during their arguments.
Both the judg 245 ments of the trial court and the High Court have discussed the evidence at length and we do not consider it necessary to once more deal with them in detail.
We agree with the reasons given by the trial court for accepting the case and the evidence of the defendant No. 6 and rejecting the plain tiff 's oral evidence and the case of the respondents.
The plaintiff contradicted himself so seriously during his examination that at one stage he had to expressly admit that several of the statements made in his examination in chief were 'false ' (see paragraph 25).
It was demonstrated by the further cross examination that he had made many more incor rect statements.
On the other hand, Chandrakanta 's evidence is far superior.
Although she also made some inconsistent statements, but the discrepancies did not relate to any matter of vital importance.
Her evidence substantially is reliable and is supported by important circumstances of (i) the mutation of her name in place of Bapalal on the basis of a statement of the latter; (ii) the description of the chawl as belonging to her on the printed rent receipts given to the tenants out of which some were issued by the defendant No. 1 and the plaintiff, and (iii) the suppression of vital materials in possession of the defendant No. 1 which were withheld from the Court.
The conduct of the parties in not filing the suit before 1960 is also consistent with the correctness of her case.
When the defendant No. 1 was effec tively removed from the management of the property by the defendant No. 6 in 1952, Bapalal was alive.
The defendant No. 1 as also the other members of the family contesting her claim kept quiet and did not risk starting a litigation during his life time.
Even in 1960 it was the plaintiff and not the defendant No. 1 who instituted the present suit in which he included the Naroda chawl in the schedule of properties to be partitioned.
The defendant No. 1 was manag ing the affairs of the family, but did not take any steps to dislodge the defendant No. 6 from the chawl.
The impugned judgment indicates that there were serious differences between the plaintiff and the defendant No. 1 on other items of property and the main reason for the plaintiff to file the suit does not appear to be his claim to the Naroda chawl.
We do not consider it necessary to reiterate the other reasons given in the trial court judgment in support of the decision in favour of the appellant, with which we agree.
We, therefore, hold that the defendant No. 6 remained in exclusive adverse possession of the disputed Naroda chawl right from 1946 onwards till the suit was filed in 1960.
Mr. Dholakia, the learned counsel for the contesting respondents contended that since the chawl has remained in actual possession of the tenants, Bapalal or the family must be held to be in symbolic 246 possession in 1946 and for that reason the defendant No. 6 also can not be treated to have come in actual possession of the property, which could have permitted her to prescribe a title in the chawl.
The learned counsel further argued that since the defendant No. 1 and the plaintiff were actually collecting rent from the tenants they also must be held to be in joint possession and, therefore, the defendant no. 6 can not succeed as she has not been able to prove their ouster.
The other members of the joint family will also be entitled to rely on this aspect so as to successfully defend their right.
Reliance was placed on the decision of the Patna High Court in Hari Prasad Agarwalla and another vs Abdul Haq and others, A.I.R. 1951 Patna 160; in support of the argument that for adverse possession actual physical possession is necessary and mere constructive possession is not sufficient.
We are afraid, it is not possible to accept the argument.
The subject matter of dispute in the present case is the title to the chawl as the owner landlord subject to the tenancy of the tenants in possession.
Neither the plaintiffs nor the defendants are claiming the actual physical posses sion of the chawl by eviction of the tenants.
Any reference to the actual physical possession of the tenant is, there fore, wholly irrelevant for the purpose of the present controversy.
It has to be remembered that the title to the chawl as owner, subject to the tenancy was an interest in immovable property so as to be covered by Article 144 of the Indian Limitation Act, 1908, which specifically mentioned," . or any interest therein".
These words were retained in Article 65 of the new Limitation Act.
It is true that it is the intention to claim exclusive title which makes possession adverse and this animus possidendi must be evidenced and effectuated by the manner of occupancy which again depends upon the nature of the property.
The manner of possession depends upon the kind of possession which the particular property is susceptible.
That possession to the extent to which it is capable of demonstration must be hostile and exclusive and will cover only to the extent of the owner 's possession.
In the present case the parties have been fighting for the rent from the chawl so long as it continues in possession of the tenants.
Before the gift of 1946 the defendant No. 1 was collecting the rent and he continued to do so even thereafter till 1952.
The appellant has, however, established her case that the defendant No. 1 acted as her agent after 1946 and when he repudiated this agency in 1952 he was effectively removed from the manage ment of the chawl.
Since 1946 the tenants attorned to the defendant No. 6 and paid rent to her under printed receipts announcing her ownership, but of course through her agent the defendant No. 1.
The actual physical possession of the tenants in 247 the circumstances would enable the appellant to establish her prescriptive title.
The decision in Uppalapati Veera Venkata Satyanarayanaraju and another vs Josyula Hanumayamma and another, , indicates that if a tenant makes an attornment in favour of a person who is not the true owner and follows and paying the rent to him, such a person must be held to have effective possession.
The land lord must be deemed to be in possession through his tenant is also demonstrated by another illustration.
If the tenant trespasses over the neighbour 's land treating it to be covered by his tenancy and remains in possession for the requisite period so as to prescribe a title thereto, his interest therein is limited to the interest of the tenant and his landlord acquires the title of the owner.
The con duct of such a tenant has been aptly described as stealing for the landlord (see I.L.R. 10 Calcutta 820 and The fact that the tenants have been in actual physical possession of the chawl is, in the circumstances, of no assistance to the respondents.
What is material is that they paid the rent to the defendant No. 6. 19.
There is no merit in the further argument that the defendant No. 1 must be treated to be in joint possession as he was actually collecting the rent from the tenants.
It is well settled that the possession of the agent is the posses sion of the principal and in view of the fiduciary relation ship the defendant No. 1 cannot be permitted to claim his own possession.
This aspect was well emphasised in David Lyeii vs John Lawson Kennedy, [1889] XIV H.L. (E) 437, where the agent who was collecting the rent from the tenants on behalf of the owner and depositing it in a separate ear marked account continued to do so even after the death of the owner.
After more than 12 years of the owner 's death his heir 's assignee brought the action against the agent for possession and the agent defendant pleaded adverse posses sion and limitation.
The plaintiff succeeded in the first court.
But the action was dismissed by the Court of Appeal.
The House of Lords reversed the decision of the Court of Appeal and remarked: "For whom, and on whose behalf, were those rents received after Ann Duncan 's death? Not by the respondent for himself, or on his own behalf, anymore than during her life time".
Emphasing the fiduciary character of the agent his possession was likened to that of trustee, a solicitor or an agent receiving the rent under a power of attorney.
Another English case of Williams vs Pott, L.R. XII Equity Cases 149, arising out of the circumstances similar to the present case was more interesting.
The agent in that case was the real owner of the estate but he collected the rents for a considerably long period as the agent of his principal who was his mother.
After the agent 's death his heir claimed the estate.
248 The mother (the principal) had also by then died after purporting by her will to devise the disputed lands to the defendants upon certain trusts.
The claim of the plaintiff was dismissed on the plea of adverse possession.
Lord Romil ly, M.R., in his judgment observed that since the possession of the agent was the possession of the principal, the agent could not have made an entry as long as he was in the posi tion of the agent or his mother, and that he could not get into possession without first resigning his position as her agent which he could have done by saying: "The property is mine; I claim the rents, and I shall apply the rents for my own purposes".
The agent had thus lost his title by reason of his own possession as agent of the principal.
A similar situation arose in Secretary of State for India vs Krishna moni Gupta, 29 Indian Appeals 104, a case between lessor and lessee.
There the proprietors of the land in dispute, Mozum dars were in actual physical possession but after getting a settlement from the Government in ignorance of their title.
The Government contended that the possession of the Mozum dars was, in circumstances, the possession of the Government claiming the proprietory right in the disputed land and that such possession was in exclusion and adverse to the claim of the Mozumdars to be proprietors thereof.
The plea succeeded.
It was observed by the Judicial Committee.
"It may at first sight seem singular that parties should be barred by lapse of time during which they were in physical possession, and estopped from disputing the title of the Government.
But there is no doubt that the possession of the tenant is in law the posses sion of the landlord or superior proprietor, and it can make no difference whether the tenant be one who might claim adversely to his landlord or not.
Indeed, in such a case it may be thought that the adverse character of the possession is placed beyond controversy.
" We are, therefore, of the view that the defendant No. 6 was in adverse possession from the period 1946 to 1952 through her agent defendant No. 1 and thereafter through her husband, Jayantilal and son, defendant No. 7 till 1960 when the suit was filed, the total period being more than 12 years.
For the reasons mentioned above, the decision of the High Court must be held to be erroneous.
Consequently the decrees for accounts against the defendants No. 6 and 7 must also go.
Accordingly, the appeals are allowed, the decision of the High Court, so far 249 the subject matter of the present appeals is concerned, is set aside and that of the trial court restored.
In view of the close relationship of the parties and the other circum stances, the parties are directed to bear their own costs throughout.
N.V.K. Appeals allowed.
| IN-Abs | Respondent No. 1 in the appeals instituted a suit for partition against his younger brothers and sisters, and the heirs of his deceased brothers.
The plaintiff was the eldest among the brothers and sisters.
The 1st and 2nd Defendants were his brothers, the 3rd Defendant his sister, the 4th and 5th Defendants, the widow and son respectively of the third brother.
Defendant 6 was the widow of the fourth brother, and Defendants 7 to 12 were his children, while Defendant No. 14 was the wife of Defendant No. 1, and Defendants 13, 15, 16 and 17 were their children.
The subject matter of the appeals related only to one item of property known as "Naroda Chawl" measuring 7 acres and 2 gunthas of land, where 115 rooms and huts stood con structed, out of which 114 rooms had been let out to ten ants, and one room was retained for the caretaker.
According to Defendants No. 6 to 12 this property exclu sively belonged to defendant No. 6 and was not liable to partition.
The other defendants however supported the plain tiff 's case that it belonged to the 233 joint family and was liable to partition.
Defendants 6 to 12 pleaded that the plaintiff 's father Bapalal orally gifted this property to his daughter in law Defendant No. 6 in March 1946 and made a statement before the Revenue authorities on .
the basis of which her name was mutated and she was put in possession thereof, that although she came in peaceful possession, the management which in cluded realisation of rent was in the hands of Defendant No. 1, that as some dispute arose in 1952 she assumed direct charge of the chawl and had remained in possession thereaf ter, and that she had acquired good title therein by adverse possession before the suit was filed in 1960.
The City Civil Judge who tried the suit, held that there was a joint Hindu family and a business was carried on for the benefit of the family and the income therefrom was thrown into the common pool and all the properties including the disputed chawl were treated as belonging to the family.
As the case of Defendant No. 6 about the gift, the mutation of her name, and her exclusive possession from 1946 till the date of the suit was found correct, it was held that she had acquired title by adverse possession, and the suit was dismissed with respect to the disputed chawl.
The plaintiff appealed to the High Court.
Some of the defendants also filed appeals in respect of the other items of property.
All these appeals were heard and disposed of by a common judgment.
The High Court reversed the finding of adverse posses sion in regard to the disputed chawl and granted a decree for partition.
It held that Defendant No. 6 remained in exclusive possession of the property only since 1952, the period was thus short of the time required for prescription of title.
It further held that since the rents of the chawl from 1952 were collected by her husband and after his death by her son (Defendant No. 7), she was liable to render accounts till the death of her husband, and she along with Defendant No. 7 would be jointly liable for the period thereafter.
Separate Appeals were preferred by Defendant Nos. 6 and 7 to this Court.
Allowing the Appeals, setting aside the decision of the High Court and restoring that of the Trial Court.
234 HELD: 1.
The principle that revenue entry furnishes presumptive evidence of title is inapplicable in the instant case.
It cannot be denied that title to Naroda Chawl could not have passed to Defendant No. 6 by virtue of the entry Ext.
The value of the chawl even in 1946 was large and no registered instrument of transfer was executed.
Besides Ext.
247 describes the plaintiff 's father (Bapalal) and Defendant No. 6 (Chandrakanta) as Kabjedar, that is occu pant.
In such circumstances, the presumption which can be raised in favour of Defendant No. 6 from this entry is with respect of her possession and possession only.
[238F G] Gangabai and others vs Fakirgowda Somaypagowda Desai and others, AIR 1930 Privy Council 93; and Desai Navinkant Kesarlal vs Prabhat Kabhai, 9 Gujarat Law Reporter 694, referred to.
The account books have to be rejected as not reli able.
It is apparent from the evidence that nobody takes the responsibility of supporting the correctness of the entries therein.
Many of the documents produced by Defendant No. 1 were accepted, but the account books which were section Nos.
123 75 to 123 97 of Ext.
123 were in express terms not admitted.
The plaintiff filed his objection Ext.
Defendant No. 6 also filed her objection Ext.
The books were admitted in evidence and marked as exhibits on the statement of the plaintiff which he made in cross exami nation.
The plaintiff by saying that he had written as per the instructions of Defendant No. 1 made it clear that he Could not vouchsafe for its reliability.
Defendant No. 1 could not summon courage to support them either personally or through any witness.
No reason has been suggested as to why he did not produce other important documents in his possession which could have supported the account books and the joint case of the parties resisting the appellant 's claim.
[243B E] 3.
Defendant No. 1 cannot be treated to be in joint possession as he was actually collecting the rents from the tenants.
it is well settled that the possession of the agent is the possession of the principal and in view of the fidu ciary relationship, Defendant No. 1 cannot be permitted to claim his own possession.
[247D E] David Lyeii vs John Lawson Kennedy, [1889] XIV H.L.(E) 437; Williams vs Pott, L.R. XII Equity Cases 149 and Secre tary of State for India vs Krishnamoni Gupta, 29 Indian Appeals 104, referred to.
It is the intention to claim exclusive title which makes 235 possession adverse and this animus possidendi must be evi denced and effectuated by the manner of occupancy which again depends upon the nature of the property.
The manner of possession depends upon the kind of possession which the particular property is susceptible.
That possession to the extent to which it is capable of demonstration must be hostile and exclusive and will cover only to the extent of the owner 's possession.
[246E F] (b).
The title to the chawl as owner, subject to the tenancy was an interest in immovable property so as to be covered by Article 144 of the Indian Limitation Act, 1908, which specifically mentioned, ".
or any interest therein".
[246E] In the instant case, the parties have been fighting for the rent from the chawl so long as it continued in posses sion of the tenants.
Before the gift of 1946 the Defendant No. 1 was collecting the rent and he continued to do so even thereafter till 1952.
The appellant has, however, estab lished her case that the Defendant No. 1 acted as her agent after 1946 and when he repudiated this agency in 1952 he was effectively removed from the management of the chawl.
Since 1946 the tenants attorned to the Defendant No. 6 and paid rent to her under printed receipts announcing her ownership, but of course through her agent the Defendant No. 1.
The fact that the tenants have been in actual physical posses sion of the chawl is, in the circumstances, of no assistance to the respondents.
What is material is that they paid the rent to the Defendant No. 6.
Defendant No. 6 was in adverse possession from the period 1946 to 1952 through her agent Defendant No. 1 and thereafter through her husband and son Defendant No. 7 till 1960 when the suit was filed, the total period being more than 12 years.
[246G H; 248G] Uppalapati Veera Venkata Satyanarayanaraju and another vs Josyula Hanumayamma and another, and Hari Prasad Agarwalla and another vs Abdul Haw and others, A.I.R. 1951 Patna 160, referred to.
|
any malafides again st Parliament and rightly.
[130B C] & ORIGINAL JURISDICTION: Writ Petition No. 162 of 1977.
(Under Article 32 of the Constitution of India. ) Jitendra Sharma for the Petitioners.
T.V.S.N. Chari for the Respondents.
The Judgment of the Court was delivered by RANGANATH MISRA, J.
This application under article 32 of the Constitution is by two petitioners petitioner No. 1, a private company and the other a Director thereof.
The pet i tioners have challenged the vires of the Sick Textile Unde r takings (Nationalisation) Act, 1974 (57 of 1974) and ha ve asked for a direction to the respondents to restore t he Mills to the petitioners in the same condition as it was on 31.10.197 1 when it was initially taken over.
Petitioners have alleged that the spinning mills prev i ously belonged to one S.R. Narasimhachari and three other section Mahalingam Chettiar, husband of the second petitione r, purchased the said Mills in 1965.
He was not at all aquain t ed with the working of spinning mills and soon found th at the affairs of the Mills were far from satisfactory a nd realised that he had acquired a non viable asset.
In Dece m ber 1967, Mahalingam issued notice of closure to be effe c tive from 3.1.1968, but as a fact by a subsequent noti ce dated December 22, 1967, the Mill was closed down wi th immediate effect.
According to the petitioners the Mill h ad ceased to be a "textile undertaking" by January 1968; t he workmen by numerous claim petitions in the Labour Court of Madurai pressed for their various demands, they took posse s sion of the Mills and even obstructed Mahalingam 's ent ry into the premises.
At one stage during that period Mahali n gam had applied for a loan of Rs. 10 lakhs from the Gover n ment of India with the hope of restarting the Mills aft er replacement of the machinery but that did not work out.
T he establishment had thus closed down and according to 129 the petitioners the textile undertaking had complete ly disappeared by 1969, and the Act did not apply to it.
Agai n, the 1974 Act was ultra vires the Constitution.
The Sick Textile Undertakings (Taking Over of Manag e ment) Ordinance 9 of 1972 became operative from 31.10.197 2.
Item 41 of the First Schedule to the Ordinance mention ed petitioner No. 1 as one of the textile undertakings who se management was to be taken over and possession was, ther e fore, taken by respondent No. 2 in terms of the provisio ns of section 4(1) thereof.
The Ordinance was replaced bY Act 72 of 1972 which received Presidential assent on 23.12.1972 b ut was deemed to be in force from 31.10.1972.
The petitione rs had challenged the validity of the Act by filing a wr it petition before the High Court of Madras but during t he pendency of the writ petition the Sick Textile Undertaki ng (Nationalisation) Ordinance, 12 of 1974, came into for ce from 1.4.1974, and petitioner No. 1 featured as Item 96 in the Schedule to the Ordinance.
The pending writ petitio n, therefore, became infructuous and the petitioners filed a fresh writ petition challenging the validity of the Ord i nance of 1974.
The Ordinance was duly replaced by the N a tionalisation Act 57 of 1974.
During the pendency of t he writ petition Emergency was proclaimed and the writ petiti on was permitted to be withdrawn in December 1976, with liber ty to approach the Court again.
That is how the present appl i cation has been filed.
Section 2(j) defines a 'sick textile undertaking 'to mean: "a textile undertaking, specified in the First Schedule, t he management of which has, before the appointed day, be en taken over by the Central Government under the Industri es (Development and Regulation) Act, 195 1, or as the case m ay be, vested in the Central Government under the Sick Texti le Undertakings (Taking Over of Management) Act, 1972.
" It is not disputed that management of petitioner No. 1 h ad been taken over under the 1972 Act and petitioner No. 1, therefore, came within the definition.
Section 3 provides: "3(1) On the appointed day, every sick textile undertaki ng and the right, title and interest of the owner in relati on to 130 :every such sick textile undertaking shall stand transfer red to, and shall vest absolutely in, the Central Govern ment.
(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 transferr ed to, and vested in, the National Textile Corporation.
" The First Schedule to the Act against Entry 96 shows t he petitioner 's Mills.; There is a legislative determinati on that petitioner No. 1 came Within the definition of 'si ck textile undertaking ' as provided in section 2(j) of the Act.
T he petitioners have not alleged any mala fides against Parli a ment and in our opinion rightly.
It is relevant to notice at this stage that the Central Act 57 of 1974 has been put in to the 9th Schedule of the Constitution by the 39th Amendme nt and, therefore, has come under the umbrella of protecti on provided under article 31 B of the Constitution.
In the case of Minerva Mills Ltd. & Ors.
vs Union of India & Ors.
, ; challenge was raised against the vires of this Ac t.
The Court dealt with the effect of the inclusion of the A ct in the 9th Schedule by referring to the ratio in Waman R ao vs Union of India; , and upheld its vire section Similar was the view of the Court in the case of Panip at Woollen and General Mills Company Ltd. & Anr.
vs Union of India & Ors.
, ; There is no force in the two contentions raised on behalf of the petitioners and the writ petition is, ther e fore, dismissed.
We direct the parties to bear their o wn costs of the proceedings.
T.N.A. Petition dismissed.
| IN-Abs | Petitioner No. 1, Kothandran Spg.
Mills Pvt. Ltd., w as taken over under the provisions of the Sick Textile Unde r takings (Taking Over of Management) Act, 1972 and possessi on of the mill was taken by the National Textile Corporatio n, respondent No. 2.
Subsequently, the Sick Textile Underta k ings (Nationalisation) Act, 1974 came into force.
The petitioners filed a writ petition under Article 32 of the Constitution challenging the vires of the Sick Te x tile Undertakings (Nationalisation) Act, 1974 and that t he mills be restored to them.
It was also submitted that t he establishment had been closed down, and the Textile Unde r taking had completely disappeared by 1969 and therefore t he aforesaid Act did not apply to it.
Dismissing the writ petition, HELD: 1.
The Sick Textile Undertakings (Nationalisatio n) Act, 1974 has been put into the 9th Schedule of the Const i tution by the 39th Amendment and, therefore, has come und er the umbrella of protection provided under Article 31 B of the Constitution.
[130C D] Minerva Mills Ltd. & Ors.
vs Union of India & Ors .
; , ; Waman Rao vs Union of India, ; ; Panipat Woollen and General Mills Company Ltd. Anr.
vs Union of India & 128 Ors.
; , , applied.
The First Schedule to the Act against Entry 96 sho ws the Petitioner 's Mills.
There is a legislative determinati on that petitioner company came within the definition of 'si ck textile undertaking ' as provided in Section 2(j) of the Ac t.
|
ivil Appeal No. 3604 of 1987.
From the Judgment and Order dated 19.9.1986 of the Rajasthan High Court in S.B.C.S.A. No. 163 of 1986.
S.K. Jain and 1.
Makwana for the Appellant.
Rajinder Sachar, Rameshwar Nath, B.P.S. Mangat and Suresh Vohra for the Respondent.
The Judgment of the Court was delivered by NATARAJAN, J.
In this appeal by special leave arising from a judgment of the High Court of Rajasthan in a second appeal, the question for consideration is whether the appel lant will not be entitled to claim the benefit of Section 13 A of the Rajasthan Premises (Control of Rent and Evic tion) Act, 1950 (hereinafter referred to as the Act) as has been held by the High Court.
It is worthy of mention even here that though the suit for eviction filed by the respond ent was pending on the date the ordinance came to be promul gated, the appel 195 lant had no knowledge of the filing of the suit and he came to be served with notice in the suit only after some months after the Ordinance came to be promulgated.
The High Court has based its conclusions on two factors viz. (1) no appli cation under Section 13 A had been made by the appellant in the suit filed by the respondent within a period of 30 days from the date of commencement of the Ordinance and (2) the suit had been filed before the Amending Ordinance No. 26 of 1975 was issued and hence the proceedings would be governed by the provisions of the unamended Act.
The facts are not in controversy and are briefly as under.
Since 1961 the appellant was a lessee of the respond ent in respect of a shop.
The agreed rent was Rs.25 per mensem and in addition he had also to pay the house tax to the municipality.
The rent was increased to Rs.30 per mensem with effect from 1.1.1963.
On the ground the appellant had committed default in payment of rent for the period 1.2.
1966 to 31.12.66, the respondent filed a suit on 17.1.1967 for eviction.
The appellant filed an application under Section 13(4) of the Act (as it stood prior to amendment) for determination of the arrears of rent and the interest payable thereon.
The Trial Court determined the arrears of rent and the interest payable thereon and on the appellant depositing the same, the suit was dismissed in terms of Section 13(7) of the Act.
Thereafter, the appellant went on depositing the rent in court.
However, the respondent filed another suit on 21.5.75 alleging that the appellant had again committed default in payment of rent and should there fore be evicted.
The appellant was served with a notice calling upon him to appear in Court on 10.2.76.
Since a copy of the plaint was not sent along with the notice, the appel lant was furnished a copy of the plaint on 10.2.76 and he was granted time till 30.3.76 to file his written statement.
In his written statement the appellant refuted his liability to be evicted on the ground of default in payment of rent.
In addition, by way of abundant caution, he filed a petition under Section 13(3) and 13(4) of the amended Act praying that if in the course of depositing the rent during the long period of eight years from 1967 to 1975 there had been any omission, due to over sight, in depositing the monthly rent, the Court may determine the amount of shortfall and the interest payable thereon and permit him to deposit the same in Court.
Even before the appellant was served with notice in the suit, the Act came to be amended on 29.9.1975 by Amending Ordinance No. 26 of 1975 (later replaced by an Act).
The Ordinance provided for a new section viz. Section 13 A being added to the Act.
Section 13 A is in the following terms: 196 "13 A. Special provisions relating to pending and other matters.
Notwithstanding anything to the contrary in this Act as it existed before the commencement of this Amending Ordinance or in any other law.
(a) No court shall, in any proceeding pending on the date of commencement of the (amending ordinance) pass any decree in favour of a landlord for eviction of a tenant on the ground of non payment of rent, if the tenant applies under clause (b) and pays to the landlord, or deposits in court, within such time such aggregate of the amount or rent in arrears, interest thereon and full costs of the suit as may be directed by the court under and in accordance with that clause; (b) in every such proceeding, the court shall, on the application of the tenant made within thirty days from the date of commencement of the (amending ordinance) notwithstanding any order to the contrary determine the amount of rent in arrears upto the date of the order as also the amount of interest thereon at 6% per annum and costs of the suit allowable to the landlord; and direct the tenant to pay the amount so determined within such time, not exceeding ninety days, as may be fixed by the court; and on such payment being made within the time fixed as aforesaid, the proceeding shall be disposed of as if the tenant had not committed any default; (c) the provisions of clauses (a) and (b) shall mutatis mutandis apply to all appeals; or applications for revisions, preferred or made, after the commencement of the (amending ordinance) against decrees for eviction passed before such commencement with the variation that in clause (b), for the expression from the commencement of the (amending ordinance), the expression "from the date of the presenta tion of the memorandum of appeal or applica tion for revision" shall be substituted; (d) omitted.
(e) omitted.
(f) omitted.
" 197 The Trial Court, after hearing both the parties, passed orders on .the application filed earlier by the appellant under Sections 13(3) and 13(4) of the Act and called upon the appellant to deposit a sum of Rs.335 towards arrears of rent and interest before 28.7.1976 after giving credit to the sum of Rs. 1290 already deposited by him.
The appellant complied with the order of the Court by depositing the said amount within the prescribed time.
Even so, the Trial Court passed a decree for eviction against the appellant on the ground of default in payment of rent and the Appellate Court confirmed the decree.
In the second appeal preferred to the High Court, the appellant 's counsel contended that the Trial Court ought to have treated the appellant 's application under Section 13(3) and 13(4) as one under Section 13 A and given the benefit of the Section to the appellant and dismissed the suit for eviction.
The High Court, in spite of accepting the position that though the suit was pending when the Amending Ordinance was promul gated, the appellant could not have filed a petition under Section 13A within thirty days from the date of the Ordi nance coming into force as the suit summons came to be served on him only later, nevertheless declined to interfere because in its view the Act has not provided for any relief to tenants.
placed in the situation in which the appellant was placed.
The High Court has further held that the Act contains a lacuna but it can be remedied only by the Legis lature and not by the Courts and, as such, the appellant cannot claim the benefit of Section 13A of the Act.
The High Court has expressed its view in the following terms: "Section 13 A of the Rent Control Act does not envisage and does not provide for a contingen cy as in the present case where the suit was pending but the defendant had no notice of the pendency of the suit and could not have availed of the benefit of Section 13 A of the Rent Control Act on account of restriction placed under Clause (b) for filing an applica tion u/s 13 A within one month from the date of the commencement of the Amending Ordinance.
It is true that Section 13 A is a beneficial legislation, to help the tenants but the Court cannot substitute or add something to the Act.
It will be for the legislature to amend section 13 A of the Rent Control Act so as to cover up contingency arising in the present case.
Language of Amended Section 13 A is not ambiguous and therefore, there is no question of interpreting so as to extend the rule of beneficial construction in order to cover up cases like the present one.
" 198 The High Court has further held that since the appellant had committed default in payment of rent for a second time, he will not be entitled to claim the benefit of Section 13(7) of the Act once again.
The High Court has expressed its view on this aspect of the matter in the following terms: "It is also not disputed that defendant had taken benefit of Section 13(7) of the Old Rent Control Act in an earlier suit filed by the plaintiff on the ground of default in payment of rent.
Since the suit had been filed before coming into force of the Amending Ordinance of 1975 or the Amending Act of 1976, the provi sions of the Old Rent Control Act before amendment will apply, as has been held by the Division Bench of this Court in Kishan Lal Sharma (supra).
" The two grounds on which the High Court had dismissed the appellant 's second appeal are the subject matter of attack in this appeal.
Learned counsel for the appellant contended that the High Court, after having found that though the suit was admittedly pending when the Amending Ordinance was promul gated the appellant had no notice of the pendency of the suit at the relevant time and as such he could not possibly have filed an application within one month 's time from the date of the commencement of the Ordinance, should not have denied the benefit of Section 13 A to the appellant on the ground the Section does not provide for an application being made beyond a period of thirty days from the date of the commencement of the Ordinance.
On the other hand, the learned counsel for the respondent argued that the Section is clear in its terms and, as such, the High Court was perfectly justified in holding that the appellant cannot claim benefits under Section 13A of the Act.
It was his further contention that since the appellant had committed default in payment of rent for a second time he will not be entitled to claim benefit under Section 13A, even if the delay in filing the application beyond the prescribed period of thirty days is to be overlooked.
In view of the conflict ing arguments of the learned counsel, two questions fall for consideration viz (1) whether the appellant is not entitled to claim the benefit of Section 13A because he had not filed an application within thirty days from the date of commence ment of the Ordinance and (2) even otherwise, whether by reason of the earlier default in payment of rent for the period 1 2 1966 to 31 12 1966, the appellant is disentitled under the Act to claim the benefit of Section 13A. 199 So far as the first question is concerned, the High Court has failed to see that the object of enacting Section 13A by the Legislature was to confer benefit on all tenants against whom suits for eviction on the ground of default in payment of rent were pending.
To achieve the object, Section 13 A has been given overriding effect.
Sub clause (1) of Section 13 A mandates all courts not to pass any decree in favour of a landlord for eviction of a tenant on the ground of non payment of rent, if the tenant makes an application as per clause (b) and pays to the landlord or deposits in court within the prescribed time the total amount of rent in arrears together with interest and full costs of the suit.
It is no doubt true sub clause (b) lays down that in every such proceeding, the Court shall, on the application of a tenant made within thirty days from the date of the com mencement of the amending Ordinance, determine the amount of rent in arrears as well as the amount of interest at six per cent per annum and the costs of the suit and direct the tenant to pay the amount so determined within a time not exceeding ninety days as may be fixed by the Court.
Sub clause (b) further provides that on such payment being made, the proceedings shall be disposed of as if the tenant had not committed any default.
The intention of the Legislature to confer the benefit of Section 13A to all tenants, provid ed actual eviction had not taken place, could further be seen by the terms of sub clause (c).
Under sub clause (c) the provisions of sub clause (a) & (b) have been made ap plicable mutatis mutandis to all appeals or applications for revision preferred or made after the commencement of the Amending Ordinance and the only stipulation contained is that the tenant preferring an appeal or an application for revision should apply to the Court within a period of thirty days from the date of presentation of the memorandum of appeal or the application for revision for giving him the benefit of Section 13A.
Such being the case, it would be unreasonable and inequitable to hold that the Legislature/had intended to confer the benefit of Section 13A only to those tenants who had received notice of the suit filed against them before the Ordinance came into force and not to those tenants against whom proceedings were pending in the sense they had been instituted but who had no notice of the pendency of the suit.
In this case, it is common ground that though the suit was filed by the respond ent on 21 5 1975, the appellant had no notice of the suit on 29.9.1975 when the Ordinance was promulgated or even before the expiry of thirty days after the Ordinance was promulgat ed.
Such being the case, the appellant, even if he had known of the promulgation of the Amending Ordinance on 29 9 1975, could not have known that a suit for eviction had been filed against him on the ground of default in payment of rent and that he should file an applica 200 tion under Sec.
13 A(1)(b) within thirty days of the com mencement of the Ordinance.
It would therefore be futile to expect compliance from him of the terms of Sec.
13 A(1)(b) in the suit which was no doubt pending, within thirty days from the date of the commencement of the Ordinance to claim the benefit of Section 13A. A somewhat similar situation came to be noticed by this Court in B.P. Khemka Pvt.
Ltd. vs
B.K. Bhowmick; , In that case the tenant made an application, in the suit filed by the landlord for eviction on the ground of default in payment of rent, under Section 17(2) of the West Bengal Premises Tenancy Act for the court determining the amount of rent payable by him to the landlord.
During the pendency of the proceeding, the West Bengal Premises Tenancy (Amending) Ordinance, which was later replaced by an Act, came to be promulgated with effect from 26 8 1967.
Sub sections (2A) and (2B) to Section 17 of the Act were insert ed and Section 5 of the Ordinance gave retrospective effect to the amendments and provided that the amendments made by the Ordinance shall have effect in respect of suits includ ing appeals which were pending on the date of the commence ment of the Ordinance.
To avail the benefit of the amended provision, the tenant preferred an application within one month and prayed for the payment of the arrears of the rent.
The Trial Court determined the amount and the tenant paid the entire arrears but even so the Trial Court struck off the defence of the appellant on the ground that in paying the rent for the months of September, 1968 and March, 1969 there had been a delay of 44 days and 6 days respectively and hence there was a contravention of Section 17(1) of the Act.
Thereafter the landlord 's suit was decreed and the decree was confirmed by the Appellate Court.
In the second appeal preferred by the tenant the High Court not only confirmed the decree for eviction but went a step further and held that the tenant was not entitled under the Act to file an application under Section 17(2A)(b) because he had not filed the application within the time specified under Sub section (1) of Section 17 of the Act viz. "one month from the service of the writ of summons on the defendant or where he appears in the suit or proceeding without the writ of summons being served on him, within one month of his appearance.
" The High Court expressed its View as under: In our view, the application under section 17(2A)(b) was not also maintainable.
It is true that Section 17(2A)(b) was made applicable to pending suits by the Ordinance.
But such applicability will be subject to the limitation imposed 201 by sub section (2B) of Section 17, namely, that an application under sub section (2A)(b) has to be made before the expiry of the time specified in sub section (1) of Section 17 for the deposit or payment of the amount due on account of default in payment of rent.
Under sub section (1) of Section 17 the time speci fied is one month from the service of the writ of summons on the defendant or where he ap pears in the suit or proceeding without the writ of summons being served on him, within one month of his appearance.
In the instant case, the summons was served on the defendants on April 6, 1967.
The application under sec tion 17(2A)(b) having been filed on September 22, 1967, it was barred by limitation . .
In our view, after the expiry of one month of the service of summons on the defendants, they had no right to avail themselves of the provi sions of section 17(2A).
Sub section (2B) of section 17 having prescribed a time limit for an application under sub section (2A), no other period of limitation can be substituted for the purpose of making an application for instalments.
It is true that the Act is a remedial statute, but that fact does not give the Court jurisdiction to alter the period of limitation as prescribed by the statute for the purpose of giving relief to the tenant.
If the legislature had intended that the tenant in a pending suit would be entitled to make an application under section 17(2A) within one month of the date of promulgation of the Ordinance, it would have expressly provided for the same as it has done in other cases covered by section 17B and 17D." In the appeal preferred by the tenant to this Court against the judgment of the High Court, this Court disap proved the view taken by the High Court.
In the judgment, reference was made to the decisions in Madhav Raw Scindia vs Union of India, AIR SC 197 1 530 and Dy.
Custodian vs Offi cial Receiver; , while setting out the prin ciple to be followed in the matter of construction of the provisions of an Act.
It was observed that the provisions of an Act must be construed in such a manner that the construc tion should serve the purpose of achieving the aim and object of the Act and not in a way as would defeat the legislative intent behind the Act.
After setting out the principle, the fallacy contained in the view taken by the High Court was pointed out in the following manner: "The High Court was, therefore, in error in holding that 202 the application under Section 17(2A)(b) was itself not maintainable.
If the High Court 's view is to be accepted it would then amount to asking the appellant to perform the impossible i.e. asking the appellant to file an applica tion under section 17(2A)(b) which came into force on 26.8.
1967 within one month from 6.4.
1967 when the suit summons was served.
" The view taken in B.B. Khemka (supra) would have rele vance in this case also because though the amending Ordi nance came to be promulgated on 29 9 1975, the appellant came to know of the filing of the suit only long after when notice was served on him to appear in Court on 10 2 1976.
Therefore, the question of filing an application under Section 13A would arise only when the appellant came to know of the filing of the suit and its pendency.
In construing the terms of Section 13A, the Court has to bear in mind the object underlying the introduction of the Section by the Legislature.
It is a settled principle that the interpreta tion of the provisions of a statute should conform to the legislative intent as far as possible and the Courts should not take a narrow or restricted view which will defeat the purpose of the Act.
So viewed the first question has to be answered in favour of the appellant.
In so far as the second question is concerned, it is not as if the appellant had committed a second default in the strict sense of the term.
The earlier suit was filed on 17 1 1967 and the appellant had made an application under Section 13(4) of the Act and had the amount of arrears and the interest payable thereon determined by the Court.
There after he had been depositing the rent in Court regularly.
However, when the respondent filed a second suit on 21 5 1975 alleging that the appellant had again committed default in payment of rent, the appellant had bonafide represented to the Court that he had been regularly depositing the rent and the house tax but it may be possible that there may have been some delay or omission here and there in the long period of eight years in the payment of rent and hence the Court may determine the amount of arrears, if any, and afford him opportunity to pay the arrears.
This prayer was granted and the Court had determined the arrears and the interest payable thereon and the appellant deposited the amount so determined within the prescribed time.
It cannot, therefore, be said that the appellant had knowingly and wilfully committed a second default.
Even though it was found that some arrears had to be paid, the appellant cannot be denied the benefit of Section 13A because the Section has been given overriding effect in so far as suits and other proceedings which were pending on 203 the date of the promulgation of the Ordinance and as such the proviso to sub section 6 of the Section 13 of the amend ed Act would not disentitle the appellant to claim the benefit of Section 13 A.
The High Court was therefore in error in holding that since the suit had been filed before Sec 13A was introduced, the appellant would be governed only by the provisions of the Act before its amendment.
For these reasons the second question also has to be answered in favour of the appellant.
In the light of our conclusion on the two questions falling for consideration in this appeal, the judgment of the High Court as well as the judgments of the courts below cannot be sustained.
Accord ingly, the appeal is allowed and the suit filed by the respondent will stand dismissed.
The appellant will however, pay the full costs of the suit to the respondent as envis aged under Section 13 A, if he has not already paid the same.
No order as to costs in this appeal.
Y.L. Appeal allowed.
| IN-Abs | Appellant herein was a lessee of the Respondent in respect of a shop since 1961, at a monthly rent of Rs.25 later increased to Rs.30 and in addition to the said rent, he was to pay house tax to the municipality.
Respondent landlord filed a suit for eviction against the appellant on the ground of default in payment of rent for the period 1.2.1966 to 31.12.66.
The appellant filed an application in that suit under sec.
13(4) of the Act (as it stood prior to amendment) for determination of arrears of rent and the interest payable thereon.
The Trial Court determined the arrears of rent and the interest payable by the appellant.
Consequent upon the appellant 's depositing the same, the suit was dismissed in terms of sec.
13(7) of the Act.
The appellant continued depositing the rent in Court.
Thereafter the Respondent filed another suit on 21.5.75 alleging that the appellant has again committed default in payment of rent and should therefore be evicted.
The appellant received a notice calling upon him to appear in Court on 10.2.76.
Since he had not received a copy of the plaint, he was granted time till 30.3.76 to file his written statement.
In the written statement he refuted his liability to pay the rent and also moved an application u/s 13(3) & 13(4) of the amended Act praying that if in the course of his depositing the rent in court, there has been any omission, due to oversight the Court may determine the arrears of rent & interest payable thereon and permit him to deposit the same in court.
It may be pointed out here that before the appellant was served with the notice of the suit, the Act was amended on 29.9.75 by Amending Ordinance No. 26 of 75 whereby a new section 13 A was added to the Act.
The object of the newly added section was to provide benefit to all tenants against whom suits for eviction on the ground of default in paying the rent were pending by making a provision that the Courts shall not pass any decree in favour of landlords on that ground if the 193 tenant makes an application within a stipulated period and deposits in court the total rent due.
The Trial Court passed orders on the application u/s 13(3) & 13(4) and called upon the appellant to deposit a sum of Rs.335 towards arrears of rent and interest before 28.7.76.
The appellant complied with the order but despite that, the Trial Court passed a decree for eviction and the appellate Court confirmed the same.
In the second appeal preferred by the appellant, he contended that the Trial Court ought to have treated the application filed by him u/s 13(3) & 13(4), as one filed u/s 13 A of the Act and given the benefit thereof to him.
Even though the High Court found that the appellant having re ceived the notice of the suit late and hence was not in a position to make the application within 30 days, declined to interfere because in its view the Act has not provided for any relief to tenants placed in the situation in which the appellant was placed.
The High Court held that the Act contains a lacuna but the same can be remedied by the legis lature and not by Courts and as such the appellant cannot claim the benefit of sec.
13 A of the Act.
The suit having been filed prior to the coming into force of Amending Act, the same will be governed by the provisions of unamended Act.
On the dismissal of the second appeal by the High Court, the appellant has filed this appeal after obtaining special leave.
Before this Court two questions arose for consideration viz: (1) whether the appellant is not entitled to the bene fit of sec.
13 A because he had not filed an application within 30 days from the date of commencement of the Act, and (2) even otherwise whether by reason of the earlier default in payment of rent for the period 1.2.1966 to 31.12.1966, the appellant is disentitled under the Act to claim the benefit of sec.
13 A. Allowing the appeal, this Court, HELD: Section 13 A has been given overriding effect.
Subsection (1) of section 13 A mandates all courts not to pass any decree in favour of a landlord for eviction of a tenant on the ground of nonpayment of rent, if the tenant makes an application as per clause (b) and pays to the landlord or deposits in court within the prescribed time the total amount of rent in arrears together with interest and full costs of the suit.
[199B C] 194 The intention of the legislature to confer the benefit of section 13 A to all tenants, provided actual eviction had not taken place could further be seen by the terms of sec tion (c).
[199D E] It would be unreasonable and inequitable to hold that the legislature had intended to confer the benefit of sec.
13 A only to those tenants who had received notice of the suit filed against them before the Ordinance came into force and not to those tenants against whom proceedings were pending in the sense they had been instituted but who had no notice of the pendency of the suit.
[199F G] Even though it was found that some arrears had to be paid, the appellant cannot be denied the benefit of sec.
13 A because the section has been given overriding effect in so far as suits and other proceedings which were pending on the date of the promulgation of the ordinance and as such the proviso to sub sec.
(6) of sec.
13 of the amended Act would not disentitle the appellant to claim the benefit of sec.
13 A. [202H; 203A] B.P. Khemka Pvt.
Ltd. vs
V.B.K. Bhowmick; , , referred to.
|
vil Appeal Nos. 1668 and 1669 of 1988.
From the Judgment and Order dated 29.4.1988 of the Madras High Court in W.R. Nos. 469 and 488 of 1988.
Soli J. Sorabjee, V.C. Mahajan, C.A. Sundaram, U.A. Rana, M. Mudgal, Ms. Indu Malhotra, C.V. Subba Rao, A. Mariar Autham, Aruna Matbur, N.N. Sharma, Jose Varghese, Bhagwan Das, R. Mohan, R.A. Perumal and A.V. Rangam for the appearing parties.
The Judgment of the Court was delivered by K. JAGANNATHA SHETTY, J.
These appeals by leave are from the judgment of the Division Bench of the Madras High Court revoking the 'U Certificate ' issued to a Tamil film called "Ore Oru Gramathile" (In one Village) for public exhibition.
Civil Appeal Nos.1668 and 1669 of 1988 are by the producer of the film and the Civil Appeal nos.13667 and 133668 of 1988 are by the Union of India.
He apprehends that she would not be able to get admission to college because she belongs to a Brahmin community.
He seeks advice from his close friend Devashayam, a Tehsildar.
The Tehsildar who otherwise belongs to a very poor family and whose father was working in a local Church responds with gratitude.
He divises a method to help Gayathri because it was through Sastry 's father that he got proper education and rose to become a Tahsildar.
He prepares a false certificate showing Gayathri as Karuppayee belonging to an Adi Dravida Community and as an orphan.
He issues the certificate under the reservation policy of the Government for the benefit of 'backward commu nities ' identified on caste consideration.
On the basis of the false certificate, Karuppayee gets admitted to college and enters I.A.S. witness to this arrangement is the brother in law of Tahsildar called Anthony who later turns out to be a villain of the piece.
"Years later, Karuppayee, who was working in Delhi is sent to a rural village called Annavayil as a Special Offi cer for flood relief operations.
Her father, Shankara Sastry happens to work in the same village as Block Development Officer.
However, both of them pretend not to recognise each other.
Karuppayee takes her work seriously and improves the living conditions of people to such an extent that she is held by them in high esteem.
By a coincidence, after the death of the Tahsildar, Anthony comes to live in the same village and recognises Karuppayee.
He starts blackmailing her and threatens to reveal the fraudulent means by which she got the caste certificate.
His attempt is to extract money from her frequently.
One evening when he visits Karup payee 's house, he is confronted by Shankara Sastry who puts a halt to his blackmailing.
Later Anthony dies of sudden heart attack but not before he informs the Government about the facts relating to Karuppayee.
Upon preliminary enquiry, the Government suspends both Karuppayee and her father and eventually they are put on trial in the Court.
The people of the village resentful of the action taken against Karuppayee rise as one man and demonstrate before the Court in a peace ful manner for her release.
They also send petitions to the Government."
"Karuppayee and her father admit in the Court the fact of their having obtained the false caste certificate but they attribute it to circumstances resulting by Government reservation policy on caste basis.
They say that they are prepared to undergo any punishment.
They contend hat some politicians are exploiting the caste consideration and that would be detrimental to national integration.
They also argue that the reservation policy should not be based on caste, but could be on economic backwardness.
Just about the time when the judgment is to be pronounced the Court re ceives intimation from Government that in the light of petitions received from the public, the case against Karup payee and her father stands withdrawn.
Karuppayee goes back to her Government job with jubilent people all round.
" 210 This is the theme of the picture presented.
As usual, it contains some songs, dance and side attractions to make the film more delectable.
On August 7, 1987, the producer applied for certificate for exhibition of the film.
The examining committee upon seeing the film unanimously refused to grant certificate.
The appellant then sought for review by a Revising Committee which consisted of nine members.
This Committee reviewed the film.
Eight members were in favour of grant of certificate and one was opposed to it.
The Chairman of the Censor Board however, referred the film to Second Revising Committee for review and recommendation.
The 'U ' certificate means for unrestricted public exhibition as against 'A ' certificate restricted to adults only.
The minority expressed the view that the film is treated in an irresponsible manner.
The reservation policy of the Govern ment is projected in a highly biased and distorted fashion.
They have also stated that the so called appeal in the film "India is One" is a hollow appeal, which in effect touches caste sensitivity of the Brahmin forward caste.
One of the members felt that the impact of the film will create law and order problem.
Another member said that the film will hurt the feelings and sentiments of certain sections of the public.
But the majority opined that the theme of the film is on the reservation policy of the Government suggesting that the reservation could be made on the basis of economic backwardness.
Such a view could be expressed in a free country like India, and it did not violate any guideline.
On December 7, 1987, 'U ' certificate was granted for the exhibition of the film which was challenged before the High Court by way of writ petitions.
The writ petitions were dismissed by the Single judge, but the Division Bench upon appeal allowed the writ petitions and revoked the certifi cate.
The producer of the film and the Government of India by obtaining leave have appealed to this Court.
The film has since been given National Award by the Directorate of Film Festival of the Government of India.
In these appeals, the fundamental point made by Mr. Soli Sorabjee, learned counsel for the producer is about the freedom of free expression guaranteed under our Constitution even for the medium of 211 movies.
The counsel argued that the opinion on the effect of the film should not be rested on isolated passages disre garding the main theme and its message.
The Film should be judged in its entirety from the point of its overall impact on the public.
The writings of the film must be considered in a free, fair and liberal spirit in the light of the freedom of expression guaranteed under our Constitution.
The counsel said that the Court is not concerned with the cor rectness or legality of the views expressed in the film and the Court cannot limit the expression on any general issue even if it is controversial.
Mr. Mahajan for the Union of India supported these submissions.
Mr. Varghese learned counsel for the contesting respondents did not dispute most of the proposition advanced for the appellants.
He was, however, critical about the manner in which the reservation policy of the Government has been condemned and the events and characters shown in the film.
He contended that they are depicted in a biased manner and reaction to the film in Tamil Nadu is bound to be volatile.
Before examining these rival contentions, a few general observations may be made as to the utility of movies and the object of the film Censors Board.
The motion pictures were originally considered as a form of amusement to be allowed to titillate but not to arouse.
They were treated as mere entertainment and not an art or a means of expression.
This theory was based on the concept that motion picture was a business "pure and simpe originated and conducted for prof it, like other spectacles.
" It was considered strictly as an "amusement industry".
It was not without significance since there were no talking pictures then.
The talking pictures were first produced in 1926, eleven years after the Mutual decision (Encyclopedia Britinnica) (1965 Vol.
15 p. 902).
The later decisions of the American Supreme Court have therefore declared that expression by means of motion pictures is included within the free speech and free press guaranty of the First Amend ment.
(See Burstyn vs Wilso, ; The First Amend ment to the U.S. Constitution provides: "Congress shall make no law . abridging the freedom of speech, or of the press." This Amendment is absolute in terms and it contains no exception for the exercise of the fight.
Heavy burden lies on the State to justify the interference.
The judicial decisions, however, limited the scope of restriction which the State could impose in any given circumstances.
The danger rule was born in Schenek vs United States, 249 U.S. 47 (1919).
Justice Holmes for a unanimous court, evolved the test of "clear and present danger".
He used the danger test to 212 determine where discussion ends and incitement or attempt begins.
The core of his position was that the First Amend ment protects only utterances that seeks acceptance via the democratic process of discussion and agreement.
But "Words that may have all the effect of force" calculated to achieve its goal by circumventing the democratic process are however, not so protected.
The framework of our Constitution differs from the First Amendment to the U.S. Constitution.
Article 19(1)(a) of our Constitution guarantees to all citizens the right to freedom of speech and expression.
The freedom of expression means the right to express one 's opinion by words of mouth, writing, printing, picture or in any other manner.
It would thus include the freedom of communication and the right to propagate or publish opinion.
The communication of ideas could be made through any medium, newspaper, magazine or movie.
But this right is subject to reasonable restrictions on grounds set out under Article 13(2) of the Constitution.
The reason able limitations can be put in the interest of sovereignty and integrity of India, the security of the State, friendly relations with foreign States, public order, deceny or morality or in relation to contempt of court, defamation or incitement to an offence.
The Framers deemed it essential to permit imposition of reasonable restrictions on the larger interests of the community and country.
They intended to strike a proper balance between the liberty guaranteed and the social interest specified under Article 19(2).
(See Santokh Singh vs Delhi Administration, ; This is the difference between the First Amendment to the U.S. Constitution and Article 19(1)(a) of our Constitu tion.
The decisions bearing on the First Amendment are, therefore, not useful to us except the broad principles and the purpose of the guaranty.
Movie doubtless enjoys the guaranty under Article 19(1)(a) but there is one significant difference between the movie and other modes of communication.
The movie cannot function in a free market place like the newspaper, magazine or advertisement.
Movie motivates thought and action and assures a high degree of attention and retention.
It makes its impact simultaneously arousing the visual and aural senses.
The focusing of an intense light on a screen with the dramatizing of facts and opinion makes the ideas more effective.
The combination of act and speech, sight and sound in semi darkness of the theatre with elimination of all distracting ideas will have an impact in the minds of spectators.
In some cases, it will have a complete and im 213 mediate influence on, and appeal for every one who sees it.
In view of the scientific improvements in photography and production the present movie is a powerful means of communi cation.
It is said: "as an instrument of education it has unusual power to impart information, to influence specific attitudes towards objects of social value, to affect emo tions either in gross or in microscopic proportions, to affect health in a minor degree through sleep disturbance, and to affect profoundly the patterns of conduct of chil dren." (See Reader in Public Opinion and Communication Second Edition by Bernard Betelson and Morris Janowitz p. 390).
The authors of this Book have demonstrated (at 391 to 401) by scientific tests the potential of the motion pic tures in formation of opinion by spectators and also on their attitudes.
These tests have also shown that the effect of motion pictures is cumulative.
It is proved that even though one movie relating to a social issue may not signifi cantly affect the attitude of an individual or group, con tinual exposure to films of a similar character will produce a change.
It can, therefore, be said that the movie has unique capacity to disturb and arouse feelings.
It has as much potential for evil as it has for good.
It has an equal potential to instil or cultivate violent or good behaviour.
With these qualities and since it caters for mass audience who are generally not selective about what they watch, the movie cannot be equated with other modes of communication.
It cannot be allowed to function in a free market place just as does the newspapers or magazines.
Censorship by prior restraint is, therefore, not only desirable but also neces sary.
Here again we find the difference between the First Amendment to the U.S. Constitution and Article 19(1)(a) of our Constitution.
The First Amendment does not permit any prior restraint, since the guaranty of free speech is in unqualified terms.
This essential difference was recognised by Douglas, J., with whom Black, J., concurred in Kingsley Corporation vs Regents of the University of New York, at 1522.
In holding that censorship by "prior restraint" on movies was unconstitutional, the learned Judge said: "If we had a provision in our Consti tution for "reasonable" regulation of the press such India has included in hers, there would be room for argument that censorship in the interests of morality would be permissi ble.
But its language, in terms that are absolute is utterly at war with censorship.
214 Different questions may arise as to censorship of some news when the nation is actually at war.
But any possible exceptions are extremely limited.
" The ("The Act") which permits censorship on movies is a comprehensive enactment.
Section 3 of the Act provides for constitution of Board of Film Cen sors.
Section 4 speaks of examination of films.
A film is examined in the first instance by an Examining Committee.
If it is not approved, it is further reviewed by a Revising Committee under Section 5.
Section 5A states that if after examining a film or having it examined in the prescribed manner, the Board considers that the film is suitable for unrestricted public exhibition, such a certificate is given which is called 'U ' certificate.
Section 5(a) provides principles for guidance in certi fying films.
It is significant to note that Article 19(2) has been practically read into Section 5(B)(1).
Section 5(C) confers right of appeal to Tribunal against refusal of certificate.
Under Section 6, the Central Government has revisional power to call for the record of any proceeding in relation to any film at any stage, where it is not made the subject matter of appeal to the Appellate Tribunal.
Under Section 8 of the Act, the Rules called the Cine matograph (Certification) Rules 1983 have been framed.
Under Section 5(B)(2) the Central Government has prescribed cer tain guidelines for the Censors Board.
Guideline (1) relates to the objectives of film censorship.
The Board shall ensure that: (a) the medium of film remains responsible and sensi tive to the values and standards of society; (b) artistic expression and creative freedom are not unduly curbed and (c) censorship is responsive to social change
Guideline (2) requires the Board to ensure that: (i) anti social activities such as violence not glorified or justified; (ii) the modus operandi of criminal or other visuals or words likely to incite the commission of any offence are not depicted; (iii) pointless or avoidable scenes of violence, cruelty and horror are not shown; (iv) human sensibilities are not offended by vulgarity, obscenity and depravity; (vi) the sovereignty and integrity of India is not called in question; (vii) the security of the State is not jeopardised or endangered; (viii) friendly relations with foreign states are not strained; and (ix) Public Order is not endangered.
Guideline (3) also requires the Board to ensure that the film: (i) 215 is judged in its entirety from the point of view of its overall impact and; (ii) is examined in the light of contem porary standards of the country and the people to whom the film relates.
It will be thus seen that censorship is permitted mainly on social interest specified under Article 19(2) of the Constitution with emphasis on maintenance of values and standards of society.
Therefore, the censorship by prior restraint must necessarily be reasonable that could be saved by the well accepted principles of judicial review.
In K.A. Abbas vs Union of India, ; a Constitution Bench of this court considered important ques tions relating to pre censorship of cinematograph films in relation to the fundamental right of freedom of speech and expression.
K.A. Abbas, a noted Indian journalist and film producer produced a short documentary film called "A tale of Four Cities".
In that film he sought to contrast the self indulgent life of the rich in Metropolitan cities with the squalor and destitution of labouring masses who helped to construct the imposing buildings and complexes utilised by the rich.
The film also goes on to explore the theme of exploitation of women by men, dealing in particular prosti tution.
Abbas applied to the Board of Film Censors for a 'U ' certificate, permitting unrestricted exhibition of the film.
He was informed by the regional officer that the Examining Committee had provisionally concluded that the film should be restricted to adults.
The Revising Committee concurred in this result, whereupon Abbas, after exchanging correspond ence with the Board, appealed to the Central Government.
The Government decided to grant 'U ' certificate provided that the scenes in the red light district were deleted from the film.
Abbas challenged the action of the Board mainly on four issues out of which two did not survive when the Solic itor General stated before the Court that the Government would set on foot legislation to effectuate the policies at the earliest possible date.
The two issues which survived thereupon were: (a) that pre censorship itself cannot be tolerated under the freedom of speech and expression; (b) that even if it were a legitimate restraint on the freedom, it must be exercised on very definite principles which leave no room for arbitrary action
The standards that we set out for our censors must make a 216 substantial allowance in favour of freedom thus leaving a vast area for creative art to interpret life and society with some of its foibles along with what is good.
We must not look upon such human relationships as banned in toto and for ever from human thought and must give scope for talent to put them before society.
The requirements of art and litera ture include within themselves a comprehen sive, view of social life and not only in its ideal form and the line is to be drawn where the average man moral man begins to feel embarassed or disgusted at a naked portrayal of life without the redeeming touch of art or genius of social value.
If the depraved begins to see in these things more than what an average person would, in much the same way as it is wrongly said, a Frenchman sees a woman 's legs in everything, it cannot be helped.
In our scheme of things ideas having redeeming social or artistic value must also have impor tance and protection for their growth." Recently, Sabyasachi Mukharji, J., in Ramesh vs Union of India, which is popularly called "TAMAS" case laid down the standard of judging the effect of the words or expression used in the movie.
The learned Judge quoting with approval of the observation of Vivian Bose, J., as he then was, in the Nagpur High Court in the case of Bhagwati Charun Shukla vs Provincial Govern ment, AIR 1947 Nag 1 (at 676): "That the effect of the words must be judged from the standards of reasonable, strong minded, firm and courageous men, and not those of weak and vacillating.
This in our opinion is the correct approach in judging the effect of exhibition of a film or of reading a Book.
It is the standard of ordinary reasona ble man or as they say in English law, "the man on the top of a Clampham omnibus.
" We affirm and reiterate this principle.
The standard to be applied by the Board or courts for judging the film should be that of an ordinary man of common sense and pru dence and not .that of an out of the ordinary or hypersensi tive man.
We, however, wish to add a word more.
The Censors Board should exercise considerable circumspection on movies affecting the morality or decency of our people and cultural heritage of the country.
The moral values in particular, should not be allowed to be sacrificed in the guise of social change or cultural assimilation.
Our country has had the distinction of giving birth to a galaxy of great sages and thinkers.
The great thinkers and sages through their life and conduct provided principles for people to follow the path of fight conduct.
There have been continuous efforts at rediscovery and reiteration of those principles.
Adi guru Shankaracharya, Ramanujacharya, Madhwacharya, Chaitanya Maha Prabhu, Swami Ram Krishan Paramhansa, Guru Nanak Sant Kabir and Mahatma Gandhi, have all enlightened our path.
If one prefers to go yet further back, he will find "TIRUKKURAL" the ethical code from Tiruv alluvar teaching which is "a general human morality and wisdom.
" Besides, we have the concept of "Dharam" (right eousness in every respect) a unique contribution of Indian civilization to humanity of the world.
These are the bedrock of our civilization and should not be allowed to be shaken by unethical standards.
We do not, however, mean that the Censors should have an orthodox or conservative outlook.
Far from it, they must be responsive to social change and they must go with the current climate.
All we wish to state is that the Censors may display more sensitivity to movies which will have a markedly deleterious effect to lower the moral standards of those who see it.
Krishna Iyer, J., in Rajkapoor vs Laxman, ; in words meaningful expressed similar thought.
The learned Judge said (at 5 17): "The ultimate censorious power over the Censors belongs to the people and by indifference, laxity or abetment, pictures which pollute public morals are liberally certified, the legislation, meant by Parlia ment to protect people 's good morals, may be sabotaged by statutory enemies within." With these prefactory remarks, let us now turn to the reasons which weighed with the High Court to revoke the 'U ' certificate and rule out the film altogether.
The High Court has found fault with the Constitution of the First Revising Committee.
It has held that the Revising Committee was constituted hurriedly and its constitution by "delegate Board Member" was illegal and without authority of law.
The Committee also showed unusual favour to the producer by reviewing the film with hot haste.
In the absence of a First Revising Committee having come into existence as known to law; the High Court said that the constitution of the Second Revising Committee was invalid and inoperative.
We do not think that the High Court was justified in reaching this conclusion.
Under the rules, the Regional Officer shall appoint an 218 Examining Committee to examine the film.
The Rule 22 inter alia, states that after screening the film, the Examining Officer shall within three working days send the recommendations of all the members of the Examining Committee to the Chairman.
Rule 24(1) provides for constitu tion of a Revising Committee.
It states that on receipt of the record referred to in rule 22, the Chairman may, of his own motion or on the request of the applicant, refer the movie to a Revising Committee.
In the instant case, the Chairman did not constitute the first Revising Committee but a member of the Board did.
The question is whether the member of the Board was competent to constitute the Revising Committee.
Our attention was drawn to the Government order dated January 21, 1987 made under sec.
7(B) of the Cinemato graph Act.
The order reads; "No. 803/1/86 F(C) Government of India Ministry of Human Resource Development Department of Culture.
New Delhi, the 21st January, 1987 ORDER In exercise of the powers conferred by Sec.
7B of the Cinamatograph Act, 1952 (37 of 1952) (hereinafter referred to as the said Act), the Central Government hereby directs that any power, authority or jurisdiction exercisable by the Board of film, Certifica tion (hereinafter referred to as the Board) in relation to matters specified in sec.4, sub secs (3) and (4) of sec.5, sec.5 A and sec.7C of the said Act shall also be exercisable subject to the condition given below by the following members of the Board at the Regional Office indicated against each, with immediate effect and until further orders: 1.
Shri Samik Banerjee Calcutta 2.
Ms. Maithreyi Ramadhurai Madras 3.
Dr. B.K. Chandrashekar Bangalore XXX XXXX XXX XXXX" This order clearly states that the power of the Board shall also be exercisable by the specified members within their regional office.
For 219 Madras region Ms. Maithrayi Ramadhurai has been constituted to exercise such powers.
It cannot be contended that the Central Government has no power to delegate the powers or to issue the said order.
7(B) empowers the Central Government to issue general or special order directing that any power, authority or jurisdiction exercisable by the Board under the Act shall be exercisable also by the Chairman or any other member of the Board.
The section further provides that anything done or action taken by the Chairman or other member specified in the order shall be deemed to be a thing done or action taken by the Board.
From the provisions of sec.7B read with the Government order dated January 21, 1987, it becomes clear that the constitution of the First Revising Committee by the member at the Madras Regional Office is not vulnerable to any attack.
It is legally justified and unassailable.
The conclusion to the contrary reached by the High Court is apparently unwarranted.
We also do not find any justification for the observa tion of the High Court that there was unusual favour shown to the producer by the First Revising Committee in reviewing the film.
It is true that the film was reviewed within 2 3 hours of the presentation of the application.
But there is no reason to attribute motives either to members of the Committee or to the producer.
In matters of certification of films, it is necessary to take prompt action by the respec tive authorities.
The producer who has invested a large capital should not be made to wait needlessly.
He has a statutory right to have the validity of ,the film determined in accordance with law.
It would be, therefore, proper and indeed appreciative if the film is reviewed as soon as it is submitted.
There are two other side issues which may be disposed of at this stage.
The scene with song No. 2 in reel No. 3 and the comments by the heroine of looking at the photo of Dr. Ambedkar, have come under serious criticism.
It is said that the song has the effect of spreading 'Kulachar ' which is 'Poisonous message ' to the depressed classes not to educate their children.
The complaint, if true, is serious.
We, therefore, gave our anxious consideration to the grievance.
We, as did the High Court, viewed the movie.
The cobbler sings the song in question with his grandson who is eager to go to school.
The song contains references to Kamaraj, Anna and MGR who without even college education became Chief Ministers.
The cobbler asks the grandson: "What are you going to achieve by education? and don 't forsake the profes sion you know and you can educate yourself as a cobbler.
" 220 While these and other exchanges are going on between the cobbler and grandson, the heroine comes and insists that the boy should go to school.
They agree to her suggestion with "Vanakkam, Vanakkam".
The song thus ends with a happy note and the cobbler agrees to send his grandson to school.
It is true as pointed out by counsel for the respondents that one or two references in the song are not palatable, but we should not read too much into that writing.
It is not proper to form an opinion by dwelling upon stray sentences or isolated passages disgregarding the main theme.
What is significant to note is that the cobbler ultimately does not insist that his grandson should continue the family pursuits.
He accepts the suggestion made by the heroine.
It is, therefore, wrong to conclude that the song was intended to convey poisonous message against the inter ests of depressed classes.
The criticism on the alleged comments on Dr. Ambedkar is equally unsustainable.
The confusion perhaps is due to the pronounced accent of an English word in the course of Tamil conversation.
The matter arises in this way: Sastry shows the photograph of Dr. Ambedkar to heroine and enquires whether she likes it.
Then she makes certain comments.
According to the High Court, she states, "Dr. Ambedkar worked for the poor.
Not for 'par '.
If she states like that, it is certainly objectionable since Dr. Ambedkar did everything to have an egalitarian society.
But while viewing the film, we could not hear any such word used by the heroine.
On the other hand, we distinctly noted her saying, "Dr. Ambedkar worked for the poor, Not for power. "
This being the remark there is no basis for the criticism of the High Court.
The last complaint and really the nub of the case for the respondent is about the reel No. 14 covering the court scene where Karuppayee and Sastry are prosecuted for offence of obtaining a false caste certificate.
The reel No. 14 contains almost a dialogue between the prosecution lawyer and Karuppayee.
She criticises the reservation policy of the Government.
She states that during the British regime, the people enjoyed educational freedom, and job opportunities which were based on merit criteria and not vote caste in a particular constituency.
Then the prosecution lawyer puts a question "why do you regret this Madam? Was not 'Bharat Matha ' under shackles then?" She replies: "You are right.
Now "Bharat Matha" is under animals ' hands.
" On a further question from the prosecutor she explains that her reference to 'animals ' hands is only to those who incite caste, language and communal fanaticism, thus confusing people and making it their profession.
She also states that it is the Government and its laws that have made her and her father to tell a lie.
The presiding Judge interrupts with a question: "What is wrong in the Government approach? Can you elaborate?" She replies: "That it is wrong not to give credence to her merit and evaluate the same on the basis of her caste and such evaluation would put a bar on the progress." She goes on to explain "Your laws are the barri ers Sir.
You have made propaganda in nook and corner stating "Be an Indian, Be an Indian".
And if I proudly say I am an Indian then the Government divides saying 'no, no, no, . .
You are a Brahmin, you are Christian, you are a Muslim.
It is the Government that divides.
" Then she puts a question to herself: "What is the meaning of "Be an Indian?" She explains that it must be without caste, creed and commu nal considerations, from Kashmir to Kanyakumari, the country must be one.
She then blames the Government with these words: "The Government in dealing with all has no one face.
Take any application form they want to know your caste and religion.
When all are Indians where is the necessity for this question.
You have divided the people according to caste.
Then if you reel off on "National integration" will not the public laugh.
" As to the reservation policy to those who are backward she says: "On Gods name, I have no objection in providing all concessions to those who are backward.
The list of those belonging to forward sections and backward sections could be prepared on the basis of economic considerations.
And those below a specified limit of income be included in the back ward list.
" How did the High Court look at it? On the remark of heroine as to the situations that existed during British administration, the High Court observed thus: "It is preposterous and offensive to claim that education was independent when India was under British rule and that, after independ ence it is not there.
" The High Court also said: "That any denigration of Rule of law would never 222 bring orderly society.
To preach that it is only law that prompted them to utter falsehood and in its absence they would not have done it is a wrong way presenting a view point.
" As to the allegations that 'Bharat Matha ' is now in the hands of politicians, who are instigating the masses on the basis of caste and language, etc., the High Court remarked: "If this sort of decrying India for being an independent nation is to be projected in films repeatedly, then in course of time, citizens will loose faith in the integrity and sovereignty of India.
With this sort of glori fication made, how could it be claimed that the film stands for national integration.
That was why one Member rightly said that it is a hollow claim.
Hence Guideline 2(vi) and (vii) are contravened.
" On the total impact of the film, the High Court observed: "That certain peculiar factors will have to be taken into account because of guidelines 3(i) and 3(ii).
This film is in Tamil.
It deals with reservations now extended to large sections of people on a particular basis, and who have suffered for Centuries, and at a time when they have not attained equality and when their valuable rights which are secured under the Constitution is attempt ed to be taken away, they get agitated.
This film taken in Tamil for Tamil population on being screened in Tamil Nadu, will certainly be viewed in the background of what had hap pened in Tamil Nadu during the preceding four decades, and the reactions are bound to be volatile.
" We find it difficult to appreciate the observations of the High Court.
We fail to understand how the expression in the film with criticism of reservation policy or praising the colonial rule will affect the security of the State of sovereignty and integrity of India.
There is no utterance in the film threatening to overthrow the Government by unlawful or unconstitutional means.
There is no talk for secession either.
Nor there is any suggestion for impairing the inte gration of the country.
All that the film seems to suggest is that the existing method of reservation on the basis of caste is bad and reservation on the basis of economic back wardness is better.
The film also deprecates exploitation of people on caste considerations.
This is the range and rigor of the film.
The High Court, however, was of opinion that public reaction to the film, which seeks to change the system of reservation is bound to be volatile.
The HIgh Court has also stated that people of Tamil Nadu who have suffered for centuries will not allow themselves to be deprived of the benefits extended to them on a particular basis.
It seems to us that the reasoning of the High Court runs a foul of the democratic principles to which we have pledged ourselves in the Constitution.
In democracy it is not necessary that every one should sing the same song.
Freedom of expression is the rule and it is generally taken for granted.
Every one has a fundamental right to form his own opinion on any issue of general concern.
He can form and inform by any legitimate means.
The democracy is a Government by the people via open discussion.
The democratic form of government itself demands its citizens an active and intelligent participation in the affairs of the community.
The public discussion with people participation is a basic feature and a rational process of democracy which distinguishes it from all other forms of government.
The democracy can neither work nor prosper unless people go out to share their views.
The truth is that public discussion on issues relating to administration has positive value.
When they ignore it, they go inside themselves and find out what is there.
They elaborate their prejudice instead of increasing their knowledge.
In Maneka Gandhi vs Union of India, [1978] 2 SCR 621 Bhagwati J., observed at 696: "Democracy is based essentially on free debate and open discussion, for that is the only corrective of Government action in a democratic set up.
If democracy means government of the people by the people.
it is obvious that every citizen must be entitled to participate in the democratic process and in order to enable him to intelligently exercise his right of making a choice, free and general discussion of public matters is absolutely essential." 224 The learned judge in Naraindas vs State of Madhya Pradesh,[1974] 3 SCR 624 while dealing with the power of the State to select text books for obligatory use by students said at 650: "It is our firm belief, nay, a con viction which constitutes one of the basic values of a free society to which we are wedded under our Constitution, that there must be freedom not only for the thought that we cherish, but also for the thought that we hate.
As pointed out by Mr. Justice Holmes in Abramson vs United States, ; "The ultimate good desired is better reached by free trade in ideas the best test of truth is the power of the thought to get itself accept ed in the competition of the market.
" There must be freedom of thought and the mind must be ready to receive new ideas, to critically analyse and examine them and to accept those which are found to stand the test of scrutiny and to reject the rest.
" In Sakal vs Union of India, ; at 866, Mudholkar, J. said: "This Court must be ever vigilent in guarding perhaps the most precious of all the freedoms guaranteed by our Constitution.
The reason for this is obvious.
The freedom of speech and expression of opinion is of para mount importance under a democratic Constitu tion which envisages changes in the composi tion of legislatures and governments and must be preserved."
Movie is the legitimate and the most important medium in which issues of general concern can be treated.
The producer may project his own messages which the others may not ap prove of.
But he has a right to "think out" and put the counter appeals to reason.
It is a part of a democratic give and take to which no one could complain.
The State cannot prevent open discussion and open expression, however, hateful to its policies.
As Professor Fraund puts it: "The State may not punish open talk, however, hateful, not for hypocritical reason that Hyde Parks are a safety valve, but because a bit of sense may be salvaged from the odious by minds striving to be rational, and this precious bit will enter into the amalgam which we forge." (Paul A. Freund On Understanding the Supreme Court 26 (1950).
"When men differ in opinion, both sides ought equally to have 225 the advantage of being heard by the public." (Benjamin Franklin).
If one is allowed to say that policy of the government is good, another is with equal freedom entitled to say that it is bad.
If one is allowed to support the governmental scheme, the other could as well say, that he will not support it.
The different views are allowed to be expressed by proponents and opponents not because they are correct, or valid but because there is freedom in this country for expressing even differing views on any issue.
Alexander Meiklejohn perhaps the foremost American philosopher of freedom of expression, in his wise little study neatly explains: "When men govern themselves, it is they and no one else who must pass judgment upon unwisdom and unfairness and danger.
And that means that unwise ideas must have a hearing as well as wise ones, unfair as well as fair, dangerous as well as safe, an Ameri can as well . American . .
If then, on any occasion in the United States it is allowable, in that situation, to say that the Constitution is a good document it is equally allowable, in that situation, to say that the Constitution is a bad document.
If a public building may be used in which to say, in time of war, that the war is justified, then the same building may be used in which to say that it is not justified.
If it be publicly argued that conscription for armed service is moral and necessary, it may likewise be publicly argued that it is immoral and unnecessary.
If it may be said that American political insti tutions are superior to those of England or Russia or German, it may with equal freedom, be said that those of England or Russia or Germany are superiors to ours.
These conflict ing views may be expressed, must be expressed, not because they are valid, but because they are relevant . .
To be afraid of ideas, any idea, is to be unfit for self government." (Political Freedom (1960) at 27).
He argued, if we may say so correctly, that the guaran tees of freedom of speech and of the press are measures adopted by the people as the ultimate rulers in order to retain control over the Government, the people 's legislative and executive agents.
Brandies, J., in Whitney vs California, ; ,375 8 (1927) propounded probably the most attractive free speech theory: 226 " . . that the greatest menace to freedom is an inert people; that public dis cussion is a political duty; . .It is hazardous to discourage thought, hope and imagination; that the path of safety lies in the opportunity to discuss freely supposed grievances and proposed remedies; and that the fitting remedy for evil counsels is good ones.
" What Archibald Cox said in his article though on "First Amendment" is equally rele vant here: "Some propositions seem true or false beyond rational debate.
Some false and harm ful, political and religious doctrine gain wide public acceptance.
Adolf Hitler 's brutal theory of a 'master race ' is sufficient exam ple.
The liberty cannot be denied to some ideas and saved for others.
The reason is plain enough: no man, no committee, and surely no government, has the infinite wisdom and disinterestedness accurately and unselfishly to separate what is true from what is debata ble, and both from what is false.
To license one to impose his truth upon dessenters is to give the same licence to all others who have, but fear to lose, power.
The judgment that the risks of suppression are greater than the harm done by bad ideas rests upon faith in the ultimate good sense and decency of free peo ple." (Society Vol.
24 p. 8 No. 1 November/December 1986).
The problem of defining the area of freedom of expres sion when it appears to conflict with the various social interests enumerated under Article 19(2) may briefly be touched upon here.
There does indeed have to be a compromise between the interest of freedom of expression and social interests.
But we cannot simply balance the two interests as if they are of equal weight.
Our commitment to freedom of expression demands that it cannot be suppressed unless the situations created by allowing the freedom are pressing and the community interest is endangered.
The anticipated danger should not be remote, conjectural or far fetched.
It should have proximate and direct nexus with the expression.
The expression of thought should be intrinsically dangerous to the public interest.
227 Our remarkable faith in the freedom of speech and ex pression could be seen even from decisions earlier to our Constitution.
There the accused was convicted under sec.124(A) of Penal Code for making a speech recommending 'Bolshevik ' form of Government to re place the then existing form of Government in Calcutta.
While setting aside the conviction and acquitting the ac cused, Lord Williams, J., who delivered the judgment ob served (at 637): "All that the speakers did was to encourage the youngmen, whom he was addressng, to join the Bengal Youth League and to carry on a propaganda for the purpose of inducing as large a number of people in India as possible to become supporters of the idea of communism as represented by the present Bolshevik system in Russia.
It is really absurb to say that speeches of this kind amount to sedition.
If such were the case, then every argument against the present form of Government and in favour of some other form of Government might be allowed to lead to hatred of the Government, and it might be suggested that such ideas brought the Govern ment into contempt.
To suggest some other form of Government is not necessarily to bring the present Government into hatred or contempt.
" To the same effect is the observation by the Bombay High Court in Manohar vs Government of Bombay, AIR 1950 BOM 210.
There the writer of an article in a newspaper was convicted for an offence under the Press (Emergency Powers) Act, 1931, for incitement to violence.
The writer had suggested the people to follow the example of China by rising against Anglo American Imperialism and their agents.
He had also suggested his readers to pursue the path of violence, as the Chinese people did, in order that Anglo American Imperialism should be driven out of this country.
Chagla C.J., while quashing the conviction said (at 2 13): "It is true that the article does state that the working class and the coiling masses can get hold of power through the path of revolution alone.
The revolution preached is not necessarily a violent revolution.
228 XXX XXX XXX XXX As the writer has not stated in this article that the toiling masses should take up arms and fight for their rights and thus achieve a revolution we refuse to read this expression as inciting the masses to violent methods.
" In Niharendu Dutt Majumdar vs Emperor, AIR 1942 FC 23, the Federal Court examined the effects of a vulgar and abusive outburst against the Government made by the accused for which he was convicted under Rule 34 of the Defence of India Rules.
Gwyer, C.J., while acquitting the person commented more boldly (at 27): "There is an English saying that hard words break no bones; and the wisdom of the common law has long refused to regard an actionable any words which, though strictly and liberally defamatory, would be regarded by all reasonable men as no more than mere vulgar abuse.
XXX XXX XXX XXX XXX The speech now before us is full of them.
But we cannot regard the speech, taken as a whole as inciting those who heard it, even though they cried "shame shame" at intervals, to attempt by violence or by public disorder to subvert the Government for the time being established by law in Bengal or elsewhere in India.
That the appellant expressed his opin ion about that system of Government is true, but he was entitled to do so,; and his reference to it were, we might almost say, both common place and in common form, and un likely to cause any Government in India a moments uneasyness.
His more violent outburst were directed against the then Ministry in Bengal and against the Governor in Bengal in his political capacity but we do not feel able to say that his speech whatever may be thought of the form in which it was expressed, exceed ed the legal limits of comment or criticism."
" Even the European Court 's approach in protecting the freedom of expression is not different although they have the extensive list of circumstances for limiting the free dom.
Article 10 of the European Convention of Human Rights and Fundamental Freedom provides: 229 "(1) Every one has the right to freedom of expression.
(2) The exercise of these freedoms, since it carries with it duties and responsibilities, may be subject to such formalities, condi tions, restrictions or penalties as are pre scribed by law and are necessary in a demo cratic society in the interests of national security, territorial integrity or public safety, for the prevention of health or mor als, for the protection of the reputation or rights of others, for preventing the disclo sure of information received in confidence, or for maintaining the authority and impartiality of the judiciary.
However, the European Court in Handyside vs United Kingdom, [1976] EHRR/737 observed at 754; "The court 's supervisory functions oblige it to pay the utmost attention to the principles characterising a 'democratic socie ty '.
Freedom of expression constitutes one of the essential foundations of such a society, one of the basic conditions for its progress and for the development of every man.
Subject to Article 10(2), it is applicable not only to 'information ' or 'ideas ' that are favourably received or regarded as inoffensive or as a matter of indifference, but also to those that offend shock or disturb the State or any sector of the population.
Such are the demands of that pluralism, tolerance and broadminded ness without which there is no 'democratic society '.
This means, amongst other things, that every 'formality ', 'condition ', 'restric tion ' or 'penalty ' imposed in this sphere must be proportionate to the legitimate aim pur sued.
" This takes us to the validity of the plea put forward by the Tamil Nadu Government.
In the affidavit filed on behalf of the State Government, it is alleged that some organisa tions like the Tamil Nadu Scheduled Castes/Scheduled Tribes People 's Protection Committee, Dr. Ambedkar People 's Move ment, the Republican Party of India have been agitating that the film should be banned as it hurt the sentiments of people belonging to Scheduled Caste/Scheduled Tribes.
It is stated that the General Secretary of the Republican Party of India has warned that his party would not hesitate to damage the cinema 230 theatres which screen the film.
It is further alleged that there were some group meetings by Republican .Party members and Dr. Ambedkar People 's Movement with their demand for banning the film.
With these averments it was contended for the State that the exhibition of the film.
will create very serious law and order problem in the State.
We are amused yet troubled by the stand taken by the State Government with regard to the film which has received the National Award.
We want to put the anguished question, what good is the protection of freedom of expression if the State does not take care to protect it? If the film is unobjectionable and cannot constitutionally be restricted under Article 19(2), freedom of expression cannot be sup pressed on account of threat of demonstration and proces sions or threats of violence.
That would tentamount to negation of the rule of law and a surrender to black mail and intimidation.
It is the duty of the State to protect the freedom of expression since it is a liberty guaranteed against the State.
The State cannot plead its inability to handle the hostile audience problem.
It is its obligatory duty to prevent it and protect the freedom of expression.
In this case, two Revesing Committees have approved the film.
The members thereof come from different walks of life with variegated experiences.
They represent the cross sec tion of the community.
They have judged the film in the light of the objectives of the Act and the guidelines pro vided for the purpose.
We do not think that there is any thing wrong or contrary to the Constitution in approving the film for public exhibition.
The producer or as a matter of fact any other person has a right to draw attention of the Government and people that the existing method of reserva tion in education institutions overlooks merits.
He has a right to state that reservation could be made on the basis of economic backwardness to the benefit of all sections of community.
Whether this view is right or wrong is another matter altogether and at any rate we are not concerned with its correctness or usefulness to the people.
We are only concerned whether such a view could be advocated in a film.
To say that one should not be permitted to advocate that view goes against the first principle of our democracy.
We end here as we began on this topic.
Freedom of ex pression which is legitimate and constitutionally protected, cannot be held to ransom, by an intolerant group of people.
The fundamental freedom 231 under Article 19(1)(a) can be reasonably restricted only for the purposes mentioned in Articles 19(2) and the restriction must be justified on the anvil of necessity and not the quicks and of convenience or expediency.
Open criticism of Government policies and operations is not a ground for restricting expression.
We must practice tolerance to the views of others.
Intolerance is as much dangerous to democracy as to the person himself.
In the result, we allow these appeals, reverse the judgment of the High Court and dismiss the writ petitions of the respondents.
In the circumstances of the case, however, we make no order as to costs.
Y.L. Appeals allowed.
| IN-Abs | The appellant, section Rangarajan is a film producer.
He produced a Tamil film "Ore Oru Gramathile" and applied for certificate for exhibition of the film.
The examination committee upon seeing the film refused to grant the Certifi cate but on a reference being made to the 2nd Revising Committee for review and recommendation, the Committee by a majority of 5:4 recommended the grant of a 'U ' certificate subject to deletion of certain scenes.
On 7.12.87 'U ' certificate was granted which was chal lenged in the High Court by means of writ petitions.
It was contended before the High Court that the film is treated in an irresponsible manner, the reservation policy of the Govt. has been projected in a biased manner and the so called appeal in the film that "India is one" is a hollow appeal which touches caste sensitivity of the Brahmin forward caste.
It was also asserted that the film would create law and order problem in Tamil Nadu.
The Writ Petitions were dismissed by the Single Judge but upon appeal they were allowed and the 'U ' certificate issued to the appellant producer was revoked.
These two appeals, one by the producer of the film and the other by the Union of India have been filed by 205 special leave of challenging the decision of the High Court.
The principal contentions raised on behalf of the appel lants were: (i) that the fundamental right of freedom of free expression guaranteed under the Constitution covers even the medium of movies; that the opinion on the film ought not to be rested on the isolated passages disregarding the main theme and its message; (ii) That the Court should not concern itself with the correctness or legality of the views expressed in the film and the Court cannot limit the expression on any general issue even if it is controversial and that the writings of the film must be considered in a free and liberal manner in the light of the freedom of expression guaranteed under the Constitution.
It was assert ed that the theme of the film is that reservation could be on the basis of economic backwardness instead of caste.
Counsel for the Respondents was critical about the manner in which the reservation policy of the Govt.
has been condemned and the events and the characters portrayed in the film, as they are depicted in a biased manner and reaction to the film in Tamil Nadu is bound to be volatile and likely to create law and order problem.
Allowing the appeals, this Court, HELD: The motion pictures were originally considered as a form of amusement to be allowed to titillate but not to arouse.
They were treated as mere entertainment and not an art or a means of expression.
Movie motivates thought and action and assures a high degree of attention and retention.
It makes its impact simultaneously arousing the visual and aural senses.
The movie had unique capacity to disturb and arouse feelings.
It has as much potential for evil as it was for good.
It has an equal potential to instil or cultivate violent or good behaviour.
[211D E; 212G; 213D] Censorship by prior restraint is, therefore, not only desirable but also necessary.
[213E] The Censors Board should exercise considerable circum spection on movies affecting the morality or decency of our people and cultural heritage of the country.
The moral values in particular, should not be allowed to be sacrificed in the guise of social change or cultural assimilation.
[216G H] The Censors should be responsive to social change and they must go with the current climate.
The Censors may display more sensitivity 206 to movies which will have a markedly deleterious effect to lower the moral standards of those who see it.
[217C D] If the film is unobjectionable and cannot constitution ally be restricted under Article 19(2), freedom of expres sion cannot be suppressed on account of threat of demonstra tion and processions or threats of violence.
That would tantamount to negation of the rule of law and a surrender to black mail and intimidation.
It is the duty of the State to protect the freedom of expression since it is a liberty guaranteed against the State.
The State cannot plead its inability to handle the hostile audience problem.
It is its obligatory duty to prevent it and protect the freedom of expression.
[230C D] The Revising Committees have approved the film.
The members thereof come from different walks of life with variegated experiences.
They represent the cross section of the community.
They have judged the film in the light of the objectives of the Act and the guidelines provided for the purpose.
There is nothing wrong or contrary to the Constitu tion in approving the film for public exhibition.
[230E F] The framework of the Indian Constitution differs from the First Amendment to the U.S. Constitution.
Article 19(1)(a) guarantees to all citizens the right to freedom of speech and expression.
The freedom of the expression means the right to express one 's opinion by words of mouth, writ ing, printing, picture or in any other manner, it would thus include the freedom of communication and the right to propa gate or publish opinion.
The communication of ideas could be made through any medium, newspaper, magazine or movie.
But this right is subject to reasonable restrictions on grounds set out under Article 19(2).
Reasonable limitations can be put in the interest of sovereignty and integrity of India, the security of the State, friendly relations with foreign States, public order, decency or morality or in relation to contempt of court, defamation or incitement to an offence.
[212B D] In matters of certification of films, it is necessary to take prompt action by the respective authorities.
The pro ducer who has invested a large capital should not be made to wait needlessly.
He has a statutory right to have the valid ity of the film determined in accordance with law.
It would be, therefore, proper and indeed appreciative if the film is reviewed as soon as it is submitted.
It is not proper to form an opinion by dwelling upon stray sentences or isolated passages disregarding the main theme.
[219E; 220B C] 207 Freedom of expression is the rule and it is generally taken for granted.
Every one has a fundamental right to form his own opinion on any issue of general concern.
He can form and inform by any legitimate means.
[223C] Democracy is Government by the people via open discus sion.
The democratic form of government itself demands its citizens an active and intelligent participation is a basic features and a rational process of democracy which distin guishes it from all other forms of govt.
Public discussion on issues relating to administration had positive value.
[223D E] Our commitment to freedom of expression demands that it cannot be suppressed unless the situations created by allow ing the freedom are pressing and the community interest is endangered.
The anticipated danger should not be remote, conjectural or far fetched.
It should have proximate and direct nexus with the expression.
The expression of thought should be intrinsically dangerous to the public interests.
In other words, the expression should be inseparably locked up with the action contemplated like the equivalent of a "spark in a power keg".
[226G H] It is difficult to understand how the expression in the film with criticism of reservation policy or praising the colonial rule will affect the security of the State or sovereignty and integrity of India.
There is no utterance in the film threatening to overthrow the Govt.
by unlawful or unconstitutional means.
There is no talk of secession either nor is there any suggestion for impairing the integration of the country.
The film seems to suggest that the existing method of reservation on the basis of caste is bad and reservation on the basis of economic backwardness is better.
The film also deprecates exploitation of people on caste considerations.
[222G H; 223A] The fundamental freedom under article 19(1)(a) can be reasonably restricted only for the purposes mentioned in article 19(2) and the restriction must be justified on the anvil of necessity and not the quicks and of convenience and expediency.
Open criticism of Government policies and opera tions is not a ground for restricting expression.
We must practice tolerance to the views of others.
Intolerance is as much dangerous to democracy as to the person himself.
[230H; 231A B] The Court allowed the appeals, set aside the judgment of the High Court and dismissed the writ petitions.
[231B C] 208 Mutual Film Corporation vs Industrial Commission, (1915) referred to, Burstyn vs Wilson, ; referred to, Schenek vs United States, ; (1919) referred to, Santosh Singh vs Delhi Administration, ; followed, K.A. Abbas vs Union of India, ; referred to, Ramesh vs Union of India, ; ; Bhagwat Charan Shukla vs Provincial Government, AIR 1947 Nag 1 at 676, Rajkappoor vs Laxman, ; , Maneka Gandhi vs Union of India, [1978] 2 SCR 621; Naraindas vs State of Madhya Pradesh, ; ; Sakal vs Union of India, ; , Whitney vs California, [274] U.S. 357, 375 378, 1927; Manohar vs Govt.
of Bombay, AIR 1950 Bombay 210; Niharender Dutt Majumdar vs Emperor, AIR 1942 FC 22 and Handyside vs United Kingdom, [1975I EHRR/737 at p. 754 referred to.
|
has indisputably been done pursuant to an order of the Court of law and the party who has done the work must be paid its remuneration.
[400C] & CIVIL APPELLATE.JURISDICTION: Civil Appeal No. 2121 of 1989.
385 From the Judgment and Order dated 4.6.1987 of the Jammu and Kashmir High Court in Application No. 180 of 1987.
Altar Ahmed and S.K. Bhattacharya for the Appellant.
S.N. Kacker, E.C. Agarwala and Ms. Purnima Bhat for the Respondent.
The following Judgments of the Court were delivered: SHARMA, J.
The present respondent who is an approved contractor of the Jammu & Kashmir State Forest Corporation (appellant before us) filed an application under sections 8, 11 and 20 of the Jammu & Kashmir Arbitration Act, 2002 (Smvt.), on the original side of the High Court of Jammu & Kashmir praying for a direction to the Corporation defendant to file an agreement between them fully described therein, and to refer the dispute mentioned in the application to an arbi trator.
Jammu & Kashmir Arbitration Act is similar to the , enacted in identical language.
The Corporation objected, pleading inter alia that the entire work allotted to the plaintiff contractor under the agree ment had been completed by him without any dispute, and the present claim of the plaintiff is not covered by the agree ment in question or its arbitration clause A learned single Judge of the High Court allowed the prayer for reference to the dispute described in the respondent 's application, and further granted an interim relief.
This judgment is under challenge before this Court by the defendant Corporation.
Special leave is granted.
As stated in the affidavit of the plaintiff contrac tor, the Corporation was created under the Jammu & Kashmir Forest Corporation Act, 1978 and its main functions are: (i) to undertake research programmes and to render technical advice to the State Government on the matters relating to forestry, (ii) to manage, maintain and develop forests transferred or entrusted to it by the Government, and (iii) to undertake removal and disposal of trees and exploitation of forest resources entrusted to it by the Government.
In February 1986 the Corporation invited tenders for extraction of timber from an area described as Compartment No. 59 Marwa which included the work of felling and removal of trees.
The plaintiff submitted his tender and was ultimately granted the work contract with reference to 4 lac cft.
standing volume timber.
Subsequently in 1987 he was also entrusted with an additional work contract for a further quantity of 2 lac cft.
in the said Compartment 59 Marwa.
Although a deci sion by the authorities had 386 been taken for extraction of a total standing volume of 10,08,000 cft.
, the plaintiff was entrusted with the extrac tion work of only 6 lac cft.
Thus 4,06,000 cft.
of standing volume remained in the area to be extracted later.
According to his case the plaintiff was entitled to get this addition al work in accordance with the practice prevalent in the Corporation and assurances given to him.
It was alleged that since the Managing Director of the Corporation was not agreeable to allow this additional work, the plaintiff approached the Chief Minister of the State who asked the Managing Director to allot him the remaining work.
The Manging Director first agreed to issue necessary orders but later refused to carry out the Chief Minister 's direction which necessitated the filing of the application before the High Court.
The Corporation denied any such practice and refuted the allegation about any assurance given on its behalf as also the statement about the Managing Director agreeing at one stage to allot the additional work in ques tion on the intervention of the Chief Minister.
It was further stated by the Corporation that a large amount of extracted timber was lying in the area and had to be re moved.
Admittedly the timber had to be transported to a distant place through difficult terrain (as has been specif ically mentioned by the contractor himself) and was, there fore, likely to take a considerable time.
The Corporation said that a decision had been taken not to work the Compart ment further till the entire timber already extracted was removed to its destination, and there was, therefore, no question of entrusting the remaining work to anybody for the present.
A decision as to how and when the additional trees will be felled and the timber removed is for the Corporation to make and it is under no obligation to the contractor in this regard.
So far as the work allotted to the contractor under the agreement is concerned, it is already complete without giving rise to any difference between the parties.
Reliance has been placed on behalf of the plaintiff before us on paragraph 41 of the agreement under which the work contract in respect to 6 lac cft.
was obtained by him, and which says that the terms and conditions of the tender notice issued by the Corporation will be terms and condi tions of the agreement.
The 15th paragraph of the tender notice reads thus: 15.
Extension for the additional volume available in the coupe will not be claimed as matter of right.
But may be consid ered by the Management where the achievement is 100%.
" 387 The arbitration clause being Clause 42 of the agreement states thus: "42.
Any dispute, difference or question which may at any time arise between the parties in respect of the work to be executed by the second party under this agreement shall be referred for arbitration to the Managing Director, J & K. State Forest Corporation, whose decision shall be final and binding on both the parties.
" As it appears from the plaintiff 's application before the High Court, his claim was rounded on "procedure", "practice," "custom", and "assurances extended to the peti tioner to that effect by the respondent Corporation through its functionaries from time to time." Although it has been contended before us that since paragraph 15 of the tender notice refers to additional volume of work to be allotted in the future, the agreement between the parties including the arbitration clause must be interpreted to include within its sweep the present claim of the respondent to the additional work of extraction, the case for reference pressed before the High Court rested mainly on the alleged "practice" and "assurances".
The High Court has emphasized in its judgment the fact that the trees in question had already been marked for extraction and, therefore, have to be felled "one day or the other" and deprecated the attitude of the Corporation in the following words: "The contention of the learned connsel for the respondents is that the respondents do not want the remaining timber to be extracted presently for unknown reasons and as such the corporation cannot be compelled for grant of sanction for extraction of remaining marked timber.
1 think the attitude of the respondent corporation is most derogatory to the facts and circumstances of the case when the peti tioner is prepared to accept all sorts of offers.
It cannot be denied that the remaining timber is to be extracted one day or the other and simply to put the petitioner to loss would not be justifiable in any manner.
" There was absolutely no justification for the Court to have commented as above when it was leaving the matter to be decided by the arbitrator.
A court, while considering the question whether an alleged dispute between the parties has to be referred for arbitration or not should refrain from expressing its opinion on the merits of the dispute which may embarrass the arbitrator.
However, the main issue before us is whether the dispute mentioned in the contractor 's application 388 could have been referred to arbitration at all.
If the foundation of the claim of the respondent be any alleged assurance or custom or practice, it cannot be said that such claim arises out of the written agreement between the parties; and so the prayer for reference has to be rejected.
If the case pleaded is true, the appropriate forum for the respondent will be a court of law directly granting the relief in an appropriate legal proceeding.
It was, however, argued on behalf of the respondent before us that in view of paragraph 15 of the tender notice, quoted earlier, which must be treated as a part of the agreement, the respondent has a right to be considered for allottment of the additional work since his past performance has been excellent.
We are afraid, the impugned judgment of the High Court cannot be defended on this basis and the prayer of the respondent for reference of the dispute, as mentioned in his application before the High Court, cannot be granted under the 15th paragraph of the tender notice aforementioned.
The language of the said term is explicit in declaring that the contractor would not be allowed to claim as a matter of right additional volume of work.
His right extends only to a consideration of his case by the management when the ques tion of allotment of additional work is taken up.
But by the application filed before the High Court the respondent did not ask for reference of a dispute as to whether he is entitled to consideration or not; the prayer is for refer ence of a higher claim of immediately getting the additional work, and this prayer has been allowed.
This issue cannot be said to have any connection with the 15th term of the tender notice or any other provision thereof or of the agreement.
A reference to the decision of this Court in Seth Thawardas Perumal vs The Union of India, [1955,] 2 SCR 48, will be helpful.
The appellant, a contractor, entered into a con tract with the Dominion of India for the supply of bricks.
A Clause in the contract required, " . . all questions and disputes relating to the meaning of the specification and in structions hereinbefore mentioned and as to quality of materials or as to any other ques tion, claim, right, matter or thing whatsoever in any way arising out of or relating to the contract, specification, instructions, orders or these conditions, or otherwise concerning the supplies whether arising during the progress or delivery of after the completion of abandonment thereof . " emphasis added) to be referred to arbitration.
It was agreed that the bricks would be 389 prepared in lots and it would be the duty of the Government to remove the bricks as soon as they were ready for deliv ery.
In order to keep to the schedule for delivery, the contractor had to prepare 'kateha ' bricks and place them in his kilns for baking, and while this lot was baking he had to prepare another lot of 'kateha ' bricks ready to take the place of the baked bricks as soon as the Government removed them.
At a certain stage the Government department failed to remove the baked bricks in time which caused a jam in the kilns and prevented the contractor from placing a fresh stock of unburnt bricks in the kilns.
Consequently the stock pile of kateha bricks kept on mounting up when the rains set in, destroying 88 lacs of katcha bricks.
The contractor claimed the loss arising out of the neglect of the Govern ment department in performing its duty in time.
The Govern ment denied the claim and a reference of the dispute was made to the arbitrator designated in the agreement who made an award and filed it in court.
On the Constitution coming into force the Dominion of India was replaced by the Union of India as the defendant in the case and it was contended on its behalf that the katcha bricks did not form part of the contract and that the loss that was occasioned by the damage to them was too remote to be covered by the arbitra tion clause.
The second ground of defence was based on Clause 6 of the agreement which absolved the Government from any liability for a damage to unburnt bricks.
The stand of the contractor was that the chief reason of the destruction of the katcha bricks was the failure of the department to lift the monthly quota of the bricks in accordance with the written agreement; and, Clause 6 of the agreement referred only to such cases where the department had no control, and would not cover a case of its own default.
The Supreme Court did not agree with him and set aside the award, inter alia observing, that if he chose to contract in the terms includ ing Clause 6 of the written agreement he could not go back on his agreement when it did not suit him to abide by it.
In the case before us, the plaintiff contractor is trying to connect the allotment of future work by a reference to paragraph 15 of the tender notice which specifically says that additional work could not be claimed as a matter of right.
The High Court, therefore, was not correct in inter preting the aforementioned Clause 15 in the following words: "There was clause 15 in the tender notice according to which extension of addi tional volume available in the coupe would not have to be claimed by the contractor as a matter of fight but he would have to be con sidered by the management where his achieve ment was 100%.
In the present case the achievement of the petitioner was 300% and 390 under such circumstances the petitioner had all the right to claim additional work in the said coupe.
" Besides, if this view be assumed to be correct, what was there left for the arbitrator to decide? Further, it is not alleged or suggested that the Corporation has ever indicated its unwillingness to consider the respondent when it takes up the question of allotting the additional work.
In absence of a repudiation by the Corporation of the respondent 's right to be considered, if and when occasion arises, no dispute can be said to have arisen which may be referred for arbitration.
In order that there may be reference to arbi tration, existence of a dispute is essential and the dispute to be referred to arbitration must arise under the arbitra tion agreement.
When in the future, the Corporation makes a decision for the execution of the additional work and takes up the question of executing a contract for the purpose, the stage for consideration of the plaintiff respondent 's claim would be reached and a dispute may then arise if the Corpo ration refuses to consider the claim.
Neither the agreement nor the tender notice deals with the question as to the conditions and time for grant of any additional work to the plaintiff and if his claim be interpreted as a demand for immediate allotment of any future work, the same cannot be connected with the agreement or the tender notice.
We, therefore, do not agree with the observations of the High Court that the conduct of the Corporation in not taking up immediate deforestation of a part of Compartment No. 59 Marwa is reprehensible, simply for the reason that the trees in the area concerned are "to be extracted one day or the other" or that the plaintiff has the right to claim the additional work on the ground that his achievement in the past has been more than 100%.
We also hold that the claim raised by the plaintiff in his application before the High Court is not covered by the arbitration clause and cannot be referred for a decision of the arbitrator.
The order of reference passed by the High Court, therefore, has to be set aside.
By the interim order the High Court permitted the plaintiff to execute the additional work claimed by him without waiting for the award.
On the quashing of the main order of reference, the interim order automatically disap pears, but we would, however, like to briefly indicate the scope of Court 's power to issue interim orders at the time of reference of a dispute to arbitration, and point out how in the present case the High Court was in grave error in granting the interim relief.
The relevant provision in the Jammu & Kashmir Arbitration Act, 2002 (Smvt.) is in section 41(b) which is quoted below: 391 "41. ,Procedure and powers of Court.
Subject to the main provisions of this Act and of rules made thereunder (a). . . . . . . . (b) the Court shall have, for the purpose of, and in relation to, arbitration proceedings, the same power of making orders in respect of any of the matters set out in the Second Schedule as it has for the purpose of, and in relation to, any proceed ings before the Court: Provided that nothing in clause (b) shall be taken to prejudice any power which may be vested in an arbitrator or umpire for making orders with respect to any such mat ters.
" section 18 deals with the power of Court to.
pass interim orders after award is actually filed in Court.
So far as clause (a) of section 41 is concerned, it makes only the proce dural rules of the Civil Procedure Code applicable.
The source of power to grant interim relief cannot be traced to clause (a), otherwise as was pointed out in H.M. Kamaluddin vs Union of India, , clause (b) would become otiose.
So far as clause (b) is concerned, it circumscribes the Court 's power within the limits indicated in the Second Schedule and further qualifies it by declaring in the Provi so that it cannot be used to the prejudice of any of the powers of the arbitrator.
The interim direction can be issued only "for the purpose of" arbitration proceedings and not to frustrate the same.
In the present ease the plain tiff contractor was allowed by the High Court to execute the extraction work which was the subject matter of the arbitra tion.
Mr. Kacker, appearing for the plaintiff.
respondent, argued that in pursuance of this part of the impugned judg ment the plaintiff was able to cut down all the trees in question before this Court passed an order of stay.
In other words it is claimed on behalf of the plaintiff respondent that he was able to completely frustrate the arbitration proceeding in a very short time on the strength of the interim order.
This statement of fact has been seriously challenged by the petitioner Corporation; but whatever be the factual position, the High Court by granting the interim relief, not in the shape of an injunction in the negative form, but by a mandatory direction clothing the plaintiff with the right to do something which he could have been entitled to, only after a final decision on the merits of the case in his favour, committed a serious error.
Paragraph 1 of the 392 Second Schedule speaks of the preservation of subject matter of the reference and paragraph 3 also highlights that as pect.
The 4th paragraph which mentions "interim injunction or the appointment of a receiver" has also to be interpret ed in that light specially because of the language of clause (b) of section 41 and the Proviso thereto.
The second part of the judgment under appeal is also, therefore, set aside.
It has been averred before us on behalf of the plain tiffrespondent that all the trees in question were cut down, and so the plaintiff must be permitted to complete the remaining work including their transportation to the desti nation.
The learned counsel for the Corporation placed reliance on the statements in several affidavits and con tended that if the entire circumstances including the period which could have been available to the respondent for the purpose of felling the trees, are examined, there is no escape .from the conclusion that the respondent had felled the trees or majority of them after service of the stay order passed by this Court.
We do not think it necessary to examine and decide this controversy as in our view the respondent, in the facts and circumstances of this case, cannot take any advantage from or claim compensation for the hurried steps he alleges to have taken under the strength of the illegal order interim in nature, which we are setting aside.
In the result, the appeal is allowed.
The impugned judgment the High Court is set aside and the respondent 's application filed before the High Court for reference is dismissed.
The respondent shall pay the costs of this Court and of the High Court to the appellantCorporation.
SABYASACHI MUKHARJI, J.
I have read the judgment pro posed to he delivered by L.M. Sharma, J. with which the learned Chief Justice has agreed.
With great respect, I am unable to agree with them on the view that there was no arbitration agreement subsisting covering the dispute in question between the parties.
It is, therefore, necessary to refer to certain facts, as I view these.
This appeal by special leave is directed against the judgment and order of the High Court of Jammu & Kashmir, dated 4th June, 1987.
The Jammu & Kashmir Forest Corporation is the appellant.
The undisputed facts leading to this appeal are that one Abdul Karim Wani, the respondent No. 1, filed an application for referring certain matters alleged to he in dispute to an independent arbitrator; and that for the last 15 years the respondent had been working as a contractor for the 393 appellant Corporation, namely, Jammu & Kashmir Forest Corpn.
and was carrying on various activities in different forest areas in Jammu Province, including felling, machine sawing, pathroo, paccinali, rope span, mahan and transportation.
It is stated that in February, 1986 the said Corporation issued tenders for felling, handsawing, pathroo, paccinali and mahan work of timber to be extracted from compartment No. 59 Marwah, In response thereto the petitioner to the original application being the respondent herein, submitted his quotation and offered the lowest rate of 11.74 per cft.
and thereby secured the contract.
A formal agreement was also executed between the parties.
In October, 1987 after about 7 months from the issuance of first work order the appellant Corporation through its General Manager (Extrac tion) issued a sanction for further quantity of 2 lac cft.
sawn volume in compartment No. 59 Marwah, on the same rates, terms and conditions as contained in the original contract.
The sanction appears at pages 26 & 28 of the present appeal papers before us.
It appears that the total marking carried out in com partment No, 59 was 10,08,000 cft.
standing out of which only 6 lac cft.
was sanctioned in favour of the respondent.
The compartment in question is at a distance of Over 70 kms.
from the nearest road point and the timber extracted from the compartment had to travel by pathroo, paccinali and mahan through Chenab river for a total distance of 80 kms.
before it is collected at loading point of Dedpeth.
1t is, further, the case of the respondent that "as per the procedure, practice, custom and assurances extended to the respondent by the appellant Corporation through its functionaries, from time to time," the entire marking con ducted in a particular compartment for extraction was re quired (emphasis supplied) to be handed over to the respond ent in compartment No. 59.
As regards sale, it is suggested that as the compartment is situated in one of the remotest area of Jammu province where making arrangements for extrac tion of timber including cartage/carriage of foodgrains, saws, tools and implements is very difficult, it was never intended that the balance work remaining in the compartment for extraction would be given to any other contractor.
The case of the respondent is that acting upon the assurances and representations of the appellant Corporation that the entire work in the aforesaid compartment would be handed over to him, the respon 394 dent had made adequate arrangement after investing Rs.5 lacs by way of provision for rations, saws, tools and implements etc.
All these arrangements at that scale were necessary and were made just to extract entire marked timber from the compartment in question and not just initially tendered quantity.
That would have been wholly uneconomical.
It was further asserted that there was also the practice in the Corporation that once a compartment was handed over to the contractor for work, it was taken back from him only after the entire available work in the said compartment stood concluded.
The contractor further alleged that the appellant Corporation was not allotting rest of the work to him contrary to the policy adopted and assurances extended, as mentioned hereinbefore.
The respondent furnished in stances where such conduct or procedure of making allot ments, as alleged by the respondent, had been followed.
We were referred to the sanction in favour of M/s. Ghulam Hussain, Sukhjinder Singh in respect of compartment No. 82 Lander on 28.4.87, Mst.
Jana Begum in respect of compartment No. 30 B, Dachhan and 62 Marmat dated 10.3.87, Sh.
Rehmatul lah Bhat for compartment No. 19A Paddar dated 5.5.87, Nas sarnllah Malik for compartment No. 16 Ramban on 12.5.87 and Irshad Ahmed Shah in respect of compartment No. 62 Sewa dated 4.2.87.
On behalf of the Corporation and others, it was stated before the learned Judge of the High Court that there was no assurance and no practice regarding grant of the contract to the respondent contractor Abdul Karim Wani, in the manner alleged.
Further, it was alleged that the respondent and the Corporation had decided not to work on the compartment till the entire extracted timber was removed to sale depot.
Once that decision was there the instances quoted by the contrac tor proved useless, according to the appellant.
It, however, very clearly appears that in compartment No. 59 Marwah marked standing trees were to the extent of 10,08,000 eft.
The second aspect emerging is that out of this volume only 6 lac eft.
standing timber had been sanctioned in favour of the contractor on two different occasions, and such timber had been extracted, removed and taken to the loading point.
The only dispute subsisting was about the rest of the stand ing trees i.e., 4,80,000 cft.
It is not disputed that the said remaining cfts.
have been marked.
These remained as marked timber which required to be extracted.
The respondent claims preference for grant of contract of extraction by way under the clause in the relevant sanction.
The only conten tion of the appellant was that they had no intention to extract 395 the said timber till other extracted timber was taken to the depot.
The case of the appellant as noted by the learned Judge in his judgment, was that the remaining timber to be extracted presently for 'unknown reasons ' was not to be then extracted and, as such, the Corporation could not be com pelled to grant or sanction extraction of remaining marked timber.
The learned Judge by his impugned judgment and order deprecated the conduct of the authorities concerned.
He proceeded on the basis that inasmuch as the remaining timber had to be extracted one day or the other, the entire work should have been given to the respondent.
In the present case, the learned Judge noted that the performance of the respondent contractor as 300%.
The respondent was entitled to the grant of this contract even if his performance had merely been 100%.
The learned Judge found that there were two different points to be examined.
He found that there existed a dispute between the parties touching the agreement executed between them.
The matter in dispute was referred to the named arbitrator, namely, the Managing Director of the State Forest Corporation, who was directed to adjudicate upon the same and submit his award within the statutory period of four months.
The learned Judge went further and as an interim measure directed that the petitioner before him, namely, the re spondent herein be allowed to do the remaining work of extraction of timber of standing marked trees in compartment No. 59 Marwah and the rates were to be determined by the arbitrator, after hearing both the parties.
This order is the subject matter of the appeal.
The main question involved in this appeal is whether there was any subsisting arbitration agreement in respect of the matters sought to be referred.
The second aspect in volved herein is whether the learned Judge was justified in making the impugned order by directing that the petitioner be allowed to do the remaining work of extraction of timber of standing marked trees in compartment No. 59 Marwah, and the rates be determined by the arbitrator after hearing both the sides.
It was contended on behalf of the appellant that the learned Judge travelled beyond the scope of his juris diction.
It was submitted that there was no subsisting arbitration agreement covering the entire area of 10,08,000 eft.
There were only two subsisting contracts one being a contract for felling trees of 4 lacs eft dated 6th March, 1986, and another for 2 lacs eft in addition, dated 28th October, 1986.
The agreement dated 6.3.86 provided that dispute in respect of these 396 should be referred to arbitration but there was, according to the appellant, no subsisting contract in respect of the remaining 4 lacs cft.
The respondent had only a right to be considered in respect of the rest and yet no contract had been granted to him.
Therefore, there being no subsisting contract there was no scope for reference to arbitration.
In my opinion, it is not the correct way to look at the facts of this case.
It appears from the first agreement, which is at page 142 onwards of the present paper book that it con tained, inter alia, the following clauses.
"The quantum of work under each activity/sub activity is estimated and as such cannot be guaranteed and can be increased or decreased upto 25% by the General Manager Ext.
East Jammu East on the contract rates subject to prior approval of the Managing Director.
Any subsequently marking carried out in a section/unit under work with the contractor shall be included in this increase of 25%.
" It also contained clause 15 which was to the following extent: "Extension for the additional volume available in the coupe will not be claimed as matter of right.
But may be considered by the Management where the achievement is 100%.
" Clause 17 of the said agreement which provided for reference to arbitration was the following: "Any dispute, difference, question which may at any time arise between the parties in respect of the works to be executed by the contractor(s) shall be referred for arbitra tion to the Managing Director J&K SFC whose decision shall be final and binding on both the parties.
" In respect of the second contract that similar terms were there, was not disputed before us.
Therefore, even though where the achievement of the contractor was 100% the contractor had a right only to be considered for grant of the additional work.
In this case it was contended on behalf of the appellant Corporation that the Corporation could not be compelled by the process of an application under Section 20 of the Arbitration Act to grant additional work to the contractor.
On the other hand, the contractor had pleaded that where the 397 achievement of the contractor in respect of the subsisting contract was 100% the contractor had a right to be consid ered for grant of the additional work, while in this case his performance was 300%.
Additional volume available in the coupe was liable to be granted to him or, at least, he was entitled to be considered in accordance with equity and justice.
The contractor has further alleged that while others in similar position had been granted this additional work, he had been wrongfully denied.
His claim was that he having fulfilled 300% performance, was entitled to the remaining work of the additional work.
It was contended on behalf of the appellant before us that there cannot be any application for filing of an arbi tration agreement for the arbitrator in respect of the contract which had not been entered into.
I am unable to accept this submission.
Clause 17 of the arbitration agree ment provided that any dispute, difference, question which might at any time arise between the parties in respect of the works to be executed by the contractor(s) should be referred to the arbitration of the Managing Director of the Jammu & Kashmir State Forest Corpn.
Therefore, it appears to me that dispute which had arisen between the parties in respect of the "works to be executed" by the contractor was a dispute which was referable in terms of the clause 17 and the dispute was, according to the pleadings, the custom, practice and procedure of granting additional volume of available coupe where the timber trees had been marked but not extracted to be considered by the Government for grant of the contract.
The contract alleged if such proper consid eration or lawful consideration in accordance with the principles of equity and justice had been made, the contract would have been granted to the contractor.
Therefore, the contractor claimed that he was entitled to the grant of additional volume of work.
In my opinion, there was a dis pute whether the contractor was entitled to the grant of additional volume of the work.
Such dispute was a dispute between the parties in respect of the "works to be executed by the contractor.
" I am clearly of the opinion that the dispute in this case was a dispute between the parties in respect of the "works to be executed by the. contractor".
In that view of the matter and in the light of clause 15 read with clause 17, the dispute in this case was clearly referable to arbi tration of the Managing Director, Jammu & Kashmir State Forest Corpn.
An arbitration agreement is one which is defined in Section 2(a) of the as a written agreement to submit present or future differences to arbi tration.
There was, in this case, an arbitra 398 tion agreement, that is to say, the parties had been ad idem.
The agreement was in writing.
It was not a contingent or a future contract.
It was a contract at present time to refer the dispute arising out of the present contract en tered into by the parties as a result of which the contrac tor got a right or a privilege to ask for consideration of grant of the further work.
It was not as sought to be argued a mere right to get the additional work.
Hence, in my opin ion, it could not be contended that there was no agreement.
Endeavour should always be to find out the intention of the parties, and that intention has to be found out by reading the terms broadly, clearly, without being circumscribed.
This contention of the appellant cannot, therefore, be accepted.
In the light in which I have read the facts, I am unable to accept the position that the claim raised by the plain tiff in this application before the High Court was not covered by the arbitration clause.
The amplitude of the arbitration clause, in my opinion, was wide enough and should be so read for the reasons mentioned hereinbefore.
If that is the position then the order of reference by the High Court was not bad and cannot be set aside.
I am unable to agree that the decision of this Court in Seth Thawardas Pherumal vs The Union of India, indicated that in the facts of this case, there could not be reference to the arbitration.
That was a case where the appellant, a contractor, entered into a contract with the Dominion of India as it then was for supply of bricks.
A clause in the contract required all disputes arising out of or relating to the contract to be referred to arbitration.
Disputes arose and the matter was duly referred.
The arbitrator gave an award in the contractor 's favour.
It was held that it was not enough for the contract to provide for arbitration but something more was necessary.
An arbitrator only got juris diction when either, both the parties specifically agreed to refer specified matters or, failing that, the court com pelled them to do so under the arbitration clause if the dispute was covered by it.
That case was mainly concerned with a specific question of law.
This Court referred to the decision of this Court in A.M. Mair & Co. vs Gordhandass Sagarmull, ; at 798 where this Court quoted a passage from Viscount Simon 's speech in Heyman vs Darwins Ltd., [1942] Appeal Cases 356 at 368.
Here in this case the clause as I read it gave the respondent a right to be con sidered.
The respondent 's grievance was, if properly consid ered his performance being 300% achievement he was entitled in the facts and circumstances set out hereinbefore to the grant of the contract and further similarly placed persons had been so given.
That right had not been duly considered.
That is the dispute in the present case and that dispute is clearly referable to the arbitration 399 clause as mentioned hereinbefore.
I am, therefore, unable to accept the position that the order of reference passed by the High Court is bad.
The second challenge to the order of the High Court was that the order so far as it directed under Section 20 of the that the petitioner be allowed to do the remaining work of extraction of timber of standing market trees in compartment No. 59 Marwah, was wholly without jurisdiction.
For this reference may be made to Section 41 of the which provides that for the purpose of and in relation to arbitration proceedings, the Court has such powers to pass interim orders for detention, preserva tion, interim custody and sale of any property the subject matter of the reference for preservation or inspection of any property or thing the subject matter of the reference or as to which any question may arise therein for taking of samples and making observations and experiments; for secur ing the amount in difference in the reference; for granting an interim injunction and appointing a receiver as the Court has in relation to any proceeding before it.
But though under Section 41(b) the Court has power to pass an interim order of injunction or appointment of receiver, in my opin ion, the Section does not empower the Court to direct execu tion of the contract, the extent of which is in dispute and is a matter referable to be adjudicated by the arbitrator.
If the Court does so then the decision of the dispute be comes academic because the contract is executed.
Where the question is whether the contract was to be executed by the respondent, if the contract is in fact executed by the respondent by virtue of the order of the Court, then nothing remains of the dispute.
There is nothing arbitrable any more and proceedings before the arbitrator cannot, in my opinion, be forestalled by interim order by ordering execution of the contract before it is decided whether it had any right to the contract for additional work in the garb of preservation of the property.
In that view of the matter, I am clearly of the opinion that the interim directions given by the High Court that the "contractor be allowed to do the remaining work of extrac tion of timber of standing marked trees in compartment No. 59, Marwah" was beyond the competence of the Court.
In this respect I agree with my learned brothers.
But so far as the Court directed that the rates be determined by the arbitrator after hearing both the parties, this direction, in my opinion, was clearly within the juris diction provided this dispute was referred to the arbitra tion.
In this case unfortunately after the order of the High Court was passed and before any order of stay could be 400 passed by this Court in a petition under Article 136 of the Constitution, the respondent had done the work of extraction of timer of standing marked trees in compartment No. 59 Marwah.
Therefore, it would be inappropriate to interfere with this order.
The events have overreached the decision of the Court.
It would be unjust to deprive any party of its dues simply because the work has been done in view of a wrong order or incorrect order of the Court of justice when there was no stay.
Would it be just to deprive a suitor of his dues in this manner under Article 136 of the Constitu tion? I have no doubt in my mind that it would be unjust.
The work indisputably has been done pursuant to an order of the Court of law and the party who has done the work must be paid its remuneration.
How would that remuneration be set tled, would it be by a decree in the suit or would it be by adjudication of an award? In the view I have taken that there was a valid reference on the contention of the re spondent, this question which was incidental thereto must be decided along with that contention.
In any view of the matter, however, for determining the work done pursuant to the liberty or right given by the Court which was not stayed by this Court arbitration undoubtedly is a better method of finding out the dues in respect of that work done.
I would not, therefore, in any event alter this direction of the High Court.
In the aforesaid view of the matter, in my opinion, it would be inappropriate to interfere with the interim direc tion of the High Court though the direction was beyond jurisdiction.
In the premises I would have disposed of the appeal by directing the arbitrator to determine the rates in respect of the extraction of the remaining timber of stand ing marked trees in compartment No. 59 Marwah.
In the aforesaid view of the matter, I would have made no order as to costs.
N.V.K. Appeal al lowed.
| IN-Abs | The appellant, a Corporation was created under the Jammu functions was to undertake the removal and disposal of trees and exploitation of the forest resources entrusted to it by the Government.
The Corporation took a decision for the extraction of timber of a total volume of 10.08 lakh c. ft. which included the work of felling and removal of trees.
The respondent an approved contractor submitted his tender and was granted the works contract initially with reference to 4 lakh c. ft., and subsequently he was entrusted with an additional work for a further quantity of 2 lakh c. ft.
The respondent completed the entire work under the contract.
Thereafter, he claimed that he was entitled to the remaining volume of the work, namely, 4.08 lakh c.ft.
as per the procedure, prac tice, custom and usage extended to him.
The appellant denied any such practice, custom or assurance and said that a decision had been taken not to work the area further till the entire timber already extracted was removed to its destination.
There was, therefore, no question of entrusting the remaining work to anybody.
Paragraph 15 of the Tender Notice stipulated that: "Extension for the additional volume in the coupe will not be claimed as a matter of right but may be considered by the Management where the achievement 381 is 100 per cent.
" The agreement provided for arbitration which was contained in clause 42, and which stipulated: "that any dispute, differences or question that may arise was to be referred for arbitration to the Managing Director of the Jammu & Kashmir Forest Corporation.
" The respondent filed an application under sections 8, 11 and 20 of the Jammu and Kashmir Arbitration Act, 2002 (Smvt) in the High Court for a direction to the Corporation to file the agreement and to refer the dispute to an arbitrator.
The High Court deprecated the attitude of the Corpora tion in not awarding the remaining work to the respondent.
It held that the trees in question had already been marked and had, therefore, to be felled 'one day or the other ', and as the contractor 's achievement was 300 per cent he had all the right to claim the remaining work as provided in para graph 15 of the Tender Notice.
The High Court also found that as there existed a dispute touching the contracts executed between the parties, it referred the matter under clause 42 of the agreement to the named arbitrator, namely, the Managing Director of the State Forest Corporation.
The High Court went further and by an interim order directed that the contractor be permitted to do the remain ing work of extraction of timber of standing marked trees and the rates be determined by the arbitrator after hearing both the parties pursuant to the said interim order.
Aggrieved by the aforesaid orders of the High Court the appellant appealed to this Court by special leave.
On the questions: (i) whether there was any subsisting arbitration agreement in respect of the matters sought to be referred, and (ii) whether the interim order of the High Court directing the respondent to do the remaining work was without jurisdiction, and whether the respondent was enti tled to any compensation for the work done.
Allowing the appeal, the Court, HELD: [R.S. Pathak.
CJ and L.M. Sharma, J. Majority Per L.M. Sharma.
J.] 1.
The claim raised by the respondent in his application before the High Court is not covered by the arbitration clause and cannot be 382 referred for a decision of the arbitrator.
The order of reference passed by the High Court has therefore to be set aside.
[390F] 2.
If the foundation of the claim of the respondent be any alleged assurance or custom or practice, it cannot be said that such claim arises out of the written agreement between the parties; and so the prayer for reference has to be rejected.
If the case pleaded is true, the appropriate forum for the respondent will be a Court of Law directly granting the relief in an appropriate legal proceeding [388A B] 3.
The language of the term contained in para 15 of the tender notice is explicit in declaring that the contractor would not be allowed to claim as a matter of right the additional volume of work.
His right extends only to a consideration of his case by the management when the ques tion of allotment of additional work is taken up.
But by the application filed before the High Court the respondent did not ask for reference of a dispute as to whether he is entitled to consideration or not; the prayer is for refer ence of a higher claim of immediately getting the additional work, and this prayer has been allowed.
This issue cannot be said to have any connection with the 15th term of the tender notice or any other provision thereof or of the agreement.
[388D E] 4.
In the absence of a repudiation by the Corporation of the respondent 's right to be considered, if and when occa sion arises, no dispute can be said to have arisen which may be referred for arbitration.
[390B] 5.
In order that there may be a reference to arbitra tion, existence of a dispute is essential, and the dispute to be referred must arise under the arbitration agreement.
[390C] Seth Thawardas Pherumal vs The Union of India, relied on.
There was no justification for the High Court in deprecating the Corporation for not awarding the remaining work 10 the contractor when it was leaving the matter to be decided by the arbitrator. [387G] 7.
A Court, while considering the question whether an alleged dispute between the parties has to be referred for arbitration or not, should refrain from expressing its opinion on the merits of the dispute which may embarrass the arbitrator.
[387G H] 383 8.
Section 18 deals with the power of the Court to pass interim orders after award is actually filed in Court.
So far as clause (a) of Section 41 is concerned, it makes only the procedural rules of the Civil Procedure Code applicable.
The source of power to grant interim relief cannot be traced to clause (a), otherwise clause (b) would become otiose.
So far as clause (b) is concerned, it circumscribes the Court 's power within the limits indicating in the second Schedule, and further qualifies it by declaring in the Proviso that it cannot be used to the prejudice of any of the powers of the arbitrator.
[391 D E] H.M. Kamaluddin vs Union of India, relied on.
Interim directions can be issued only 'for the pur pose of ' arbitration proceedings and not to frustrate the same.
[391E] 10.
The High Court in the instant case, by granting the interim relief, not in the shape of an injunction in the negative form, but by a mandatory direction clothing the respondent plaintiff with the right to do something which he could have been entitled to only after a final decision on the merits of the case in his favour committed a serious error.
[391G H] [Per Sabyasachi Mukharji, J partly dissenting] 1.
There was a dispute in the instant case, whether the contractor was entitled to the grant of the additional volume of work.
Such dispute was a dispute between the parties in respect of the 'works to be executed by the contractor '.
In that view of the matter and in the light of clause 15 read with clause 17 of the Agreement the dispute was clearly referable to the arbitration of the Managing Director, Jammu & Kashmir State Forest Corporation.
[397F G] 2.
Endeavour should always be to find out the intention of the parties, and that intention has to be found out by read ing the terms broadly, clearly, without being circumscribed.
[398B C] 3.
An arbitration agreement is one which is defined in section 2(a) of the as a written agreement to submit present or future differences to arbi tration.
There was, in the instant case, an arbitration agreement that is to say, the parties had been ad idem.
The agreement was in writing.
It was not a contingent or a future contract.
It was a contract at present time to refer the dispute arising out of the present contract entered into by the parties as a result of which the 384 contractor got a right or privilege to ask for consideration of grant of the further work.
It was not a mere right to get the additional work.
The amplitude of the arbitration clause was wide enough and should be so read.
[397H; 398A B, C D] Seth Thawardas Pherumal vs The Union of India, distinguished.
A.M. Mair & Co. vs Gordhandass Sagarmull ; at 798 and Heyman vs Darwins Ltd., [1942] Appeal Cases 356 at 368 referred to.
Though under section 41(b) the Court has power to pass an interim order or injunction or appointment of re ceiver, the Section does not empower the Court to direct execution of the contract, the extent of which is in dispute and is a matter referable to be adjudicated by the arbitra tor.
If the Court does so, then the decision of the dispute becomes academic because the contract is executed.
[399D E] 5.
Where the question is whether the contract was to be executed by the respondent, if the contract is in fact executed by the respondent by virtue of the order of the Court, then nothing remains of the dispute.
There is nothing arbitrable any more land proceedings before the arbitrator cannot be forestalled by interim order by ordering execution of the contract before it is decided whether the contractor had any right to the contract for additional work in the grab of preservation of the property.
[399E F] 6.
The interim directions given by the High Court that the contractor be allowed to do the remaining work of ex traction of timber of standing marked trees was beyond the competence of the Court.
[399F G] 7.
It would be unjust to deprive any party of its dues simply because the work has been done in view of a wrong order or incorrect order of the Court of justice when there was no stay. ]400B]
|
ivil Appeal No. 3561 of 1986.
From the Judgment and Order dated 28.2.1986 of the Gujarat High Court in SCA No. 1176 of 1974.
Mehta, Shishir Sharma and P.H. Parekh for the Appel lants.
Respondent in person.
(N.P.) The Judgment of the Court was delivered by SINGH, J.
This appeal is directed against the judgment and order of the High Court of Gujarat dated 28.2.1986 allowing the respondent 's writ petition and quashing order of discharge from service and directing his reinstatement in service.
The respondent joined service as technical assistant with the Gujarat State Electricity Board (hereinafter re fened to as the Board).
He was promoted to the post of Deputy Engineer.
While he was posted at Surat as Deputy Engineer he was transferred to Ukai subdivision under the order of the Superintending Engineer dated 29th March, 1974.
Pursuant to the order of transfer he was relieved from his duties at Surat on 30th March, 1974 to enable him to join at Ukai.
He made representation to the Additional Chief Engi neer for cancelling his transfer order on the ground that his mother aged 70 years was ailing and it would cause great inconvenience to him if he was required to join at Ukai.
His representation was rejected and he was directed to 361 join at Ukai but he did not do so instead he filed a civil suit at Baroda challenging validity of the order of trans fer.
Meanwhile, the Chief Engineer by his order dated 27th May, 1974 discharged the respondent from service with effect from 31st March, 1974 in accordance with service Regulation No. 113.
The respondent challenged the validity of the order of his discharge from service by means of a writ petition under Article 226 of the Constitution before the High Court of Gujarat.
A learned Single Judge of the High Court quashed the order of termination on the findings that the order of discharge was issued m violation of the basic principles of natural justice as no opportunity was afforded to the re spondent before discharging him from services under Regula tion No. 113.
The learned Single Judge granted a declaration in respondent 's favour holding the order void and illegal but having regard to recalcitrant attitude of the appellant and his continued conduct of disobedience of the orders of his superior authorities, he refused to grant consequential reliefs regarding reinstatement or payment of back wages.
The respondent as well as the appellant board, both pre ferred Letters Patent appeals against the order of learned Single Judge.
A Division Bench of the High Court dismissed the appeal preferred by the Appellants but it allowed the respondent 's appeal.
The Division Bench upheld the order of the learned Single Judge holding the order of discharge illegal and void but it set aside the order of the learned Single Judge refusing to grant consequential relief instead it directed the appellants to reinstate the respondent, and to treat him in service without any break in service and to grant him benefits of increments, seniority, and promotion to which he may be entitled under the rules.
The Bench, however, did not grant full back wages to the respondent instead it directed the Board to pay him 50 per cent of back wages.
Aggrieved, the appellant has preferred the instant appeal after obtaining special leave of this Court.
This appeal came up for hearing before us on 28th Janu ary, 1988 and on that day Sh.
B.K. Mehta, Advocate appearing for the appellants and Sh.
Vimal Dave, Advocate, appearing for the respondent were fully heard.
After hearing learned counsel for the parties we were satisfied that the learned Single Judge as well as the Division Bench both had commit ted error in allowing the writ petition and granting relief to the respondent.
We expressed our view in the Court and suggested to Mr. Vimal Dave, counsel for the respondent, that if he agreed the original writ petition of the respond ent could be dismissed without directing him to refund the amount which he had already been paid by the appellants in pursuance to the orders of the High Court and of this Court as during the pendency of the appeal, the appellants 362 were directed by means of interim order of this Court to continue to pay salary to the respondent which was being paid to him regularly.
The hearing was adjourned to enable Sh.
Vimal Dave, to obtain instructions from the respondent.
The appeal came up for hearing before us on 16.2.1988 when another counsel appeared to argue the appeal on behalf of the respondent on merits.
We refused to hear the counsel as we had already completed hearing.
Thereupon, the respondent himself appeared in person and sought permission to make his submissions personally.
We refused to accede to his request as oral heating had already been completed and the matter had been adjourned only to enable the respondent 's counsel to obtain instructions.
However, in the interest of justice we permitted the respondent to file written submissions.
if any, in support of his case.
Thereafter, the case was listed several times but no written submissions were filed instead the respondent adopted an unusual course by sending an application by post expressing his no confidence in us with a prayer to transfer the case to some other Bench.
Since this was unusual, uncalled for and unjustified request we ignored the same and reserved the order.
We are constrained to note that instead of utilising the opportunity granted to him for filing written submissions the respondent has mis used adjournments for the purposes of raising frivolous objections for getting the case transferred to some other Bench.
No party is entitled to get a case transferred from one Bench to the other, unless the Bench is biased or there are some reasonable grounds for the same, but no right to get a case transferred to any other Bench, can legitimately be claimed merely because the judges express opinion on the merits of the case on the conclusion of hearing.
In the instant case on the conclusion of the oral hearing we had expressed our opinion on 28.1.1988 in the open court, that we were inclined to allow the appeal and set aside the order of the High Court and dismiss the writ petition but taking a sympathetic view we requested Sh.
Vimal Dave, learned coun sel appearing for the respondent to obtain instructions as aforesaid.
The opportunity granted to the respondent has, however, been misused by raising mischievous and frivolous objections instead of filing written submissions.
The re spondent 's prayer is accordingly rejected and since oral hearing has already been completed, and in spite of several adjournments respondent failed to appear before the Court or to file the written submissions we proceed to decide the case on merits.
Transfer of a Government servant appointed to a particu lar cadre of transferable posts from one place to the other is an incident of service.
No Government servant or employee of Public Undertaking has legal tight for being posted at any particular place.
Transfer from 363 one place to other is generally a condition of service and the employee has no choice in the matter.
Transfer from one place to other is necessary in public interest and efficien cy in the Public administration.
Whenever, a public servant is transferred he must comply with the order but if there be any genuine difficulty in proceeding on transfer it is open to him to make representation to the competent authority for stay, modification or cancellation of the transfer order.
If the order of transfer is not stayed, modified or cancelled the concerned public servant must carry out the order of transfer.
In the absence of any stay of the transfer order a public servant has no justification to avoid or evade the transfer order merely on the ground of having made a repre sentation, or on the ground of his difficulty in moving from one place to the other.
If he fails to proceed on transfer in compliance to the transfer order, he would expose himself to disciplinary action under the relevant Rules, as has happened in the instant case.
The respondent lost his serv ice as he refused to comply with the order of his transfer from one place to the other.
There is no dispute that the respondent was holding a transferable post and under the conditions of service ap plicable to him he was liable to be transferred and posted at any place within the State of Gujarat.
The respondent had no legal or statutory right to insist for being posted at one particular place.
In fact, during the tenure of his service in the Board the respondent had been transferred from one place to an other place several times.
In March, 1974 he was transferred .
from Surat to Ukai.
The distance between the two places as was stated before us during the hearing of the case is less than 50 kms.
He was relieved from his duties at Surat on 30th March, 1974 but he did not join at Ukai till the impugned order of discharge was issued on May 27, 1974.
The Chief Engineer who discharged the respondent 's services exercised his power under Service Regulation No. 113, which runs as under: "113.
The continued absence from duty or overstay, m spite of warning, to return to duty shall render the employee liable to summarily discharge from service without the necessity of proceedings under the Gujarat Electricity Board, Conduct, Discipline and Appeal Procedure.
" The above Rule provides that if an employee of the Gujarat Electricity Board continues to remain absent from duty or overstays the period of sanctioned leave and in spite of warning, he fails to return to duty, he renders himself liable to be discharged summarily from service without 364 complying with the procedure prescribed for taking discipli nary action, under the Gujarat Electricity Board, Conduct, Discipline and Appeal Procedure.
Regulation 113 confers wide powers on the authorities to summarily discharge an employee from service, if he continues to be absent from duty in an unauthorised manner and refuses to join his duty even after warning.
Under the disciplinary rules detailed procedure is required to be followed for removing an employee from serv ice but Regulation 113 provides for summary discharge from service.
Before this power is exercised, two conditions must be satisfied; Firstly, the employee must be found to be absent from duty without leave or overstaying the period of sanctioned leave, and secondly, he failed to join his duty even after a warning.
The object and purpose of giving warning is to remind the delinquent employee that if he continues to be absent from duty he would be liable to action under Regulation 113 and to afford him an opportunity to make amends by joining his duty.
If even thereafter he fails to join duty, his services are liable to be terminated by an order of discharge.
It is noteworthy that the validity of Regulation 113 was not challenged before the High Court and the parties proceeded on the assumption that Regulation 113 was valid and applicable to the respondent 's service.
The Chief Engineer discharged the respondent from service as he had continued to remain absent from duty w.e.f. March 30, 1974 to May 27, 1974.
The Division Bench of the High Court held that no warning as contemplated by service Regulation No. 113 had been issued to the respondent nor he had been afforded any opportunity of showing cause before the im pugned order of discharge was passed and consequently, the order of discharge was null and void being contrary to service Regulation No. 113 itself.
On perusal of the materi al on record we are of the opinion that the view taken by the High Court is not sustainable as there is sufficient material on record which shows that warning had been issued to the respondent before the order of discharge was issued.
In determining the question whether any warning was given to the respondent it is necessary to refer to the sequence of events and the correspondence which ensued between the appellants and the respondent.
On March 29, 1974 the Superintending Engineer of the Board issued the order, transferring the respondent from Surat to Ukai, on 30.3.1974 the respondent was relieved from Surat and directed to join his duty at Ukai, but the respondent did not join his duty at the new place of posting.
Instead he made a representa tion to the Additional Chief Engineer on 8.4.1974 after the transfer order.
The Transfer order was not stayed and as the respondent did not join 365 his duties, he continued to be absent without sanction of any leave.
In this situation the Superintending Engineer by his letter dated 18th April, 1974 directed the respondent to show cause as to why action should not be taken against him for disobeying the order of transfer and also for unautho rised absence from duty in breach of service Regulation No. 113.
The letter is as under: "GUJARAT ELECTRICITY BOARD O & M DIVISION Nana Varchha Road Surat.
Dated 18th April, 1974 To Shri A.S. Pohani Junior Engineer, Ukai 37, Gurunagar Society Near Jakat Naka, Surat 3.
Sub: Transfer from Surat to Ukai.
You have been relieved on 30.3.1974 A.N. on account of your transfer from Surat to Ukai, but you have not reported to Ukai till today and remained on unauthorised absence on re lief, which is breach of S.R. No. 112 and 113.
Please submit your explanation as to why action should not be taken against you for disobeying order of superior and breach of S.R. No. 112 and 113 within 7 days from re ceipt of this letter.
Sd/ Execut ive Engineer (O & M) Surat Copy f.w.c.s.
to Superintending Engineer, GEB, Utran.
" There is no dispute that the respondent received the afore said letter as he sent a reply to the Superintending Engi neer on April 20, 1974, a copy of which was annexed as Annexure 'J ' by the petitioner, to his 366 petition before the High Court.
By that letter respondent stated that he was waiting for the decision of his represen tation made for reconsideration of his transfer from Surat to Ukai and therefore, the question of his remaining on unauthorised leave was misconceived.
Since the respondent had not obtained any sanctioned leave for his absence his absence from duty was unauthorised.
No Government servant or employee of any public undertaking has a right to be absent from duty without sanction of leave, merely on account of pendency of representation against the order of transfer.
Since the respondent continued to be absent from duty the Superintending Engineer by a registered post acknowledgment due letter dated April 24, 1974 informed the respondent that his request to postpone his transfer was rejected and he was directed to join his duty at Ukai and on his failure to do so disciplinary action would be taken against him.
The Establishment Officer (P) of the Board, also informed the respondent by his letter dated May 6, 1974 that his repre sentation against the order of transfer was not accepted and he was directed to obey the order of transfer.
A copy of the letter filed by the petitioner himself as Annexure 'K ' to the writ petition in the High Court.
But even thereafter, the respondent did not join his duties.
Ultimately, the Chief Engineer of the Board took action against the respond ent and discharged him from service with effect from 31.3.1974 by his letter dated May 27, 1974.
The sequence of events and the correspondence which ensued between the officers of the Board and the respondent clearly show that the respondent disobeyed the order of transfer and he re mained absent from duty in an unauthorised manner without obtaining sanction of leave.
The aforesaid documents leave no room for any doubt that the respondent was reminded of his failure to join his duties at Ukai and he was further reminded that his unauthorised absence had exposed him to disciplinary action.
In fact, the Superintending Engineer had by his letter dated 18th April, 1974 clearly reminded the respondent that his unauthorised absence was in breach of Service Regulation No. 113 and called upon to show cause why action should not be taken against him but in spite of these letters the respondent failed to join his duties.
The Division Bench of the High Court has held that since no warning was issued to the respondent action taken under Service Regulation No. 113 was not in accordance with law.
This finding is wholly misconceived.
A warning need not be in any particular form.
The object and purpose of the warn ing as contemplated by the Regulation,.
is to remind the delinquent employee that his continued unauthorised absence from duties was liable to result in discharge of his serv ice.
The substance of the Superintending Engineer 's letter dated 18th April, 1974 which was admittedly served on the respondent, contained 367 warning to the respondent, which fully met the requirement of Regulation No. 113.
Before the High Court a controversy was raised as to whether the registered letter dated 24.4.1974 addressed by the Superintending Engineer to the respondent was received by him or not.
The registered cover, containing the letter dated 24.4.1974 was returned back by the postal authorities with an endorsement that the addressee refused to accept the same.
The respondent 's case was that no such registered letter was tendered to him by the postman nor he ever re fused to accept the same.
The Division Bench held that letter dated 24.4.1974 which contained a warning had not been served on the respondent and since the Board had failed to raise the question before the learned Single Judge it could not do so in the letters patent appeal.
The Division Bench further held that since the letter dated 24.4.1974 was not served on the respondent, there was no material to show that any warning had been issued to the respondent before he was discharged from service.
We do not agree with the view taken by the Division Bench.
Firstly, even if the letter dated 24.4.1974 was not served on the respondent there is no dispute that the Superintending Engineer 's letter dated 18th April, 1974 had been served on him.
By that letter warning as contemplated by Regulation No. 113 had been issued to the respondent.
Therefore even if the letter dated 24.4.1974 was not served on the respondent the order of discharge as contemplated by Regulation No. 113 is sustainable in law.
But even otherwise, the Division Bench committed error in holding that the Board had raised the question of service of the letter dated 24.4.1974 for the first time before the Division Bench in the letters patent appeal.
Perusal of the averments made in paragraphs 17, 18, 23 and 25 (2)(ii) of the counter affidavit filed in reply to the petitioner 's writ petition before the learned Single Judge shows that the Board had categorically pleaded that the respondent was informed by letter dated 24.4.1974 that his representation to postpone his transfer was rejected and he should obey the order of transfer.
It was further pleaded that the respond ent had refused to accept the registered letter and the same had been returned back by the postal authorities with an endorsement that the addressee refused to accept the same.
In his rejoinder affidavit the respondent denied the afore said allegations and asserted that the letter was not ten dered to him and he never refused to accept the registered cover and the postal endorsement was wrong and incorrect.
Apart from denying the postal endorsement, the respondent placed no material before the Court in support of his plead ing.
In this view, we are of the opinion that the Division Bench was totally wrong in holding that 368 no opportunity was afforded to the respondent to meet the case set up by the Board that the letter dated 24.4.1974 was served on the respondent.
No new plea had been raised by the Board before the Division Bench instead the plea relating to service of the aforesaid letter had already been before the learned Single Judge.
There is presumption of service of a letter sent under registered cover, if the same is returned back with a postal endorsement that the addressee refused to accept the same.
No doubt the presumption is rebuttable and it is open to the party concerned to place evidence before the Court to rebut the presumption by showing that the address mentioned on the cover was incorrect or that the postal authorities never tendered the registered letter to him or that there was no occasion for him to refuse the same.
The burden to rebut the presumption lies on the party, challenging the factum of service.
In the instant case the respondent failed to dis charge this burden as he failed to place material before the Court to show that the endorsement made by the postal au thorities was wrong and incorrect.
Mere denial made by ,the respondent in the circumstances of the case was not suffi cient to rebut the presumption relating to service of the registered cover.
We are, therefore, of the opinion that the letter dated 24.4.1974 was served on the respondent and he refused to accept the same.
Consequently,the service was complete and the view taken by the High Court is incorrect.
In view of the above discussion, we therefore hold that the respondent 's failure to join his duties at Ukai resulted in unauthorised absence and his failure to join his duties in spite of the repeated reminders and letters issued to him constituted sufficient valid ground for taking action under Regulation No. 113.
We further hold that before issuing the order of discharge the respondent was not only warned but he was also afforded an opportunity to explain as to why disci plinary action should not be taken against him.
The respond ent acted in an irresponsible manner in not complying with the order of transfer which led to his discharge from serv ice in accordance with the Service Regulation No. 113.
The learned Single Judge as well as the Division Bench both erred in law in setting aside the order of discharge.
We, accordingly, allow the appeal, set aside the order of the Single Judge as well as Division Bench and dismiss the respondent 's petition.
There would be no order as to costs.
The respondent has been paid a sum of Rs. 1,04,170 towards salary under the interim orders of this Court.
Now, since the order of 369 discharge is held to be valid the amount paid to the re spondent is liable to be recovered from him, but having regard to the facts and circumstances of the case and the hardship which could be caused to the respondent, we direct the appellant not to recover the amount already paid to the respondent.
S.K.A. Appeal al lowed.
| IN-Abs | The respondent joined service as technical assistant with the Gujarat State Electricity Board and was later promoted to the post of Deputy Engineer.
While he was posted at Surat he was transferred to Ukai Sub division under the order of the Superintending Engineer dated 29th March, 1974 and he was relieved from his duties at Surat on 30th March, 1974.
He made representation to the Addl.
Chief Engineer for cancelling his transfer order which was rejected and he was directed to join at Ukai but he did not do so and continued to be absent without sanction of any leave and instead he filed a civil suit challenging validity of the order of transfer.
The Superintending Engineer by his letter dated 18th April, 1974 directed the respondent to show cause as to why action should not be taken against him for disobeying the order of transfer and also for unauthorised absence from duty in breach of service Regulation No. 113.
The respondent failed to join his duty even after a warning.
Thereafter the Superintending Engineer sent a letter dated 24th April, 1974 by registered cover which contained a warning but the same was returned back by the postal authorities with an endorse ment that the addressee refused to accept the same.
Meanwhile, the Chief Engineer by his order dated 27th May, 358 1974 discharged the respondent from service in accordance with service Regulation No. 113 as he had continued to remain absent from duty since 30th March, 1974.
The respondent filed a writ petition before the High Court challenging the validity of the order of his discharge from service.
A learned Single Judge of the High Court quashed the order of discharge but looking to the attitude of the respondent and continued conduct of disobedience of the orders of his superior he was not granted consequential reliefs.
The respondent as well as the appellant Board preferred Letter Patent Appeals.
A Division Bench of the High Court dismissed the appeal of the appellant Board and allowed the respondent 's appeal upholding the order of discharge as illegal and void and directed the appellants to reinstate the respondent, to treat him in service, and to grant him benefits of incre ments, seniority, and promotion.
The Division Bench, howev er, did not grant full back wages but directed the Board to pay the respondent 50 per cent of back wages.
Against the order of the Division Bench of the High Court the appellants preferred an appeal to this Court by special leave.
The appeal came up for hearing and advocates for both the parties were fully heard.
Being satisfied that the Single Judge as well as Division Bench of the High Court committed error in allowing the writ petition of the re spondent, this Court suggested to the counsel for the re spondent that if he agreed the original writ petition of the respondent could be dismissed without directing him to refund the amount which he had already been paid by the appellants in pursuance to the orders of the High Court and of this Court.
The bearing was adjourned to enable counsel to obtain instructions from the respondent.
On the next hearing another counsel appeared on behalf of the respondent to argue on merits.
The Court refused to hear fresh argu ments as the hearing had already been completed.
Thereupon, the respondent appeared in person to make his submissions which the Court refused as oral.
hearing has already been completed.
However, in the interest of justice the respond ent was permitted to file written submissions.
No written submissions were filed, instead the respondent adopted an unusual course by sending an application by post expressing his no confidence in the Bench of this Court with a prayer to transfer the case to some other Bench.
The Court ignored the request of the respondent as it was unusual, uncalled for, and unjustified.
359 Allowing the appeal by special leave, this Court, HELD: No party is entitled to get a case transferred from one Bench to the other, unless the Bench is biased or there are some reasonable grounds for the same.
but no right to get a case transferred to any other Bench, can legiti mately be claimed merely because the Judges express opinion on the merits of the case on the conclusion of hearing.
[362E] Transfer of a Government servant appointed to a particu lar cadre of transferable posts from one place to other is an incident of service.
No Government servant or employee of public undertaking has legal right for being posted at any particular place.
Transfer from one place to other is gener ally a condition of service and the employee has no choice in the matter.
Transfer from one place to other is necessary in public interest and efficiency in the Public Administra tion.
[362H; 363A] Whenever, a public servant is transferred he must comply with the order but if there be any genuine difficulty in proceeding on transfer it is open to him to make representa tion to the competent authority for stay, modification, or cancellation of the transfer order.
If the order of transfer is not stayed, modified, or cancelled the concerned public servant must carry out the order of transfer.
[363B] If he fails to proceed on transfer in compliance to the transfer order, he would expose himself to disciplinary action under the relevant Rules, as has happened in the instant case.
The respondent lost his service as he refused to comply with the order of his transfer from one place to the other.
[363C] No Government servant or employee of any public under taking has a right to be absent from duty without sanction of leave, merely on account of pendency of representation against the order of transfer.
[366B] There is presumption of service of a letter sent under registered cover, if the same is returned back with a postal endorsement that the addressee refused to accept the same.
No doubt the presumption is rebuttable and it is open to the party concerned to place evidence before the Court to rebut the presumption by showing that the address mentioned on the cover was incorrect or that the postal authorities never tendered the registered letter to him or that there was no occasion for him to refuse the same.
The burden to rebut the presumption lies on 360 the party, challenging the factum of service.
[368B C] In the instant case, the respondent 's failure to join his duties at Ukai resulted in unauthorised absence and his failure to join his duties in spite of repeated reminders and letters issued to him constituted sufficient valid ground for taking action under Regulation No 113.
Before issuing the order of discharge the respondent was not only warned but he was also afforded an opportunity to explain as to why disciplinary action should not be taken against him.
The respondent acted in an irresponsible manner in.
not complying with the order of transfer which led to his dis charge from service in accordance with the Service Regula tion No. 113.
The Single Judge as well as the Division Bench both therefore erred.
in law in setting aside the order of discharge.
[368E G]
|
ivil Appeal No. 2647 of 1980.
From the Judgment and Order dated 24.4.1980 of the Patna High Court in Original Decree No. 289 of 1979(R).
Shankar Ghosh, S .P. Lal and H.K. Puri for the Appellant.
L.N. Sinha, R.N. Sachthey and A. Sachthey for the Respond ents.
The Judgment of the Court was delivered by K. JAGANNATHA SHETTY, J.
This appeal by certificate under article 133(1) of the Constitution is from a decision of the Patna High Court which reversed the decree in the suit filed by the appellant for declaration of title and confir mation of possession.
In the court of the Subordinate Judge, the First Court at Dhanbad, the plaintiff/appellants instituted a suit in respect of Schedule B of the plaint for a declaration of their homestead right thereto and for confirmation of pos session or in the alternative recovery of possession.
The suit property consists of 30 bighas, 18 kattar and 11 chha taks being part of plot nos.
59 and 70 in village Dhansar.
The plaintiff 's claim was based on a registered indenture of lease dated December 9, 1949 by which it is said that the possession in the Zamindari right of Kali Prasad was settled to Ruplal Aggarwal, father of plaintiff No. 1 and grand father of plaintiff Nos. 2 and 3.
The plaintiffs ' claim that they have become the owners of the lease hold land and are in possession of the same by exercising diverse acts of possession, mutating their name and by payments of stipulat ed rents to the State of Bihar, who recognised the said lease.
The defendant is a Government company called Messrs. Bharat Coking Coal Limited (The Company).
The Company re sisted the suit on three main grounds: firstly, that the disputed land formed part of North Bhuggatdih Colliery which had vested in the Central Government and thereafter in the company under the provisions of the Coal Mines (Nationalisa tion) Act, 1973, secondly, that the interest claimed by the plaintiffs automatically stood extinguished with the vesting of the estate of the plaintiffs ' lessor, by reason of the vesting notification 286 issued under sec.
3 of the Bihar Land Reforms Act, 1950.
Lastly, that actual lease of the land was taken much earlier expressly for the purposes of the mines and that the instru ment of 1949 is contaminated with flaw and obtained with a view to certifying the vesting of the estates in the State of Bihar and even that on a misapprehension that the so called homestead land would.
not vest.
The trial court negatived all the defences and decreed the suit.
Upon appeal by the company, the Patna High Court re versed the decree of the trial court and dismissed the suit.
There are two main findings recorded by the High Court to allow the appeal.
As to the scope and effect of the provi sions of the Bihar Land Reforms Act, 1950 in respect of the suit property, the High Court held: "For the reasons indicated above, I am of the view that a lease granted to the plaintiffs in the instant case was an encum brance and it was annihilated with the issu ance of the notification under sec.
3 of the Act.
The submission urged on behalf of the appellants, therefore, in this behalf must be accepted.
The lease of the plaintiffs having come to an end consequent upon the issuance of notification under sec.
3 of the Act, the plaintiffs have no title to be declared and the decree of the trial court is liable to be set aside.
" As to the nature of the suit property and the scope and effect of the Coal Mines (Na tionalisation) Act, 1973, the High Court on an appraisal of the oral and documentary evidence led by both the parties said: "I would, therefore, prefer their positive evidence (referring to the defend ants/respondents evidence) than to the nega tive evidence adduced on behalf of the plain tiffs.
It will, however, be seen that the suit lands are adjacent to a coal mine, namely, North Bhuggatdih Colliery and were being used for the purposes of the said mine, namely, stacking of coal and effecting local sales thereof.
The conclusion is, therefore, ines capable that the suit lands are more within the meaning of the Nationalisation Act.
What vests under the Nationalisation Act is the mine and not merely the interest of the owner of the mine.
" 287 Having regard to these findings, the High Court did not find it necessary to examine whether the instrument of 1949 was a genuine transaction.
In this appeal, on the submission of counsel for both sides, two questions arise for our consideration: (i) wheth er the suit lands had vested, free from encumbrance in the.
State consequent upon the issuance of Notification under sec.
3 of the Bihar Land Reforms Act; and (ii) whether the suit land is "mines" within the meaning of the ? In our opinion, it is unnecessary to consider the first question and indeed it is not proper also to consider the question in the absence of the State which is a necessary party for adjudication of that dispute.
The State of Bihar is not impleaded as a party to the suit and we, therefore, refrain from expressing any opinion on the first question.
On the second question, the relevant provisions of the (The Act) may now be noted.
"Section 2(h) defines "mines" to mean any excavation where any operation for the purpose of searching for or obtaining minerals has been or is being carried on, and includes XXX XXX XXX XXX XXX (iv) all open cast workings; XXX XXX XXX XXX XXX (vi) all lands, buildings, works, adits, levels, planes, machinery and equip ments, instruments stores, vehicles, railways, tramways and sidings in, or adjacent to, a mine and used for the purposes of the mine; XXX XXX XXX XXX XXX (x) all lands, buildings and equip ments belonging to the owners of the mine, and in, adjacent to or situated on the surface of, the mine where the washing of coal obtained from the mine or manufacture, therefrom, of coke is carried on.
XXX XXX XXX XXX XXX XXX 288 Section 3, so far it is relevant, reads.
"(1) On the appointed day, the right, title and interest of the owners in relation to the coal mines specified in the Schedule shall stand transferred to, and shall vest absolutely in, the Central Government free from all incumbrances . . " Section 5(1) reads as under: "(1) Notwithstanding anything con tained in secs.
3 and 4, the Central Govern ment may, if it is satisfied that a Government company is willing to comply, or has complied, with such terms and conditions as that Govern ment may think fit to impose, direct, by an order in writing, that the right, title and interest of an owner in relation to a coal mine referred to in sec.
3, shall, instead of continuing to vest in the Central Government, vest in the Government Company either on the date of publication of the direction or on such earlier or later date (not being a date earlier than the appointed day), as may be specified in the direction.
" Section 6(1) provides as under: "(1) All property which vests in the Central Government or in a Government company under this Chapter 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.
" Sections 8 to 10 in chapter III provide for payment of compensation to owners of coal mines.
Provisions under Chapter IV of the Act deal with claims to be .made for compensation and for disbursing the amounts payable to the Owners of coal mines by Commissioner of Payments.
On behalf of the plaintiffs, 11 witnesses were examined including plaintiff No. 1 himself.
Most of the witnesses have not made any relevant statement on the question of location or user of the suit land.
289 However, Kanhaiya Lal Agarwal, witness No. 6 for the plain tiff stated, "The land is full of collieries on all the four sides." Likewise Ram Briksha Viswakarma, witness No. 8 for the plaintiffs has stated that the suit land is a fallow land and no crop is grown on it and there is nothing except the road in between the suit land and the North Bhagatdih Colliery.
The 9th witness of the plaintiffs B.K. Mukherjee, who surveyed the locality and submitted a report stated: "At the time of my inspection, the defendants were removing the over burdened surface and then taking out coal and this is called open cast working . .
I do not see the quarry by Southern side of the leased coal land but do not remember whose quarry was there.
There were coal all over the land but it was after the burden of earth was removed . .
The coal was being ,cut at the depth of 25 from the surface.
Adjoining the quarry, the land was not for homestead pur poses.
" The witnesses for the defendant company have specifical ly stated that the land in dispute constitutes the upper layer of the coal lying beneath and above the surface.
The working of the mines is by open cast working system.
When the mining operations are carried on in the other parts of the Seam, the land is being used for the various purposes connected with the mining operations.
In the light of this evidence, the location of the suit land and the uses to which it is put to are beyond doubt.
The land is being used for carrying on the mining operations and it is adjacent to a mine.
It is used for the purposes of the mine for carrying on the mining operations in respect of the part of the Seam lying immediately below the surface.
Apparently, there cannot be any working mine without the surface being included in that concept.
If the surface does not form part of the concept of mine, it is not possible to have any excavation.
Section 2(h)(iv) includes open cast working within the definition of "mine".
Secondly, the suit land is also adjacent to a coal mine, namely, North Bhagatdih Colliery and is being used for the purposes of the said mine, namely, stacking of the coal and effecting local sale thereof.
It is, therefore, a mine as defined under sec.
2(h)(vi) of the Act.
Under sec.
3 of the Act, the right, title and interest of the owners in relation to the coal mines stand trans ferred to and shall vest abso 290 lutely in the Central Government free from encumbrances.
For the purpose of acquisition and vesting, it is immaterial whether the mine belongs to the State or to the plaintiffs.
In either case, the Act extinguishes the title.
A Constitu tion Bench of this Court in State of West Bengal vs Union of India, [1964] 1 SCR 371 has held that under Entry 44 of List 3 of the Seventh Schedule to the Constitution, Parliament is competent to make a law for acquisition of property owned by the State.
It was, however, urged for the appellants that there is no proper pleading or issue for determination of the afore said question and the evidence let in should not be looked into.
It is too late to raise this contention.
The parties went to trial knowing fully well what they were required to prove.
They have adduced evidence of theft choice in support of the respective claims.
That evidence has been considered by both courts below.
They cannot now turn round and say that the evidence should not be looked into.
This is a well accepted principle.
In Kunju Kesavan vs M.M. Philip & Others, ; , this Court has stated (as summarised in the headnote at p. 637): "The parties went to trial, fully understanding the central fact whether the succession as laid down in the Ezhava Act applied to Bhagavathi Valli or not.
The ab sence of an issue, therefore, did not lead to a material sufficient to vitiate the decision.
The plea was hardly needed in view of the fact that the plaintiff stated in his replication that the "suit property was obtained as makka thayam property, by Bhagavathi Valli under the Ezhava Act".
The subject of exemption from Part IV of the Ezhava Act, was properly raised in the trial court and was rightly considered by the High Court.
" On the facts and circumstances of the case we cannot, therefore, accept the contention urged for the appellant in this regard.
In the result and for the reasons stated above, the appeal fails and is dismissed.
In the circumstances, howev er.
we make no order as to costs.
P.S.S. Appeal dis missed.
| IN-Abs | Section 3 of the Bihar Land Reforms Act, 1950 provided for vesting an estate or tenure in the State.
Section 2(h) of the defines a 'mine, to mean any excavation where any operation for the purpose of searching for or obtaining minerals has been or is being carried on.
Sub clause (iv) thereto includes there in all open cast workings and sub clause (vi) takes in all lands, buildings etc., in or adjacent to a mine and used for the purposes of the mine.
Section 3(1) provides for acquisi tion of rights of owners in respect of coal mines by the Central Government.
Section 5(1)empowers the Central Govern ment to direct vesting of the said rights in a Government company.
Section 6(1) refers properties vested in the Cen tral Government free from mortgages etc.
The appellants instituted a suit in respect of a large expanse of land for declaration of their homestead right thereto.
The possession in the zamindari right was settled to their ancestor in 1949.
They, therefore, claimed owner ship of leasehold land.
The respondent Government company resisted the suit on the grounds, firstly, that the disputed land formed part of a colliery which had vested in the Central Government and thereafter in the company under the provisions of the and secondly, that the interest claimed by the plaintiffs, automatically stood extinguished with the vesting of the estate of the plaintiffs ' lessor by reason of the notification issued under section 3 of the Land Reforms Act.
The trial court negatived all the defences anti decreed the suit.
284 Reversing the said decree, the High Court held that the lease granted to the plaintiffs was an encumbrance which was annihilated with the issuance of the notification under section 3 of the Land Reforms Act, and that the lease having thus come to an end the plaintiffs had no title to be declared.
It further found that the salt lands were adjacent to a coal mine and were being used for the purpose of the said mine.
Therefore, it held that the suit lands were more within the meaning of the Nationalisation Act, and that what vests under that Act is the mine and not .merely the interest of the owner of the mine.
Dismissing the appeal, HELD: 1.1 The evidence on record both for the plaintif fappellants and the defendant respondents makes it evident that the land was being used for the purpose of the mine for carrying on the mining operations in respect of the part of the seam lying immediately below the surface.
There cannot be any working mine without the surface being included in that concept.
If the surface does not form part of the concept of mine, it is not possible to have any excavation.
Section 2(h)(iv) of the includes open cast working within the definition of 'mine. ' [289E F] 1.2 The suit land was also adjacent to a coal mine and was being used for the purposes of the said mine, namely, stacking of the coal and effecting local sale thereof.
It was therefore, a mine as defined under section 2(h)(vi) of the Act.
[289G] 2.
Under section 3 of the said Act, the right, title and interest of the owners in relation to the coal mines stood transferred to and vested absolutely in the Central Govern ment free from encumbrances.
It was immaterial whether the mine belonged to the State or to a private party.
The appel lant 's title to the said land, if any, thus stood extin guished.
[289H; 290A] State of West Bengal vs Union of India, [1964] 1 SCR 371, referred to.
The parties went to trial knowing fully well what they were required to prove.
They have adduced evidence of their choice in support of the respective claims.
That evidence has been considered by both courts below.
The appellants cannot now turn round and say that the evidence should not be looked into.
This is a well accepted princi ple.
[290C D] 285 Kunju Kesavan vs
M.M. Philip & Ors., ; , referred to.
|
Appeals Nos. 143 to 145 of 1954, 27 to 30 and 161 to 164 of 1956.
Appeals from the judgment and order dated September 14, 1953, of the former Travancore Cochin High Court in Original Petitions Nos. 53, 56 and 57 of 1952.
Appeals from the judgment and order dated December 14, 1954, of the Mysore High Court in C. P. Nos.
755 52 and 53 and W. P. Nos. 105 and 106 of 1954.
Appeals from the judgment and order dated March 22, 1955, of the Mysore High Court in Writ Petition No. 122 of 1954 and order dated April 7, 1955, in W.P. Nos. 35, 36 and 37 of 1955.
K.S. Krishnaswami Iyengar, M. U. Isaac and Sardar Bahadur, for the appellants in C. As.
143 45 of 1954.
H. N. Sanyal, Addl.
Solicitor General of India, B. Gana pathy Iyer and R. H. Dhebar, for the appellants in C. As.
27 30 and 161 164 of 1956.
R. Ganapathy Iyer and R. H. Dhebar, for the respondent in C. As.
143 145 of 1954.
A. V. Viswanatha Sastri and G. Gopalakishnan, for the respondents in C. As.
27 30 of 1956.
A. V. Viswanatha Sastri, K. R. Choudhury and G. Gopalakri shnan, for the respondents in C. As.
161 164 of 1956.
April 28.
The Judgment of the Court was delivered by S.K. DAS J.
This judgment relates to and governs eleven appeals which for convenience have been classified into two groups.
The first group may be called the group of Travancore Cochin appeals, and within this group fall Civil Appeals Nos. 143 to 145 of 1954.
The, second group may be called the group of Mysore appeals and within this group are eight appeals, namely, Civil Appeals Nos.
27 to 30 of 1956 and 161 to 164 of 1956.
By reason of the circumstance that certain common questions of law and fact arise in all these eleven appeals, they have been heard one after the other; but it will be convenient and will avoid confusion if we state the facts relating to the Travancore Cochin group first and then deal with the questions arising therefrom.
We shall then state the additional facts of the Mysore group of appeals, and answer the questions arising therefrom, in so far only as they have not been answered already in relation to the Travancore Cochin group.
It may be here added 756 that in the Travancore Cochin appeals (Civil Appeals 143 to 145 of 1954) the appellant is the assessee, A. N. Lakshmana Shenoy, of Messrs. New Guna Shenoy Company, Ernakulam, and the two respondents are the Income tax Officers of Ernakulam in Cochin and of Kottayam in Travancore.
In the other group of appeals, namely, the Mysore appeals, the appellants are the Income tax Officers of certain income tax circles in Bangalore and the respondents are assessees who carry on business within the jurisdictional area of the said Income tax Officers.
In the Travancore Cochin appeals, the High Court of Travancore Cochin came to a decision against the assessee, while in the Mysore appeals the High Court of Mysore came to an opposite conclusion on identical questions of law; that is why in the first group of appeals the assessee is the appellant and in the second group the appellants are the Income tax Officers.
Travancore Cochin appeals: We proceed now to deal with the Travancore Cochin appeals.
The assessee, A. N. Lakshmana Shenoy, is a hardware merchant who carried on his trade and business for several years in the then States of Travancore and Cochin, with his headquarters at Ernakulam in Cochin.
He was assessed to income tax in both the States under the income tax law in force there, namely, the Cochin Income tax Act of 1117 M. E. (hereinafter referred to as the Cochin Act) and the Travancore Income tax Act of 1121 M. E. (hereinafter referred to as the Travancore Act).
He was so assessed by the Incometax Officer at Ernakulam for the Cochin State and the Income tax Officer at Kottayam for the Travancore State.
It is a matter of history that Cochin and Travancore were formerly independent States, and till the lapse of paramountcy, the Crown as represented by and operating through the political authorities provided the nexus between those States and the Central Indian Government.
The Indian Independence Act, 1947, released the States from their obligation to the Crown; but in August, 1947, the Rulers of the two States acceded to the Dominion of India.
This was followed by a process of 757 two fold integration the consolidation of the States into sizeable administrative units and their democratisation.
On May 27, 1949, the Rulers entered into a covenant which was concurred in by the Government of India.
By that covenant the Rulers agreed that as from the first day of July, 1949, the States of Travancore and Cochin should be united in and form one State with a common executive, legislature and judiciary by the name of the United State of Travancore and Cochin.
The covenant further provided that " there shall be a Rajpramukh for the United State and the Ruler of Travancore shall be the first Rajpramukh; the executive authority of the United State shall be exercised by the Rajpramukh and there shall be a council of ministers to aid and advise him ".
Article IX of the covenant said that " the Rajpramukh 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 earlier Instruments of Accession of the covenanting States; and he shall by such Instrument, accept as matters with respect to which the Dominion Legislature may make laws for the United State all the matters mentioned in List I and List III of the Seventh Schedule to the said Act, except the entries in List I relating to any tax or duty ".
There was a proviso to the Article which said that nothing in the Article shall be deemed to prevent the Rajpramukh from accepting any or all of the entries in the said List I relating to any tax or duty as matters with respect to which the Dominion Legislature may make laws for the United State.
On July 14, 1949, a supplementary Instrument was executed by the Rajpramukh by which he accepted, on behalf of the United State, all matters enumerated in List I and List III of the Seventh Schedule to the Government of India Act, 1935, as matters in respect of which the Dominion Legislature might make laws for the United State, subject, however, to "the proviso that nothing contained in the said lists or in any other provision of the Government of India Act, 1935, shall be deemed to empower the 758 Dominion Legislature to impose any tax or duty in the territories of the United State.
The result was that in spite of the integration and accession of the United State to the Dominion of India, the Cochin Act continued to be in force in the territory formerly known as Cochin and the Travancore Act in the territory known as Travancore.
On November 24, 1949, there was a proclamation by the Rajpramukh which stated that in the best interests of the United State of Travancore and Cochin it was desirable that the constitutional relationship established between the United State and the Dominion of India shall not only be continued, but the relation as between that State and the contemplated Union of India shall be further strengthened ; it was then stated that the Constitution of India as drafted by the Constituent Assembly of India which included duly appointed representatives of the United State provided a suitable basis for strengthening the relation between the two States.
The proclamation then went on to say ' 'And whereas by virtue of the power vested 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 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.
" The Constitution of India came into force on January 26, 1950, and on that date Travancore Cochin became one of the Part B States within the Constitution of India.
Under that Constitution the subject of "taxes on income other than agricultural income" was 759 included in the Union Legislative List and Parliament alone ' had exclusive power to; make laws in respect thereof All laws in force in the territory of Travancore Cochin became subject to the Constitution of lndia when it came into force; but article 277 of the Constitution enaccted " Any taxes, duties, cesses or fees which immediately before the commencement of this Constitution, were being lawfully levied by the Government of any State or by any municipality or other local authority or body for the purposes of the State municipality, district or other local area may, notwithstanding that those taxes, duties, cesses or fees are mentioned in the Union List, continue to be levied and to be applied to the same purposes until provision to the contrary is made by Parliament by law.
The result of the aforesaid provision of the Constitution was that the taxes leviable under the Cochin Act or the Travancore Act continued to be so levied until provision to the contrary was made by Parliament by law.
Such provision was made by the Finance Act, 1950 (XXV of 1950).
Section 3 of that Act extended the Indian Income tax Act, 1922, to the whole of India except the State of Jammu and Kashmir, with effect from April 1, 1950.
The interpretation of section 13 (1) of this Finance Act, 1950, is one of the questions argued in these appeals, and the relevant provision of that sub section must be quoted in full "If immediately before the 1st day of April, 1950, there, is in force in any Part B State other than Jammu and Kashmir, or in, Manipur, Tripura or Vindhya Pradesh or in the merged territor of CoochBehar any law relating to income tax or super tax or tax on profits of business, that law shall cease to have effect except for the purposes of the levy, assessment and collection of income tax and super tax in respect of any period not included in the previous year for the purposes of assessment under the Indian Income tax Act, 1922, for the year ending on the 31st day of March, 1951, or for any, subsequent year, or, as the case may be, the levy, assessment and collection of 97 760 the tax on profits of business for any chargeable accounting period ending on or before the 31st day of March 1949.
Provided that any reference in any such law to an officer, authority, tribunal or court shall be construed as a reference to the corresponding officer, authority, tribunal or court appointed or constituted under the said Act, and if any question arises as to who such corresponding officer, authority, tribunal or court is, the decision of the Central Government thereon shall be final: ".
So far we have traced the constitutional history of the integration of Travancore Cochin, its accession to the Dominion of India and finally its acceptance of the Constitution of India whereby it became a Part B State within the Constitution of India.
We now go back to the story of the assessments made on the assessee.
The income of the assessee for the two accounting years, 1122 and 1123 M.E. (corresponding to the years ending on August 16, 1947, and August 16, 1948, respectively) was assessed in the two assessment years, 1123 and 1124 M.E. in accordance with the Cochin Act by the Income tax Officer at Ernakulam by his orders dated July 28, 1949, and January 31, 1950, respectively.
These assessments, the assessee alleged, became final and he paid the taxes accordingly.
Similarly, the income of the assessee in Travancore for the accounting years 1122 and 1123 M.E. was assessed under the Travancore Act for the assessment years 1123 and 1124 by the Income tax Officer, Kottayam, by his orders dated April 11, 1949, and July 30, 1949, and these assessments also, according to the assessee, became final and he paid the taxes accordingly.
The income of the assessee for the accounting year 1124 M.E.was assessed under the Indian Incometax Act ' 1922, in the assessment year 1951 52 by the Income tax Officer, Ernakulam, by his order dated January 21, 1952.
The account books of the assessee were rejected as unreliable and the Income tax Officer, Ernakulam, made a " best of judgment " assessment.
This assessment order is Ext.
VIII in the record.
The assessee appealed against it and, subsequently, on 761 December 14, 1953, that is, subsequent to the decision on the three writ petitions filed in the High Court of Travancore Cochin, the Appellate Assistant Commissioner, Trivandrum, passed an order which has been produced before us with an application for taking it on the record.
We accepted the application and both the assessment order, Ext.
VIII dated January 21, 1952, and the appellate order dated December 14, 1953, will be duly considered by us.
On February 12, 1952, the Income tax Officer, Ernakulam, issued four notices to the assessee, two under section 44 of the Cochin Act and two under section 47 of the Travancore Act stating therein that in consequence of definite information which had come into his possession, he had discovered that the income of the assessee assessable to income tax for the assessment years 1123 and 1124 M. E. had been under assessed and the Income tax Officer, therefore, proposed to re assess the said income; the assessee was asked to submit a return in respect of his total world income, for the two years in question.
On March 14, 1952, the Income tax Officer, Kottayam, issued two similar notices to the assessee under section 47 of the Travancore Act stating therein that he had discovered in consequence of definite information which had come into his possession that the income of the assessee for the two years 1123 and 1124 assessable to income tax had either escaped assessment or had been under assessed or had been assessed at too low a rate and therefore be proposed to re assess the said income.
Presumably, the Incometax Officer, Kottayam, issued the two notices, because it was doubtful if the Income tax Officer, Ernakulam, had authority to issue notices to the assessee under the Travancore Act.
Nothing, however, turns upon this, so far as the appeals before us are concerned.
On June 16, 1952, the assessee filed a writ petition in the High Court of Travancore Cochin in which he challenged the jurisdiction of the Income tax Officer, Ernakulam, to re assess his income for the two assessment years, 1123 and 1124 M. E.
On the very day on which the assessee filed his writ petition, the Incometax Officer, Ernakulam, made an " escaped income " 762 assessment under section 44 of the Cochin Act for the assessment year 1123.
This ' order was communicated to the assessee on June 17,1952, and the assessee filed a second writ petition in, the High Court TravancoreCochin ion June 19, 1952, in which he again challenged the, jurisdictions of the Income tax Officer, Erhakulam to make the assessment Linder section 44 of the Cochin Act and further said ' that %the assessment was made in spite of his application for adjournment 'and an 'order of stay passed by the High Court on June 17, 1952.
On June 20, 1952 the assessee filed a third writ petition in the Travancore Cochin High Court in respect of the two notices issued to him by the Income tax Officer, Kottayam.
By this writ petition the assessee challenged the jurisdiction of the Income tax Officer, Kottayam, to issue the two notices; in question under section 47 of the Travancore Act.
;These three writ petitions, numbered as original petitions 53, 56 and 57 of 1952, were dealt with together by the TravancoreCochin High Court and a Bench of three Judges of the said High Court held by their judgment and order dated September 14, 1953, that the, two Income tax Officers concerned had jurisdiction to re assess the income of the assessee for the: two assessment years 1123 and 1124 M. E.
They accordingly dismissed the writ petitions, but without costs.
They, however, gave a certificate that the cases were fit for appeal to the Supreme Court under article 133 of ' the Constitution and on that certificate the three appeals, which we have called Travancore Cochin appeals, have been brought to this Court, from the judgment and order of the High Court of Travancore Cochin dated September 14, 1953.
In the High Court three main points were urged on behalf of the assessee : the first point taken was that with the passing of the Finance Act, 1950, which made Travancore Cochin a " taxable territory " within the meaning of the Indian Income tax Act, 1922, incometax laws of Travancore and Cochin became void and inoperative and Parliament could not, under section 13, keep alive the Income tax Acts of Travancore and 'Cochin, or any, provisions thereof, inconsistent with 763 the Constitution Section 13 of the Finance Act, 1950,was, therefore, invalid in so far as it tried to keep alive the Cochin Act or the Travancore Act for the purpose of levy, assessment and collection of incometax, for, the period referred to therein.
The second contention was that even if section 13 of the Finance Act, 1950,was valid and kept alive the provisions of the Cochin Act and the Travancore Act, it did so only " for the purpose of the levy, assessment and collection of income tax and super tax " in respect of the period mentioned in the section, and section 13(1) did not have the, effect of saving the provisions of the Travancore Act or Cochin Act for, the purpose of " re assessment of income tax and super tax ".
The third contention urged was that neither of the two Income tax Officers concerned had any definite information in consequence of which they came to any discovery that the income of the assessee for the two years in question had been under ' assessed or escaped assessment or had been assesed at too low a rate.
It was contended on behalf of the assessee that the statements in the notices with regard to definite information etc.
were only " a pretence to clutch at jurisdiction " and the very foundation of the action sought to be taken by the Income.
tax Officers under section 44 of the Cochin Act or section 47 of the Travancore Act was non existent.
The learned Judges of the High Court negatived the aforesaid contentions, and as we have already stated, the writ petitions.
Before us the first point urged on behalf of the assessee in the High Court has not been pressed.
The other two points, namely, (1) the true construction of section 13(1) of the Finance Act, 1950, and (2) tile absence of any foundation for the action sought to be taken under section 44 of the Cochin Act or section 47 of the Travancore Act have been pressed with great vehemence.
A third point which was specifically raised in the Mysore appeals in the High Court there and which arises in the Travancore Cochin appeals also, has been taken :before us, though it was not specifically taken in the High Court of Travancore Cochin.
We have allowed learned counsel for the assessee to raise the point, as 764 it involves a pure question of law.
The point is this.
In the wake of accession and political integration of the States and Unions of States with India arose the problem of federal financial integration.
The States ,and Unions of States, so long as they continued as separate units, had retained their own pre existing public finance structures.
They had one common feature, distinguishing them from the Provinces of India, in that except in respect of certain matters covered by the Standstill Agreements, the States were free to follow their own policies in matters of federal finance and taxation, that is to say, in the field of public finance, such as customs, income tax, central excise, railways, posts and telegraphs etc.
When the question of integration of these States with India arose, naturally the question of extinguishing the special rights and obligations of the States in the field of federal finance and of making good to them the net gap in their revenues also arose.
By a resolution dated October 22, 1948, the Government of India appointed a committee of experts, referred to as the Indian States Finances Enquiry Committee, to consider the problem of federal finance.
The Committee 's terms of reference were, inter alia, as follows " To examine and report upon: (1)the present structure of Public Finance in Indian States and Unions of States; (2)the desirability and feasibility of integrating Finance in Indian States and Unions of States with that of the rest of India, to the end that a uniform system of Federal Finance may be established throughout the Dominion of India; (3)whether, and if so, the extent to which the process of integrating Federal Finance in the Indian States and Unions with that of the rest of India should be gradual and the manner in which it should be brought about; and the machinery required for his purpose, especially as regards the legislative groundwork and the administrative Organisation necessary for the imposition, assessment and collection of federal taxes; ".
The Committee submitted a report in due course and 765 made certain recommendations.
On the basis of those recommendations certain agreements were entered into between the President of India and the Rajpramukhs, including the Rajpramukh of Travancore Cochin and the Rajpramukh of Mysore.
We shall refer in somewhat greater detail to these agreements, particularly the agreements entered into by the Rajpramukhs of Travancore Cochin and Mysore.
The contention on behalf of the assessee is that these agreements with Part B States with regard to certain financial matters received constitutional sanctity in article 278 of the Constitution (now repealed by the Constitution (Seventh Amendment) Act, 1956).
Article 278, so far as it is relevant for our purpose, was in these terms " 278 (1).
Notwithstanding anything in the Constitution, the Government of India may, subject to the provisions of clause (2), enter into an agreement with the Government of a State specified in Part B of the First Schedule with respect to (a)the levy and collection of any tax or duty leviable by the Government of India in such State and for the distribution of the proceeds thereof otherwise than in accordance with the provisions of this Chapter ; (b). . (c). . and, when an agreement is so entered into, the provisions of this Chapter shall in relation to such State have effect subject to the terms of such agreement.
" The argument on behalf of the assessee is that the recommendations of the Indian States Finances Enquiry Committee which were accepted by the Rajpramukh of Travancore Cochin in the agreement entered into by the Rajpramukh with the President of India on February 25, 1950, were designed to secure " legal continuity of pending proceedings " and " finality and validity of completed proceedings " under the preexisting State legislation ; therefore, section 13(1) of the Finance Act, 1950, should be so construed as to be in consonance with the aforesaid agreement, and, in the alternative, if section 13(1) is construed to be at variance with the aforesaid financial agreement, it should be 766 held to be void by reason of the; provisions; of articles 278 and 295 of the Constitution.
We proceed now to a consideration in detail of the arguments urged before us on behalf of the assessee in the Travancore Cochin appeals.
In logical sequence the point as to the absence of foundation for the action taken by the two Income tax Officers of Ernakulam and Kottayam in the matter of the issue, of" notices.
for reassessment, comes first and we propose now to deal with it.
It is necessary at this stage to set out the two sections under which the Income tax Officers proposed to take action against the assessee.
The two sections are section 44 of the Cochin Act and section 47 of the Travancore Act.
Section, 44 of the Cochin Act, so far as it is relevant for our purpose, is in these terms " 44(1) If in consequence of definite information which has come, into his possession the Income tax Officer discovers, that income ' profits or gains chargeable to income tax have escaped assessment in any year, or have been under assessed, or have been assessed at too low a rate, or have been the subject of excessive relief under this Act the Income tax Officer way, in any case in which he has reason to believed that the assessee has concealed the particulars of his income or deliberately furnished inaccurate particulars thereof, at any time within eight years, and in any other case at any time within four years of the end of that year, serve, on the person liable to pay tax on such income, profits or gains, or, in the case of a. company, on the principal officer thereof, a notice containing all or any of the requirement, which may be included in a notice under sub section (2) of section 27, and, may proceed to assess or re assess such income profits or gains, and the provisions of this Act shall so far as may be, apply, accordingly,as if the notice were a notice issued under that sub section.
" Section 47 (1) of the Travancore Act is identical ill terms and need not therefore be, quoted.
It is worthy, of note that the terms of the.
aforesaid two sections are similar to section 34 of, the Indian Income tax Act, 1922, as it,.stood after the amending Act of 1939 and, before the amendments of 1948.
The two requisites conditions 767 for the application of the section are contained in the first part, and they are: firstly, there must be definite information which has come into possession of the Income tax Officer and, secondly, in consequence of that information, the Income fax Officer discovers that,, income, profits or gains chargeable to income tax have escaped assessment in any year etc.
It is only when these two conditions are fulfilled that the Income tax Officer can take necessary action under section 44.
The question before us is whether these two conditions were fulfilled in the cases out of which the TravancoreCochin appeals have arisen.
As in the High Court so also before us, the only document on which the Income tax Officers relied for this part of their case is Ext.
This document, according to the Income tax Officers, furnished the definite information in consequence of which they made the necessary discovery.
Learned counsel for the assessee has taken us through Ext.
VIII, Ext.
A (statement of the case submitted by the assessee to the Appellate Assistant Commissioner) and the order of the Appellate Commissioner, dated December 14, 1953, and he has contended that (1) Ext.
VIII does not relate to the years in question and cannot, therefore, constitute definite information for those years; (2) it gives certain highly speculative grounds for discrediting the account books of the assessee, which grounds have not been accepted by the Appellate Assistant Commissioner; and (3) in any view, it contained no information on which the Income tax Officers could be said to have made any discovery.
As to (1) above, the High Court rightly pointed out that Ext.
VIII contained information of a kind which disclosed a definite and systematic pattern of transactions for avoidance of tax not only in respect of the year covered by the order but spread over years anterior to it.
Secondly, Ext.
VIII disclosed, according to the Income tax Officers concerned, a systematic suppression of cash Bales., a regular trade in purchase and sale of controlled commodities at profiteering rates, passing bogus bills for purchases, understating stocks, segregating stocks 98 768 for clandestine sales, and selling goods to the branches at artificial book losses.
There can be no doubt that all this information, if honestly believed, would reasonably support the opinion of the Income tax Officers that there is a discovery of " escaped " income etc., within the meaning of section 44 of the Cochin Act and section 47 of the Travancore Act.
But learned counsel for the assessee argues that while it may be right to say that Ext.
VIII prima facie contains the kind of information which will satisfy the conditions of section 44 of the Cochin Act and section 47 of the Travancore Act, we must take note of the fact that according to the Appellate Assistant Commissioner, as shown by his order dated December 14, 1953, the so called information contained in Ext.
VIII was really non existent, and the information being non existent, there was no foundation for the action taken by the Income tax Officers.
We are unable to accept this argument as correct.
Apart from the consideration that the order of the Appellate Assistant Commissioner was not available when the Income tax Officers issued their notices, we think that the argument overstates the effect of the order of the Appellate Assistant Commissioner.
It is true that the Appellate Assistant Commissioner considered in detail the various criticisms of the Income tax Officer with regard to the account books along with the explanations offered on behalf of the assessee; but he expressed his final conclusion in the following words: " I have given my careful consideration to the various adverse criticisms of the Income tax Officer and to the Advocate 's answers thereto.
I have also looked into the accounts and other revelant papers.
As a result, I am satisfied that the Income tax Officer 's criticisms are in most cases not at all well founded and that the Advocate has successfully met almost every point raised by the former.
In fact, the Income tax Officer himself admitted at the time of the hearing that has order was shown to be quite vulnerable.
But he contended that it would not be enough if the Advocate merely answered the specific criticisms in the order and that the case should be looked at as a whole and a decision should be arrived at as to whether on such 769 a comprehensive view the appellant 's accounts could be regarded as completely faultless and worthy of unquestioned acceptance.
Seen from this broad angle, it cannot of course be said that the accounts are free from defects.
There is firstly no stock book for uncontrolled goods and the accuracy of the inventories of opening and closing stocks of such goods is therefore open to doubt.
Again, whatever may be the appellant 's reasons for not recording full details for cash sales, there is the admitted fact that the cash sales stand partly unvouched and details as to the names and addresses of purchasers are not available for the major part of the year, and there is therefore no possibility of satisfying one self whether all the cash sales have been duly brought to account.
There is also the further fact that at least some of the purchases are not satisfactorily vouched and that the rates of gross profit disclosed by the accounts both at the head office and the branches are not quite adequate.
These, in my opinion, are sufficient grounds for discrediting the book results and resorting to an estimate of the turnover as well as the gross profit.
" It cannot, therefore, be Raid that the order of the Appellate Assistant Commissioner washed out the entire information contained in Ext.
VIII so as to strike at the very root of the jurisdiction of the Income tax Officers concerned to issue the notices in question.
It is to be remembered that there is a distinction between receipt of definite information as a consequence of which a discovery is made and a notice is issued, and the final determination as to the liability or extent of liability for escaped assessment etc.
We accept as correct the view expressed in Firm Jitanram Nirmalram vs Commissioner of Income tax (1), that the phrase " definite information " cannot be construed in a universal sense and its meaning must depend on and vary with the circumstances of each case.
There is no doubt, however, that the information must be definite, that is, more than mere guess, gossip or rumour.
There must also be a causal connexion between the information and the discovery; but " discovery " in (1) A.I.R. 1952 Pat.
770 the context of the section does not mean a conclusion of certainty at the stage of notice.
What is necessary at that stage is that the Income tax Officer should have formed an honest belief upon materials which reasonably support such belief.
This, in our opinion, is the correct view, and judged from that standpoint, Ext.
VIII fulfilled the requirements of section 44 of the Cochin Act and section 47 of the Travancore Act.
We now turn to the construction of section 13 (1) of the Finance Act, 1950.
The argument on this point has meandered over a wide area; but it is really dependent on the meaning to be given to the expression for the purposes Of the levy, assessment and collection of income tax and super tax " occurring in the section.
Does the word 'assessment ' include 're assessment ' ? The contention of the assessee is that it does not.
The Travancore Cochin High Court did not accept this contention, but the Mysore High Court did in favour of the respondents in the Mysore appeals.
The general scheme of the Cochin Act and the Travancore Act is the same as that of the Indian Income tax Act, 1922, and for a clear understanding of the meaning of the expression 'levy, assessment and collection of income tax ', it is best to explain the general scheme of these Income tax Acts with reference to the Indian Income tax Act, 1922, which served more or less as their model.
Section 3 is the charging section which imposes liability in respect of " the total income of the previous year of every individual etc.", and 'total income ' means the 'total amount of income, profits and gains computed in the manner laid down in the Act '.
It is clear that so far as the charging section is concerned, the liability does not cease unless the total income, profits and gains have been computed in the manner laid down in the Act.
Section 4 states inter alia that subject to the provisions of the Act, the total income of any previous year of any person includes all income, profits and gains from whatever source derived.
Leaving out the sections which deal with Income tax authorities we come to the sections in Chapter 111, which explain what is 771 taxable income under different heads.
Chapter IV deals with deductions and assessment, and the words 'assessment ' and Ire assessment ' occur in several sections of this Chapter.
Under section 22(2) the Incometax Officer must serve notice on any person whose total income is in the Income tax Officer 's opinion of such an amount as to render such person liable to income tax, requiring him to furnish a return in the prescribed form of his total income during the previous year.
Sub section (4) authorises the Income tax Officer to serve on any person upon whom a notice has been served under sub section
(2) a further notice requiring him to produce accounts and documents, subject to the limitation that he shall not require the production of any accounts relating to a period more than three years prior to the year previous to the year of assessment.
Section 23 provides for the making of the assessment.
Sub section (1) requires the Income tax Officer, if he is satisfied that the return made under section 22 is correct and complete, to assess the total income and to determine the sum payable.
Under sub section
(2) if the Income tax Officer has reason to believe that the return is incorrect or incomplete he must serve on the person who made the return a notice requiring him either to attend at the Income tax Officer 's office or to produce any evidence relied on in support of the return.
Sub section (3) provides that the Income tax Officer, after hearing such evidence as the person who made the return may produce and such other evidence as the Income tax Officer may require on specified points shall by an order in writing assess the total income and determine the sum payable.
Subsection (4) makes provision for an assessment by the Incometax Officer to the best of his judgment if the assessee fails to make a return or to comply with the terms of the notices issued to him.
This whole procedure, it may be recalled, not only applies on first assessment but is also prescribed by section 34 if for any reason income, profits or gains have escaped assessment or have been assessed at too low a rate.
Section 27 deals with cancellation of assessment in certain circumstances, and states " the Income tax Officer shall cancel the 772 assessment and proceed to make a fresh assessment in accordance with the provisions of section 23 ".
Section 29 talks of a notice of demand to the person liable to pay the tax etc.
, the notice specifying the sum so payable.
Section 30 gives a right of appeal from certain orders.
Section 31 deals with.
hearing of appeals and states inter alia that the appellate authority may set aside the assessment, and direct the Income tax Officer to make.
a fresh assessment.
Section 33 provides for appeals against the orders of the Appellate Assistant Commissioner and sections 33A and 33B give powers of revision to the Commissioner.
In appropriate cases the Commissioner can cancel the assessment and direct a fresh assessment.
Then comes section 34 which corresponds to section 44 of the Cochin Act and section 47 of the Travancore Act.
In substance it deals with income which has escaped assessment for one reason or another and says in the operative part that the Income tax Officer " may proceed to assess or re assess such income, profits or gains etc.
" There has been some argument before us as to the meaning of the juxtaposition of the words " assess or re assess " occurring in the section, and it has been contended that a distinction has obviously been drawn between income which has totally escaped assessment and income which has been under assessed or assessed at too low a rate etc., and the word 'assess ' appropriately applies to the former case and the word ' re assess ' to the latter case.
Two other sections which are relevant for our purpose are sections 66 and 67.
Section 66 (7) says that notwithstanding that a reference has been made under this section to the High Court, income tax shall be payable in accordance with the assessment made in the case.
The word 'assessment ' here undoubtedly includes 're assessment '.
Section 67 which bars civil suits says that no suit shall be brought in any civil court to set aside or modify any assessment made under the Act.
Here again 'assessment ' must include 're assessment ', for it cannot have been the intention that a civil suit shall lie in respect of a reassessment under section 34 but not in respect of an assessment.
This brief resume of the relevant provisons of the 773 Income tax Act clearly establishes that the word assessment ' has to be understood in each section with reference to the context in which it has been used.
In some sections it has a comprehensive meaning and in some a somewhat restricted meaning, to be distinguished from a 're assessment ' or even a 'fresh assessment '.
Now, the question is in what sense has the word assessment ' been used in section 13(1) of the Finance Act, 1950.
Two circumstances may be noticed at once,.
The long title says that the Finance Act, 1950, is an Act to give effect to the financial proposals of the Central Government for the year beginning on April 1, 1950, and in section 13(1) the collocation of words is " levy, assessment and collection of income tax".
In our opinion, both these circumstances point towards a comprehensive meaning; for it could not have been intended, as part of the proposal of the Central Government, that those whose income had totally escaped assessment should be liable but those who had been under assessed should go soot free.
We can see nothing in the words of the section which would justify such a distinction: we say this quite apart from the argument that section 13(1) should be interpreted in consonance with the financial agreement entered into between the Rajpramukh and the President, an argument to which we shall presently advert.
Moreover, the collocation of the words, levy, assessment, and collection ' indicates that what is meant is the entire process by which the tax is ascertained, demanded and realised.
On behalf of the assessee it has been contended that (1) the Income tax Act makes a distinction between a normal or original assessment under section 23, a fresh assessment under section 27 and a re assessment or second assessment under section 34 and (2) inasmuch as section 13 (1) uses the word I assessment only, it must be taken to have been used in a restricted sense.
In support of these contentions great reliance has been placed on the decision of the Privy Council in Commissioner of Income tax, Bombay Presidency and Aden vs Khemchand Ramdas (1).
The Mysore High Court also referred (1)(1938) L.R. 65 I.A. 236, 248.
774 to this decision in support of its view on the construction of section 13 (1).
We are unable to accept these contentions as correct; nor do we think that the decision cited supports the view expressed by the Mysore High Court.
The facts in Khemchands case (1) were briefly these.
The firm of Khemchand applied to the Incometax Officer to have the firm registered, the consequence of such registration being that the profits of the firm would not be assessable to super tax.
On January 17, 1927, the Income tax Officer assessed the firm to income tax for the year 1926 27 under section 23, sub section
(4) of the Act; but no super tax was imposed as the firm having applied for registration was registered.
Notice of demand for the amount assessed was made in 1927.
Subsequently, the Commissioner ordered the cancellation of registration, and directed the Income tax Officer to take necessary action thereupon.
On May 4, 1929, the Income tax Officer imposed super tax and issued a notice of demand in May, 1929.
The question in the appeal was whether the Income tax authorities had any jurisdiction to assess Khemchand 's firm to super tax for the year 1926 27.
Their Lordships pointed out that the powers of the Commissioner tinder section 33 could only be exercised subject to the provisions of the Act, of which the provisions in sections 34 and 35 were important.
They held that it was debatable whether the circumstances of the case were such as to bring it within section 34 and so far as section 35 was concerned, the Income tax Officer was hopelessly barred by time.
In that context, their Lordships said: " It is possible that the final assessment may not be made until some years after the close of the fiscal year.
Questions of difficulty may arise and cause considerable delay.
Proceedings may be taken by way of appeal and cause further delay.
Until all such questions are determined, and all such proceedings have come to an end, there can be no final assessment.
But when once a final assessment is arrived at, it cannot, in their Lordships ' opinion, be reopened except in the circumstances detailed in sections 34 and 35 of the Act (to which reference is made hereafter) and within the time (1)[1938] L. R. 65 I. A. 236. 775 limited by those sections.
In the present case the liability of the respondents both for income tax and for super tax wag determined by the Income tax Officer on January 17, 1927.
In the order made by him on that date he assessed the respondents to income tax at the maximum rate, but as the respondents were at that time a registered firm he held, as he was bound to hold, that no super tax was to be levied.
On some date before the end of March, 1927, he served on the respondents a notice of demand for the tax that he had determined was properly leviable.
The assess ment having been made under section 23, sub section
(4), no appeal lay in respect of it.
The assessment of the respondents was therefore final both in respect of income tax and super tax.
Their liability in respect of both taxes had been finally determined, and none the less because the question of their liability to supertax had been determined in their favour.
It was, indeed, contended before their Lordships that the assessment could not be regarded as having been determined inasmuch as the Commissioner might at any time, and apparently after any lapse of time, however long, cancel the registration of the respondents as a registered firm and so subject the respondents to liability to pay super tax.
Their Lordships would, in any case, hesitate long before acceding to a contention that would lead to so extravagant results.
In their opinion, however, the contention cannot prevail.
The Commissioner 's powers under section 33 can only be exercised subject to the provisions of the Act, of which the provisions in sections 34 and 35 are in this respect of the greatest importance.
" These observations lend no support to the view that the word" assessment" must always bear a particular meaning in the Income tax Act.
On the contrary, at p. 247 of the report, their Lordships said: " These two questions are so closely related to one another that they can conveniently be considered together.
In order to answer them it is essential to bear in mind the method prescribed by the Act for making an assessment to tax, using the word assessment 99 776 in its comprehensive sense as including the whole procedure for imposing liability upon the tax payer.
The method consists, of the following steps.
In the first place, the taxable income of the tax payer has to be computed.
In the next place, the sum payable by him.
on the basis of such computation has to be determined.
Finally, a notice of demand in the prescribed form, specifying the sum so payable, has to be served upon the tax payer.
" If the word ' assessment ' is taken in its comprehensive sense, as we think it should be taken in the context of section 13(1) of the Finance Act, 1950, it would include I re assessment ' made under the provisions of the Act.
Such 're assessment ' will without doubt come within the expression 'levy, assessment and collection of income tax '.
In his speech in Commissioners For General Purposes of Income Tax For City of London vs Gibbs and Others (1), Lord Simon has pointed out that the word 'assessment ' is used in the English Incometax Code in more than one sense; and sometimes within the bounds of the same section, two separate meanings of the word may be found.
One meaning is the fixing of the sum taken to represent the actual profit and the other the actual sum in tax which the taxpayer is liable to pay.
It has been contended before us that the Finance Act and the Income tax Act should be read together as forming one Code, and so read the words I assessment ' and I re assessment 'acquire definite and distinct connotations.
We are unable to agree, for the reasons which we have already given, that even if we read the Finance Act along with the Income tax Act the word ' assessment ' can be given a restricted meaning.
To repeat those reasons: the income tax code itself uses the word assessment in different senses, and in the context and collocation of the words of the Finance Act, the word 'assessment ' is capable of bearing a comprehensive meaning only.
We can find no good.
reasons for holding that in the matter of levy, assessment and collection of income tax, the Finance Act, 1950, contemplated that some persons should enjoy a,, (1)[1942] A.C. 402, 406. 777 privilege and escape payment of the full tax leviable under the provisions of the relevant Act.
On this point we approve of the decision in Firm L. Hazari Mal vs Income tax Officer, Ambala (1), where Bhandari C. J., said "These three expressions 'levy ', 'assessment ' and 'collection ' are of the widest significance and embrace in their broad sweep all the proceedings. for raising money by the exercise of the power of taxation. .
This brings us to the third question.
Is there any thing in the financial agreement of February 25, 1950, and the recommendations of the Indian States Finances Enquiry Committee, which would restrict the meaning of the expression 'levy, assessment and collection of income tax '? Or, in the alternative, bring section 13(1) of the Finance Act, 1950, into conflict with articles 278 and 295 of the Constitution? The relevant portion of the agreement between the President of India and the Rajpramukh of TravancoreCochin dated February 25, 1950, states: " Now, therefore, the President of India and the Rajpramukh of Travancore Cochin, have entered into the following agreement, namely : The recommendations of the Indian States Finances Enquiry Commitee, 1948 49 (hereinafter referred to as the Committee) contained in Part I of its report read with Chapters, 1, 11 and III of Part 11 of its Report, in so far as they apply to Travancore Cochin (hereinafter referred to as the State) together with the recommendations contained in the Comittee 's Second Interim Report, are accepted by the Parties hereto, subject to the following modifications.
" The modifications which follow have no bearing on the question at issue and need not be set out.
Now, let us examine the relevant recommendations of the Committee, which are accepted by the Parties and form part of the agreement.
These recommendations are summarised in para.
9 of the annexure to Part I of the Committee 's report, and are set out below "Our suggestions concerning certain legal and 778 other matters of general importance, affecting most federal subjects including taxes on income), which will arise in connection with federal financial integration in all States, have been set out in paragraph 11 of Chapter 11 in Part 11 of our Report.
Those relating to legal matters are, however, re produced below for convenient reference: " (5) Apart from the constitutional requirement in connection with the integration of federal finances in States vide paragraphs 37 and 40 Part I of our Report certain important issues of a legal nature will arise in connection with the actual taking over of " federal " subjects in the States by the Centre.
This is a difficult subject upon which we are not qualified to offer competent advice.
We have endeavoured, however, to indicate below the main features of what we conceive will be required in order to establish " continuity of proceedings " in regard to all " federal " subjects whether relating to revenues, expenditure or Service Departments at the point of their transition from the States to the Centre;. (a)Almost every " federal " subject is dealt with in the State as in the rest of India, under powers conferred by appropriate legislation consisting of relevant Codes, Acts, Ordinances and Statutory Rules and Regulations.
Subject to the limitations indicated below, which are designed to secure legal " continuity " of pending proceedings and " finality and validity " of completed proceedings under the pre existing State legislation , we think the whole body of State legislation relating to " federal " subjects should be repealed and the corresponding body of Central legislation extended proprio vigore to the States, with effect from the prescribed date or as and when the administration of particular " federal " subject is assumed by the Centre.
(b)For the above purpose, as well as for future "federal" administration in States, it may be necessary specifically to extend not merely the legislative, but also the executive and administrative competence of the Centre, its officers and " authorities ", and the judicial authority of its Courts, to the territories of the States.
779 (c)Such State Courts (except Courts of final appeal from orders of the State High Courts) as may in fact correspond to particular grades and classes of "British Indian" Courts (Civil and Criminal) may have to be statutorily " recognised " as " corresponding judicial authorities " for purpose of dealing with cases arising in the States under the " federal " laws of the Union of India; and the Supreme Court in India will have to be made the Court of final appeal from decisions of the State High Courts to the same extent as in the case of Provincial High Courts.
(d) Those sections of the various Indian Acts and Ordinances which set out their territorial " extent of application " will require amending so as to include State territories with effect from the prescribed date.
(e)It will be necessary to provide that all matters and proceedings pending under, or arising out of, the preexisting State Acts shall be disposed of under those Acts, by so far as may be, the " corresPonding authorities ", (nominated by the Chief Executive Authority) under the corresponding Indian Acts.
" In view of the fact that the members of the Committee themselves felt that the legal issues involved in the actual taking over of " federal " subjects in the States by the Centre constituted a difficult subject on which they were not qualified to offer competent advice and their further statement that they were merely endeavouring to indicate the main features of what they considered to be required in order to establish " continuity of proceedings ", it has been argued before us on behalf of the Income tax authorities that it would be wrong to treat the recomendations as binding statutory rules, even though the financial agreement between the high contracting Parties states generally that the recommendations are accepted; it is contended that the Committee in express terms states that the recommendations merely endeavour to indicate the main features of what the Committee thought was required, and they should not be placed on a pedestal higher than what the Committee itself did.
We think that there is much force in this contention; but in the view which we have taken of these 780 recommendations, we do not think that it is necessary to decide finally what constitutional sanctity they have acquired by reason of their acceptance in the financial agreement and the provisions of article 278 of the Constitution.
Assuming but without deciding that they have binding force, what is their true meaning and effect? The argument on behalf of the assessee is that cl.
(a) of the recommendations is the operative clause, and inasmuch as it talks of " continuity of pending proceedings " and " finality and validity of completed proceedings " tinder the pre existing State legislation, the true effect is that all assessment proceedings which have become complete and finance I by the issue of a demand notice under section 29 of the Indian Income tax Act (or corresponding section of the Cochin Act or Travancore Act) are saved under the clause and cannot be reopened; and only proceedings actually pending on the relevant date can be continued thereunder.
We are unable to accept, this as the true meaning and effect of clause (a).
What is worthy of special notice is that cl.
(a) specifically says that the clauses which follow it are the limitations or qualifications subject to which the whole body of State legislation is to be repealed, and they are designed to secure two objects continuity of pending proceedings and finality and validity of completed proceedings; therefore, cl.
(a) is not the operative clause, and it merely indicates the reasons or objects for which certain limitations or qualifications are suggested on the proposal to repeal the State legislation.
Clause (a) is followed by cls.
(b), (c), (d) and (e).
Clause (b) which deals with executive and administrative competence of Incometax Officers and judicial authority of Courts need not detain us.
So also cls.
(c) and (d), which have little bearing on the problem before us.
Clause (e) is important, and it states that " all matters and proceedings pending under, or arising out of, the pre existing State Acts shall be disposed of under those Acts etc.
" That a proceeding for re assessment under section 44, Cochin Act, or section 47, Travancore Act, is a proceeding arising out of the pre existing State Acts admits of no doubt, and is clearly covered by cl.
We see no good grounds 781 why full effect should not be given to it; it is one of the limitations, as stated in cl.
(a), subject to which the State law is to be repealed.
The matter is made still more clear by what is stated in the paragraph that immediately follows, viz. paragraph 10 of the annexure to the report of the Committee.
That paragraph states " The recommendation made in the last two subparagraphs quoted above should be understood as requiring that all income, profits and gains accruing or arising in States, of all periods which are " previous years " of the States ' assessment years 1949 50 or earlier should, subject to the provisions of section 14(2)(c) of the Indian Income tax Act, be assessed wholly in accordance with the States ' laws and at the States ' rates, respectively, appropriate to the assessment years concerned etc." really no doubt left in the matter.
The Committee did not restrict the limitations they were suggesting, to a proceeding which was actually pending on the date of repeal of the State law; it gave a wider meaning to pending proceedings that is, "proceedings pending under and arising out of the preexisting State Acts".
It is to be remembered that where an assessment starts with a notice under section 34 of the Indian Income tax Act (or corresponding section of the Cochin or Travancore Act), all the relevant provisions of that Act apply as effectively as where the assessment starts with a notice under section 22 (2) or corresponding section of the Cochin or Travancore Act in the ordinary course.
It is also not disputed that the assessment made under section 34 in any year subsequent to the relevant assessment year must be made as if it were made in the relevant assessment year, and the assessment must be based on the provisions of the Act as it stood in the year in which the income ought to have been assessed.
Having regard to these considerations, we find no difficulty in holding that a re assessment proceeding under section 44, Cochin Act, or section 47, Travancore Act, is a proceeding which comes under cl.
(e) of the recommendations of the 782 Committee, and must be disposed of under the preexisting State law.
Section 13 (1) of the Finance Act, 1950, gives effect to that recommendation.
There is, therefore, nothing in the recommendations which would restrict the meaning of the expression " levy, assessment and collection of income tax " in section 13 (1) of the Finance Act; nor do they bring section 13 (1) into conflict with articles 278 and 295 of the Constitution.
We accordingly hold that there is no substance in any of the three points urged on behalf of the assessee in the Travancore Cochin appeals.
Mysore Appeals.
These are eight appeals and the relevant facts are these.
Civil Appeals 27 to 30 of 1956 arise out of four writ petitions numbered 52 and 53 of 1953, and 105 and 106 of 1954, which were dealt with together in the Mysore High Court by a common judgment dated December 14, 1954.
Civil Appeals 161 to 164 also arise out of four writ petitions (No. 122 of 1954 and nos.
35 to 37 of 1955) filed in the same High Court.
The orders passed in those writ petitions were that they were governed by the aforesaid decision dated December 14, 1954.
ln the result, all the writ petitions were allowed with costs.
In all these cases the petitioners, who are respondents before us, were assessed to income tax under the Mysore Income tax Act, 1923 (hereinafter called the Mysore Act) for different years previous to the integration of Mysore with India, and the assessment proceedings were completed and closed under the Mysore Act by demand notices issued by the Income tax Officers concerned.
But subsequent to the integration of Mysore, notices under section 34 of the Mysore Act were issued against the petitioners, and they challenged the jurisdiction of the Income tax Officers to issue such notices.
Section 34 of the Mysore Act states " If for any reason, income, profits or gains chargeable to income tax has escaped assessment in any year, or has been assessed at too low a rate, the Income tax Officer may at any time within four years of the end of that year, serve on the person liable to 783 pay tax on such income, profits or gains, or in the case of a company, on the principal officer thereof, a notice I containing all or any of the requirements which may be included in a notice under sub section 2 of section 22, and may proceed to assess, or re assess such income, profits or gains, and provisions of this Act shall, so far as may be, apply accordingly as if the notice were a notice issued under that sub section: Provided that the tax shall be charged at the rate at which it would have been charged, had the income, profits or gains, not escaped assessment, or full assessment, as the case may be.
" It corresponds to section 34 of the Indian Income tax Act as it stood prior to the amending Act of 1939 and the general scheme of the Mysore Act was the same as that of the Indian Income tax Act, 1922, as it stood before 1939.
The two grounds on which the jurisdiction of the Income tax Officers was challenged were (1) Under the Finance Act, 1950, the Mysore Act stood repealed on and from April 1, 1950, and section 13 (1) of the Finance Act kept alive the Mysore Act for the purpose of levy; assessment and collection of incometax etc.
for the period mentioned therein, but did not save section 34 of the Mysore Act for the purpose of reassessment of income tax; therefore, the notices issued under section 34 of the Mysore Act were without jurisdiction and authority.
(2) Even otherwise, the financial agreement between the President of India and the Rajpramukh of Mysore on February 28, 1950, which received constitutional sanctity in article 278 of the Constitution rendered the initiation of such re assessment proceedings against the respondents unconstitutional and void.
The learned Chief Justice of the Mysore High Court upheld ground No. (1) and considered it unnecessary to pronounce on the second ground.
Mallapa J., in a separate but concurring judgment expressed the view that having regard to the wording of section 13 (1) of Finance Act, 1950, and the financial agreement of February 28, 1950, he had no doubt that section 13 (1) did 100 784 not provide for re assessment under section 34 of the Mysore Act.
The process of integration of Mysore with India was similar to.
that of Travancore Cochin.
The State of ,.Mysore acceded to the Dominion of India by an Instrument of Accession executed on August 9, 1947, and accepted by the Governor General on August 16, 1947.
A supplementary Instrument of Accession was executed on June 1, 1949.
By a Proclamation dated November 25, 1949, the Constitution of India to be adopted by the Constituent Assembly of India was accepted for Mysore, and on January 26,1950, Mysore became a Part B State within the Constitution of India.
A similar financial agreement was entered into by the Rajpramukh with the President of India on February 28, 1950.
On April 1, 1950, the Finance Act, 1950, applied the Indian Income tax Act, 1922, to Mysore, subject to the provisions of section 13 thereof.
In dealing with the Travancore Cochin appeals, we have fully dealt with the two grounds on which the respondent assessees in the Mysore appeals challenged the jurisdiction of the Income tax Officers concerned to issue the notices under.
section 34 of The Mysore Act.
Two additional points urged in support of ground No. (1) maybe stated here.
It has been urged that the proviso to section 34 of the Mysore Act brings out the distinction between I assessment ' and ' re assessment '; and secondly, it is contended that the jurisdiction under section 34 is limited to ascertainment of extra income not assessed and the section does not confer jurisdiction to make a new assessment, for taxing whole of that assessment, under the Act.
Learned counsel for the assessees has invited our attention to In re Kashi Nath Bagla (1); Madhavjee Damodar Thackersay and Another vs Commissioner of Income Tax, BOMBAY(2) and Anglo French Textile Co. Ltd. vs Commissioner of Income Tax, Madras, No. 4 (3).
The real question for decision in these appeals is the true scope and effect of section 13 (1) of the Finance Act, and on that question the additional points ' mentioned (1) A. 1.
R. 1932 All.
(2) (3) [1950] 18 785 above throw very little light.
There is, indeed, a dis tinction between an original or normal assessment under section 23 and a re assessment under section 34; but we ' have shown that the word " assessment " has been used in more than one sense in Income tax law, and( so far as section 13 (1) of the Finance Act, 1950, is concerned, there is no doubt that the expression I levy, assessment and collection of income tax ' has been used in a comprehensive sense so as to include the whole procedure for imposing liability upon the taxpayer.
Result : The final result, therefore, is (a) the TravancoreCochin appeals (Civil Appeals 143 to 145 of 1954) are dismissed with costs; and (b) the Mysore appeals (Civil Appeals 27 to 30 of 1956 and Civil Appeals 161 to 164 of 1956) are allowed and the judgment and orders of the Mysore High Court are set aside.
The appellants in these Mysore appeals will be entitled to their costs in this Court and the High Court of Mysore.
Appeals Nos. 143 to 145 dismissed.
Appeals No. 27 to 30 and 161 to 164 allowed.
| IN-Abs | Section 13(1) of the Finance Act, 1950, provided If immediately before the 1st day of April, 1950, there is in force in any Part B State. any law relating to income tax or supertax or tax on profits of business, that law shall cease to have effect except for the purposes of the levy, assessment and collection of income tax and super tax in respect of any period not included in the previous year for the purposes of assessment under the Indian Income tax Act, 1922 for the year ending on the 31st day of March, 1951, or for any subsequent year, or, as the case may be, the levy, assessment and collection of the tax on profits of business for any chargeable accounting period ending on or before the 31st day of March, 1949.
" The appellant, a merchant carrying on his business in the erstwhile States of Travancore and Cochin, was assessed to income tax for the two accounting years 1122 M. E. (1946 1947) and 1123 M. E. (1947 1948) under the income tax law in force there, namely, the Travancore Income tax Act of 1121 M. E. and the Cochin Income tax Act of 1117 M. E. Between 1947 and 1950 there were constitutional changes resulting in the integration of the two States, formation of the United State of Travancore and Cochin, accession of the latter to the Dominion of India, and finally, its acceptance of the Constitution of India whereby it became a Part B State within the Constitution of India.
The question of financial integration was considered by the Indian States Finances Enquiry Committee and on the basis of the recommendations made by it a financial agreement was entered into on February 25, 1950, between the President of India and the Rajpramukh of the State of Travancore Cochin.
By article 277 of the Constitution taxes leviable under the Travancore Income tax Act or the Cochin Income tax Act continued to be so levied until provision to the contrary was made by Parliament by law.
Such provision was made by the Finance Act, 1950, which extended the Indian Income tax Act, 1922, to the State of Travancore Cochin, but by section 13(1) saved certain provisions of the Travancore and Cochin Income tax Acts.
In respect of the assessment for the accounting year 1124 M. E. the Income tax Officer of Ernakulam rejected the appellant 's books of account as unreliable and made a " best of judgment " assessment by his order dated January 11, 1952.
On February 12, 1952, the Income tax Officer, Ernakulam, issued four notices to the appellant, two under section 44 Of the Cochin Income tax Act and two under section 47 of the Travancore Income tax Act stating therein that in consequence of definite information which had come into his possession, he had discovered that the income of the appellant 753 for the assessment years 1123 and II24 M. E had been under assessed and that he proposed to re assess the said income ; and the appellant was asked to submit a return in respect of his total world income for the two years in question.
The appellant challenged the jurisdiction of the Income tax Officer to re assess his income and contended (1) that the assessment order dated January 11, 1952, made by the Income tax Officer for the accounting year 1124 M. E. being the only document on which the Income tax Officer relied for issuing a notice to the appellant, the requisite conditions for the application of the statutory provisions were lacking, (2) that section 13(1) of the Finance Act, 1950, did not have the effect of saving the provisions of the Travancore Income tax Act or the Cochin Income tax Act for the purpose of re assessment of income tax, and (3) that the financial agreement made between the President of India and the Raj pramukh dated February 25, 1950, which received constitu tional sanctity in article 278 of the Constitution, rendered the initiation of such re assessment proceedings unconstitutional and void : Held, (1) that though the meaning of the phrase " definite information " in section 44 (1) Of the Cochin Income tax Act and section 47(1) Of the Travancore Income tax Act, must depend on the circumstances of each case, there must be a casual connection between the information and the discovery, referred to in the sections ; but discovery does not mean a conclusion of certainty at the stage of notice ; it is enough if the Income tax Officer forms an honest belief.
Accordingly, the assessment order dated January 11, 1952, which disclosed a definite and systematic pattern of transactions for avoidance of tax not only in respect of the year covered by the order but spread over years anterior to it, amounted to information which, if honestly believed, would reasonably support the opinion of the Income tax Officer that there was a discovery of " escaped " income, etc., within the meaning of the sections ; Firm jitanyam Niymalram vs Commissioner of Income tax, A. 1.
R. 1952 Pat.
163, approved.
(2)that the expression " levy, assessment and collection of income tax " in section 13(1) Of the Finance Act, 1950, was wide enough to comprehend re assessment proceedings under section 47 of the Travancore Income tax Act and section 44 Of the Cochin Income tax Act; Commissioner of Income tax, Bombay Presidency and Aden vs Khemchand Ramdas, (1938) L. R. 65 1.
A. 236, explained.
Firm L. Hazari Mal vs Income tax Officer, Ambala, A. 1.
R. 1957 Punjab 5, approved.
(3)that on a true construction of the recommendations of the Indian States Finances Enquiry Committee, the financial 754 agreement between the President of India and the Rajpramukh did not render the impugned proceedings unconstitutional or void.
In the connected appeals, the respondents who were merchants doing business in the State of Mysore, were assessed to income tax under the Mysore Income tax Act, 1923, for the years prior to the integration of Mysore with India.
But subsequent to the integration of Mysore notices under section 34 Of the Mysore Income tax Act were issued against them for re assessment of income tax for the years prior to the integration.
The respondents contended that the Income tax Officer had no jurisdiction to issue such notices on the grounds (1) that under the Finance Act, 1950, the Mysore Income tax Act, 1923, stood repealed on and from April 1, 1950, and section 13(1) of the former Act kept alive the Mysore Act for the purpose of levy, assessment and collection of income tax, etc., for the period mentioned therein, but did not save section 34 Of the Mysore Income tax Act for the purpose of re assessment of income tax and, therefore, the notices issued under section 34 were without jurisdiction and authority, (2) that the financial agreement between the President of India and the Rajpramukh of Mysore, dated February 28, 1950, rendered the initiation of such re assessment proceedings unconstitutional and void, and (3) that the jurisdiction under section 34 Of the Mysore Income tax Act was limited to ascertainment of extra income not assessed and the section did not confer jurisdiction to make a new assessment under the Act.
Held, (1) that the Finance Act, 1950, empowered the Income tax Officer to take proceedings under section 34 Of the Mysore Income tax Act, for re assessment, for the prior years, of the under estimated or escaped income; (2)that the financial agreement dated February 28, 1950, did not render the proceedings for re assessment, unconstitu tional or void; and (3)that though there was a distinction between an original or normal assessment under section 23 and a re assessment under section 34 of the Mysore Income tax Act, the expression " levy, assessment and collection of income tax " in section 13(1) of the Finance Act, 1950, had been used in a comprehensive sense so as to include the whole procedure for imposing liability upon the assessee.
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